SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended September 30, 1995
[ ] Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ___________ to ____________
----------------------------
COMMISSION FILE NUMBER: 0-6511
----------------------------
O. I. CORPORATION
(Exact name of registrant as specified in its charter)
OKLAHOMA
(State of Incorporation)
73-0728053
(IRS Employer Identification Number)
P.O. BOX 9010
151 GRAHAM ROAD
COLLEGE STATION, TEXAS
(Address of Principal Executive Offices)
77842-9010
(Zip Code)
(409) 690-1711
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Number of shares outstanding of each of the issuer's classes of
common stock, as of September 30, 1995:
4,116,129 shares
<PAGE>
O.I. CORPORATION
Condensed Consolidated Balance Sheet
(In thousands)
(unaudited)
Sept 30, Dec 31,
1995 1994
Assets ------- ---------
Current assets:
Cash and cash equivalents . . . . . . $ 7,657 $ 2,848
Short term investments. . . . . . . . 0 5,139
Accounts receivable . . . . . . . . . 3,303 3,292
Inventories . . . . . . . . . . . . . 2,456 2,160
Current deferred tax asset. . . . . . 478 243
Other current assets. . . . . . . . . 295 318
-------- ---------
Total current assets. . . . . . . . . 14,189 14,000
Property, plant and equipment, net . . . 1,656 1,504
Other assets . . . . . . . . . . . . . . 975 475
-------- ---------
Total assets. . . . . . . . . . . . . $ 16,820 $ 15,979
======== =========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable. . . . . . . . . . . $ 731 $ 993
Accrued compensation. . . . . . . . . 382 545
Accrued expenses. . . . . . . . . . . 1,500 1,307
-------- ---------
Total current liabilities . . . . . . 2,613 2,845
Deferred income taxes. . . . . . . . . . 294 252
-------- ---------
Total liabilities . . . . . . . . . . 2,907 3,097
Shareholders' equity:
Common stock ($.10 par value) . . . . 412 404
Additional paid in capital. . . . . . 4,731 4,432
Retained earnings . . . . . . . . . . 8,770 8,046
-------- ---------
Total shareholders' equity. . . . . . 13,913 12,882
-------- ---------
Total liabilities & shareholders' equity $ 16,820 $ 15,979
======= ========
<PAGE>
O.I. CORPORATION
Condensed Consolidated Statement of Earnings
(In thousands, except per share data)
(unaudited)
Three Nine
Months Ended Months Ended
Sept 30 Sept 30
---------------- -----------------
1995 1994 1995 1994
------ ------ ------ -------
Net sales. . . . . . . . $ 4,450 $ 4,437 $13,577 $13,898
Cost of goods sold . . . 2,292 2,421 7,122 7,692
------ ------ ------ ------
Gross profit . . . . . . 2,158 2,016 6,455 6,206
Res. & Dev. expenses . . 401 485 1,373 1,337
Selling, general &
administrative expenses 1,424 1,121 4,349 3,479
------ ----- ----- -----
Operating income . . . . 333 410 733 1,390
Int. inc./other income . 148 109 405 281
Interest expense . . . . 0 0 5 2
----- ------ ----- -----
Income before inc. taxes 481 519 1,133 1,669
Provision for taxes on
earnings . . . . . . . 181 199 409 567
----- ------- ------- -------
Net income . . . . . . . $ 300 $ 320 $ 724 $ 1,102
====== ====== ====== ======
Weighted average number
of shares outstanding . 4,226,729 4,170,322 4,230,913 4,157,214
Earnings per share . . . $ 0.07 $ 0.08 $ 0.17 $ 0.27
Dividends per share. . . -0- -0- -0- -0-
<PAGE>
O.I. CORPORATION
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
Nine Months Ended
--------------------
Sept 30, Sept 30,
1995 1994
-------- --------
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 724 $ 1,102
Depreciation & amortization 345 232
Deferred income taxes (39) (101)
Change in working capital, net
of effect from purchase of
Laboratory Automation, Inc. (LAI)
in 1995. 44 (1,480)
(Gain) loss on disposition of
equipment (16) 0
-------- -------
Net cash flows provided (used)
by operating activities 1,058 (247)
CASH FLOW FROM FINANCING ACTIVITIES:
Principal payments on capital
lease obligation 0 (7)
------- -------
Net cash flows provided (used) by
financing activities 0 (7)
CASH FLOW USED IN INVESTING ACTIVITIES:
Proceeds from disposition of equipment 36 13
Purchase of property, plant & equipment (224) (330)
Purchase of LAI (1,174) 0
Purchase of investments 0 (4,885)
Maturity of investments 5,117 0
Investment in patents (22) (221)
Investment in other assets 0 (59)
Change in deposits 18 (8)
------ -----
Net cash flows used in investing
activities 3,751 (5,490)
Increase (decrease) in cash $ 4,809 $ (5,744)
======= ========
Cash and cash equivalents at
beginning of year $ 2,848 $ 8,442
Cash and cash equivalents at
end of quarter $ 7,657 $ 2,698
<PAGE>
O.I. CORPORATION
Notes to Financial Statements
(Unaudited)
1. Summary of Significant Accounting Policies.
The accompanying unaudited financial statements have been
prepared by O.I. Corporation and include all adjustments
which are, in the opinion of management, necessary for a fair
presentation of financial results for the three and nine
months ended September 30, 1995 and 1994, pursuant to the
rules and regulations of the Securities and Exchange
Commission. All adjustments and provisions included in these
statements are of a normal recurring nature. For further
information regarding the Company's accounting policies,
refer to the Consolidated Financial Statements and related
notes included in the Company's Annual Report and Form 10-K
for the year ended December 31, 1994.
The Company is an environmental instrument company that
specializes in the design, manufacture, sale and service of
instruments for the sampling, analysis, detection and
reporting of compounds that contaminate water, air and soil.
Sales of the Company's products are recorded based on
shipments of products and no substantial right of return
exists.
2. Inventories.
Sept. 30, 1995 Dec. 31, 1994
-------------- -------------
Raw Materials $ 1,137,000 $ 1,262,000
Work in Process 516,000 370,000
Finished Goods 803,000 528,000
------------ -------------
$ 2,456,000 $ 2,160,000
============ =============
3. Earnings per Common and Common Equivalent Shares.
Earnings per common and common equivalent share is computed
using the weighted average number of shares of common stock
and common stock equivalents outstanding during the period.
Common stock equivalents include the number of shares
issuable upon exercise of dilutive stock options, less the
number of shares that could have been repurchased with the
exercise proceeds using the treasury stock method.
4. Acquisition of Laboratory Automation, Inc. (LAI).
The Company acquired LAI on February 9, 1995, for 76,479
shares of the Company's common stock and $1,117,000, in a
stock and cash transaction accounted for as a purchase. The
unaudited pro forma combined results of operations of the
Company and LAI for the three and nine months ended September
30, 1994 are as follows:
Three Months Nine Months
Ended Sept 30 Ended Sept 30
-------------- -------------
Net Revenue $ 5,283 $ 16,594
Net Income 269 1,090
Earnings per share .06 .26
Proforma combined results for the nine months ended September
30, 1995 are not materially different from the actual results
due to the timing of the acquisition of LAI.
5. Reclassification
Certain amounts in the prior periods have been reclassified
to conform with the current period presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
__________________________________________________
Sales for the third quarter of 1995 were $4,450,000, compared to
$4,437,000 for the third quarter of 1994. Sales of sample
preparation products from the 1995 acquisition of LAI, which were
not included in the prior year, and an increase in sales of
microwave and TOC products offset a decline in sales of gas
chromatography (GC) components and systems. The U.S.
environmental market remains in a state of consolidation, with
environmental testing labs continuing to merge and to close,
creating excess equipment. The excess equipment is then sold on
the used equipment market at substantial discounts and mitigates
the demand for new equipment. In the third quarter of 1995, the
Company began shipping new products shown at the Pittsburgh
Conference Exhibition in March 1995. Management believes the new
products introduced in 1995 have applications in non-
environmental markets. In particular, the TOC product has
applications in the semiconductor and pharmaceutical markets, and
a new halogen selective detector has a number of potential
applications outside the environmental market. However, the
Company's sales to date in these sectors have not been material.
Sales for the nine months ended September 30, 1995 decreased 2%
to $13,577,000, compared to $13,898,000 for 1994. International
sales, which constituted 15% of sales for the nine months ended
September 30, 1995, increased by 117% over the same period of
1994.
Gross profit increased to $2,158,000, or 49% of sales for the
third quarter of 1995, compared to $2,016,000, or 45% of sales
for the same quarter of 1994. Year-to-date gross profit
increased to $6,455,000, or 48% of sales, through the third
quarter of 1995 compared to $6,206,000, or 45% of sales for the
same period of 1994. The increase in gross profit was due to the
mix of products sold, a decrease in the manufacturing costs and
lower product warranty costs.
Income before taxes for the third quarter 1995 amounted to
$481,000, a decrease of 7% from 1994 third quarter results of
$519,000. Net income for the third quarter 1995 was down 6% to
$300,000, or $.07 per share, compared to $320,000, or $.08 per
share in the same period of 1994.
Year-to-date income before taxes decreased to 32% to $1,133,000
through the third quarter of 1995, compared to $1,669,000 for the
same period of 1994. The effective tax rates were 36% in 1995
and 34% in 1994. The lower effective tax rate for 1994 is due to
the receipt of a federal income tax refund in 1994 relating to an
amendment of the Company's 1992 return. Year-to-date net income
decreased 34% to $724,000, or $.17 per share through the third
quarter of 1995, from $1,102,000, or $.27 per share for the same
period of 1994. The decrease in year-to-date net income was the
result of decreased sales and increased SG&A expense, offset in
part by higher interest income.
Research and development (R&D) expenses for the third quarter of
1995 were $401,000, or 9.0% of sales, compared to 1994 third
quarter expenses of $485,000, or 10.9% of sales. Year-to-date
R&D expenses through September 30, 1995 were $1,373,000, or 10.1%
of sales, compared to $1,337,000, or 9.6% of sales, for the same
period of 1994. The decreased amount of R&D expenses for the
third quarter 1995 was the result of a reduction in personnel, a
decrease in the purchase of supplies and the termination of the
consulting agreement the Company had with a former officer.
Several product development projects that were in progress during
1994 were concluded and product shipments began during the third
quarter of 1995.
Selling, general, and administrative (SG&A) expenses for the
third quarter of 1995 increased 27% to $1,424,000, or 32% of
sales, compared to $1,121,000, or 25% of sales for 1994. Year-
to-date SG&A expenses through September 30, 1995, increased 25%
to $4,349,000, or 32% of sales, compared to $3,479,000, or 25% of
sales, for the same period of 1994. Third quarter and year-to-
date SG&A expenses increased due to higher legal fees, the
addition of four direct sales people, increased travel costs and
costs associated with producing and distributing the 1995 sales
catalog. Other expenses such as salaries, rent, utilities and
telephone increased due to the acquisition of LAI. The Company
has and will continue to incur significant legal expenses related
to the patent infringement complaint it filed against a
competitor on March 3, 1995. Management believes it is in the
best interest of the stockholders to pursue this litigation and
protect the Company's intellectual property.
Liquidity
Cash and cash equivalents totaled $7,657,000 as of September 30,
1995, compared to $2,848,000 as of December 31, 1994. Working
capital, as of September 30, 1995, was $11,576,000, an increase
of 4%, compared to $11,155,000 as of December 31, 1994. Working
capital, as a percentage of total assets, was 69% as of September
30, 1995, compared to 70% as of December 31, 1994. The current
ratio was 5.43 to 1 at September 30, 1995, as compared to 4.92 to
1 at December 31, 1994. Total liabilities as a percentage of
equity was 21% as of September 30, 1995, compared to 24% as of
December 31, 1994.
Net cash flow provided (used) by operating activities for the
nine months ended September 30, 1995, was $1,058,000, compared to
($247,000) for the same period of 1994. The increase in cash
flow from operating activities for the first nine months of 1995
was primarily due to decreases in inventory and accounts
receivable, partially offset by a decrease in accounts payable.
All changes in working capital accounts are net of the effect of
the purchase of LAI. Net cash flow provided (used) by investing
activities for the nine months ended September 30, 1995 was
$3,751,000, compared to ($5,490,000) for the same period of 1994.
The increase in cash flow from investing activities was the
result of the maturity of investments purchased in 1994,
partially offset by the purchase of LAI. Capital expenditures
for the remainder of the year are anticipated to be consistent
with the past year, which includes personal computers,
automobiles for field service and sales personnel and other
miscellaneous purchases. The Company will continue to seek
acquisitions but cannot predict whether any acquisitions will be
made. The Company has financed its growth from funds generated
from operations and expects to continue to do so in the
foreseeable future.
Part II: Other Information
Item 1. Legal Proceedings: On March 3, 1995, the Company
filed a patent infringement complaint against the
Tekmar Company in the Galveston Division of the
U.S. District Court. The Company alleges that the
Tekmar Model 3000 Purge and Trap Sample
Concentrator infringes on U.S. Patent No.
5,358,557 issued to the Company on October 25,
1994. The suit seeks to enjoin the manufacture
and sale of the Model 3000 and like products sold
under different name designations and seeks
unspecified damages. A trial date has been set
for July 22, 1996.
Item 2. Changes in Securities: None
Item 3. Defaults upon Senior Securities: None
Item 4. Submission of Matters to a Vote of Security
Holders: None
Item 5. Other Information: None
Item 6. Exhibits and Reports on Form 8-K: Exhibit 27
SIGNATURES
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 thereunto duly authorized.
O.I. CORPORATION
(Registrant)
Date: November 8, 1995 BY: /s/ Julie Wright
Julie Wright
Controller
Date: November 8, 1995 BY: /s/ W. W. Botts
William W. Botts
President & CEO
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND> THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION
EXTRACTED FROM THE CONDENSED CONSOLIDATED BALANCE SHEET AND THE
CONDENSED CONSOLIDATED STATEMENT OF EARNINGS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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