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): May 10, 2001
(May 9, 2001)
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 May 9, 2001, the Registrant issued the following press release
announcing its operating results on an unaudited basis for the third quarter
and nine months of fiscal year 2001 ended March 31, 2001:
PRECISION OPTICS CORPORATION ANNOUNCES THIRD QUARTER RESULTS
GARDNER, MASSACHUSETTS - Precision Optics Corporation, Inc. (Nasdaq: POCI)
announced today operating results on an unaudited basis for the third quarter
and nine months of fiscal year 2001 ended March 31, 2001. Highlights of the
quarter included record production and sales of Dense Wavelength Division
Multiplexing (DWDM) filters and initial sales of a new line of DWDM filter test
instruments.
OPERATING RESULTS
Revenues for the quarter were $1,133,984 compared to $784,503 for the same
period in fiscal year 2000, an increase of 44.5%. Revenues for the quarter
increased 45.7% sequentially over the quarter ended December 31, 2000. Net loss
was $1,110,948, or $0.11 per share, compared to $667,662, or $0.08 per share,
for the same period last year. The weighted average common shares outstanding
were 10,498,908 compared to 8,471,946 for the same period last year.
For the nine months ended March 31, 2001, revenues were $2,800,817 compared to
$2,088,791 for the same period last year, an increase of 34.1%. Net loss was
$2,402,833, or $0.23 per share, compared to $1,818,547 or $0.23 per share, for
the same period last year. The weighted average common shares outstanding were
10,464,586 compared to 7,803,594 for the same period last year.
The increase in revenues for the quarter ended March 31, 2001 over last year's
third quarter was driven by initial sales of DWDM filter test instrumentation
and higher sales of DWDM filters and medical products.
200 GHZ DWDM FILTERS
During the quarter ended March 31, 2001, sales of 200 GHz DWDM filters more than
doubled over last year's third quarter to a record quarterly level, and
represented 19.4% and 15.6%, respectively, of total revenues for the quarter and
nine months ended March 31, 2001.
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As previously reported, this growth had been interrupted during the previous
quarter pending the renegotiation of pricing and delivery terms on several large
orders amidst downward pricing pressure in the DWDM market. During the quarter
ended March 31, 2001, these negotiations were successfully completed and
shipments were resumed. However, one customer, who was a participant in these
negotiations, and accounted for 5.7% and 3.9%, respectively, of total revenues
for the quarter and nine months ended March 31, 2001, subsequently canceled the
balance of its order prior to quarter end due to the loss of a contract with one
of its own customers.
Production levels and yields for 200 GHz filters have continued to improve
significantly. Sales this quarter through the first week of May, none of which
were made in connection with the canceled order referred to above, have already
exceeded filter sales for the entire quarter ended March 31, 2001. Current
orders as of March 31, 2001 for 200 GHz filters totaled approximately $885,000,
with delivery scheduled during the quarters ending June and September, 2001.
Discussions are now proceeding to secure new and repeat filter orders extending
beyond this period.
100 GHZ DWDM FILTERS
In late March the Company took delivery of a new state-of-the-art 100 GHz
production system. Installation was completed in April, with full production and
shipment of 100 GHz filters expected to begin in the quarter ending June 30,
2001.
DWDM FILTER TEST INSTRUMENTATION
Also in March, the Company introduced two major new products at the Optical
Fiber Communication Conference (OFC) trade show -- the manual Gen III(TM) DWDM
Test Fixture for characterizing telecommunications filters and a fully automated
filter testing system. Both products are based on patent-pending technology and
allow greatly enhanced speed and accuracy in the measurement of filters. These
were received enthusiastically. Initial shipments of manual test fixtures
represented 8.7% of total Company revenues for the quarter, and additional units
are scheduled for delivery during the current quarter. Product development is
continuing on the automated filter testing system, with initial sales
anticipated during the next fiscal year.
PRODUCT AND INFRASTRUCTURE DEVELOPMENT
The Company has continued to invest aggressively in research, development and
capital equipment to support increased participation in the long-term
opportunities the telecommunications industry offers. In particular, work has
accelerated on improved, higher-capacity manufacturing processes for 200 GHz
filter production, and development and commercialization of 100 GHz filters.
With the installation of the 100 GHz system described above, the Company now has
proprietary state-of-the-art systems in place for producing both 100 and 200 GHz
filters. These systems have accounted for a substantial portion of the Company's
recent research and development and capital equipment expenses. For the nine
months ended March 31, 2001, R&D expenses were approximately $2.2 million (up
71% from last year), and capital equipment expenditures were approximately $3.3
million, up more than 350% from the same period last year. With a
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large part of the DWDM infrastructure currently in place, R&D and capital
equipment expenditure increases of this magnitude are not anticipated in the
foreseeable future.
MEDICAL PRODUCTS
Sales of medical products were up 19.8% over last year's third quarter, and
represented 77% of total revenues for the nine months ended March 31, 2001.
However, the Company's principal customer for stereo endoscopes has notified the
Company that, upon completion of current orders in June 2001, it would cease
placing orders for stereo endoscopes with the Company in favor of other sources
of supply. Sales of stereo endoscopes to this customer amounted to 35% of total
revenues for the nine months ended March 31, 2001.
OUTLOOK
The loss of the Company's principal customer for stereo endoscopes will have an
adverse impact on near-term medical sales unless these revenues are replaced.
However, we are moving aggressively to offset this reduction in revenue with new
product offerings to other major medical customers. One example is a new 5mm
laparoscope which began shipping in April following successful prototype trials.
While the current economic slowdown has had significant impact throughout the
telecommunications industry, the Company believes that its current DWDM filters
and filter testing products are well positioned to help customers respond to
continuing price pressures as well as long-term demand for high-performance
components.
A major thrust of Company activity over the last two quarters has been the
development of higher-volume, higher-yield and lower-cost production and test
facilities for both 200 and 100 GHz filters. April 2001 marked the first month
in which the Company attained consistent production volumes over an entire
month's production, and work is continuing to improve yield per deposition run,
helped by the significantly higher throughput of the Company's new manual Gen
IIITM DWDM Test Fixture, which is also generating revenue as a separate product.
The automatic test system currently being integrated into production lines will
enable further increases in throughput, and should begin to generate its own
additional sales in the coming fiscal year. The Company believes that these
developments in the DWDM area are positive indicators for near-term improvements
in telecommunications-related sales.
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 include DWDM filters
used to increase the bandwidth capacity of fiber-optic telecommunications
networks. The Company's medical instrumentation line includes laparoscopes,
arthroscopes, 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 THIRD QUARTER AND NINE MONTHS ENDED
MARCH 31, 2001 AND 2000
--THIRD QUARTER-- --NINE MONTHS--
2001 2000 2001 2000
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(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUES $ 1,133,984 $ 784,503 $ 2,800,817 $ 2,088,791
COST OF GOODS SOLD 920,578 595,472 2,099,185 1,372,895
------------ ----------- ------------ -----------
GROSS PROFIT 213,406 189,031 701,632 715,896
RESEARCH and DEVELOPMENT EXPENSES 878,715 442,835 2,216,164 1,299,480
SELLING, GENERAL and
ADMINISTRATIVE EXPENSES 629,456 457,823 1,528,006 1,280,899
------------ ----------- ------------ -----------
TOTAL 1,508,171 900,658 3,744,170 2,580,379
------------ ----------- ------------ -----------
OPERATING LOSS (1,294,765) (711,627) (3,042,538) (1,864,483)
INTEREST EXPENSE (2,544) (6,537) (9,640) (19,414)
INTEREST INCOME 186,361 50,502 649,345 65,350
------------ ----------- ------------ -----------
LOSS BEFORE PROVISION
FOR INCOME TAXES (1,110,948) (667,662) (2,402,833) (1,818,547)
PROVISION FOR INCOME TAXES -- -- -- --
------------ ----------- ------------ -----------
NET LOSS $ (1,110,948) $ (667,662) $ (2,402,833) $(1,818,547)
============ =========== ============ ===========
BASIC AND DILUTED LOSS PER SHARE $(0.11) $(0.08) $(0.23) $(0.23)
============ =========== ============ ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,498,908 8,471,946 10,464,586 7,803,594
============ =========== ============ ===========
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
MARCH 31, 2001 JUNE 30, 2000
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CURRENT ASSETS
Cash and Cash Equivalents $ 12,058,336 $ 15,128,750
Accounts Receivable, Net 752,643 638,299
Inventories 1,314,282 1,109,511
Prepaid Expenses 240,570 70,807
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Total Current Assets 14,365,831 16,947,367
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PROPERTY AND EQUIPMENT 9,097,874 5,768,913
Less: Accumulated Depreciation (3,487,071) (2,901,892)
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Net Property and Equipment 5,610,803 2,867,021
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OTHER ASSETS 257,456 270,806
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TOTAL ASSETS $ 20,234,090 $ 20,085,194
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 762,673 $ 756,414
CAPITAL LEASE OBLIGATION AND OTHER 87,229 88,175
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value--
Authorized -- 20,000,000 shares
Issued and Outstanding - 10,498,908 and
10,285,158 shares at March 31, 2000
and June 30, 2000, respectively 104,989 102,852
Additional Paid-in Capital 27,638,474 25,094,195
Accumulated Deficit (8,359,275) (5,956,442)
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Total Stockholders' Equity 19,384,188 19,240,605
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,234,090 $ 20,085,194
============ ============
Forward-looking statements contained in this news release, including those
related to the Company's products under development and operation of the
Company's production facilities, 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, market acceptance of any new products
introduced by the Company, 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, 2000.
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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: May 10, 2001 By: /s/ JACK P. DREIMILLER
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Name: Jack P. Dreimiller
Title: Senior Vice President, Finance
and Chief Financial Officer
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