OEA Announces Second Quarter Results
23 February 1999
OEA Announces Second Quarter Results
Inflator and Initiator Shipments Continue to Increase;
Company Receives New Business Awards for Inflators and Micro-Gas Generators
DENVER, Feb. 23 -- OEA, Inc. today announced
results for its second quarter and six-month period ended January 29, 1999.
The Company reported a net loss of $1.0 million, or $.05 per share, on sales
of $59.4 million for the quarter as compared with net income of $2.4 million,
or $.12 per share, on sales of $59.4 million in the same quarter a year ago.
For the six-month period OEA reported a net loss of $3.7 million, or $.18
per share, on sales of $116.2 million versus net income before the cumulative
effect of a change in accounting principle of $7.0 million, or $.34 per share,
on sales of $116.7 million in the same period a year ago.
Charles B. Kafadar, President and CEO, said growing demand for OEA's
automotive products resulted in increased unit shipments during the quarter
and six-month period, and that the relatively flat sales figures reflected
price reductions totaling approximately $10 million in each of the first two
quarters of fiscal 1999. Air bag inflator shipments in the quarter increased
21% over the same quarter a year ago to 1.7 million units, while initiator
shipments increased 50% to 6.2 million units.
"We made significant progress in our cost reduction efforts during the
quarter which resulted in improved financial performance. Although we have
experienced some delays in implementing cost reductions, we continue to move
forward aggressively on these initiatives," Kafadar said. "We have made
significant strides in increasing productivity and in reducing scrap. In
addition, we anticipate further cost reductions later this year as a result of
continuing productivity improvements and design modifications recently
approved by our customers."
Kafadar said that OEA's sales and marketing efforts continue to generate
new business awards. He specifically cited two large multi-year orders for
inflators, as well as a major order for the Company's new micro-gas
generators, which are used in seat belt pretensioners. This new business has
a combined potential value of $75 million over the next four years. "These
awards include next generation technology developed by OEA," Kafadar said.
"While we anticipate demand for our core products to continue to grow, we
believe demand for new automotive safety technology will be the driving force
behind our growth over the next decade."
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
future profitability, the success of cost reduction programs, productivity
improvements, sales of and demand for core products and new automotive safety
products, technology leadership, 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,
1998, 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.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands)
ASSETS
January 29, July 31,
1999 1998
Current Assets: (Unaudited)
Cash and Cash Equivalents $2,976 $1,920
Accounts Receivable, Net 43,973 43,998
Unbilled Costs and Accrued Earnings 2,811 3,190
Income Taxes Receivable 9,033 12,040
Inventories
Raw Material and Component Parts 23,975 25,954
Work-in-Process 21,509 17,222
Finished Goods 2,852 11,391
48,336 54,567
Prepaid Expenses and Other 1,173 1,863
Total Current Assets 108,302 117,578
Property, Plant and Equipment 284,298 272,411
Less: Accumulated Depreciation 79,469 67,761
Property, Plant and Equipment, Net 204,829 204,650
Long-Term Receivable 3,000 3,000
Investment in Foreign Joint Venture 2,323 2,323
Other Assets 1,210 1,208
Total Assets $319,664 $328,759
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts Payable $21,675 $22,457
Interest Payable 2,201 2,368
Accrued Expenses 5,948 6,636
Federal and State Income Taxes -- --
Total Current Liabilities 29,824 31,461
Long-term Bank Borrowings 121,000 124,000
Deferred Income Taxes 10,821 10,821
Other 958 971
Total Liabilities 162,603 167,253
Stockholders' Equity:
Common Stock - $.10 par value,
Authorized 50,000,000 shares:
Issued - 22,019,700 Shares 2,202 2,202
Additional Paid-In Capital 13,249 13,201
Retained Earnings 145,023 150,440
Less: Cost of Treasury Shares,
1,420,099 and 1,424,943 (2,134) (2,142)
Equity Adjustment from Translation (1,279) (2,195)
Total Stockholders' Equity 157,061 161,506
Total Liabilities and Stockholders'
Equity $319,664 $328,759
OEA, INC.
CONSOLIDATED CONDENSED STATEMENT OF EARNINGS
(in thousands, except share data)
Three Months Ended Six Months Ended
Jan. 29, Jan. 30, Jan. 29, Jan. 30,
1999 1998 1999 1998
Net Sales $59,434 $59,414 $116,227 $116,749
Cost of Sales 56,563 51,305 111,847 98,476
Gross Profit 2,871 8,109 4,380 18,273
General and Administrative
Expenses 3,113 2,118 5,837 4,003
Research and Development Expenses 735 376 1,741 677
Operating Profit (977) 5,615 (3,198) 13,593
Other Income (Expense):
Interest Income 104 69 138 200
Interest Expense (2,082) (1,401) (3,998) (2,376)
Royalty Income & Other, Net(a) 1,531 (291) 1,643 (137)
(447) (1,623) (2,217) (2,313)
Earnings Before Income Taxes (1,424) 3,992 (5,415) 11,280
Federal and State Income Taxes (423) 1,614 (1,697) 4,270
Net Earnings (Loss) Before
Cumulative Effect of a Change
In Accounting Principle $(1,001) $2,378 $(3,718) $7,010
Cumulative Effect of a Change in
Accounting Principle -- -- -- (10,040)
Net Earnings (Loss) $(1,001) $2,378 $(3,718) $(3,030)
Earnings (Loss) Per Share
Before Cumulative Effect
of a Change in Accounting
Principle - Basic $(0.05) $0.12 $(0.18) $0.34
Cumulative Effect of a Change in
Accounting Principle - Basic $ -- $ -- $ -- $(0.49)
Earnings (Loss) Per Share
-- Basic (0.05) 0.12 (0.18) (0.15)
Weighted Average Number
of Shares Outstanding
-- Basic 20,599,573 20,576,208 20,597,758 20,566,693
(a) Effective with the quarter ended January 29, 1999, OEA began accruing
fixed royalty income on a quarterly basis to more properly reflect
earned income throughout the fiscal year.