SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
January 30, 2002 (January 29, 2002)
PRECISION OPTICS CORPORATION, INC.
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(Exact name of registrant as specified in its charter)
Massachusetts 001-10647 04-2795294
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(State or other jurisdiction of (Commission (I.R.S. Employer
of incorporation or organization) File Number) Identification No.)
22 East Broadway, Gardner, Massachusetts 01440
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (978) 630-1800
Item 5. Other Events.
On January 29, 2002, the Registrant issued the following press release
announcing operating results on an unaudited basis for the second quarter and
six months of fiscal year 2002 ended December 31, 2001:
FOR IMMEDIATE RELEASE TUESDAY, JANUARY 29, 2002
PRECISION OPTICS CORPORATION ANNOUNCES
SECOND QUARTER RESULTS
GARDNER, Massachusetts - Precision Optics Corporation, Inc. (Nasdaq: POCI) today
announced operating results on an unaudited basis for the second quarter and six
months of fiscal year 2002 ended December 31, 2001.
OPERATING RESULTS
Revenues for the quarter were $323,314, compared to $778,534 for the same period
in fiscal year 2001, a decrease of 58.5%. Net loss, including restructuring
charges of $668,250, was $1,995,301, or $0.19 per share, compared to $855,895 or
$0.08 per share, for the same period last year. The weighted average common
shares outstanding were 10,503,908 compared to 10,498,608 for the same period
last year.
For the six months ended December 31, 2001, revenues were $814,410 compared to
$1,666,833 for the same period last year, a decrease of 51.1%. Net loss,
including charges for asset impairment, restructuring and inventory write-down
totaling $4,652,628, was $7,501,230, or $0.71 per share, compared to $1,291,885
or $0.12 per share, for the same period last year. The weighted average common
shares outstanding were 10,503,908 compared to 10,447,425 for the same period
last year.
The revenue decrease from the prior year for the second quarter was due
primarily to lower sales of medical products (down 64%). For the quarter ended
December 31, 2001, medical sales were lower due primarily to significantly lower
shipments of stereo endoscopes and cameras.
The revenue decrease from the prior year for the six months ended December 31,
2001 was due to lower sales of medical products (down 60%), and lower sales of
non-medical products (down 10%). For the six months ended December 31, 2001,
medical sales were lower due primarily to lower sales of stereo endoscopes and
cameras. Non-medical sales were lower due primarily to lower sales of Dense
Wavelength Division Multiplexing (DWDM) filters. DWDM filter sales represented
13.2% of total revenues during the six months ended December 31, 2001 compared
to 12.9% for the corresponding period of the prior year (a reduction in filter
sales of approximately 50%).
PROVISION FOR ASSET IMPAIRMENT AND RESTRUCTURING AND INVENTORY WRITE-DOWN
As previously announced in November 2001, the Company recorded a provision for
restructuring costs in the second quarter ended December 31, 2001 totaling
$668,250 related to its November 2001 workforce reduction affecting 13 employees
and the resulting idle leased space in its Optical Thin Films Technology Center.
The provision for asset impairment and restructuring of $668,250 and $4,112,628,
respectively, in the quarter and six months ended December 31, 2001 consists of
(1) a provision for restructuring costs recorded in the quarter ended December
31, 2001, representing the present value of future lease payments related to
idle leased space and employee severance costs; and (2) a provision for asset
impairment of approximately $3,444,000 recorded in the quarter ended September
30, 2001 which represents a write-down to the lower of carrying value or fair
market value of certain of the Company's property, plant and equipment invested
in its optical thin films coating business.
The Company determined that certain inventories of DWDM filters and filter test
instrumentation may not be sold within the Company's business cycle or the
products' life cycle. As previously announced in November 2001, the Company
recorded, in cost of goods sold, a provision for excess and obsolete inventory
of approximately $540,000 in the quarter ended September 30, 2001.
OUTLOOK
The asset impairment and restructuring measures as mentioned above, along with
the August 2001 workforce reduction, which affected in total 37 employees, are
expected to result in a reduction in future annual expenses. During the quarter
ended December 31, 2001, total recurring operating expenses (excluding inventory
purchases) were approximately $1 million (or 39%) lower than the quarter ended
June 30, 2001. Going forward, these cost reduction measures are expected to
result in expense savings of at least $3.5 million per year, of which
approximately $2.8 million per year represent actual cash savings.
Capital equipment expenditures during the six months ended December 31, 2001
were approximately $59,000, down 93% from the same period last year. It is
anticipated that the level of capital spending for the balance of fiscal year
2002 will continue to be substantially lower than last year.
For the quarter ended December 31, 2001, research and development expenses were
approximately $737,000, down 4.5% from the quarter ended December 31, 2000. It
is anticipated that the quarterly level of R&D expenses for the balance of
fiscal year 2002 will be substantially lower than last year.
The Company believes that downward trends in the selling prices of DWDM filters
along with severely reduced demand may continue for an indeterminate period of
time. For these reasons, the Company is proceeding cautiously in this market,
conserving cash and other vital resources while evaluating potential courses of
action during this period of market slowdown. The Company has retained certain
DWDM capabilities in order to be positioned to capitalize on potential future
opportunities in this market.
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Meanwhile, the Company is pursuing advances on several fronts in the medical
area and certain non-medical applications. Among these initiatives are
improvements in medical instrument lens coatings, a new 30 DEG. line of sight
version of the successful 5 mm Laparoscope, and other new products. The Company
has made significant progress in autoclavable seal technology, which is expected
to result in autoclavable sterilization of new endoscope products. Recent
achievements of ISO 9001 and CE Mark certification, as recently announced, is
also expected to support increased sales opportunities, both foreign and
domestic, for the Company's medical products, as autoclavable endoscopes become
available by the Company.
ABOUT PRECISION OPTICS
Precision Optics Corporation, a leading manufacturer of optical thin films and
optical instruments since 1984, designs and manufactures high-quality optical
thin film coatings, medical instruments, and other advanced optical systems.
Major applications for the Company's thin film coatings have included DWDM
filters used to increase the bandwidth capacity of fiber-optic
telecommunications networks. The Company's medical instrumentation line includes
laparoscopes, arthroscopes and endocouplers and a world-class 3-D endoscope for
use in minimally invasive surgical procedures.
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE SECOND QUARTER AND SIX MONTHS ENDED
DECEMBER 31, 2001 AND 2000
-- SECOND QUARTER -- -- SIX MONTHS --
2001 2000 2001 2000
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUES $323,314 $778,534 $814,410 $1,666,833
COST OF GOODS SOLD 476,728 640,366 1,972,912 1,178,607
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GROSS PROFIT (LOSS) (153,414) 138,168 (1,158,502) 488,226
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RESEARCH and DEVELOPMENT 737,187 772,277 1,412,897 1,337,449
SELLING, GENERAL and
ADMINISTRATIVE EXPENSES 479,060 451,033 948,169 898,550
PROVISION FOR ASSET IMPAIRMENT and
RESTRUCTURING 668,250 -- 4,112,628 --
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TOTAL OPERATING EXPENSES 1,884,497 1,223,310 6,473,694 2,235,999
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OPERATING LOSS (2,037,911) (1,085,142) (7,632,196) (1,747,773)
INTEREST EXPENSE (3,739) (3,153) (5,667) (7,096)
INTEREST INCOME 46,349 232,400 136,633 462,984
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NET LOSS $(1,995,301) $(855,895) $(7,501,230) $(1,291,885)
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BASIC and DILUTED LOSS PER SHARE ($0.19) ($0.08) ($0.71) ($0.12)
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WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 10,503,908 10,498,608 10,503,908 10,447,425
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
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DECEMBER 31, 2001 JUNE 30, 2001
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CURRENT ASSETS
Cash and Cash Equivalents $ 7,739,831 $10,530,298
Accounts Receivable, Net 144,706 1,003,496
Inventories 1,105,242 1,524,119
Prepaid Expenses 243,636 109,760
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Total Current Assets 9,233,415 13,167,673
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PROPERTY AND EQUIPMENT 5,983,406 9,386,047
Less: Accumulated Depreciation (3,851,278) (3,600,380)
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Net Property and Equipment 2,132,128 5,785,667
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OTHER ASSETS 269,256 266,671
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TOTAL ASSETS $11,634,799 $19,220,011
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 625,887 $ 1,062,056
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NONCURRENT LIABILITIES 420,890 68,703
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STOCKHOLDERS' EQUITY
Common Stock, $.01 par value-
Authorized -- 20,000,000 shares
Issued and Outstanding - 10,503,908
shares at December 31, 2001 and
June 30, 2001 105,039 105,039
Additional Paid-in Capital 27,682,657 27,682,657
Accumulated Deficit (17,199,674) (9,698,444)
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Total Stockholders' Equity 10,588,022 18,089,252
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $11,634,799 $19,220,011
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Forward-looking statements contained in this news release, including those
related to the Company's products under development, operation of the Company's
production facilities, and revenue estimates, are made under "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995 and involve a
number of risks and uncertainties that could materially affect future results.
Among these risk factors are general economic and business conditions and growth
in the optical communications and medical product markets, the impact of
competitive products and pricing, performance by the Company's vendors,
availability of third-party components, cost and yields associated with
production of the Company's optical communications and other products, the
ability of the Company to successfully and in a timely manner complete product
and process development efforts, and the other risk factors and cautionary
statements listed from time to time in the Company's periodic reports filed with
the Securities and Exchange Commission, including but not limited to, the
Company's Annual Report on Form 10-KSB for the year ended June 30, 2001.
###
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PRECISION OPTICS CORPORATION, INC.
Date: January 30, 2002 By: /s/ Jack P. Dreimiller
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Name: Jack P. Dreimiller
Title: Senior Vice President, Finance and
Chief Financial Officer