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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[ ] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 2000
[ ] 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
O. I. CORPORATION
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(Exact name of registrant as specified in its charter)
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<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: (979) 690-1711
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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 [ ]
Number of shares outstanding of each of the issuer's classes of common stock, as
of March 31, 2000:
2,999,546 shares
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O.I. CORPORATION
Condensed Consolidated Balance Sheet
(In thousands, except par value)
(unaudited)
<TABLE>
<CAPTION>
March 31, 2000 Dec. 31, 1999
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<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 187 $ 887
Short-term investments, held to maturity 1,654 1,760
Short-term investments, available for sale 389 0
Accounts receivable-trade, net of allowance for doubtful accounts 4,443 3,928
of $244 and $254, respectively
Investment in sales-type leases 655 486
Inventories 4,641 4,923
Current deferred tax asset 602 602
Other current assets 123 134
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TOTAL CURRENT ASSETS 12,694 12,720
Property, plant and equipment, net 3,887 3,895
Investment in sales-type lease, net of current 495 422
Long-term investments 253 553
Other assets 1,870 1,900
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TOTAL ASSETS $19,199 $19,490
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,823 $ 2,299
Accrued compensation 650 643
Accrued expenses 1,910 1,813
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TOTAL CURRENT LIABILITIES 4,383 4,755
Deferred income taxes 182 202
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TOTAL LIABILITIES 4,565 4,957
Stockholders' equity:
Preferred stock, $0.10 par value, 3,000 shares authorized, no shares
issued and outstanding
Common stock, $0.109 par value, 10,000 shares authorized
4,103 shares issued, 2,999 and 3,056 outstanding, respectively 410 410
Additional paid in capital 4,381 4,381
Accumulated other comprehensive income and (loss) (10) 0
Treasury stock, 1,104 and 1,047 shares, respectively, at cost (4,826) (4,597)
Retained earnings 14,679 14,339
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TOTAL STOCKHOLDERS' EQUITY 14,634 14,533
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TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $19,199 $19,490
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See notes to unaudited condensed consolidated financial statements
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O.I. CORPORATION
Condensed Consolidated Statement of Earnings and Comprehensive Income
(In thousands, except per share data)
(unaudited)
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<CAPTION>
Three Months Ended
March 31,
2000 1999
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<S> <C> <C>
Net sales $ 6,590 $ 6,105
Cost of goods sold 3,686 3,480
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Gross profit 2,904 2,625
Research and development expenses 503 389
Selling, general & administrative expenses 1,948 1,823
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Operating income 453 413
Interest income/other income 86 102
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Income before income taxes 539 515
Provision for taxes on earnings (199) (192)
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Net income $ 340 $ 323
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Other comprehensive income and (loss), net of tax:
Unrealized losses on investments available for sale (10) 0
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Comprehensive income $ 330 $ 323
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Earnings per share:
Basic $ 0.11 $ 0.10
Diluted $ 0.11 $ 0.09
Shares used in computing earnings per share:
Basic 3,037 3,351
Diluted 3,057 3,462
Dividends per share -0- -0-
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See notes to unaudited condensed consolidated financial statements
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O.I. CORPORATION
Condensed Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
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<CAPTION>
Three Months Ended
March 31,
2000 1999
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<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 340 $ 323
Depreciation & amortization 182 151
Deferred income taxes (20) (9)
Gain on disposition of property (11) 0
Change in working capital, net of effect of purchase of GAC in 1999 (837) (396)
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Net cash flows provided by (used in) operating activities (346) 69
CASH FLOW FROM INVESTING ACTIVITIES:
Purchase of property, plant & equipment (143) (150)
Sale of property, plant & equipment 30 20
Purchase of GAC 0 (260)
Purchase of investments (399) 0
Maturity of investments 403 778
Change in other assets (16) (5)
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Net cash flows provided by (used in) investing activities (125) 383
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock 17 16
Purchase of treasury stock (246) 0
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Net cash flows provided by (used in) financing activities (229) 16
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INCREASE (DECREASE) IN CASH (700) 468
Cash and cash equivalents at beginning of quarter 887 1,537
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Cash and cash equivalents at end of quarter $ 187 $ 2,005
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See notes to unaudited condensed consolidated financial statements
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O.I. CORPORATION
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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, 2000 and 1999, 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, 1999.
The Company designs, manufactures, markets, and services analytical,
monitoring and sample preparation products, components, and systems used
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.
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<CAPTION>
Mar. 31, 2000 Dec. 31, 1999
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<S> <C> <C>
Raw Materials $2,340 $2,342
Work in Process 304 472
Finished Goods 1,997 2,109
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$4,641 $4,923
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3. COMPREHENSIVE INCOME.
Comprehensive income refers to revenues, expenses, gains and losses that
under generally accepted accounting principles are recorded as an element
of stockholders' equity and are excluded from net income. The Company's
components of comprehensive income are net income and unrealized gains and
losses on available-for-sale investments.
4. EARNINGS PER SHARE.
The Company reports both basic earnings per share, which is based on the
weighted average number of common shares outstanding, and diluted earnings
per share, which is based on the weighted average number of common shares
outstanding and all dilutive potential common shares outstanding. Stock
options are the only dilutive potential common shares the Company has
outstanding. At March 31, 2000, options to acquire 272 shares of common
stock at weighted average exercise prices of $5.36 per share were not
included in the computation of dilutive earnings per share as the options'
exercise price was greater than the average market price of the common
shares.
5. SEGMENT DATA
The Company manages its businesses primarily on a product and services
basis. The Company's reportable segments are analytical instruments and
beverage monitors. The reportable segments provide products as described
in the Company's Form 10-K for the year ended December 31, 1999. The
accounting policies of the segments are the same as those described in the
"Summary of Significant Accounting Policies" in Note 1 to the Notes to the
Consolidated Financial Statements included in that Form 10-K. The Company
evaluates the performance of its segments and allocates resources to them
based on segment profit. The Company does not segregate assets by
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reportable segment. The table below presents certain information
regarding the reportable segments for the quarter ended March 31, 2000
and 1999:
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<CAPTION>
Analytical Beverage Reconciling
QUARTER ENDED MARCH 31, 2000 Instruments Monitors Items Total
---------------------------- ----------- -------- ----- -----
<S> <C> <C> <C> <C>
Revenue from unaffiliated customers 6,518 72 0 6,590
Interest income 0 0 86 (1) 86
Income(loss) from continuing operations before tax 1,015 (141) (335)(2) 539
QUARTER ENDED MARCH 31,1999
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Revenue from unaffiliated customers 5,842 263 0 6,105
Interest income 0 0 102 (1) 102
Income(loss) from continuing operations before tax 763 (13) (235)(2) 515
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Reconciling items for quarter ended March 31, 2000 and March 31, 1999:
(1) Corporate interest income.
(2) Corporate interest income plus corporate general and administrative
expenses.
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 quarter ended March 31, 2000 increased 8% to $6,590,000,
compared to $6,105,000 for the same period of the prior year. Sales of gas
chromatography systems and components, sample preparation products, ion analysis
equipment, refrigerant monitors and revenue derived from service increased,
while sales of beverage analyzers decreased. Sales of beverage analyzers were
hurt by delays in the introduction of a new product, competitor actions, and
lower demand due to restructuring in the soft drink bottling industry.
First quarter 2000 domestic and international sales increased compared to the
same quarter of 1999. International sales to the Asia-Pacific area continued to
be weak due to the economic conditions in that area, while sales to Europe
increased.
Gross profit for the first quarter of 2000 increased 11% to $2,904,000, or 44%
of sales, compared to $2,625,000, or 43% of sales, for the same quarter of 1999.
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The increase in gross profit was due to increased sales, a decrease in
warranty cost and a decrease in the manufacturing variance. The improvement in
the manufacturing variance was due to greater sales volume and the relocation
during the fourth quarter of 1999 of the manufacturing of beverage and
refrigerant monitoring products to the Company's headquarters in College
Station, TX.
Research and development (R&D) expenses for the first quarter of 2000 increased
29% to $503,000, or 8% of sales, compared to 1999 first quarter expenses of
$389,000, or 6% of sales. The increase in R&D expenses for the first quarter of
2000 was due to increased consulting expense and expenses related to the
development of a new sample preparation product. This product is a major
revision of a current product and is scheduled to be released for sale during
the second quarter of 2000. The Company continued to incur cost related to the
development of a potential new beverage monitor, the introduction of which has
been delayed.
Selling, general, and administrative (SG&A) expenses for the first quarter of
2000 increased 7% to $1,948,000, or 30% of sales, compared to $1,823,000, or 30%
of sales for 1999. SG&A expenses for the first quarter of 2000 were higher than
1999 due to increased commissions and royalties due to the increase in sales,
increased staffing in the service organization and the international sales
organization that occurred in the latter part of 1999 and an increase in
advertising.
Income before tax for the first quarter of 2000 amounted to $539,000, compared
to $515,000 for the same period of 1999. The higher profit for 2000 was
primarily a result of increased sales and gross margin, offset in part by an
increase in SG&A expense and R&D expense. The effective tax rates were 37% for
1999 and 2000. Net income after tax for the first quarter of 2000 increased 5%
to $340,000, compared to $323,000 in the same period of 1999. Basic earnings per
share was $0.11 per share in the first quarter of 2000 compared to $0.10 per
share for the same period of 1999. Diluted earnings per share increased to $0.11
per share in the first quarter of 2000, compared to $0.09 per share in the first
quarter of 1999.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents totaled $187,000 as of March 31, 2000, compared to
$887,000 as of December 31, 1999. Working capital, as of March 31, 2000, was
$8,311,000, compared to $7,965,000 as of December 31, 1999. Working capital, as
a percentage of total assets, was 43% as of March 31, 2000, compared to 41% at
December 31, 1999. The current ratio was 2.9 to 1 at March 31, 2000, as compared
to 2.7 to 1 at December 31, 1999. Total liabilities to equity was 31% as of
March 31, 2000, compared to 34% as of December 31, 1999.
Net cash flow provided by (used in) operating activities for the period ending
March 31, 2000, was ($346,000), as compared to $69,000 for the same period of
1999. The increase in cash flow used in operating activities for 2000 was
primarily due to an increase in accounts receivable, a decrease in accounts
payable and an increase in investment in sales-type leases, offset in part by an
increase in net income and a decrease in inventory. Net cash flow provided by
(used in) investing activities was ($125,000) for the first quarter 1999,
compared to $383,000 for the first quarter 1999. The increase in cash used in
investing activities was due to an increase in the purchase of investments. Net
cash flow provided by (used in) financing activities for the first quarter 2000
was ($229,000), compared to $16,000 for the first quarter 1999. The increase in
cash flow used in financing activities was the result of the repurchase of
61,900 shares of the Company's Common Stock during the first quarter of 2000. As
of March 31, 2000, the Company held 1,103,831 shares in treasury and is
authorized to purchase up to 401,785 additional shares. The Company has financed
its growth from funds generated from operations and expects to continue to do so
for the foreseeable future.
MARKET RISK
The Company is exposed to a variety of risks, including changes in interest
rates and the market value of its investments. In the normal course of business,
the Company employs established polices and procedures to manage its exposure to
changes in the market value of its investments. To date, the Company has not
experienced any material
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effects to its financial position or results of operations due to market risks.
The fair value of the Company's investments in debt securities and preferred
stock at March 31, 2000 was $1,893,165 and $389,250, respectively.
YEAR 2000
To coordinate the phases of the Company's Year 2000 project, the Company
established an executive steering committee and a project team. The phases of
the project were: (i) awareness; (ii) assessment; (iii) remediation; (iv)
testing; (v) implementation of the necessary modifications and (vi) contingency
planning. The goal of the Year 2000 project was to ensure that all of the
critical systems and processes under the Company's direct control remained
functional. As of December 31, 1999, the Company had substantially completed the
above phases for all critical systems. While the Year 2000 rollover date has
passed with no apparent disruptions experienced by the Company's systems and
processes, it remains possible that third parties may have experienced
disruptions which have not yet manifested any impact on the Company, but could
in the future. Accordingly, the Company is prepared to implement its contingency
plans should a disruption occur. The Company does not expect to incur any
remaining material costs related to the project in 2000.
PART II: OTHER INFORMATION
Item 1. Legal Proceedings: None
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: 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
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(Registrant)
Date: May 5, 2000 BY: /s/ William W. Botts
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William W. Botts
President/CEO
Date: May 5, 2000 BY: /s/ Julie A. Wright
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Julie A. Wright
Corporate Controller
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EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
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27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 187
<SECURITIES> 2,296
<RECEIVABLES> 4,687
<ALLOWANCES> 244
<INVENTORY> 4,641
<CURRENT-ASSETS> 12,694
<PP&E> 6,127
<DEPRECIATION> 2,240
<TOTAL-ASSETS> 19,199
<CURRENT-LIABILITIES> 4,383
<BONDS> 0
0
0
<COMMON> 410
<OTHER-SE> 14,224
<TOTAL-LIABILITY-AND-EQUITY> 19,199
<SALES> 6,590
<TOTAL-REVENUES> 6,590
<CGS> 3,686
<TOTAL-COSTS> 1,434
<OTHER-EXPENSES> 1,017
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 539
<INCOME-TAX> 199
<INCOME-CONTINUING> 340
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 340
<EPS-BASIC> .11
<EPS-DILUTED> .11
</TABLE>
