Quarterly report pursuant to Section 13 or 15(d)

Segment Reporting

v3.23.2
Segment Reporting
 9 Months Ended
Jul. 02, 2023
Segment Reporting [Abstract]  
Segment Reporting

Note 3 - Segment Reporting

 

The Company’s two reportable segments, Applied Optics Center and Optex Systems – Richardson (“Optex Systems”), are strategic businesses offering similar products to similar markets and customers; however, they are operated and managed separately due to differences in manufacturing technology, equipment, geographic location, and specific product mix. Applied Optics Center was acquired as a unit, and management at the time of the acquisition was retained.

 

The Applied Optics Center segment also serves as the key supplier of laser coated filters used in the production of periscope assemblies for the Optex Systems segment. Intersegment sales and transfers are accounted for at annually agreed to pricing rates based on estimated segment product cost, which includes segment direct manufacturing and general and administrative costs, but exclude profits that would apply to third party external customers.

 

Optex Systems (OPX) – Richardson, Texas

 

Optex Systems revenues are primarily in support of prime and subcontracted military customers. Military sales to prime and subcontracted customers represented approximately 96% and sales to commercial customers represented approximately 4% of the external segment revenue for the nine months ended July 2, 2023. The Optex Systems segment revenue is comprised of approximately 85% domestic military customers and 11% foreign military customers. For the nine months ended July 2, 2023, Optex Systems – Richardson represented 44% of the Company’s total consolidated revenue and consisted of revenue from the U.S. government (17%), two major U.S. defense contractors (14% and 6%), and all other customers (7%).

 

Optex Systems is located in Richardson Texas, with leased premises consisting of approximately 49,100 square feet. As of July 2, 2023, the Richardson facility operated with 56 full time equivalent employees in a single shift operation which includes 8 home office support employees. The facilities at Optex Systems, Richardson serve as the home office for both the Optex Systems and Applied Optics Center segments.

 

Applied Optics Center (AOC) – Dallas, Texas

 

The Applied Optics Center serves primarily domestic U.S. customers. Sales to commercial customers represented approximately 50% and military sales to prime and subcontracted customers represented approximately 50% of the external segment revenue for the nine months ended July 2, 2023. Approximately 95% of the AOC revenue was derived from external customers and approximately 5% was related to intersegment sales to Optex Systems in support of military contracts. For the nine months ended July 2, 2023, AOC represented 56% of the Company’s total consolidated revenue and consisted of revenue from one major defense contractor (5%), one commercial customer (27%), and all other customers (24%).

 

The Applied Optics Center is located in Dallas, Texas with leased premises consisting of approximately 44,867 square feet of space. As of July 2, 2023, AOC operated with 45 full time equivalent employees in a single shift operation.

 

 

The financial tables below present information on the reportable segments’ profit or loss for each period, as well as segment assets as of each period end. The Company does not allocate interest expense, income taxes or unusual items to segments.

 

   

Reportable Segment Financial Information

(thousands)

  
    As of and for the three months ended July 2, 2023  
   

Optex Systems

Richardson

   

Applied Optics Center

Dallas

   

Other

(non-allocated costs and intersegment eliminations)

   

Consolidated

Total

 
                                 
Revenues from external customers   $ 3,069     $ 4,103     $ -     $ 7,172  
Intersegment revenues     -       265       (265 )     -  
Total revenue   $ 3,069     $ 4,368     $ (265 )   $ 7,172  
                                 
Interest expense   $ -     $ -     $ 22     $ 22  
                                 
Depreciation and amortization   $ 14     $ 72     $ -     $ 86  
                                 
Income (loss) before taxes   $ (60 )   $ 893     $ (103 )   $ 730  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (386 )   $ 386     $ -     $ -  
Stock compensation expense   $ -     $ -     $ 81     $ 81  
Warranty expense   $ -     $ 57     $ -     $ 57  
                                 
Segment assets   $ 11,671     $ 9,293     $ -     $ 20,964  
Expenditures for segment assets   $ -     $ 222     $ -     $ 222  

  

   

Reportable Segment Financial Information

(thousands)

  
    As of and for the three months ended July 3, 2022  
   

Optex Systems

Richardson

   

Applied Optics Center

Dallas

   

Other

(non-allocated costs and intersegment eliminations)

   

Consolidated

Total

 
                         
Revenues from external customers   $ 2,653     $ 3,517     $ -     $ 6,170  
Intersegment revenues     -       258       (258 )     -  
Total revenue   $ 2,653     $ 3,775     $ (258 )   $ 6,170  
                                 
Interest expense   $ -     $ -     $ -     $ -  
                                 
Depreciation and amortization   $ 8     $ 66     $ -     $ 74  
                                 
Income (loss) before taxes   $ 185     $ 361     $ (36 )   $ 510  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (268 )   $ 268     $ -     $ -  
Stock compensation expense   $ -     $ -     $ 36     $ 36  
Warranty expense   $ -        42        -        42   
            $       $ -     $    
Segment assets   $ 14,676     $ 6,637     $ -     $ 21,313  
Expenditures for segment assets   $ 49     $ 69     $ -     $ 118  

 

 

   

Reportable Segment Financial Information

(thousands)

  
    As of and for the nine months ended July 2, 2023  
   

Optex Systems

Richardson

   

Applied Optics Center

Dallas

   

Other

(non-allocated costs and intersegment eliminations)

   

Consolidated

Total

 
                         
Revenues from external customers   $ 7,742     $ 9,840     $ -     $ 17,582  
Intersegment revenues     -       511       (511 )     -  
Total revenue   $ 7,742     $ 10,351     $ (511 )   $ 17,582  
                                 
Interest expense   $ -     $ -     $ 31     $ 31  
                                 
Depreciation and amortization   $ 38     $ 214     $ -     $ 252  
                                 
Income (loss) before taxes   $ (527 )   $ 1,747     $ (165 )   $ 1,055  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (978 )   $ 978     $ -     $ -  
Stock compensation expense   $ -     $ -     $ 134     $ 134  
Warranty expense   $ -     $ 171     $ -     $ 171  
                                 
Segment assets   $ 11,671     $ 9,293     $ -     $ 20,964  
Expenditures for segment assets   $ 25     $ 343     $ -     $ 368  

 

   

Reportable Segment Financial Information

(thousands)

  
    As of and for the nine months ended July 3, 2022  
   

Optex Systems

Richardson

   

Applied Optics Center

Dallas

   

Other

(non-allocated costs and intersegment eliminations)

   

Consolidated

Total

 
                         
Revenues from external customers   $ 6,588     $ 9,057     $ -     $ 15,645  
Intersegment revenues     -       693       (693 )     -  
Total revenue   $ 6,588     $ 9,750     $ (693 )   $ 15,645  
                                 
Interest expense   $ -     $ -     $ -     $ -  
                                 
Depreciation and amortization   $ 28     $ 193     $ -     $ 221  
                                 
Income (loss) before taxes   $ (276 )   $ 737     $ (127 )   $ 334  
                                 
Other significant noncash items:                                
Allocated home office expense   $ (802 )   $ 802     $ -     $ -  
Stock compensation expense   $ -     $ -     $ 127     $ 127  
Warranty expense   $ -       122       -       122  
            $       $       $    
Segment assets   $ 14,676     $ 6,637     $ -     $ 21,313  
Expenditures for segment assets   $ 55     $ 181     $ -     $ 236