<PAGE> 1
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 March 31, 1997
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[ ] Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
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Commission File Number: 0-6511
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O. I. CORPORATION
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(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
OKLAHOMA 73-0728053
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State of Incorporation I.R.S. Employer Identification No.
P.O. Box 9010
151 Graham Road
College Station, Texas 77842-9010
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (409) 690-1711
-----------------------------------
</TABLE>
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Former Name, Former Address and Former Fiscal Year,
if Changed Since Last Report
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
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Number of shares outstanding of each of the issuer's classes of common stock,
as of March 31, 1997:
3,958,164 shares
<PAGE> 2
O.I. CORPORATION
Condensed Consolidated Balance Sheet
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . . . . $ 1,538 $ 1,963
Investments. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,309 5,138
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . 3,597 3,928
Investment in sales-type lease . . . . . . . . . . . . . . . . . 355 312
Inventories. . . . . . . . . . . . . . . . . . . . . . . . . . . 4,147 3,780
Deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . 810 810
Other current assets . . . . . . . . . . . . . . . . . . . . . . 253 299
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Total current assets. . . . . . . . . . . . . . . . . . . . . 15,009 16,230
Property, plant and equipment, net . . . . . . . . . . . . . . . . 1,548 1,548
Long-term investments. . . . . . . . . . . . . . . . . . . . . . . 1,107 0
Investment in sales-type lease, net of current . . . . . . . . . . 399 301
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,099 1,107
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TOTAL ASSETS. . . . . . . . . . . . . . . . . . . . . . . . . $ 19,162 $ 19,186
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . $ 1,666 $ 1,309
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . 406 637
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . 1,987 1,893
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Total current liabilities . . . . . . . . . . . . . . . . . . 4,059 3,839
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . . 388 386
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TOTAL LIABILITIES . . . . . . . . . . . . . . . . . . . . . . 4,447 4,225
Stockholders' equity:
Common stock ($.10 par value). . . . . . . . . . . . . . . . . . 414 414
Additional paid in capital . . . . . . . . . . . . . . . . . . . 4,587 4,587
Treasury stock at cost . . . . . . . . . . . . . . . . . . . . . (681) (113)
Retained earnings. . . . . . . . . . . . . . . . . . . . . . . . 10,395 10,073
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TOTAL STOCKHOLDERS' EQUITY. . . . . . . . . . . . . . . . . . 14,715 14,961
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY. . . . . . . . . . . $ 19,162 $ 19,186
============= ============
</TABLE>
<PAGE> 3
O.I. CORPORATION
Condensed Consolidated Statement of Earnings
(In thousands, except share and per share data)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
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1997 1996
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<S> <C> <C>
Net sales. . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 5,321 $ 4,648
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . 2,737 2,171
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Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,584 2,477
Research and development expenses. . . . . . . . . . . . . . . . . 520 444
Selling, general & administrative expenses . . . . . . . . . . . . 1,703 1,797
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Operating income . . . . . . . . . . . . . . . . . . . . . . . . . 361 236
Interest income/other income . . . . . . . . . . . . . . . . . . . 139 120
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . 0 0
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Income before income taxes . . . . . . . . . . . . . . . . . . . . 500 356
Provision for taxes on earnings. . . . . . . . . . . . . . . . . . (178) (142)
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Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 322 $ 214
============= ============
Weighted average number of common and
common equivalent shares outstanding . . . . . . . . . . . . . . 4,074,827 4,088,794
Earnings per common and common
equivalent share . . . . . . . . . . . . . . . . . . . . . . . . $ 0.08 $ 0.05
Dividends per share. . . . . . . . . . . . . . . . . . . . . . . . -0- -0-
</TABLE>
<PAGE> 4
O.I. CORPORATION
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
------------------------------
1997 1996
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 322 $ 214
Depreciation & amortization. . . . . . . . . . . . . . . . . . . 131 110
Deferred income taxes. . . . . . . . . . . . . . . . . . . . . . 2 0
Change in working capital. . . . . . . . . . . . . . . . . . . . 85 (234)
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Net cash flows provided by operating activities . . . . . . . 540 90
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock . . . . . . . . . . . . . 0 10
Purchase of treasury stock . . . . . . . . . . . . . . . . . . . (568) (484)
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Net cash flows used in financing activities . . . . . . . . . (568) (474)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment. . . . . . . . . . . . . (136) (89)
Sale of property, plant & equipment. . . . . . . . . . . . . . . 30 0
Purchase of investments. . . . . . . . . . . . . . . . . . . . . (3,264) (2,811)
Maturity of investments. . . . . . . . . . . . . . . . . . . . . 2,985 0
Change in other assets . . . . . . . . . . . . . . . . . . . . . (12) (9)
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Net cash flows used in investing activities . . . . . . . . . (397) (2,909)
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INCREASE (DECREASE) IN CASH . . . . . . . . . . . . . . . . . . . (425) (3,293)
Cash and cash equivalents at beginning of quarter. . . . . . . . . 1,963 5,503
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Cash and cash equivalents at end of quarter. . . . . . . . . . . . $ 1,538 $ 2,210
============= ============
</TABLE>
<PAGE> 5
O.I. CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.
The accompanying unaudited consolidated 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 months ended March 31, 1997 and 1996, 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. All significant intercompany balances and transfers have
been eliminated. 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, 1996.
The Company develops, manufactures, markets and services analytical,
monitoring and sample preparation products, components and systems used to
prepare samples for analysis and to detect, measure and analyze chemical
compounds. Sales of the Company's products are recorded based on shipments
of products with no substantial right of return.
2. INVENTORIES.
<TABLE>
<CAPTION>
Mar. 31, 1997 Dec. 31, 1996
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<S> <C> <C>
Raw Materials $ 2,501,000 $ 2,365,000
Work in Process 371,000 458,000
Finished Goods 1,275,000 957,000
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$ 4,147,000 $ 3,780,000
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3. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES.
Earnings per common and common equivalent shares 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. RECLASSIFICATION.
Certain amounts in the prior period have been reclassified to conform with
the current period presentation.
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
This Form 10Q includes certain statements that may be deemed to be
"forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements, other than statements of
historical facts, included in this Form 10Q that address activities, events
or developments that the Company expects, believes or anticipates will or
may occur in the future, are forward-looking statements. These statements
are based on certain assumptions and analyses made by the Company in light
of its experience and its perception of historical trends, current
conditions, expected future developments and other factors it believes are
appropriate in the circumstances. Such statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond the
control of the Company. Investors are cautioned that any such statements
are not guarantees of future performance and that actual results or
developments may differ materially from those projected in the
forward-looking statements.
OPERATING RESULTS
Net sales for the first quarter increased 14% to $5,321,000, compared to
$4,648,000 for 1996, primarily due to volume increases. Sales of the Company's
gas chromatography (GC) systems, components, water analyzers, and sample
preparation were down slightly while sales of continuous monitoring products
increased as compared to first quarter 1996 sales. The Company began selling
flow analyzer products with the acquisition of Alpkem in May 1996; therefore,
there were no sales of such products in the first quarter of 1996. Net sales
for the first quarter of 1996 included a non-recurring payment of $232,000
received in connection with the settlement of a lawsuit in February 1996.
Gross profit was $2,584,000, or 49% of sales, for the first quarter of 1997,
compared to $2,477,000, or 53% of sales, for the same quarter of 1996. The
increase in gross profit amount was due to the increase in sales, and the
decrease in gross profit percentage was due to product mix and the receipt of a
non-recurring payment in the first quarter of 1996.
Research and development (R&D) expenses for the first quarter of 1997 increased
17% to $520,000, or 9.8% of sales, compared to 1996 first quarter expenses of
$444,000, or 9.6% of sales. The Company's product development effort consists
of improving existing products and developing possible new products and
applications. The increased amount of R&D expense for 1997 was the result of
an increase in consulting and contract labor fees and increased purchases of
supplies. At the Pittsburgh Conference, the analytical industry's major trade
show held in March 1997, the Company introduced several new products, including
TOC Solids Analyzer and Microwave Digestion and Extraction products.
Selling, general, and administrative (SG&A) expenses for the first quarter of
1997 decreased 5% to $1,703,000, or 32% of sales, compared to $1,797,000, or
39% of sales for 1996. SG&A expenses for the first quarter of 1997 were lower
than 1996 due to a decrease in legal fees, offset in part by increased staffing
and advertising. Other expenses, such as rent, utilities and telephone
increased due to the acquisition of Alpkem. Legal expenses relating to a
patent infringement claim filed against a competitor were approximately $18,000
in the first quarter of 1997, compared to $433,000 in the first quarter of
1996. Total non-recurring legal fees of $496,000 in the first quarter of 1996
were offset by a settlement received of $290,000, part of which was included in
sales.
<PAGE> 7
Income before tax for the first quarter of 1997 amounted to $500,000, an
increase of 40% over 1996 first quarter results of $356,000. The higher profit
for 1997 was a result of increased sales and decreased SG&A expenses, offset in
part by increased R&D expenses. The effective tax rates were 36% for 1997 and
40% for 1996. The decrease in the effective tax rate for 1997 reflected an
increase in the estimated tax savings from the Company's foreign sales
corporation. Net income after tax for the first quarter of 1997 was up 50% to
$322,000 or $.08 per share, compared to $214,000, or $.05 per share in the same
period of 1996.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $1,538,000 as of March 31, 1997, compared to
$1,963,000 as of December 31, 1996. Working capital, as of March 31, 1997, was
$10,950,000 compared to $12,391,000 as of December 31, 1996. Working capital
decreased due to the investment of approximately $1,100,000 in long-term
corporate bonds and the use of cash to acquire treasury stock. Such bonds
mature in the first and second quarter of 1998 and were purchased to increase
the Company's yield on investments. Working capital, as a percentage of total
assets, was 57% as of March 31, 1997, compared to 65% at December 31, 1996.
The current ratio was 3.70 to 1 at March 31, 1997, as compared to 4.23 to 1 at
December 31, 1996. Total liabilities to equity was 30% as of March 31, 1997,
compared to 28% as of December 31, 1996.
Net cash flow provided from operating activities for the period ending March 31,
1997, was $540,000, as compared to $90,000 for the same period of 1996. The
increase in cash flow from operating activities for 1997 was primarily due to an
increase in net income, a decrease in accounts receivable, and an increase in
accounts payable, offset in part by an increase in inventory. Net cash flow
used in financing activities for the first quarter 1997 was $568,000 compared to
$474,000 for the first quarter 1996. The increase in cash flow used in
financing activities was due to the purchase of treasury stock. On February 17,
1997, the Company's Board of Directors authorized the purchase of up to 400,000
common shares, in addition to the purchase of 400,000 shares previously
authorized in December 1995. The Company has purchased a total of 373,029
common shares for treasury stock and holds 184,882 shares in treasury as of
March 31, 1997. Net cash flow used in investing activities was $397,000 for the
first quarter 1997 compared to $2,909,000 for the first quarter 1996. The
decrease in cash used in investing activities was due to the maturity of certain
investments. The Company is in the initial planning phase of a facilities
expansion at its College Station location to accommodate future growth and
consolidation of certain existing operations. The Company plans to complete the
expansion in late 1997 or early 1998. The preliminary budget for the project is
$1,500,000. The Company has financed its growth from funds generated from
operations and expects to continue to do so in the foreseeable future.
Management regularly evaluates opportunities to acquire products or businesses
complementary to the Company's operations. Such acquisition opportunities, if
they arise and are successfully consummated, may involve the use of cash, or,
depending upon the size and terms of the acquisitions, may involve equity or
debt financing. Although the Company has completed four acquisitions in the
past three years, the Company cannot guarantee that it will be able to
successfully consummate any future acquisitions or that, if consummated, that
they will have either a short-term or a long-term positive effect on Company
operations.
<PAGE> 8
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. On June 17, 1996, a Motion by
Defendant for Summary Judgement of Non-Infringement was granted. The
Company appealed the decision to the U.S. Court of Appeals for the
Federal Circuit in Washington, D.C. Oral arguments were heard on March
6, 1997 and the Company is waiting for the Court's decision.
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: On March 17, 1997, O.I. Corporation announced
that Mark G. Whiteman joined the Company as vice president/general
manager of O.I. Analytical. Mr. Whiteman will be responsible for
all O.I. Analytical operations including research and development,
manufacturing, marketing, domestic and international sales, and
information systems.
Item 6. Exhibits and Reports on Form 8-K: None
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: 5/6/97 BY: /s/ William W. Botts
-------------------- ------------------------------
William W. Botts
President/CEO
Date: 5/6/97 BY: /s/ Julie Wright
-------------------- ------------------------------
Julie Wright
Controller
<PAGE> 9
EXHIBIT INDEX
Exhibit
Number Description
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Ex. 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This 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.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1997
<CASH> 1,538
<SECURITIES> 4,309
<RECEIVABLES> 3,855
<ALLOWANCES> 258
<INVENTORY> 4,147
<CURRENT-ASSETS> 15,009
<PP&E> 3,768
<DEPRECIATION> 2,220
<TOTAL-ASSETS> 19,162
<CURRENT-LIABILITIES> 4,059
<BONDS> 0
0
0
<COMMON> 414
<OTHER-SE> 14,301
<TOTAL-LIABILITY-AND-EQUITY> 19,162
<SALES> 5,321
<TOTAL-REVENUES> 5,321
<CGS> 2,737
<TOTAL-COSTS> 1,249
<OTHER-EXPENSES> 974
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 500
<INCOME-TAX> 178
<INCOME-CONTINUING> 322
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 322
<EPS-PRIMARY> 0.08
<EPS-DILUTED> 0.08
</TABLE>
