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): August 22, 2001
(August 21, 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 August 21, 2001, the Registrant issued the following press release announcing
operating results for the fourth quarter and year ended June 30, 2001:
FOR IMMEDIATE RELEASE TUESDAY, AUGUST 21, 2001
PRECISION OPTICS CORPORATION ANNOUNCES
FOURTH QUARTER AND YEAR-END RESULTS
GARDNER, MASSACHUSETTS - Precision Optics Corporation, Inc. (Nasdaq: POCI)
announced today operating results for the fourth quarter and year ended June 30,
2001.
OPERATING RESULTS
Revenues for the quarter were $1,447,011 compared to $920,858 for the same
period in fiscal year 2000, an increase of 57.1%. Revenues for the fourth
quarter of fiscal year 2001 increased 27.6% sequentially over revenues for the
third quarter of fiscal year 2001. Net loss was $1,339,169 or $0.13 per share,
compared to $337,343, or $0.03 per share, for the same period last year. The
weighted average common shares outstanding were 10,499,741 compared to
10,106,850 for the same period last year.
For the year ended June 30, 2001, revenues were $4,247,828 compared to
$3,009,649 for the same period last year, an increase of 41.1%. Net loss was
$3,742,002, or $0.36 per share, compared to $2,155,890 or $0.26 per share, for
the same period last year. The weighted average common shares outstanding were
10,473,348 compared to 8,379,408 for the same period last year.
The increase in revenues for the fourth quarter ended June 30, 2001 over last
year's fourth quarter was driven by higher sales of DWDM (Dense Wavelength
Division Multiplexing) filters and DWDM filter test instrumentation. Medical
sales for the quarter were relatively flat compared to last year.
DWDM filter sales represented 24.8% of total revenues for the year ended June
30, 2001.
200 GHZ FILTERS
During the quarter ended June 30, 2001, sales of 200 GHz filters represented
42.7% of total revenues, and increased 181% sequentially over the third quarter
of this year and increased 296% compared to the fourth quarter of last year.
As previously announced, subsequent to June 30, 2001, the Company's principal
customer for DWDM filters notified the Company that it had canceled
approximately $140,000 of filter orders. The Company was notified that this
action was due to the customer's excess inventory issues affecting all of its
vendors. As a result, The Company expects shipments of its DWDM filters during
the quarter ending September 30, 2001 to be substantially lower than the
previous quarter. The Company continues to seek to secure new and repeat filter
orders from several potential customers.
100 GHZ DWDM FILTERS
In March 2001, the Company took delivery of a new state-of-the-art 100 GHz
production system. Installation and pre-production testing was completed during
the quarter ended June 30, 2001. Sample 100 GHz filters
have been provided to several potential customers, and discussions are
proceeding to obtain initial 100 GHz production orders.
DWDM FILTER TEST INSTRUMENTATION
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. Shipments of manual
test fixtures represented 4.7% of total Company revenues for fiscal year 2001.
Product development is continuing on the automated filter testing system, with
initial sales anticipated during fiscal year 2002.
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 year
ended June 30, 2001, R&D expenses were approximately $3.2 million (up 90% from
last year), and capital equipment expenditures were approximately $3.6 million,
up more than 75% from the same period last year. With a large part of the DWDM
infrastructure currently in place, R&D and capital equipment expenditures of
this magnitude are not anticipated in the foreseeable future.
MEDICAL PRODUCTS
For the year ended June 30, 2001, sales of medical products were up 10.7% over
last year, and represented 67% of total revenues for fiscal year 2001. However,
as was previously reported, the Company's principal customer for stereo
endoscopes notified the Company that 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 29% of total revenues for fiscal year
2001.
WORKFORCE REDUCTION
The sharp reduction in demand and industry-wide excess inventory levels of
passive telecommunications components has hampered the Company's ability to
obtain new orders for its DWDM filters. The Company cannot predict when
significant demand for its DWDM filters will resume. As previously announced, in
August 2001, the Company reduced its workforce by approximately 30%, or 24
employees. Along with the workforce reduction, the Company will be reducing
other discretionary expenses. These actions together are expected to generate
annual cash savings in the range of $1.5 million to $2 million. The Company will
continuously monitor marketplace conditions to determine whether additional cost
savings measures are necessary.
OUTLOOK
Noteworthy achievements during fiscal year 2001 included achieving volume
production and sales levels for 200 GHz DWDM filters, introducing new
instrumentation for low cost production testing of DWDM filters, and
introduction of several medical products to partially offset the previously
announced loss of our stereo endoscopy contract.
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Business prospects remain uncertain largely because of lack of visibility
concerning future spending levels for telecommunications equipment. The Company
believes that downward trends in the selling prices of DWDM filters may continue
because of existing inventory surpluses, increasing competitive pressure, and
softening demand experienced by telecommunications equipment providers.
Following the previously announced workforce reduction, the Company continues to
cautiously evaluate courses of action which will allow it to retain its core
DWDM capabilities in a state of readiness for the return of DWDM filter
opportunities, while conserving cash reserves and other vital resources during
this period of market slow down. The Company continues to believe its DWDM
filters and test instrumentation will be well positioned to generate higher
revenues when the overall economy and market conditions in the
telecommunications industry improve.
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 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 FOURTH QUARTER AND TWELVE MONTHS ENDED
JUNE 30, 2001 AND 2000
--FOURTH QUARTER-- --TWELVE MONTHS--
2001 2000 2001 2000
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(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
REVENUES $ 1,447,011 $ 920,858 $ 4,247,828 $ 3,009,649
COST OF GOODS SOLD 1,339,494 593,094 3,438,679 1,965,989
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GROSS PROFIT 107,517 327,764 809,149 1,043,660
RESEARCH and DEVELOPMENT EXPENSES 999,093 394,929 3,215,257 1,694,409
SELLING, GENERAL and
ADMINISTRATIVE EXPENSES 575,511 478,987 2,103,517 1,759,886
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TOTAL 1,574,604 873,916 5,318,774 3,454,295
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OPERATING LOSS (1,467,087) (546,152) (4,509,625) (2,410,635)
INTEREST EXPENSE (2,220) (4,903) (11,860) (24,317)
INTEREST INCOME 131,050 214,624 780,395 279,974
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LOSS BEFORE PROVISION
FOR INCOME TAXES (1,338,257) (336,431) (3,741,090) (2,154,978)
PROVISION FOR INCOME TAXES 912 912 912 912
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NET LOSS $ (1,339,169) $ (337,343) $ (3,742,002) $(2,155,890)
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BASIC AND DILUTED LOSS PER SHARE $ (0.13) $ (0.03) $ (0.36) $ (0.26)
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WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 10,499,741 10,106,850 10,473,348 8,379,408
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PRECISION OPTICS CORPORATION, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
ASSETS
JUNE 30, 2001 JUNE 30, 2000
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CURRENT ASSETS
Cash and Cash Equivalents $ 10,530,298 $ 15,128,750
Accounts Receivable, Net 1,003,496 638,299
Inventories 1,524,119 1,109,511
Prepaid Expenses 109,760 70,807
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Total Current Assets 13,167,673 16,947,367
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PROPERTY AND EQUIPMENT 9,386,047 5,768,913
Less: Accumulated Depreciation (3,600,380) (2,901,892)
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Net Property and Equipment 5,785,667 2,867,021
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OTHER ASSETS 266,671 270,806
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TOTAL ASSETS $ 19,220,011 $ 20,085,194
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LIABILITIES AND STOCKHOLDERS' EQUITY
TOTAL CURRENT LIABILITIES $ 1,062,056 $ 756,414
CAPITAL LEASE OBLIGATION AND OTHER $ 68,703 $ 88,175
STOCKHOLDERS' EQUITY
Common Stock, $.01 par value-
Authorized -- 20,000,000 shares
Issued and Outstanding - 10,503,908 and
10,285,158 shares at June 30, 2001
June 30, 2000, respectively 105,039 102,852
Additional Paid-in Capital 27,682,657 25,094,195
Accumulated Deficit (9,698,444) (5,956,442)
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Total Stockholders' Equity 18,089,252 19,240,605
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 19,220,011 $ 20,085,194
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Forward-looking statements contained in this news release 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, availability of third-party components,
cost and yields associated with production of the Company's optical
communications and other products 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: August 22, 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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