OEA Reports Q4 and Year End Results
21 September 1998
OEA Reports Fourth Quarter and Year End Results
DENVER, Sept. 21 -- OEA, Inc. today reported
results for its fourth quarter and fiscal year ended July 31, 1998.
In the fourth quarter OEA reported a net loss of $1.4 million, or $.07 per
share, on sales of $65.0 million versus net income of $10.4 million, or $.51
per share, on sales of $60.3 million in the fourth quarter a year ago. As
previously announced, the fourth quarter's results were impacted by effects of
the General Motors strike ($.09 per share) and by replacement and testing
costs associated with a product issue at OEA's Aerospace division ($.05 per
share) -- an issue that has since been rectified.
For the year OEA reported net income before one-time charges, the effects
of the General Motors strike and accounting changes of $9.7 million, or $.47
per share, on sales of $245.4 million as compared with net income of
$33.4 million, or $1.63 per share, on sales of $211.6 million. After one-time
charges, the effects of the General Motors strike and accounting changes, the
Company reported a net loss of $19.3 million, or $.94 per share, versus net
income of $35.4 million, or $1.73 per share.
The one-time charges, which were taken in the third quarter, related
primarily to issues associated with start-up of the Company's new inflator
production lines and consolidation of its domestic initiator production. In
addition, in the fourth quarter the Company adopted a change in accounting
principle that became effective retroactively in the first quarter of fiscal
1998. The AICPA's accounting change, "Statement of Position 98-5, Reporting
on the Costs of Start-up Activities," requires the costs of start-up
activities to be expensed as incurred rather than capitalized and written off
over time. Accordingly, the book value of previously capitalized start-up
costs as of the beginning of the year was written off in a one-time, below-
the-line adjustment under "cumulative effect of change in accounting
principle." Additionally, start-up costs previously capitalized in the
current year were expensed in the period incurred. Financial statements for
the first three quarters of fiscal 1998 will be restated to recognize these
changes.
"Fiscal 1998 was a transitional year on several key fronts as OEA
aggressively ramped up high-volume manufacturing operations to support
increasing demand for our products," said Charles B. Kafadar, President and
Chief Executive Officer. "At the same time, we were consolidating operations
and resources as part of a strategy designed to counter price decreases that
took effect August 1, 1998. While these decisions had an impact on short-term
results, we have made excellent progress in lowering our cost structure and
positioning OEA to be highly competitive and profitable.
"We are excited about prospects for improving our financial performance in
the current fiscal year," Kafadar added. "Orders for existing products
continue to increase, our cost reduction programs are showing positive results
and we are developing several new products that have the potential to redefine
industry standards."
OEA is the technology leader and a major manufacturer in the air bag
inflator and initiator industry. The Company is also a leader in the design
and manufacture of personnel escape systems for military aircraft and high-
reliability devices for missile and aerospace applications.
Certain of the information set forth above, including statements regarding
Company strategy, its soundness, Company growth and profitability, product
demand, sales volume increases, margin potential, technology leadership, and
the success of cost reduction programs and improved manufacturing processes,
as well as other statements or implications regarding future events, are
"forward-looking statements" for purposes of federal securities laws. Actual
results or events may differ materially from these forward-looking statements
depending on a variety of factors. Reference is made to the cautionary
statements under the caption "Forward-Looking Statements" in OEA's Annual
Report on Form 10-K for the year ended July 31, 1997 and the Company's report
on Form 8-K filed on June 4, 1998 for a description of various factors that
might cause OEA's actual results to differ materially from those contemplated
by such forward-looking statements.
OEA, INC.
FINANCIAL SUMMARY
$(THOUSANDS, EXCEPT SHARE DATA)
3 MONTHS ENDED 7/31 12 MONTHS ENDED 7/31
BEFORE ONE-TIME CHARGES 1998 1997 1998 1997
NET SALES 65,034 60,334 245,375 211,557
OPERATING PROFIT (1,763) 12,719 16,661 49,559
OTHER INCOME (EXPENSE) (248) 2,172 (3,636) 2,502 (a)
EARNINGS BEFORE TAXES (2,011) 14,891 13,025 52,061
INCOME TAXES (650) 4,454 5,145 18,656
NET EARNINGS BEFORE
CUMULATIVE EFFECT (1,361) 10,437 7,880 33,405
NET EARNINGS PER SHARE
BEFORE CUMULATIVE EFFECT (0.07) 0.51 0.38 1.63
ESTIMATED IMPACT OF GM STRIKE 0.09 -- 0.09 --
3 MONTHS ENDED 7/31 12 MONTHS ENDED 7/31
AFTER ONE-TIME CHARGES 1998 1997 1998 1997
NET SALES 65,034 60,334 245,375 211,557
OPERATING PROFIT (1,763) 12,719 (5,588) 49,559
OTHER INCOME (EXPENSE) (248) 2,172 (8,343) 5,745
EARNINGS BEFORE TAXES (2,011) 14,891 (13,931) 55,304
INCOME TAXES (650) 4,454 (4,655) 19,863
NET EARNINGS BEFORE
CUMULATIVE EFFECT (1,361) 10,437 (9,276) 35,441
CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING PRINCIPLE -- -- (10,040) --
NET EARNINGS (1,361) 10,437 (19,316) 35,441
NET EARNINGS PER SHARE (0.07) 0.51 (0.94) 1.73
AVERAGE NUMBER OF
SHARES OUTSTANDING 20,594,757 20,551,001 20,580,651 20,539,993
(a) Excludes $3,243 gain on sale of foreign joint venture.