As filed with the Securities and Exchange Commission on August 16, 1996.
Registration No. 333-09925
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------
Amendment No. 1
to
FORM S-4
Registration Statement
Under
The Securities Act of 1933
--------------------------
Optical Coating Laboratory, Inc.
(Exact name of registrant as specified in its charter)
------------------
Delaware 3827 68-0164244
(State or other (Primary Standard (I.R.S. Employer
jurisdiction of Industrial Classification Identification No.)
incorporation or Code Number)
organization)
2789 Northpoint Parkway
Santa Rosa, CA 95407-7397
(707) 545-6440
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Joseph C. Zils
Vice President, General Counsel and Secretary
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, CA
(707) 545-6440
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
John V. Erickson, Esq. Robert DeN. Cope, Esq.
Collette & Erickson LLP 44 Elm Street
555 California Street Suite 503
Suite 4350 Worcester, MA 01609-2523
San Francisco CA 94101-1791
----------------------
Approximate date of commencement of proposed sale
of the securities to the public:
As soon as practicable after the Registration Statement has become effective.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
The Exhibit Listing appears on Page 111-113.
<PAGE>
<TABLE>
CROSS REFERENCE SHEET
Between Items of Form S-4 and Prospectus
<CAPTION>
Item Location in Prospectus
- ---- ----------------------
<S> <C> <C>
A. Information About the Transaction
1. Forepart of the Registration
Statement and Outside Front
Cover Page of Prospectus .......... Outside Front Cover Page; Cross Reference Sheet
2. Inside Front and Outside Back
Cover Pages of Prospectus ......... Inside Front Cover Page; Table of Contents;
Available Information
3. Risk Factors and Ratio of
Earnings to Fixed Charges
and Other Information ............. Summary
4. Terms of the Transaction ......... Summary; Special Meeting; The Merger; Comparison of Rights
of Holders of OCLI Common Stock and OCA Common
Stock; Description of OCLI's Capital Stock; Certain
Federal Income Tax Consequences
5. Pro Forma Financial Information ... Summary
6. Material Contracts with the
Company Being Acquired ............ The Merger; Relationship and Transactions between
OCLI and OCA
7. Additional Information Required
for Reoffering by Persons
Deemed to be Underwriters ......... Not Applicable
8. Interests of Named Experts
and Counsel ................... Experts; Legal Opinions
9. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities ................... Not Applicable
B. Information About the Registrant
10. Information with Respect to S-3
Registrants ......................Available Information; Incorporation of Certain Documents by
Reference; Summary; Special Meeting; The Merger;
Comparison of Rights of Holders of OCLI Common
Stock and OCA Common Stock; Description of OCLI's
Capital Stock; Relationship and Transactions
between OCLI and OCA; OCLI and OCA Managements;
Ownership of OCA Common Stock and OCLI Common Stock
1
<PAGE>
Item Location in Prospectus
- ---- ----------------------
11. Incorporation of Certain
Information by Reference .......... Incorporation of Certain Documents by Reference
12. Information with Respect to S-2
or S-3 Registrants ................ Not Applicable
13. Incorporation of Certain
Information by Reference .......... Not Applicable
14. Information with Respect to
Registrants other than S-3
or S-2 Registrants ................ Not Applicable
C. Information about the Company Being Acquired
15. Information with Respect to
S-3 Companies ..................... Not Applicable
16. Information with Respect to
S-2 or S-3 Companies .............. Not Applicable
17. Information with Respect to
Companies Other than S-3 or S-2
Companies ........................ Summary; Special Meeting; The Merger; Rights of
Dissenting Shareholders; Comparison of Rights
of Holders of OCLI Common Stock and OCA Common
Stock; Relationship and Transactions between
OCLI and OCA; Management's Discussion and
Analysis of Financial Condition and Results of
Operations of OCA; OCLI and OCA Managements;
Ownership of OCA Common Stock and OCLI Common
Stock; Certain Relationships and Related
Transactions; Index to Financial Statements
D. Voting and Management Information
18. Information if Proxies,
Consents or Authorizations
are to be Solicited ............... Summary; The Meeting; The Merger; Ownership of OCA
Common Stock and OCLI Common Stock; Other
Matters
19. Information if Proxies,
Consents or Authorizations
are not to be Solicited or
in an Exchange Offer .............. Not Applicable
2
</TABLE>
<PAGE>
[OCA LETTERHEAD]
August 9, 1996
Dear Fellow Shareholders:
You are cordially invited to attend a Special Meeting of the
Shareholders of Optical Corporation of America ("OCA") to vote on the proposed
acquisition of OCA by Optical Coating Laboratory, Inc. ("OCLI") through the
merger (the "Merger") of OCA with a wholly-owned subsidiary of OCLI. Upon
consummation of the Merger, you will receive, in exchange for each share of OCA
Common Stock that you own on the effective date of the Merger, 2.042 shares of
OCLI Common Stock. Based on the closing price of OCLI Common Stock as reported
by NASDAQ on August 6, 1996, of $14.75 per share, the Merger is expected to
provide approximately $30.12 in value of OCLI Common Stock in exchange for each
share of OCA Common Stock. However, the closing price of the OCLI Common Stock
on the effective date of the Merger may be more or less than $14.75. Ten percent
of the shares of OCLI Common Stock you would be entitled to receive in the
Merger will be held in escrow to provide indemnification to OCLI against damages
incurred as a result of any misrepresentations, breaches of warranties and
breaches of covenants in connection with the Merger. See "THE MERGER --
Indemnification of OCLI; Escrow."
At the Special Meeting, Shareholders will be asked to approve and adopt
the Agreement and Plan of Merger.
The Special Meeting will be held at OCA's corporate offices located at
170 Locke Drive, Marlborough, Massachusetts 01752, on Tuesday, September 10,
1996, beginning at 10:00 a.m.
Management believes the Merger and the related transactions are in the
best interests of OCA and its Shareholders and recommends that you vote FOR
approval of these matters. For information concerning Management's reasons for
making this recommendation, please read carefully the sections in the enclosed
Proxy Statement/Prospectus entitled "THE MERGER."
It is very important that your shares be represented at the Special
Meeting, whether or not you plan to attend personally. Therefore, you should
complete and sign the enclosed proxy card and return it as soon as possible in
the enclosed postage-paid envelope. This will insure that your shares are
represented at the Special Meeting.
Yours very truly,
/s/ Donald A. Johnson
Donald A. Johnson, Chairman
3
<PAGE>
Optical Corporation of America
170 Locke Drive
Marlborough, Massachusetts 01752
(508) 481-9860
-------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 10, 1996
-------------------
To the Holders of Common Stock of OPTICAL CORPORATION OF AMERICA:
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders (the
"Special Meeting") of Optical Corporation of America, a Massachusetts
corporation ("OCA"), will be held at the corporate offices of OCA located at 170
Locke Drive, Marlborough, Massachusetts 01752, on Tuesday, September 10, 1996 at
10:00 a.m. for the following purposes, all of which are more fully described in
the accompanying Proxy Statement/Prospectus:
1. To consider and vote upon a proposal to approve and adopt the
Agreement and Plan of Merger, dated June 28, 1996 (the "Merger Agreement"),
among OCA, Optical Coating Laboratory, Inc., a Delaware corporation ("OCLI"),
and OCA Acquisition Corp. ("Acquisition Corp."), a Delaware corporation which is
a wholly-owned subsidiary of OCLI, providing, among other things, for the merger
of Acquisition Corp. with and into OCA (the "Merger") pursuant to which each
share of OCA's common stock, $.01 par value per share ("OCA Common Stock"),
outstanding at the effective time of the Merger (other than shares with respect
to which dissenters' rights are perfected) will be converted into 2.042 shares
of OCLI's common stock, $.01 par value per share ("OCLI Common Stock"), and OCA
will become a wholly-owned subsidiary of OCLI, all as more fully described in
the accompanying Proxy Statement/Prospectus. A copy of the Merger Agreement
(including the principal exhibits thereto) is available without charge, upon
written or oral request, from Optical Corporation of America, 170 Locke Drive,
Marlborough, Massachusetts 01752, Attention: Clerk; telephone: (508) 481-9860,
facsimile: (508) 481-3559. In order to ensure timely delivery of the documents
requested, any such request should be made by August 26, 1996.
2. To transact such other business as may properly come before the
Special Meeting or any adjournments or postponements thereof.
The record date for the determination of Shareholders entitled to
notice of and to vote at the Special Meeting, and any adjournments or
postponements thereof, is August 9, 1996 (the "Record Date"). Only holders of
record of shares of OCA Common Stock at the close of business on the Record Date
are entitled to notice of and to vote at the Special Meeting. A list of OCA
Shareholders entitled to vote at the Special Meeting will be available, during
normal business hours, at OCA's corporate offices, 170 Locke Drive, Marlborough,
Massachusetts 01752, for 10 days prior to the Special Meeting for examination by
any OCA Shareholder for purposes germane to the Special Meeting.
Holders of OCA Common Stock have a right to dissent from the Merger,
and if the Merger is consummated, to receive "fair value" for their shares in
cash by complying with the provisions of
<PAGE>
Massachusetts law, including Sections 85 to 98 of Chapter 156B of the
Massachusetts Business Corporation Law, the full text of which is attached as
APPENDIX I to the Proxy Statement/Prospectus accompanying this Notice of Special
Meeting.
If the Merger is approved by the Shareholders at the Meeting and
effected by OCA, any Shareholder (1) who files with OCA before the taking of the
vote on the approval of the Merger, written objection to the Merger stating that
such Shareholder intends to demand payment for such Shareholder's OCA Common
Stock if the Merger is completed and (2) whose shares of OCA Common Stock are
not voted in favor of the Merger has or may have the right to demand in writing
from OCA, within twenty (20) days after the date of mailing to such Shareholder
of notice in writing that the Merger has become effective, payment for such
Shareholder's shares of OCA Common Stock and an appraisal of the value thereof.
OCA and any such Shareholder shall in such cases have the rights and duties and
shall follow the procedure set forth in Sections 88-98, inclusive, of Chapter
156B of the General Laws of Massachusetts.
Your vote is very important regardless of how many shares of OCA Common
Stock you own. Regardless of whether you plan to attend the Special Meeting, you
are requested to sign, date and return the enclosed Proxy without delay in the
enclosed postage-paid envelope. You may revoke your Proxy at any time prior to
its exercise. If you are present at the Special Meeting or any adjournments or
postponements thereof, you may revoke your Proxy and vote personally on the
matters properly brought before the Special Meeting.
By Order of the Board of Directors
Robert DeN. Cope, Assistant Clerk
August 9, 1996
PLEASE SIGN AND DATE THE ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE
PLEASE DO NOT SEND IN STOCK CERTIFICATES AT THIS TIME
<PAGE>
SUBJECT TO COMPLETION - DATED AUGUST 16, 1996
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
PROXY STATEMENT/PROSPECTUS
------------------
PROXY STATEMENT
Optical Corporation of America
170 Locke Drive
Marlborough, MA 01752
(508) 481-9860
------------------
PROSPECTUS
Optical Coating Laboratory, Inc.
2789 Northpoint Parkway
Santa Rosa, CA 95407-7397
(707) 545-6440
1,930,869 Shares of Common Stock,
$.01 par value
------------------
This Proxy Statement/Prospectus is being furnished to Shareholders of
Optical Corporation of America, a Massachusetts corporation ("OCA"), in
connection with the proposed merger (the "Merger") of OCA Acquisition Corp., a
Delaware corporation ("Acquisition Corp."), which is a wholly-owned subsidiary
of Optical Coating Laboratory, Inc., a Delaware corporation ("OCLI"), with and
into OCA, pursuant to an Agreement and Plan of Merger by and among OCLI,
Acquisition Corp. and OCA dated June 28, 1996 (the "Merger Agreement").
See "THE MERGER" for a description of the terms and conditions of the
Merger.
All information in this Proxy Statement/Prospectus concerning OCLI and
Acquisition Corp. has been supplied by OCLI. All information contained in this
Proxy Statement/Prospectus concerning OCA has been supplied by OCA.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES AGENCY NOR HAS THE
COMMISSION OR ANY STATE SECURITIES AGENCY PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
This Proxy Statement/Prospectus was first furnished to Shareholders of
OCA on or about August 9, 1996.
<PAGE>
TABLE OF CONTENTS
Page Number
AVAILABLE INFORMATION ............................................ 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE .................. 2-3
SUMMARY
The Special Meeting .............................................. 4-5
The Merger ....................................................... 5-7
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Rights of Dissenting Shareholders ................................ 8
Business of OCLI and Acquisition Corp. ........................... 8-9
Business of OCA .................................................. 9
Market Prices .................................................... 9
Ownership of Securities .......................................... 9-10
Resale of OCLI Common Stock
Received in the Merger; Affiliates .......................... 10
Accounting Treatment; Regulatory Approvals ....................... 11
Certain Federal Income Tax Consequences .......................... 11-12
OCLI Selected Financial Data ..................................... 13-14
OCA Selected Financial Data ...................................... 15
Unaudited Pro Forma Combined Selected
Financial Data .............................................. 16-31
SPECIAL MEETING
General .......................................................... 32
Purposes; Recommendation of the OCA Board of
Directors and Management .................................... 32
Record Date ...................................................... 32-33
Votes Required ................................................... 33
Voting and Revocation of Proxies ................................. 34
Solicitation of Proxies .......................................... 34
Dissenters' Rights ............................................... 34-35
THE MERGER
Background of the Merger and Related Matters ..................... 35-37
OCLI's Reasons for the Merger .................................... 37-38
OCA's Reasons for the Merger ..................................... 38-39
Structure and Terms of the Merger ................................ 39-40
Assumption of OCA Stock Options .................................. 40
Indemnification of OCLI; Escrow .................................. 41-42
Procedure for Exchange of Shares;
Fractional Shares ........................................... 42-43
Management and Operations of OCA
After the Merger ............................................ 43
1
<PAGE>
Page Number
THE MERGER (continued)
Effective Date .................................................... 43-44
Conditions to Consummation of the Merger .......................... 44-45
Conduct of OCA's Business Pending the Merger ...................... 45-46
Accounting Treatment .............................................. 46-47
Regulatory Approvals .............................................. 47
Resale of OCLI Common Stock Received
in the Merger; Affiliates .................................... 47-48
Termination, Amendments and Expenses .............................. 48
Certain Effects of the Merger ..................................... 48-49
Interests of Certain Persons in the Merger ........................ 49-50
Certain Employee Benefits Matters ................................. 50
RIGHTS OF DISSENTING SHAREHOLDERS ................................. 50-51
COMPARISON OF RIGHTS OF HOLDERS OF OCLI
COMMON STOCK AND OCA COMMON STOCK ................................. 51
Amendment of Charter and By-Laws .................................. 52
Certain Actions Requiring Supermajority Votes ................... 52-53
Board of Directors ................................................ 53
Removal of Directors .............................................. 54
Special Meeting of Stockholders ................................... 54
Actions by Stockholders Without a Meeting ........................ 55-56
Cumulative Voting ................................................ 56
Vote Required for Certain Mergers and Consolidations .............. 56-57
Class Vote for Certain Reorganizations ........................... 57
Dissenters' Rights ................................................ 57-58
Anti-Takeover Statutes ............................................ 58-60
Stockholder Rights Plan ........................................... 60-61
Preemptive Rights ................................................ 61
Dividends ......................................................... 61
Limitation on Directors' Liability; Indemnification .............. 62-64
Loans to Officers and Employees ................................... 64
Voting by Ballot .................................................. 65
Inspection of Shareholder Lists ................................... 65
DESCRIPTION OF OCLI'S CAPITAL STOCK ............................... 65
Common Stock ...................................................... 65-66
Preferred Stock ................................................... 66-67
Stockholder Rights Plan ........................................... 67
RELATIONSHIP AND TRANSACTIONS BETWEEN OCLI AND OCA ................ 67-68
2
<PAGE>
Page Number
BUSINESS OF OCA
General ............................................................ 68
Products and Services .............................................. 68-71
Research and Development ........................................... 71
Manufacturing ...................................................... 71
Sales, Marketing and Customer Support .............................. 72
Patents and Intellectual Property .................................. 72
Changes In and Disagreements with Accountants ...................... 72
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS OF OCA .................................................. 72-77
OCLI AND OCA MANAGEMENTS
Executive Officers and Directors of OCA ............................ 78
OCLI Executive Officers and Directors
and Executive Compensation .................................... 78
OWNERSHIP OF OCA COMMON STOCK AND OCLI COMMON STOCK
Ownership of OCA Common Stock ...................................... 78-80
Ownership of OCLI Common Stock ..................................... 80
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ..................... 80-81
CERTAIN FEDERAL INCOME TAX CONSEQUENCES ............................ 81-82
EXPERTS ............................................................ 83
LEGAL OPINIONS ..................................................... 83
3
<PAGE>
Page Number
OTHER MATTERS .................................................. 84
OCA CONSOLIDATED FINANCIAL STATEMENTS WITH
ACCOUNTANTS' REPORT THEREON .................................... 85-107
APPENDIX I - Sections 85 to 98 of the
Massachusetts Business Corporation Law .................... A1-A7
APPENDIX II - FORM OF PROXY
4
<PAGE>
AVAILABLE INFORMATION
OCLI is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy statements and other information
filed by OCLI with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 or at its regional offices located at 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can be obtained from the
Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. In addition, OCLI's Common Stock is
listed on the Nasdaq National Market System, and the reports, proxy statements
and other information filed by OCLI with the Commission can be inspected at the
offices of The Nasdaq Stock Market, Reports Section, 1735 K Street N.W.,
Washington, D.C. 20006.
OCLI has filed with the Commission a Registration Statement on Form S-4
under the Securities Act of 1933, as amended, with respect to the OCLI Common
Stock offered by this Proxy Statement/Prospectus. This Proxy
Statement/Prospectus omits certain information contained in the Registration
Statement. Reference is hereby made to the Registration Statement and the
exhibits filed as a part thereof for further information with respect to OCLI
and the OCLI Common Stock offered hereby, and any statement herein concerning
any exhibit is qualified in all respects by the provisions of such exhibit.
No person is authorized to give any information or to make any
representations, other than those contained in this Proxy Statement/Prospectus,
in connection with the offering made hereby, and, if given or made, such
information or representations must not be relied on as having been authorized.
This Proxy Statement/Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy the securities to which it relates in any
jurisdiction in which, or to any person to whom, it is unlawful to make such an
offer or solicitation. Neither the delivery of this Proxy Statement/Prospectus
nor any offer or sale made hereunder shall, under any circumstances, create any
implication that there has been no change in the information set forth herein or
in the affairs of OCLI, Acquisition Corp. or OCA since the date hereof.
OCA is not subject to the informational requirements of the Exchange
Act. Copies of OCA's Articles of Organization and By-Laws, each as amended, are
available without charge, upon written or oral request, from Optical Corporation
of America, 170 Locke Drive, Marlborough, Massachusetts 01752, Attention: Clerk;
telephone: (508) 481-9860, facsimile: (508) 481-3559. In order to ensure timely
delivery of the documents requested, any such request should be made by August
26, 1996.
1
<PAGE>
INCORPORATION OF DOCUMENTS BY REFERENCE
This Proxy Statement/Prospectus incorporates by reference documents
which are not presented herein or delivered herewith. Copies of any such
documents relating to OCLI, other than exhibits to such documents (unless such
exhibits specifically are incorporated by reference in such documents), are
available without charge, upon written or oral request, from Optical Coating
Laboratory, Inc., 2789 Northpoint Parkway, Santa Rosa California, 95407-7397,
Attention: Joseph C. Zils, Esq., Secretary; telephone: (707) 525-7030,
facsimile: (707) 525-6840. In order to ensure timely delivery of the documents
requested, any such request should be made by August 16, 1996.
The following documents previously filed by OCLI with the Commission
are incorporated in this Proxy Statement/Prospectus by reference:
(1) OCLI's Annual Report on Form 10-K for the fiscal year ended
October 31, 1995.
(2) OCLI's Quarterly Report on Form 10-Q for the fiscal quarter
ended January 28, 1996.
(3) OCLI's Quarterly Report on Form 10-Q for the fiscal quarter
ended April 28, 1996.
(4) OCLI's Form 8-K dated May 8, 1995 regarding the Acquisition of
a Controlling Interest in Flex Products, Inc.
All reports and other documents subsequently filed by OCLI pursuant to
Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this
Proxy Statement/Prospectus and prior to the date of the Special Meeting of
Shareholders of OCA shall be deemed to be incorporated by reference herein and
to be part hereof from the date of the filing of such reports and documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Proxy Statement/Prospectus to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute part of this Proxy
Statement/Prospectus.
2
<PAGE>
This Proxy Statement, which is being furnished to the Shareholders of
OCA, also constitutes the Prospectus of OCLI for the issuance of OCLI Common
Stock. Each person who controls or who is under common control with OCA at the
time the Merger is submitted for a vote of the OCA Shareholders may, in
connection with any distribution of the OCLI Common Stock received in the
Merger, be deemed to be an "underwriter" within the meaning of the Securities
Act of 1933, as amended, unless such stock is sold pursuant to paragraph (d) of
Rule 145 promulgated under such Act, pursuant to an effective registration
statement filed under such Act with respect to such sales or pursuant to another
applicable exemption therefrom. This Proxy Statement/Prospectus does not cover
any resales of the OCLI Common Stock received by such OCA Shareholders upon
consummation of the Merger, and no person is authorized to make any use of the
Proxy Statement/Prospectus in connection with any such resale. See "THE MERGER
- -- Resale of OCLI Common Stock Received in the Merger; Affiliates."
3
<PAGE>
SUMMARY
The following is a summary of certain information contained in this
Proxy Statement/Prospectus concerning the proposed merger (the "Merger") of OCA
Acquisition Corp., a Delaware corporation ("Acquisition Corp.") which is a
wholly-owned subsidiary of Optical Coating Laboratory, Inc., a Delaware
corporation ("OCLI"), with and into Optical Corporation of America, a
Massachusetts corporation ("OCA"). Acquisition Corp. has been formed
specifically for the purpose of carrying out the Merger. It is anticipated that
the Merger will be consummated on or about September 10, 1996 (the "Effective
Date"). This summary should be read in conjunction with, and is qualified in its
entirety by reference to, the full text of this Proxy Statement/Prospectus,
including the exhibits hereto. Each Shareholder is, therefore, urged to read the
entire Proxy Statement/Prospectus with care.
The Special Meeting
The Special Meeting. A Special Meeting of Shareholders of OCA will be
held on September 10, 1996, at 10:00 a.m. at the corporate offices of Optical
Corporation of America, 170 Locke Drive, Marlborough, Massachusetts 01752 (the
"Special Meeting"). Shareholders of record at the close of business on August 9,
1996 (the "Record Date") will be entitled to notice of and to vote at the
Special Meeting. The date of the mailing of this Proxy Statement/Prospectus to
Shareholders of OCA will be on or about August 9, 1996. At the close of business
on the Record Date, there were outstanding and entitled to vote 794,577 shares
of common stock, $.01 par value, of OCA (the "OCA Common Stock"), all of which
are expected to be outstanding and entitled to vote on the date of the Special
Meeting. See "NOTICE OF SPECIAL MEETING -- Ownership of OCLI Common Stock and
OCA Common Stock."
The purpose of the Special Meeting is to vote upon a proposal to
approve an Agreement and Plan of Merger dated June 28, 1996 (the "Merger
Agreement"), entered into by and among OCLI, Acquisition Corp. and OCA, pursuant
to which Acquisition Corp. will merge with and into OCA, and OCLI will become
the owner of all the issued and outstanding shares of OCA Common Stock (see "THE
MERGER"). The Merger Agreement (including the principal exhibits thereto) are
available without charge, upon written or oral request, from Optical Corporation
of America, 170 Locke Drive, Marlborough, Massachusetts 01752, Attention: Clerk;
telephone: (508) 481-9860, facsimile: (508) 481-3559. In order to ensure timely
delivery of the documents requested, any such request should be made by August
16, 1996.
4
<PAGE>
Required Vote. Approval of the Merger Agreement requires the
affirmative vote of the holders of two-thirds of the outstanding shares of OCA
Common Stock.
The Merger
Effective Date. The Merger shall become effective upon the later of the
date of filing of a Certificate of Merger with the Secretary of State of the
State of Delaware pursuant to Section 252 of the Delaware General Corporation
Law and the date of filing of Articles of Merger with the Secretary of State of
the Commonwealth of Massachusetts pursuant to Section 79 of the Massachusetts
Business Corporation Law (the "Effective Date"). It is anticipated that the
Effective Date will be on or about September 10, 1996.
Exchange of Shares; Fractional Shares. Upon consummation of the Merger,
each outstanding share of OCA Common Stock (other than shares held in OCA's
treasury and shares with respect to which statutory dissenters' rights are
perfected) will be converted into the right to receive 2.042 shares of OCLI
Common Stock, $.01 par value (the "OCLI Common Stock"), and OCLI will become the
owner of all of the issued and outstanding shares of OCA Common Stock. No
fractional shares of OCLI Common Stock will be issued in connection with the
Merger. Any OCA Shareholder otherwise entitled to a fractional share of OCLI
Common Stock as a result of the Merger shall receive cash in lieu thereof,
without interest, in an amount determined by multiplying such OCA Shareholder's
fractional interest by the closing price of OCLI Common Stock as reported on the
Nasdaq National Market System on the Effective Date. See "THE MERGER --
Procedure For Exchange of Shares; Fractional Shares."
Based on the number of outstanding shares of OCA Common Stock as of the
Record Date, and on the assumption that (i) no OCA Shareholders exercise
appraisal rights, (ii) no OCA Options are exercised prior to the Effective Date
(iii) OCA purchases, prior to the Effective Date, the 46,875 shares of OCA
Common Stock held by The Perkin-Elmer Corporation ("Perkin-Elmer") in
satisfaction of an obligation to Perkin-Elmer which has been outstanding since
August 31, 1995, and (iv) OCA Warrants to purchase 86,000 shares of OCA Common
Stock are exercised prior to the Effective Date as contemplated by the Merger
Agreement approximately 1,702,419 shares of OCLI Common Stock will be issued to
former OCA Shareholders upon the consummation of the Merger and an additional
132,731 shares of OCLI Common Stock will be reserved for issuance upon the
exercise of the options and warrants to purchase OCA Common Stock outstanding as
of the Effective Date (the "OCA Options" and the "OCA Warrants") assumed by
OCLI. As a result, 11,430,548 shares of OCLI
5
<PAGE>
Common Stock will then be outstanding, of which approximately 1,702,419 shares,
representing approximately 14.9% of the total, will be held by former holders of
OCA Common Stock.
Assumption of OCA Stock Options and OCA Warrants. At or prior to the
Effective Date, OCLI and OCA shall take all action necessary to cause the
assumption by OCLI as of the Effective Date of the then outstanding OCA Options
and OCA Warrants. Each of the OCA Options and the OCA Warrants shall be
converted without any action on the part of the holder thereof into an option to
purchase shares of OCLI Common Stock as of the Effective Date. As of the Record
Date, 41,000 shares of OCA Common Stock were subject to outstanding OCA Options
and 110,000 shares of OCA Common Stock were subject to outstanding OCA Warrants,
which would be equivalent to a total of approximately 308,342 shares of OCLI
Common Stock after conversion. See "THE MERGER -- Assumption of OCA Stock
Options and OCA Warrants."
Indemnification of OCLI; Escrow. Ten percent of the shares of OCLI
Common Stock issued in the Merger will be placed in escrow (the "Escrowed
Shares") and held pursuant to the Indemnification and Stock Escrow Agreement
attached as Exhibit A to the Merger Agreement (the "Escrow Agreement"). The
Escrowed Shares will be reserved to provide indemnification to OCLI against
damages incurred as a result of misrepresentations, breaches of warranties and
breaches of covenants contained in the Merger Agreement, the Escrow Agreement
and the other agreements executed in connection therewith, and to satisfy claims
of OCLI arising as a result of the Merger Agreement, the Escrow Agreement and
such other agreements. See Article 3 of the Merger Agreement and Section 4 of
the Escrow Agreement for a description of the representations, warranties and
covenants that are covered by the Escrow Agreement. In the event OCLI has an
appropriate claim for indemnification, shares of OCLI Common Stock will be
returned to OCLI in satisfaction of the claim. However, OCLI will be entitled to
indemnification only if and when the total of all Indemnifiable Amounts exceeds
$250,000, at which point OCLI will be entitled to indemnification for all
Indemnifiable Amounts, and not just those in excess of $250,000. The Escrow
Agreement requires the Escrow Agent to deliver to the Shareholders the Escrowed
Shares remaining in escrow after the date of the completion of the first audit
of OCA covering a period ending after the Effective Date, except that if there
is a claim by OCLI at or prior to such date, the Escrow Agent will retain
Escrowed Shares in an amount sufficient to cover such claims until they are
resolved. See "THE MERGER -- Indemnification of OCLI; Escrow."
6
<PAGE>
Conditions to the Merger. The consummation of the Merger is conditioned
upon, among other things, (i) approval of the Merger and the adoption of the
Merger Agreement by OCA Shareholders, (ii) the holders of not more than 10% of
the shares of OCA Common Stock having demanded their right to an appraisal of
their OCA Common Stock, and (iii) the representations and warranties of each
party to the Merger Agreement being true and correct as of the Effective Date
and the satisfaction of certain other conditions. The Merger Agreement may be
terminated by the mutual consent of the Boards of Directors of OCLI and OCA. If
the Merger is not consummated, OCA intends to operate in substantially the same
manner as it has in the past. Any of the conditions to the Merger may be waived
at any time prior to the Merger by the party or parties to the Merger Agreement
benefiting from such conditions. However, no assurance can be given that any of
such parties will determine to waive any unfulfilled conditions. See "THE MERGER
- -- Conditions to Consummation of the Merger."
Certain Effects of the Merger. If the Merger is consummated, the
holders of OCA Common Stock (other than holders of shares with respect to which
dissenters' rights are perfected) will exchange their shares of stock for OCLI
Common Stock. The rights of OCA Shareholders, which are presently governed by
Massachusetts law and by the Articles of Organization and the By-Laws of OCA,
each as amended, will be governed by Delaware law and the Amended and Restated
Certificate of Incorporation and By-Laws of OCLI. Certain differences in the
rights of OCA Shareholders will arise as a result of this change in governing
law as well as from distinctions between the Articles of Organization and
By-Laws of OCA, as amended, and the Amended and Restated Certificate of
Incorporation and By-Laws of OCLI. See "THE MERGER -- Certain Effects Of The
Merger" and "Comparison of Rights of Holders of OCLI Common Stock and OCA Common
Stock."
Interests of Certain Persons in the Merger. Upon consummation of the
Merger, all members of OCA's Board of Directors will resign, and OCLI intends to
name Herbert M. Dwight, Jr., Donald A. Johnson and Joseph C. Zils to OCA's
Board. OCLI expects Mr. Dwight, who is Chairman and President of OCLI, to serve
as Chairman of OCA's Board. OCLI currently intends that certain of the existing
officers of OCA will retain their offices after the Effective Date, but may
appoint additional officers of OCA. See "THE MERGER -- Interests of Certain
Persons in the Merger," and "OCLI AND OCA MANAGEMENTS -- Executive Officers and
Directors of OCA."
7
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
Rights of Dissenting Shareholders
Under Massachusetts law, Shareholders who have not voted for the Merger
Agreement (collectively, "Dissenting Shareholders"), may, under varying
circumstances, receive cash in the amount of the fair market value (as
determined by agreement with OCA or by a court decision) of their shares in lieu
of the shares of OCLI Common Stock they would otherwise receive in the Merger.
Such Dissenting Shareholders must (i) deliver to OCA, before the vote on the
Merger Agreement is taken at the Special Meeting, written notice of such
Dissenting Shareholders' intent to demand payment for their shares of OCA Common
Stock and (ii) not vote such shares of OCA Common Stock in favor of the Merger
Agreement. Dissenting Shareholders must also comply with the other requirements
of Sections 86 to 98 of the Massachusetts Business Corporation Law, the full
text of which is attached to this Proxy Statement/Prospectus as APPENDIX I. Any
deviation from or failure to comply with all such requirements may result in the
forfeiture of the rights of Dissenting Shareholders. See "RIGHTS OF DISSENTING
SHAREHOLDERS."
Business of OCLI and Acquisition Corp.
Optical Coating Laboratory, Inc. (OCLI) designs, develops and
manufactures multi-layer thin film coatings which control and enhance light by
altering the transmission, reflection and absorption of its various wavelengths
to achieve a desired effect, such as anti-reflection, anti-glare,
electromagnetic shielding, electrical conductivity and abrasion resistance. OCLI
markets and distributes components to OEMs of optical and electro-optical
systems. OCLI sells its Glare/Guard(R) brand ergonomic computer display products
through resellers and officer retailers. OCLI is headquartered in Santa Rosa,
California and has manufacturing facilities in Santa Rosa, Hillend, Scotland and
Goslar, Germany.
Acquisition Corp. was formed specifically for the purpose of effecting
the transactions contemplated by the Merger Agreement. It is not anticipated
that, prior to the Merger, Acquisition Corp. will have any significant assets or
liabilities other than its rights and obligations under the Merger Agreement or
that Acquisition Corp. will engage in any activities other than those incidental
to its formation and the transactions contemplated by the Merger Agreement.
The principal executive offices of OCLI and Acquisition Corp. are
located at 2789 Northpoint Parkway, Santa Rosa, California 95407-7397 (telephone
number: (707) 545-
8
<PAGE>
6440). See "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
Business of OCA
OCA develops, manufactures and markets optical and electro-optical
products, components and subsystems for a wide range of applications in the
medical, telecommunications, industrial, scientific, aerospace and defense
industries.
The principal executive offices of OCA are located at 170 Locke Drive,
Marlborough, Massachusetts 01752 (telephone number: 508-481-9860). OCA has
manufacturing facilities in Marlborough, Massachusetts and Garden Grove,
California. See "BUSINESS OF OCA" and "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS."
Market Prices
The high, low and closing prices of OCLI's Common Stock on the Nasdaq
National Market System on June 28, 1996, the last business day preceding the
public announcement of the proposed Merger, were $18.00, $16.875 and $18.00,
respectively. The high, low and closing prices of OCLI's Common Stock on the
NASDAQ National Market System on August 6, 1996 were $14.875, $14.325 and
$14.75, respectively. Shareholders of OCA are urged to obtain current quotations
for the OCLI Common Stock.
The OCA Common Stock is not currently, and has never previously been,
traded on any established public market. Price quotations for OCA Common Stock
are, therefore, not available.
As of the Record Date, there were 1,029 record holders of OCLI Common
Stock and 49 record holders of OCA Common Stock.
Ownership of Securities
At the Record Date, there were a total of 794,577 shares of OCA Common
Stock outstanding all of which are expected to be outstanding and entitled to
vote on the date of the Special Meeting. Accordingly, the Merger will be
approved if 529,718 shares of OCA Common Stock are voted in favor of the Merger.
As of the Record Date, OCA's directors, officers, their respective affiliates
and family members held, directly or indirectly, 529,793 shares of
9
<PAGE>
OCA Common Stock, or approximately 66.7% of the shares of OCA Common Stock
outstanding as of such date. See "THE MERGER -- Interests of Certain Persons in
the Merger" and "OWNERSHIP OF OCA COMMON STOCK AND OCLI COMMON STOCK."
At the date hereof, approximately 2.08% of the shares of outstanding
OCLI Common Stock entitled to vote are held by directors and executive officers
of OCLI and their affiliates. The vote of stockholders of OCLI is not required
to approve the Merger Agreement or to consummate the Merger. See "SPECIAL
MEETING -- Voting and Revocation of Proxies."
Resale of OCLI Common Stock Received in the Merger; Affiliates
Certain officers, directors and principal Shareholders of OCA have
agreed that, until such time as financial results covering at least thirty days
of combined operations of OCA and OCLI have been published by OCLI, they will
not sell, transfer or otherwise dispose of, or offer or agree to sell, transfer
or otherwise dispose of any shares of OCLI Common Stock received by them
pursuant to the Merger or any securities which may be paid as a dividend or
otherwise distributed thereon or with respect thereto or issued or delivered in
exchange or substitution therefor. See "THE MERGER -- Resale Of OCLI Common
Stock Received In The Merger; Affiliates."
The Registration Statement and this Proxy Statement/Prospectus do not
relate to or cover the resale after the Effective Date of shares of OCLI Common
Stock issued to certain Shareholders of OCA in the Merger who may be deemed to
be "affiliates" of OCA and thus "underwriters" within the meaning of Rule 145
under the Securities Act of 1933, as amended (the "Securities Act"), and no
person is authorized to make any use of this Proxy Statement/Prospectus in
connection with any such resale. Such securities may not be publicly reoffered
or resold by such persons except pursuant to an effective registration statement
under the Securities Act or pursuant to another applicable exemption therefrom.
For this purpose, the term "affiliate" means any person who, directly, or
indirectly through one or more intermediaries, possesses the power to direct or
cause the direction of the management and policies of OCA, whether through the
ownership of OCA Common Stock, by contract, or otherwise.
10
<PAGE>
Accounting Treatment; Regulatory Approvals
The Merger is expected to meet all of the conditions for
pooling-of-interests accounting. It is a condition to the obligation of OCLI to
consummate the Merger that OCLI shall have received an opinion from Deloitte &
Touche LLP, OCA's independent accountants, to the effect that Deloitte & Touche
LLP, based on certain material representations provided by OCLI and OCA is not
aware of any fact concerning OCA that would preclude OCLI from accounting for
the Merger as a pooling-of-interests.
The Merger is subject to the requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 and the regulations thereunder (the
"Antitrust Improvements Act"), which provide that certain acquisition
transactions (including the Merger) may not be consummated until certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC"),
and certain waiting period requirements have been satisfied. OCLI and OCA have
filed the required information and material with the Antitrust Division and the
FTC, but, as of the date of this Proxy Statement/Prospectus, the applicable
waiting period has not yet expired. There can be no assurance that the waiting
period will expire without a challenge to the Merger from the Antitrust Division
or the FTC. Termination of the waiting period does not preclude the Antitrust
Division, the FTC or any other party from challenging or seeking to delay or
enjoin the Merger on antitrust or other grounds. There can be no assurance that
any such challenge, if made, would not be successful; however, neither OCLI nor
OCA believes that the Merger will violate the antitrust laws. Any such action
taken or threatened prior to the consummation of the Merger could relieve OCLI
or OCA of their respective obligations to consummate the Merger. See "THE MERGER
- --Regulatory Approvals."
Except for the Antitrust Improvements Act filings, and filings with the
Secretary of State of the State of Delaware and Commonwealth of Massachusetts,
no federal or state regulatory approvals are required in order to consummate the
Merger.
Certain Federal Income Tax Consequences
The Merger is intended to qualify as a tax-free reorganization under
Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code").
Neither OCA nor OCLI intends to request a ruling from the Internal Revenue
Service with respect to the Merger. Assuming that the Merger is a tax-free
reorganization, (i) no gain or loss will be recognized by OCLI or OCA and (ii)
no gain or loss will be recognized by Shareholders of OCA other than
Shareholders perfecting statutory dissenters' rights or in connection with the
cash settlement of fractional shares. If the Merger fails to qualify as
11
<PAGE>
a reorganization under Section 368(a) of the Code, on the Effective Date each
shareholder of OCA will recognize gain or loss on the exchange of his OCA Common
Stock for OCLI Common Stock. Holders of OCA Common Stock are urged to consult
with their tax advisers to determine the particular tax consequences of the
Merger to them.
12
<PAGE>
Optical Coating Laboratory, Inc. Selected Financial Information
<TABLE>
The selected financial information presented below as of and for the
five years ended October 31, 1995 has been derived from OCLI's Consolidated
Financial Statements, which have been audited by Deloitte & Touche LLP,
independent public accountants. This information should be read in conjunction
with OCLI's Consolidated Financial Statements and related notes. The selected
financial information for the six-month periods ended April 30, 1995 and April
28, 1996 has not been audited but, in the opinion of OCLI, includes all
adjustments (consisting only of normal, recurring adjustments) necessary to
present fairly such information in accordance with generally accepted accounting
principles applied on a consistent basis. The results of operations for the
six-month period ended April 28, 1996 are not necessarily indicative of results
for the entire year.
<CAPTION>
(In Thousands, Except Per Share Amounts)
Six Months Ended
Year Ended October 31, April 30, April 28,
----------------------------------------------------------- ------------------------
Statements of Operations Data 1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Revenue ................................. $ 103,711 $ 115,016 $ 123,013 $ 131,780 $ 169,417 $ 77,480 $ 92,362
Cost of sales ........................... 63,640 69,958 81,885 84,001 106,009 47,275 60,147
--------- --------- --------- --------- --------- --------- ---------
Gross Profit ........................ 40,071 45,058 41,128 47,779 63,408 30,205 32,215
Operating expenses:
Research and development ............ 7,691 8,178 5,926 5,229 8,401 3,019 5,010
Selling and administrative .......... 26,974 26,532 30,153 31,341 37,462 18,634 19,201
Restructuring charges ............... 2,742 9,746
Amortization of intangibles ......... 446 648 975 475 565
--------- --------- --------- --------- --------- --------- ---------
Total operating expense ............ 37,407 34,710 46,271 37,218 46,838 22,128 24,776
--------- --------- --------- --------- --------- --------- ---------
Income (loss) from operations ....... 2,664 10,348 (5,143) 10,561 16,570 8,077 7,439
Other income (expense):
Interest income ..................... 529 295 130 338 667 422 139
Interest expense .................... (2,014) (2,223) (2,998) (3,215) (3,547) (1,911) (1,723)
--------- --------- --------- --------- --------- --------- ---------
Insurance recovery ...................... 364 1,180
--------- ---------
Income before provision for
income taxes and minority
interest and cumulative effect
of accounting changes ........... 1,543 9,600 (8,011) 7,684 13,690 6,588 5,855
Provision for income taxes .............. 13 3,573 (2,274) 3,080 5,483 2,766 2,459
Minority interest ....................... -- -- -- -- 816 -- 585
Cumulative effect of accounting
changes ............................... (829) 510
Net income (loss) .............. 701 6,537 (5,737) 4,604 7,391 3,822 2,811
Dividend on convertible
redeemable preferred stock .......... (300) -- -- -- (462) -- (480)
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) applicable to
common stock ......................... $ 401 $ 6,537 $ (5,737) $ 4,604 $ 6,929 $ 3,822 $ 2,331
========= ========= ========= ========= ========= ========= =========
Net income (loss) per share ............. $ .05 $ .75 $ (.65) $ .51 $ .73 $ .41 $ .23
========= ========= ========= ========= ========= ========= =========
Weighted average number of
common equivalent shares .............. 7,455 8,636 8,795 9,023 9,510 9,103 10,139
========= ========= ========= ========= ========= ========= =========
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
As of
As of October 31, April 30, April 28,
--------------------------------------------------------- ---------------------
Balance Sheet Data 1991 1992 1993 1994 1995 1995 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Total Current Assets ........................... $ 38,249 $ 47,539 $ 41,353 $ 57,710 $ 61,194 $ 53,783 $ 62,724
Other Assets and Investments ................... $ 974 $ 896 $ 8,949 $ 9,159 $ 17,029 $ 10,937 $ 16,062
Property, Plant and Equipment, Net ............. $ 45,196 $ 42,878 $ 48,924 $ 52,010 $ 91,611 $ 61,667 $ 95,969
Total Assets ................................... $ 84,419 $ 91,313 $ 99,226 $118,879 $169,834 $126,387 $174,755
Total Current Liabilities ...................... $ 16,336 $ 20,140 $ 25,102 $ 29,018 $ 33,179 $ 33,648 $ 33,041
Long Term Debt ................................. $ 20,935 $ 14,900 $ 23,110 $ 35,441 $ 47,267 $ 34,441 $ 49,117
Common Stockholders' Equity .................... $ 43,112 $ 52,254 $ 47,135 $ 52,037 $ 62,537 $ 56,261 $ 64,130
14
</TABLE>
<PAGE>
<TABLE>
Optical Corporation of America Selected Financial Information
The selected financial information presented below as of and for the
five years ended June 30, 1995 has been derived from OCA's Consolidated
Financial Statements, which have been audited by Deloitte & Touche LLP,
independent public accountants. The selected financial information for the
nine-month periods ended March 31, 1995 and March 31, 1996 have not been audited
but, in the opinion of the management of OCA, includes all adjustments
(consisting only of normal, recurring adjustments) necessary to present fairly
such information in accordance with generally accepted accounting principles
applied on a consistent basis. The results of operations for the nine-month
period ended March 31, 1996 are not necessarily indicative of results for the
entire year.
<CAPTION>
Nine Months Ended
Year Ended June 30, March 31,
------------------------------------------------------------ -----------------------
1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Statements of Operations Data
Revenue ................................. $ 27,650 $ 29,689 $ 27,397 $ 25,174 $ 26,537 $ 19,735 $ 21,600
Cost of sales ........................... 20,195 21,998 22,048 19,237 19,905 14,880 15,644
-------- -------- -------- -------- -------- -------- --------
Gross Profit ........................ 7,455 7,691 5,349 5,937 6,632 4,855 5,956
Operating expenses:
Research and development ............ 595 614 491 99 568 335 1,167
Selling and administrative .......... 4,956 5,130 5,895 5,215 4,814 3,514 3,758
Restructuring charges ............... -- -- 1,241 -- -- -- --
-------- -------- -------- -------- -------- -------- --------
Total operating expense ........... 5,551 5,744 7,627 5,314 5,382 3,849 4,925
-------- -------- -------- -------- -------- -------- --------
Income (loss) from operations ....... 1,904 1,947 (2,279) 623 1,250 1,006 1,031
-------- -------- -------- -------- -------- -------- --------
Other income (expense):
Interest expense .................... (989) (1,245) (679) (764) (734) (551) (627)
-------- -------- -------- -------- -------- -------- --------
Income before provision (benefit)
for income taxes and minority
interest ........................ 915 702 (2,957) (141) 516 455 404
Provision (benefit) for income taxes .... 240 285 (372) 6 8 20 20
-------- -------- -------- -------- -------- -------- --------
Net income (loss) .............. $ 675 $ 417 $ (2,585) $ (147) $ 508 $ 435 $ 384
======== ======== ======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of
As of June 30, March 31,
----------------------------------------------------------- --------------------
Balance Sheet Data 1991 1992 1993 1994 1995 1995 1996
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Total Current Assets .................... $ 9,516 $10,436 $10,332 $11,156 $ 9,555 $ 8,302 $ 9,575
Other Assets and Investments ............ $ 138 $ 70 $ 32 $ 79 $ 49 $ 54 $ 41
Property, Plant and Equipment, Net ...... $ 3,680 $ 4,358 $ 4,463 $ 4,134 $ 4,298 $ 4,162 $ 5,694
Total Assets ............................ $13,333 $14,865 $14,827 $15,369 $13,902 $12,517 $15,310
Total Current Liabilities ............... $ 5,950 $ 6,303 $ 7,973 $ 7,696 $ 6,523 $ 5,426 $ 7,514
Stockholders' Equity .................... $ 3,693 $ 4,787 $ 2,167 $ 1,922 $ 2,333 $ 2,309 $ 2,845
Long Term Debt .......................... $ 3,238 $ 3,148 $ 4,031 $ 4,997 $ 4,196 $ 3,981 $ 4,094
Redeemable Common Stock ................. $ 462 $ 559 $ 656 $ 753 $ 850 $ 850 $ 857
</TABLE>
15
<PAGE>
Unaudited Pro Forma Combined Selected Financial Data
The following tables present selected historical consolidated financial
data and pro forma combined financial information for OCLI and OCA and selected
per share data for OCLI Common Stock on a historical and pro forma combined
basis giving effect to the acquisition of 100% of the OCA shares by OCLI on a
pooling-of-interests accounting basis. The information is derived from the
consolidated historical financial statements of OCLI and OCA, including the
related notes thereto, appearing elsewhere or incorporated by reference herein.
The pro forma statement of income data for each period gives effect to the
Merger as if it had occurred at the beginning of such period, and the pro forma
balance sheet data gives effect to the Merger as if it had occurred on the
balance sheet date. The pro forma combined information has been prepared on the
assumption that the Merger will be accounted for on a pooling-of-interests
basis. Due to differences in reporting periods, OCA's results for the three
months ended September 30, 1994 were not included in the pro forma combined
statements of operations. For that three month period, OCA reported unaudited
revenue of $7,171,000 and unaudited net income of $91,000.
The pro forma combined information for OCLI, OCA and Flex Products,
Inc. assumes that OCLI's acquisition of Flex Products, Inc., which took place in
May 1995, took place at the beginning of OCLI's fiscal year 1994.
Redeemable common stock represents amounts payable by OCA to
Perkin-Elmer upon surrender of 46,875 shares of OCA common stock. The pro forma
data does not assume conversion of the Perkin-Elmer shares.
The combined pro forma common and common equivalent shares, used in
calculating pro forma earnings per share, is the combined weighted average of
OCLI and OCA common and common equivalent shares assuming each share of OCA
Common Stock is convertible into 2,042 shares of OCLI Common Stock.
Historical book value per share for OCLI is computed by dividing
stockholders' equity by the number of shares of common stock outstanding at the
end of the period. Pro forma combined book value per share is computed by
dividing pro forma combined stockholders' equity by the pro forma shares of
common stock outstanding at the end of the period after giving effect to the
common shares added pursuant to the merger.
These data are not necessarily indicative of the results of the future
operations of the combined entity or the actual results that would have occurred
had the Merger been consummated prior to the periods indicated.
16
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Years Ended October 31, 1993 and June 30, 1993
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA
12 Months 12 Months
Ended Ended Pro Forma Pro Forma
10/31/93 6/30/93 Adjustments Combined
-------- ------- ----------- --------
<S> <C> <C> <C> <C>
Revenue ............................................. $ 123,013 $ 27,397 -- $ 150,410
Cost of sales ....................................... 81,885 22,048 -- 103,933
--------- --------- ---------
Gross profit .................................... 41,128 5,349 -- 46,477
Operating expenses:
Research and development ........................ 5,926 491 -- 6,417
Selling and administrative ...................... 30,153 5,895 -- 36,048
Restructuring charges ........................... 9,746 1,241 -- 10,987
Amortization of intangible assets ............... 446 -- 446
--------- --------- ---------
Total operating expense ...................... 46,271 7,627 -- 53,898
--------- --------- ---------
Loss from operations .................. (5,143) (2,278) -- (7,421)
Other income (expense):
Interest income ................................. 130 -- -- 130
Interest expense ................................ (2,998) (679) -- (3,677)
--------- --------- ---------
Loss before provision for
income taxes and minority
interest ......................... (8,011) (2,957) -- (10,968)
Provision for income taxes .......................... (2,274) (372) (531)(B) (3,177)
--------- --------- ------ ---------
Net loss ................................... $ (5,737) $ (2,585) $ 531 $ (7,791)
========= ========= ====== =========
Net loss per common and common
equivalent share.................................. $ (0.65) $ (.75)
========= =========
Weighted average number of common equivalent
shares............................................ 8,795 10,361
========= =========
</TABLE>
17
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1994
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA
12 Months 12 Months
Ended Ended Pro Forma Pro Forma
10/31/94 6/30/94 Adjustments Combined
-------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue ................................................. $ 131,780 $ 25,174 $(514) $ 156,440
Cost of sales ........................................... 84,001 19,237 (514) 102,724
--------- --------- ------ ---------
Gross profit ........................................ 47,779 5,937 -- 53,716
Operating expenses:
Research and development ............................ 5,229 99 -- 5,328
Selling and administrative .......................... 31,341 5,215 -- 36,556
Amortization of intangible assets ................... 648 -- 648
--------- --------- ---------
Total operating expense .......................... 37,218 5,314 -- 42,532
--------- --------- ---------
Income from operations .................... 10,561 623 -- 11,184
Other income (expense):
Interest income ..................................... 338 -- -- 338
Interest expense .................................... (3,215) (764) -- (3,979)
--------- --------- ---------
Income before provision for
income taxes and minority
interest .............................. 7,684 (141) -- 7,543
Provision for income taxes .............................. 3,080 6 (10)(B) 3,076
--------- --------- ------ ---------
Net income (loss) .............................. $ 4,604 $ (147) $ (10) $ 4,467
========= ========= ====== =========
Net income per common and common
equivalent share...................................... $ 0.51 $ 0.42
========= =========
Weighted average number of common equivalent
shares............................................... 9,023 10,707
========= =========
</TABLE>
18
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1993
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA Pro Forma
12 Months 12 Months Combined
Ended Ended Pro Forma OCLI &
10/31/93 6/30/93 Adjustments OCA
-------- ------- ----------- ---
<S> <C> <C> <C> <C>
Revenue............................................ $123,013 $ 27,397 - $150,410
Cost of sales...................................... 81,885 22,048 - 103,933
-------- -------- --------
Gross profit................................... 41,128 5,349 - 46,477
Operating expenses:
Research and development....................... 5,926 491 - 6,417
Selling and administrative..................... 30,153 5,895 - 36,048
Restructuring charges.......................... 9,746 1,241 - 10,987
Amortization of intangible assets.............. 446 - 446
-------- -------- --------
Total operating expense..................... 46,271 7,627 - 53,898
-------- -------- --------
Loss from operations................. (5,143) (2,278) - (7,421)
Other income (expense):
Interest income................................ 130 - - 130
Interest expense............................... (2,998) (679) - (3,677)
-------- -------- --------
Loss before provision for
income taxes and minority
interest........................ (8,011) (2,957) - (10,968)
Provision for income taxes......................... (2,274) (372) (531)(B) (3,177)
-------- -------- ----- --------
Net loss.................................. $ (5,737) $ (2,585) $ 531 $ (7,791)
======== ======== ===== ========
Net loss per common and common
equivalent share................................ (0.65)
======== $ (.75)
========
Weighted average number of common equivalent
shares.......................................... 8,795 $ 10,361
======== ========
</TABLE>
19
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1994
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA Pro Forma
12 Months 12 Months Combined
Ended Ended Pro Forma OCLI &
10/31/94 6/30/94 Adjustments OCA
-------- ------- ----------- ----
<S> <C> <C> <C> <C>
Revenue............................................ $131,780 $25,174 $(514)(A) $156,440
Cost of sales...................................... 84,001 19,237 (514)(A) 102,724
-------- ------- ----- --------
Gross profit................................... 47,779 5,937 - 53,716
Operating expenses:
Research and development....................... 5,229 99 - 5,328
Selling and administrative..................... 31,341 5,215 - 36,556
Amortization of intangible assets.............. 648 - 648
-------- ------- --------
Total operating expense..................... 37,218 5,314 - 42,532
-------- ------- --------
Income from operations............... 10,561 623 - 11,184
Other income (expense):
Interest income................................ 338 - - 338
Interest expense............................... (3,215) (764) - (3,979)
-------- ------- --------
Income before provision for
income taxes and minority
interest......................... 7,684 (141) - 7,543
Provision for income taxes.........................
3,080 6 $ (10)(B) 3,076
-------- ------- ----- --------
Net income (loss)......................... $ 4,604 $ (147) 10 $ 4,467
======== ======= ===== ========
Net income per common and common
equivalent share................................ $ 0.51 0.42
======== ========
Weighted average number of common equivalent
shares......................................... 9,023 10,707
======== ========
</TABLE>
20
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1994
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Pro Forma Flex Products, Inc. Adjusted Pro
Combined 12 Months Forma Combined
OCLI and Ended Pro Forma OCLI, OCA and
OCA 12/31/94 Adjustments Flex Products, Inc.
--- -------- ----------- -------------------
<S> <C> <C> <C> <C>
Revenue $156,440 $23,624 $(1,116)(C) $178,948
Cost of sales 102,724 13,663 295(C),(D) 116,682
Gross profit 53,716 9,961 (1,411) 62,266
Operating expenses:
Research and development 5,328 3,342 (171)(C) 8,499
Selling and administrative 36,556 2,831 39,387
Amortization of intangible assets 648 1,322 (254)(E) 1,716
-------- ------- ------- --------
Total operating expense 42,532 7,495 (425) 49,602
-------- ------- ------- --------
Income from operations 11,184 2,466 (986) 12,664
Other income (expense):
Interest income 338 - - 338
Interest expense (3,979) (908) 521(F) (4,366)
-------- ------- ------- --------
Income before provision for
income taxes and minority
interest 7,543 1,558 (465) 8,636
Provision for income taxes 3,076 (4,897) 5,403(G) 3,582
Minority interest - - 710(H) 710
-------- ------- ------- --------
Net income 4,467 6,455 (6,578) 4,344
Dividend on convertible redeemable
preferred stock - - 960(I) 960
-------- ------- ------- --------
Net income applicable to common
stock $ 4,467 $ 6,455 $(7,538) $ 3,384
======== ======= ======= ========
Net income per common and
common equivalent share $ 0.42 $ 0.32
======== ========
Weighted average number of
common equivalent shares 10,707 10,707
======== ========
</TABLE>
21
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA Pro Forma
12 Months 12 Months Combined
Ended Ended Pro Forma OCLI &
10/31/95 9/30/95 Adjustments OCA
-------- ------- ----------- ----
<S> <C> <C> <C> <C>
Revenue............................................ $169,417 $27,599 (75)(A) $196,941
Cost of sales...................................... 106,009 20,791 (75)(A) 126,725
-------- ------- ----- --------
Gross profit................................... 63,408 6,808 - 70,216
Operating expenses:
Research and development....................... 8,401 772 - 9,173
Selling and administrative..................... 37,462 4,719 - 42,181
Amortization of intangible assets.............. 975 - - 975
-------- ------- --------
Total operating expense..................... 46,838 5,491 - 52,329
-------- ------- --------
Income from operations............ 16,570 1,317 - 17,887
Other income (expense):
Interest income................................ 667 4 - 671
Interest expense............................... (3,547) (716) - (4,263)
-------- ------- --------
Income before provision for
income taxes and minority
interest...................... 13,690 605 - 14,295
Provision for income taxes......................... 5,483 12 219(B) 5,714
Minority interest.................................. 816 - - 816
-------- ------- ----- --------
Net income................................ 7,391 593 (219) 7,765
Dividend on convertible
redeemable preferred stock..................... 462 - - 462
-------- ------- ----- --------
Net income applicable to common stock.... $ 6,929 $ 593 $(219) $ 7,303
======== ======= ===== ========
Net income per common and common
equivalent share............................... $ 0.73 0.65
======== ========
Weighted average number of common equivalent
shares........................................ 9,510 $ 11,212
======== ========
</TABLE>
22
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Year Ended October 31, 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Pro Forma Flex Products, Inc. Adjusted Pro
Combined 12 Months Forma Combined
OCLI and Ended Pro Forma OCLI, OCA and
OCA 4/30/95 Adjustments Flex Products, Inc.
--- ------- ----------- -------------------
<S> <C> <C> <C> <C>
Revenue $196,941 $12,590 $(618)(C) $208,913
Cost of sales 126,725 7,302 -(C),(D) 134,027
-------- ------- ----- --------
Gross profit 70,216 5,288 (618) 74,886
Operating expenses:
Research and development 9,173 1,368 (114)(C) 10,427
Selling and administrative 42,181 1,891 44,072
Amortization of intangible assets 975 661 (572)(E) 1,064
-------- ------- ----- --------
Total operating expense 52,329 3,920 (686) 55,563
-------- ------- ----- --------
Income from operations 17,887 1,368 68 19,323
Other income (expense):
Interest income 671 17 - 688
Interest expense (4,263) (496) 123(F) (4,636)
-------- ------- ----- --------
Income before provision for
income taxes and minority
interest 14,295 889 191 15,375
Provision for income taxes 5,714 402 26(G) 6,142
Minority interest 816 - 195(H) 1,011
-------- ------- ----- --------
Net income 7,765 487 (30) 8,222
Dividend on convertible redeemable
preferred stock 462 - 498(I) 960
-------- ------- ----- --------
Net income applicable to common
stock $ 7,303 $ 487 $(528)(J) $ 7,262
-------- ------- ----- --------
Net income per common and
common equivalent share $ 0.65 $ 0.65
-------- --------
Weighted average number of
common equivalent shares
11,212 11,212
-------- --------
</TABLE>
23
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Six Month Period Ended April 30, 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA Pro Forma
6 Months 6 Months Combined
Ended Ended Pro Forma OCLI &
4/30/95 3/31/95 Adjustments OCA
------- ------- ----------- ---
<S> <C> <C> <C> <C>
Revenue............................................ $77,480 $13,627 $ (75)(A) $91,032
Cost of sales...................................... 47,275 10,315 (75)(A) 57,515
------- ------- ----- -------
Gross profit................................... 30,205 3,312 - 33,517
Operating expenses:
Research and development....................... 3,019 198 - 3,217
Selling and administrative..................... 18,634 2,399 - 21,033
Amortization of intangible assets.............. 475 - - 475
------- ------- ----- -------
Total operating expense..................... 22,128 2,597 - 24,725
------- ------- ----- -------
Income from operations............ 8,077 715 - 8,792
Other income (expense):
Interest income................................ 422 - - 422
Interest expense............................... (1,911) (351) - (2,262)
------- ------- ----- -------
Income before provision for
income taxes.................. 6,588 364 - 6,952
Provision for income taxes......................... 2,766 20 101(B) 2,887
------- ------- ----- -------
Net income (loss)......................... $ 3,822 $ 344 $(101) $ 4,065
======= ======= ===== =======
Net income per common and common
equivalent share............................... $ 0.41 $ 0.37
======= =======
Weighted average number of common equivalent
shares........................................ 9,202 10,898
======= =======
</TABLE>
24
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Six Month Period Ended April 30, 1995
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
Pro Forma Flex Products, Inc. Adjusted Pro
Combined 12 Months Forma Combined
OCLI and Ended Pro Forma OCLI, OCA and
OCA 4/30/95 Adjustments Flex Products, Inc.
--- ------- ----------- -------------------
<S> <C> <C> <C> <C>
Revenue $91,032 $12,590 $(618)(C) $103,004
Cost of sales 57,515 7,302 -(C),(D) 64,817
------- ------- ----- --------
Gross profit 33,517 5,288 (618) 38,187
Operating expenses:
Research and development 3,217 1,368 (114)(C) 4,471
Selling and administrative 21,033 1,891 22,924
Amortization of intangible assets 475 661 (572)(E) 564
------- ------- ----- --------
Total operating expense 24,725 3,920 (686) 27,959
------- ------- ----- --------
Income from operations 8,792 1,368 68 10,228
Other income (expense):
Interest income 422 17 - 439
Interest expense (2,262) (496) 123(F) (2,635)
------- ------- ----- --------
Income before provision for
income taxes and minority
interest 6,952 889 191 8,032
Provision for income taxes 2,887 402 26(G) 3,315
Minority interest - - 195(H) 195
------- ------- ----- --------
Net income 4,065 487 (30) 4,522
Dividend on convertible redeemable
preferred stock - - 498(I) 498
------- ------- ----- --------
Net income applicable to common
stock $ 4,065 $ 487 $(528)(J) $ 4,024
======= ======= ===== ========
Net income per common and
common equivalent share $ 0.37 $ 0.37
======= ========
Weighted average number of
common equivalent shares 10,898 10,898
======= ========
</TABLE>
25
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statement of Operations
For The Six Month Period Ended April 28, 1996
(In Thousands, Except Per Share Amounts)
(Unaudited)
<CAPTION>
OCLI OCA Pro Forma
6 Months 6 Months Combined
Ended Ended Pro Forma OCLI &
4/28/96 3/31/96 Adjustments OCA
------- ------- ----------- ---
<S> <C> <C> <C> <C>
Revenue............................................ $92,362 $14,430 $(312)(A) $106,480
Cost of sales...................................... 60,147 10,192 (312)(A) 70,027
------- ------- ----- --------
Gross profit................................... 32,215 4,238 36,453
Operating expenses:
Research and development....................... 5,010 906 - 5,916
Selling and administrative..................... 19,201 2,663 - 21,864
Restructuring charges.......................... - - - -
Amortization of intangible assets.............. 565 - - 565
------- ------- ----- --------
Total operating expense..................... 24,776 3,569 - 28,345
------- ------- ----- --------
Income from operations............ 7,439 669 - 8,108
Other income (expense):
Interest income................................ 139 - 139
Interest expense............................... (1,723) (445) - (2,168)
------- ------- ----- --------
Income before provision for
income taxes and minority
interest...................... 5,855 224 - 6,079
Provision for income taxes......................... 2,459 16 59(B) 2,534
Minority interest.................................. 585 - - 585
------- ------- ----- --------
Net income (loss)......................... 2,811 208 (59) 2,960
Dividend on convertible
redeemable preferred stock..................... 480 - - 480
------- ------- ----- --------
Net income applicable to common stock.... $ 2,331 $ 208 $ (59) $ 2,480
======= ======= ===== ========
Net income per common and common
equivalent share............................... $ 0.23 $ 0.21
======= ========
Weighted average number of common equivalent
shares........................................ 10,139 11,830
======= ========
</TABLE>
26
<PAGE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Statements of Operations
(Dollars in Thousands)
(Unaudited)
Summary of pro forma adjustments - Dr(Cr):
(A) Elimination - Intercompany Activity of OCLI and OCA
12 Months Ended 6 Months Ended
----------------------- -------------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Revenue $ 514 $ 75 $ 75 312
Cost of Sales $ (514) $ (75) $ (75) (312)
To eliminate intercompany revenue and cost of sales on product purchased and
resold by OCLI and OCA.
(B) Tax Provision Adjustment to Valuation Allowance Recorded by OCA
12 Months Ended 6 Months Ended
-------------------------- --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Deferred Income Tax Asset $ 531 $ (10) $(219) $(101) $ (59)
Provision for Income Taxes $(531) $ 10 $ 219 $ 101 $ 59
To record the tax provision adjustment to each period resulting from adjustments
to the valuation allowance recorded by OCA.
(C) Elimination-Intercompany Activity of OCLI and Flex Products, Inc.
12 Months Ended 6 Months Ended
-------------------------- ----------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Revenue - $ 1,116 $ 618 $ 618 -
Cost of sales - $ (945) $ (504) $ (504) -
Research and Development - $ (171) $ (114) $ (114) -
To eliminate intercompany royalty revenue and research and development expense
between OCLI and Flex Products, Inc.
27
<PAGE>
(D) Inventory and Fixed Assets Revaluation Increase to Cost of Sales of Flex
Products, Inc.
12 Months Ended 6 Months Ended
--------------------------- ----------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Cost of sales - $ 1,240 $ 504 $ 504 -
Inventory - $ (495) $ (131) $ (131) -
Accumulated depreciation - $ (745) $ (373) $ (373) -
To record the cost of sales increase resulting from increased inventory
valuation and fixed asset step-up upon acquisition.
(E) Amortization of Intangibles of Flex Products, Inc.
12 Months Ended 6 Months Ended
----------------------- -------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Amortization of intangibles - $(254) $(572) $(572) -
Goodwill - $ 254 $ 572 $ 572 -
To eliminate Flex Products, Inc. amortization of intangibles and record adjusted
amortization amounts.
(F) Reclassify Minority Shareholder Interest and Record Additional Interest on
Assumed Borrowings for Flex Products, Inc.
12 Months Ended 6 Months Ended
------------------------- ----------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Interest expense - $(521) $(123) $(123) -
Other accrued expenses - $ 521 $ 123 $ 123 -
To reclassify minority shareholder interest and record assumed interest on
borrowings required in order to consummate the purchase of Flex Products, Inc.
(G) Provision for Income Taxes
12 Months Ended 6 Months Ended
-------------------------- ---------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Income taxes payable - $(5,589) - - -
Provision for income taxes - $ 5,589 - - -
Income taxes payable - $ 186 $ (26) $(26) -
Provision for income taxes - $ (186) $ 26 $ 26 -
To record the income tax effect of removal of Flex Products, Inc. valuation
allowance and to record the tax effect of the pro forma adjustments.
28
<PAGE>
(H) Minority Interest in Flex Products, Inc.
12 Months Ended 6 Months Ended
------------------- --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Minority interest
(income statement) - $ 710 $ 195 $ 195 -
Minority interest (balance sheet) - $(710) $(195) $(195) -
To record minority interest in Flex Products, Inc. for the applicable periods.
(I) Dividend on Preferred Stock
12 Months Ended 6 Months Ended
------------------- --------------
1993 1994 1995 1995 1996
---- ---- ---- ---- ----
Dividend on convertible redeemable
preferred stock - $ 960 $ 498 $ 498 -
Retained earnings - $(960) $(498) $(498) -
To record pro forma dividend on convertible redeemable preferred stock issued by
OCLI pursuant to the acquisition of Flex Products, Inc.
29
<PAGE>
<TABLE>
Optical Coating Laboratory, Inc.
Pro Forma Condensed Combined Balance Sheet
As of April 28, 1996
(Dollars in Thousands)
(Unaudited)
<CAPTION>
OCLI OCA Pro Forma
As of As of Pro Forma Combined
4/28/96 3/31/96 Adjustments OCLI & OCA
------- ------- ----------- ----------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and short-term investments $ 4,499 $ 134 - $ 4,633
Accounts receivable (net) 31,311 6,519 - 37,830
Inventories 18,294 2,856 - 21,150
Current deferred income tax asset 6,311 - 339(A) 6,650
Prepaid expenses/other current assets 2,309 66 - 2,375
-------- ------- ---- --------
Total Current Assets 62,724 9,575 339 72,638
Other Assets and Investments 16,062 41 - 16,103
Property, Plant and Equipment:
Property, plant and equipment 174,872 11,430 - 186,302
Less accumulated depreciation (78,903) (5,736) - (84,639)
-------- ------- ---- --------
Property, plant and equipment (net) 95,969 5,694 - 101,663
-------- ------- ---- --------
Total Assets $174,755 $15,310 $339 $190,404
======== ======= ==== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 10,931 $ 1,697 - $ 12,628
Accrued compensation expenses 5,528 - - 5,528
Other accrued expenses 10,140 1,942 - 12,082
Notes payable 2,321 2,550 - 4,871
Current maturities on long-term debt 3,412 1,325 - 4,737
Deferred revenue 709 - - 709
-------- ------- ---- --------
Total Current Liabilities 33,041 7,514 40,555
Postretirement health and pension liabilities 2,174 - - 2,174
Deferred income tax liabilities 2,341 - - 2,341
Long-term debt 49,117 4,094 - 53,211
Minority interest 12,643 - - 12,643
Convertible redeemable preferred stock 11,309 - - 11,309
Redeemable common stock 857 857
Common stockholders' equity 64,130 2,845 339(A) 67,314
-------- ------- ---- --------
Total Liabilities and Stockholders' Equity $174,755 $15,310 $339 $190,404
======== ======= ==== ========
Book Value per Common Share $ 6.69 $ 6.07
======== --------
</TABLE>
30
<PAGE>
Optical Coating Laboratory, Inc. and Subsidiaries
Pro Forma Condensed Combined Balance Sheets
(Dollars in Thousands)
(Unaudited)
Summary of pro forma adjustments - Dr(Cr):
(A) Adjustment to Deferred Tax Valuation Allowance for OCA
OCLI as of
4/28/96
-------
Deferred Tax Asset 339
Common Stockholders' Equity (339)
Record adjustment to deferred tax asset resulting from adjustment to OCA
valuation allowance.
31
<PAGE>
SPECIAL MEETING
General
This Proxy Statement/Prospectus is being furnished to holders of OCA
Common Stock in connection with the solicitation of proxies by the Board of
Directors of OCA for use at the OCA Special Meeting, which will be held at OCA's
corporate offices located at 170 Locke Drive, Marlborough, Massachusetts 01752,
on September 10, 1996 beginning at 10:00 a.m. and at any adjournments or
postponements thereof. This Proxy Statement/Prospectus is accompanied by a form
of proxy for use at the Special Meeting.
This Proxy Statement/Prospectus also constitutes the Prospectus of OCLI
with respect to the shares of OCLI Common Stock to be issued pursuant to the
Merger, which Prospectus is part of a Registration Statement on Form S-4 filed
by OCLI with the Commission under the Securities Act of 1933, as amended (the
"Securities Act").
No vote by the stockholders of OCLI is required to consummate the
Merger.
Purposes; Recommendation of the OCA Board of Directors and Management
The purposes of the Special Meeting are (i) to consider and vote upon a
proposal to adopt and approve the Merger Agreement and the transactions
contemplated thereby and (ii) to transact such other business as may properly
come before the Special Meeting and any adjournments or postponements thereof.
The Board of Directors of OCA is not presently aware of any such other business.
The management of OCA and OCA's Board of Directors have approved the
Merger Agreement and the transactions contemplated thereby and believe the
Merger and the other transactions contemplated by the Merger Agreement are fair
to and in the best interests of OCA and its Shareholders.
THE MANAGEMENT AND BOARD OF DIRECTORS OF OCA RECOMMEND THAT OCA
SHAREHOLDERS VOTE IN FAVOR OF THE ADOPTION AND APPROVAL OF THE
MERGER AGREEMENT.
Record Date
Only holders of record of OCA Common Stock as of the close of business
on August 9, 1996 are entitled to receive notice of and to vote at the Special
Meeting and any adjournments or postponements thereof. As of the close of
business on August 9, 1996, 794,577 shares of OCA Common Stock were outstanding,
all of which are expected to be outstanding and entitled to vote as of the date
of the Special Meeting. Each share of OCA Common Stock is entitled to one vote
upon each
32
<PAGE>
matter properly submitted at the Special Meeting. See "THE MERGER -- Interests
of Certain Persons in the Merger" and "OWNERSHIP OF OCA COMMON STOCK AND OCLI
COMMON STOCK."
Votes Required
Under Massachusetts law and pursuant to OCA's Articles of Organization
and the OCA By-Laws, each as amended, the affirmative vote of the holders of
two-thirds of the outstanding shares of OCA Common Stock is required to adopt
and approve the Merger Agreement and the transactions contemplated thereby.
The presence, in person or by proxy, at the Special Meeting of the
holders of at least a majority of the votes entitled to be cast at the Special
Meeting is necessary to constitute a quorum for the transaction of business.
Abstentions will be counted as present for the purposes of determining whether a
quorum is present but will not be counted as votes cast in favor of the Merger
Agreement. Because the vote on the Merger Agreement requires the approval of
two-thirds of the votes entitled to be cast by the holders of the outstanding
shares of OCA Common Stock, abstentions will have the same effect as a negative
vote on these proposals.
As of the Record Date, the directors and officers of OCA, together with
their respective affiliates and family members, owned directly or indirectly an
aggregate of 529,793 shares of OCA Common Stock, constituting approximately
66.7% of the then outstanding shares of OCA Common Stock expected to be entitled
to vote at the Special Meeting. Each of the directors and officers of OCA has
agreed with OCLI to vote his shares of OCA Common Stock in favor of the
proposals to adopt and approve the Merger Agreement. The affirmative vote of
these individuals, together with the affirmative vote of their respective family
members, virtually ensures the adoption and approval of the Merger Agreement by
the OCA Shareholders without regard to the votes of any other OCA Shareholders.
33
<PAGE>
Voting and Revocation of Proxies
Shares of OCA Common Stock that are entitled to vote and are
represented by a proxy properly signed and received at or prior to the Special
Meeting, unless subsequently properly revoked, will be voted in accordance with
the instructions indicated thereon. If a proxy is signed and returned without
indicating any voting instructions, shares of OCA Common Stock represented by
such proxy will be voted FOR the proposal to adopt and approve the Merger
Agreement. The Board of Directors of OCA is not currently aware of any business
to be acted upon at the Special Meeting other than as described herein. If,
however, other matters are properly brought before the Special Meeting or any
adjournments or postponements thereof, the persons appointed as proxies will
have the discretion to vote or act thereon in accordance with their best
judgment.
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before the shares represented by such proxy are
voted at the Special Meeting by (i) filing with the Clerk of OCA a written
notice of revocation bearing a later date than the proxy, (ii) duly executing a
proxy relating to the same shares bearing a later date and delivering it to the
Clerk of OCA or (iii) voting in person at the Special Meeting. Attendance at the
Special Meeting will not in and of itself constitute a revocation of a proxy.
All written notices of revocation and other communications with respect to
revocation of proxies should be addressed as follows: Optical Corporation of
America, 170 Locke Drive, Marlborough, Massachusetts 01752, attention: Clerk,
and must be received before the taking of the vote at the Special Meeting.
Solicitation of Proxies
Each of OCLI and OCA will bear its respective costs incurred in
preparing this Proxy Statement/Prospectus (and the related Registration
Statement) and the form of proxy, except that OCA will bear the costs of mailing
proxy materials to OCA Shareholders in connection with the Special Meeting. In
addition to solicitation by mail, directors, officers and employees of OCA, who
will not be specifically compensated for such services, may solicit proxies from
OCA Shareholders personally or by telephone, telecopy, telegram or other means
of communication.
Dissenters' Rights
Shareholders of OCA who do not vote in favor of the adoption and
approval of the Merger Agreement and the transactions contemplated thereby
(collectively, "Dissenting Shareholders") have certain rights to demand payment
for the "fair value" of
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their shares of OCA Common Stock if they timely provide a written notice of
dissent prior to the Special Meeting and strictly comply with all other
applicable requirements under Massachusetts law. Failure to take any of the
steps required on a timely basis will result in the loss of dissenters' rights.
Merely voting against or failing to vote for the Merger Agreement will not
perfect a Dissenting Shareholder's dissenter's rights. The amount obtainable
upon the valid exercise of dissenters' rights cannot be predicted. The
procedures to be followed by Dissenting Shareholders are summarized in "RIGHTS
OF DISSENTING SHAREHOLDERS," and a copy of the applicable provisions of the
Massachusetts Business Corporation Law is attached as APPENDIX I to this Proxy
Statement/Prospectus and incorporated herein by this reference.
OCA SHAREHOLDERS SHOULD NOT SEND ANY STOCK CERTIFICATES
WITH THEIR PROXY CARDS.
THE MERGER
Background of the Merger and Related Matters
OCLI and OCA have worked together on several projects over the past six
years. Beginning in 1990, OCLI subcontracted with OCA for the coating of missile
domes for the U.S Department of Defense. Under this arrangement, OCA fabricated
the missile domes in its facilities in Garden Grove, California and sent them to
OCLI to be coated at its facilities in Santa Rosa. Since the initial order, OCLI
has received several follow-on orders from OCA for the coating of the missile
domes, in addition to several other smaller coating subcontracts, for which OCLI
has received orders worth approximately $657,000 since 1992, including
approximately $40,000 of sales after the second quarter of 1996.
Beginning in 1995, OCA subcontracted with OCLI for the supply of
optical subassemblies and optical fabrication. In fiscal 1995 OCLI placed orders
with OCA worth approximately $75,000 and orders year-to-date in fiscal 1996 are
worth $407,000, including approximately $200,000 of open orders at the end of
the second quarter of 1996.
In addition to being both suppliers and customers to each other over
the last several years, OCA and OCLI have both competed for optical filter
business in the defense, aerospace, medical instrumentation and office
automation market segments along with other companies including, but not limited
to, Barr Associates, Optical Filter Corporation, Varo, and Deposition Sciences,
Inc.
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In July of 1993, Frank Bufano, OCLI's Vice President and Director of
Operations, visited OCA's facilities in Massachusetts and met with John
Viggiano, OCA's Vice President and General Manager of East Coast operations, to
review OCA's capabilities and to discuss a possible strategic alliance between
the companies. Following Mr. Bufano's visit, Donald A. Johnson, CEO of OCA
summarized those discussions in a letter to Herbert M. Dwight, Jr., OCLI's
President and CEO, and suggested that Mr. Dwight and Mr. Johnson meet to discuss
a possible strategic alliance.
On October 28, 1993, as suggested by Mr. Johnson, Mr. Dwight visited
OCA's facilities in Garden Grove, California to review OCA's West Coast
operations and to discuss a possible strategic alliance between OCA and OCLI. In
subsequent discussions between OCLI's senior managers and Board of Directors, it
was determined that further discussions with OCA at that time were not in OCLI's
best interest in light of the other major projects and acquisitions OCLI had
already undertaken. In November of 1993, Mr. Dwight informed Mr. Johnson of
OCLI's decision not to pursue the discussions any further at that time. However,
it was agreed that the companies should revisit the possibilities in 6 to 12
months.
On July 15, 1994, in response to an invitation from OCA, Dr. Jim
Seeser, OCLI's Chief Technical Officer, Glenn Yamamoto, the Product Line Manager
for OCLI's instrumentation business, Lenn Mott, OCLI's Director of Engineering,
and Dr. James Rancourt, one of OCLI's Senior Scientists, visited OCA's
facilities in Garden Grove, California, to conduct a preliminary review of OCA's
business to determine whether OCLI had any interests in pursuing a strategic
business relationship. Based upon the findings of Dr. Seeser's team it was again
decided that there were current opportunities around which the companies should
seek to form a strategic relationship.
In April of 1995, in a series of telephone conversations between Mr.
Johnson, Mr. Viggiano and Mr. Yamamoto, OCLI learned of several new product
development efforts at OCA. During these conversations, OCLI was informed that
OCA's Shareholders were interested in developing some liquidity for their
investments, and it was suggested that representatives of the companies meet
again to discuss a possible strategic alliance. Over the next few months various
representatives from OCLI engaged in the review of OCA's new product development
efforts and independent studies of the respective market opportunities for these
new products.
On December 21, 1995, OCA and OCLI executed a Confidentiality Agreement
in order to allow for the exchange and discussion of OCA proprietary information
in contemplation of a possible acquisition of OCA by OCLI.
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On February 26, 1996, OCA's Board of Directors met with members of
OCLI's senior management group, including Herbert Dwight, John Markovich, John
McCullough, Jim Seeser, Rick Strandlund, Glenn Yamamoto, and Joseph Zils, to
discuss the proposed acquisition and agree in principle on the terms of the
transaction.
On March 1, 1996, OCA and OCLI executed a Letter of Intent setting
forth the general terms of the agreement and providing a schedule for the
execution of definitive agreements. Numerous telephone conversations and
meetings among counsel for OCA and OCLI and among representatives of OCA and
OCLI subsequently ensued. During the months of March 1996 through June 20, 1996,
OCA and OCLI negotiated the terms of the Agreement and Plan of Merger (the
"Agreement") and related agreements.
On June 20, 1996, at a regularly scheduled meeting, OCLI's Board of
Directors considered management's recommendations on the Agreement and
unanimously voted to adopt a resolution authorizing management to execute the
Agreement on behalf of OCLI.
On June 20, 1996, the Board of Directors of OCA, in a special
telephonic meeting, unanimously voted to adopt a resolution authorizing
management to execute the Agreement and to recommend its adoption to OCA's
Shareholders.
On June 28, 1996, the companies executed the Agreement setting forth
the terms and conditions under which OCLI would acquire all the outstanding
shares of OCA's stock.
OCLI's Reasons for the Merger
OCLI's purpose for engaging in the transactions contemplated by the
Agreement is to acquire OCA. OCLI believes that the acquisition of OCA will
provide OCLI with an established, well-recognized provider of optical
subassemblies, optical design, and fiber optic communication component design
and manufacturing to both government and industry. At the same time, OCLI hopes
both to identify opportunities to further commercialize OCA's existing
technologies and to combine its research and development activities with those
of OCA's with a goal of creating new technologies. It is anticipated that the
Merger will also allow the companies to realize additional economies in
manufacturing, support service and corporate administration. The structure of
the Merger was established to achieve the business objectives of OCLI, in light
of relevant financial,
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legal, tax and other considerations.
OCA's Reasons for the Merger
OCA believes that a number of significant strategic benefits will
accrue from the Merger. In addition to its established product lines, OCA has
recently developed an important position in the embryonic, but rapidly growing
market for fiber optics products used in telecommunications. These products
incorporate narrow bandpass filters produced by using OCA's MicroPlasma(TM) thin
film coating process. OCA believes that OCLI's manufacturing capacity, access to
capital, distribution network and international business presence as one of the
world's largest thin-film coating manufacturers will significantly benefit the
development, marketing, sales and distribution of OCA's product lines as well as
enable OCA to capitalize on domestic and international business opportunities.
There can be no assurances, however, that the OCA Shareholders will realize all
of the benefits expected from the Merger.
In evaluating the Merger, the Board of Directors and management of OCA
considered, among other things, (i) the OCLI Common Stock offered by OCLI as
consideration for the outstanding shares and options to purchase shares of OCA
Common Stock; (ii) information concerning the management, results of operations,
performance, financial condition and prospects of OCLI; (iii) the technology and
customer base of OCLI's businesses; (iv) the prospects for further growth in
value of OCLI's Common Stock; (v) current economic, industry and market
conditions affecting both OCA and OCLI; (vi) the terms of the Merger Agreement;
(vii) the tax-free nature of the Merger; and (viii) the potential impact of the
Merger on OCA's employees, suppliers and customers. Based on all of these
matters, and such other matters as OCA deemed relevant, the Board of Directors
and management of OCA unanimously support the Merger Agreement and recommend
that the holders of the OCA Common Stock vote for its approval and adoption.
Working Relationships. OCA has become well acquainted with OCLI, its
subsidiaries, its management, its products, and its business strategy. See
"BACKGROUND OF THE MERGER AND RELATED MATTERS."
Compatibility. In the opinion of OCA's management, the Merger with OCLI
will provide OCA Shareholders with a fair value for their OCA Common Stock, and
OCA will become an important part of a growing, well-respected business
operation, providing expanded opportunities for the growth and development of
OCA's employees.
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Stockholder Value. OCA Shareholders will receive OCLI Common Stock in a
tax free exchange. OCLI's Common Stock, which is traded on the NASDAQ, will
provide greater liquidity to OCA Shareholders than may be possible with OCA
Common Stock. The OCA Common Stock is not currently, and has never previously
been, traded on any established public market.
Summary. The management and the Board of Directors of OCA believe that
the terms of the Merger are fair to, and in the best interest of, OCA and its
Shareholders and unanimously have approved the Merger Agreement and the
transactions contemplated thereby.
Structure and Terms of the Merger
If the Merger is consummated, the outstanding shares of Acquisition
Corp. will be converted into new shares of OCA Common Stock (which will be held
by OCLI) and all of the previously outstanding shares of OCA Common Stock (other
than any such shares held in the treasury of OCA and shares with respect to
which dissenters' rights are perfected) will be converted into shares of OCLI
Common Stock. As a result of the Merger, OCA will become a wholly-owned
subsidiary of OCLI, and each person who previously held shares of OCA Common
Stock (other than those who perfect statutory dissenters' rights) will receive,
upon the surrender of their stock certificates to a designated agent of OCLI,
2.042 shares of OCLI Common Stock for each share of OCA Common Stock held. A
copy of the Merger Agreement (including the principal exhibits thereto) are
available without charge, upon written or oral request, from Optical Corporation
of America, 170 Locke Drive, Marlborough, Massachusetts 01752, Attention: Clerk;
telephone: (508) 481-9860, facsimile: (508) 481-3559. In order to ensure timely
delivery of the documents requested, any such request should be made by August
16, 1996.
Based on the number of outstanding shares of OCA Common Stock as of the
Record Date, and on the assumption that (i) no OCA Shareholders exercise
appraisal rights, (ii) no OCA options are exercised prior to the Effective Date,
(iii) OCA purchases, prior to the Effective Date, the 46,875 shares of OCA
Common Stock held on the Record Date by Perkin-Elmer in satisfaction of an
obligation to Perkin-Elmer which has been outstanding since August 31, 1995, and
(iv) OCA Warrants to purchase 86,000 shares of OCA Common Stock are exercised
prior to the Effective Date as contemplated by the Merger Agreement,
approximately 1,702,419 shares of OCLI Common Stock will be issued to former OCA
Shareholders upon the
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consummation of the Merger and an additional 132,731 shares of OCLI Common Stock
will be reserved for issuance upon the exercise of the OCA Options and OCA
Warrants assumed by OCLI. As a result, 11,430,548 shares of OCLI Common Stock
will then be outstanding, of which approximately 1,702,419 shares, representing
approximately 14.9% of the total, will be held by former holders of OCA Common
Stock.
Assumption of OCA Stock Options and OCA Warrants
At or prior to the Effective Date, OCLI and OCA shall take all action
necessary to cause the assumption by OCLI as of the Effective Date of the
options and warrants to purchase OCA Common Stock outstanding as of the
Effective Date (the "OCA Options" and "OCA Warrants"). Each of the OCA Options
and OCA Warrants shall be converted without any action on the part of the holder
thereof into an option to purchase shares of OCLI Common Stock (the "OCLI
Options" and "OCLI Warrants") as of the Effective Date. The number of shares of
OCLI Common Stock that each record holder of an option or warrant agreement
which represents OCA Options or OCA Warrants (the "Optionholders" and
"Warrantholders") shall be entitled to receive upon the exercise of such option
or warrant shall be a number of whole shares determined by multiplying the
number of shares of OCA Common Stock subject to such option, determined
immediately before the Effective Date, by 2.042. The exercise price of each
share of OCLI Common Stock subject to an assumed OCA Option or OCA Warrant shall
be the amount (rounded up to the nearest whole cent) obtained by dividing the
exercise price per share of OCA Common Stock at which such option or warrant is
exercisable immediately before the Effective Date by 2.042. The assumption and
substitution of OCA Options and OCA Warrants does not give the Optionholders and
Warrantholders additional benefits which they did not have immediately prior to
the Effective Date, result in any acceleration of any vesting schedule for any
OCA Option or OCA Warrant or relieve the Optionholders and Warrantholders of any
obligations or restrictions applicable to their options or warrants or the
shares obtainable upon exercise of the options or warrants. Only whole shares of
OCLI Common Stock shall be issued upon exercise of any former option or warrant
for OCA Common Stock, and the holder of such option or warrant shall receive in
cash the fair market value of the fractional share, net of the applicable
exercise price of the fractional share and applicable withholding taxes. As of
the Record Date, 41,000 shares of OCA Common Stock were subject to outstanding
OCA Options and 110,000 shares of OCA Common Stock were subject to outstanding
OCA Warrants, which would be equivalent to a total of approximately 308,342
shares of OCLI Common Stock after conversion.
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Indemnification of OCLI; Escrow
Upon consummation of the Merger, 10% of the shares of OCLI Common Stock
issued in the Merger will be placed in escrow (the "Escrowed Shares") and held
pursuant to the Indemnification and Stock Escrow Agreement attached as Exhibit A
to the Merger Agreement (the "Escrow Agreement"). The Escrowed Shares will be
reserved to provide indemnification to OCLI against costs, liabilities or
damages incurred, paid by or imposed upon OCLI, Acquisition Corp. or OCA after
the Effective Date as a result of misrepresentations, breaches of warranties and
breaches of covenants contained in the Merger Agreement, the Escrow Agreement
and the other agreements executed in connection therewith. See Article 3 of the
Merger Agreement and Section 4 of the Escrow Agreement for a description of the
representations and warranties that are covered by the Escrow Agreement.
In the event OCLI has an appropriate claim for indemnification, shares
of OCLI Common Stock held in the escrow account will be returned to OCLI in
satisfaction of the claim. The amount of indemnification to which OCLI would be
entitled with respect to an indemnifiable claim (the "Indemnifiable Amount")
shall be determined and computed by reference to the actual economic loss to
OCLI, Acquisition and/or OCA (and not just by reference to any effect on the
value of the shares of OCA) and shall be deemed to include all losses,
liabilities, expenses or costs incurred by OCLI and/or Acquisition, including
reasonable attorney's fees. For purposes of determining the number of shares of
OCLI Common Stock which would be returned to OCLI in satisfaction of a claim,
each share will be valued at the closing price of OCLI Common Stock on the
Nasdaq National Market System on the Effective Date. Thus, for purposes of
satisfying the indemnification requirements of the Escrow Agreement, the former
OCA Shareholders would not have the benefit of any increase, nor the risk of any
decrease, in the market price of shares of OCLI Common Stock after the Effective
Date. OCLI will be entitled to indemnification only if and when the total of all
Indemnifiable Amounts exceeds $250,000, at which point OCLI will be entitled to
indemnification for all Indemnifiable Amounts, and not just those in excess of
$250,000.
If a claim is made, the Escrow Agent will deliver to OCLI an amount of
shares with a total value equal to the Indemnifiable Amount within 30 days of
the demand unless written objection to such demand is received by the Escrow
Agent and OCLI from the Shareholder Representative (as defined below). If the
Shareholder Representative objects to OCLI's claim, the dispute may be submitted
to a court of competent jurisdiction if not previously settled.
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The Escrow Agreement requires the Escrow Agent to deliver to the OCA
Shareholders the Escrowed Shares remaining in escrow after the date of the
completion of the first audit of OCA covering a period ending after the
Effective Date, except that if there is a claim by OCLI at or prior to such
date, the Escrow Agent will retain Escrowed Shares in an amount sufficient to
cover such claims until they are resolved. Assuming that the Effective Date will
occur prior to October 31, 1996, which is the end of OCLI's current fiscal year,
such first audit is expected to be completed prior to the end of January 1997.
OCA is not aware of any claims threatened or asserted that it expects to give
rise to a right of indemnification under the Escrow Agreement. It should be
understood, however, that claims may arise in amounts which would result in all
of the Escrowed Shares being either distributed to OCLI or sold by the
Shareholder Representative pursuant to the Escrow Agreement, in which event none
of the Escrowed Shares would be distributed to the Shareholders at the end of
the escrow period.
Shares held in escrow will be registered in the name of the Escrow
Agent, and each former OCA Shareholder will be entitled to instruct the Escrow
Agent how to vote his shares with respect to matters placed before the OCLI
Stockholders. Former OCA Shareholders will be entitled to directly receive cash
dividends, if any, paid or declared out of earned surplus on the Escrowed Shares
during the escrow period; however, any additional shares of OCLI Common Stock or
other property that are distributed with respect to the Escrowed Shares during
the escrow period will be held pursuant to the Escrow Agreement to satisfy any
indemnification claims.
Kenneth D. Roberts, 72 Windsor Road, Wellesley Hills, Massachusetts
02181-6134, an OCA Shareholder, has agreed to serve as representative of the OCA
Shareholders for purposes of the Escrow Agreement (the "Shareholder
Representative"). Any action taken by the Shareholder Representative with
respect to the settlement of a claim against the Escrowed Shares will be binding
on all OCA Shareholders. The Shareholder Representative will have the right to
sell shares of OCLI Common Stock held in escrow in order to obtain funds to pay
any expenses incurred or anticipated to be incurred in connection with his
services.
Procedure for Exchange of Shares; Fractional Shares
Promptly following the consummation of the Merger, ChaseMellon
Shareholder Services, acting in the capacity of exchange agent (the "Exchange
Agent") will mail to each former OCA Shareholder a form of letter of
transmittal, together with instructions for the exchange of such holder's
certificates representing OCA Common Stock for certificates representing shares
of OCLI Common Stock. Upon surrender to the Exchange Agent of one or more
certificates for OCA Common Stock together with a
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properly completed letter of transmittal, the Exchange Agent will issue and mail
to the former OCA Shareholder a certificate representing a number of shares of
OCLI Common Stock that is equal to 90% of the number of shares of OCLI Common
Stock into which such shares of OCA Common Stock have been converted pursuant to
the Merger, and, where applicable, a check for the amount representing any
fractional share determined in the manner described in the following paragraph.
Under the Merger Agreement, a certificate representing the remaining 10% of the
shares of OCLI Common Stock into which an OCA Shareholder's shares of OCA Common
Stock have been converted will be placed in escrow and thereafter delivered to
the OCA Shareholder or returned to OCLI in accordance with the terms of the
Escrow Agreement. See "THE MERGER -- Indemnification of OCLI; Escrow."
Neither certificates nor scrip for fractional shares of OCLI Common
Stock shall be issued to OCA Shareholders and no OCA Shareholder shall be
entitled to any voting or other rights of a holder of shares for a fractional
share interest. Each OCA Shareholder who otherwise would have been entitled to
receive a fraction of a share of OCLI Common Stock shall receive cash in lieu
thereof, without interest, in an amount determined by multiplying such
Shareholder's fractional interest by the closing price of OCLI Common Stock as
reported on the Nasdaq National Market System on the Effective Date.
OCA SHAREHOLDERS SHOULD NOT SEND IN THEIR CERTIFICATES
UNTIL THEY RECEIVE THE LETTER OF TRANSMITTAL FORM AND
INSTRUCTIONS FROM THE EXCHANGE AGENT.
Management and Operations of OCA After the Merger
It is contemplated that after the Merger, OCA will continue to operate
as a separate entity and that OCLI does not presently intend to change the
domicile, name or operations of OCA. OCLI has advised OCA, however, that Herbert
M. Dwight, Jr., Donald A. Johnson and Joseph C. Zils will be named as directors
of OCA. OCLI currently intends that certain of the existing officers of OCA will
retain their offices after the Effective Date, but may appoint additional
officers of OCA from time to time. See "OCLI AND OCA MANAGEMENTS -- Executive
Officers and Directors of OCA."
Effective Date
The Merger shall become effective upon the later of the date of filing
of a Certificate of Merger with the Secretary of State of the State of Delaware
pursuant to Section 252 of the Delaware General Corporation Law and the date of
filing of Articles of
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Merger with the Secretary of State of the Commonwealth of Massachusetts pursuant
to Section 79 of the Massachusetts Business Corporation Law (the "Effective
Date"). It is currently expected that the Effective Date will be on or about
September 10, 1996.
Conditions to Consummation of the Merger
The respective obligations of OCLI, Acquisition Corp. and OCA under the
Merger Agreement are subject to a number of conditions specified in the Merger
Agreement. Unless all such conditions to the obligations have been satisfied or
waived by the party to the Merger Agreement benefiting from such conditions,
such party is not required to consummate the Merger and the transactions
contemplated in connection therewith.
The conditions to the obligations of OCA include the following: (i) the
representations and warranties of OCLI and Acquisition Corp. contained in the
Merger Agreement shall be true and correct in all material respects as of the
Effective Date, (ii) OCLI and Acquisition Corp. shall have performed in all
material respects their respective agreements contained in the Merger Agreement,
(iii) all necessary consents, permits or approvals necessary to consummate the
Merger by any governmental authority having jurisdiction over OCA, OCLI or
Acquisition Corp., or any other person in any contractual or other relationship
with OCA, OCLI or Acquisition Corp., shall have been granted, (iv) the OCA
Shareholders shall have approved the Merger and the execution, delivery and
performance of the Merger Agreement in accordance with the applicable laws of
the Commonwealth of Massachusetts, (v) the Registration Statement of which this
Proxy Statement/Prospectus is a part shall be effective and no stop order
suspending the effectiveness of such Registration Statement shall have been
issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, (vi) the Nasdaq National Market System shall have
approved the shares of OCLI Common Stock to be issued in the Merger for listing,
subject to official notice of issuance, (vii) no legal action or other
proceedings to restrain or prohibit the consummation of the transactions
contemplated by the Merger Agreement shall be pending or threatened, (viii) OCA
shall have received an opinion of Collette & Erickson, counsel for OCLI and
Acquisition Corp., dated the Effective Date, in form reasonably satisfactory to
OCA, and (ix) compliance with the filing and waiting period requirements of the
Antitrust Improvements Act.
The conditions to the obligations of OCLI and Acquisition Corp. include
the following: (i) OCA's representations and warranties contained in the Merger
Agreement shall be true and correct in all material respects as of the Effective
Date, (ii) OCA shall have performed in all material respects all of its
agreements contained in the Merger
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Agreement, (iii) all necessary consents, permits or approvals necessary to
consummate the Merger by any governmental authority having jurisdiction over
OCA, OCLI or Acquisition Corp. or any other person in any contractual or other
relationship with OCA, OCLI or Acquisition Corp. shall have been granted, (iv)
the Registration Statement of which this Proxy Statement/Prospectus is a part
shall be effective and no stop order suspending the effectiveness of such
Registration Statement shall have been issued and no proceedings for that
purpose shall have been initiated or threatened by the Commission, (v) the
Nasdaq National Market System shall have approved the shares of OCLI Common
Stock to be issued in the Merger for listing, subject to official notice of
issuance, (vi) the holders of not more than 10% of the shares of OCA Common
Stock shall have demanded and perfected their right to an appraisal of their OCA
Common Stock, (vii) OCLI shall have received from Deloitte & Touche LLP an
opinion to the effect that Deloitte & Touche LLP, based on certain material
representations from OCLI and OCA, is not aware of any fact that would preclude
OCLI from accounting for the Merger as a "pooling-of-interests" for accounting
purposes, (viii) OCLI shall have received an opinion of Robert DeN. Cope,
counsel for OCA and the OCA Shareholders, dated the Effective Date, in form
reasonably satisfactory to OCLI, (ix) no legal action or other proceedings to
restrain or prohibit the consummation of the transactions contemplated by the
Merger Agreement shall be pending or threatened, (x) compliance with the filing
and waiting period requirements of the Antitrust Improvements Act, and (xi)
exercise of certain of the OCA Warrants on or prior to Closing.
Conduct of OCA's Business Pending the Merger
OCA has agreed to carry on its business prior to the Effective Date in
substantially the same manner as prior to the date of the Merger Agreement. OCA
has further agreed, prior to the Effective Date to (i) maintain all of its
properties in customary repair, order and condition, reasonable wear and use and
damage covered by insurance excepted, and take all steps reasonably necessary to
maintain its intangibles, (ii) maintain insurance upon its properties and
insurance in respect of the kinds of risks currently insured against, in
accordance with its current practice, (iii) pay its taxes as they become due,
(iv) promptly advise OCLI in writing of any material adverse change in OCA's
condition (financial or otherwise), assets, liabilities, earnings, business or
prospects, (v) duly comply in all material respects with all laws, rules and
regulations applicable to OCA and to the conduct of its business, (vi) except as
required by law or by agreements existing on the date of the Merger Agreement,
preserve and maintain and prevent the disclosure or publication of any
proprietary information or trade secrets belonging to OCA, and (vii) promptly
advise OCLI of any written objection to the Merger from a Shareholder of OCA.
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Subject to certain exceptions, OCA has also agreed that prior to the
Effective Date, it will not engage in certain types of transactions without the
prior written consent of OCLI, including, among other transactions, (i) making
any changes in its management or granting any increase in compensation or bonus
to any member of management or, except in the ordinary course of business
consistent with past practice, entering into or altering or amending any
employment or consulting contract or similar agreement, (ii) entering into any
transaction or contract with any of its shareholders, officers, management,
directors or employees or their family members, (iii) creating, incurring,
assuming, guaranteeing, or otherwise becoming liable with respect to any
indebtedness other than in the ordinary course of business or pursuant to
existing financing commitments, (iv) amending its Articles of Organization or
By-Laws, (v) disposing of or encumbering any of its properties and assets other
than in the ordinary course of business, (vi) merging or consolidating with any
other corporation, or acquiring any stock, or any business, property or assets
of any other person, firm, association, corporation or other business
organization, (vii) issuing any shares of capital stock except pursuant to
existing OCA Options or OCA Warrants, or entering into any commitment or
agreement, or granting any option, warrant or right, calling for the issuance of
any shares of stock, or creating or issuing any securities convertible into any
such shares or convertible into securities in turn so convertible, (viii)
declaring any dividends on or in respect of shares of capital stock; or
redeeming, repurchasing or otherwise acquiring any shares of stock, (ix)
entering into, assuming or canceling any material contract, agreement,
obligation, lease, license or commitment except for those in the ordinary course
of business, or doing any act or omitting to do any act which would cause a
material breach of or default under any contract, commitment or obligation, (x)
amending, terminating or waiving any material right, (xi) making or committing
to make any capital expenditure, capital addition or capital improvement, (xii)
taking any action that would constitute or result in a breach of any
representation or warranty in the Merger Agreement, either as of the date made
or on the Effective Date, (xiii) taking any action directly or indirectly that
would prevent OCLI from accounting for the Merger and other transactions
contemplated by the Merger Agreement as a pooling-of-interests for accounting
purposes, (xiv) taking any action which would prevent the Merger from qualifying
as a tax-free reorganization under Section 368(a) of the Code, or (xv) taking
any action that constitutes an offer, offer to sell, offer for sale, or sale of
OCLI Common Stock except for the distribution of a preliminary or final form of
this Proxy Statement/Prospectus and related proxy materials.
Accounting Treatment
The Merger is expected to meet all of the conditions for
pooling-of-interests accounting. It is a condition to the obligation of OCLI to
consummate the Merger that
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OCLI shall have received an opinion from Deloitte & Touche LLP, OCA's
independent accountants, to the effect that Deloitte & Touche LLP, based on
material representations from OCLI and OCA, is not aware of any fact that would
preclude OCLI from accounting for the merger as a pooling-of-interests.
Regulatory Approvals
The Merger is subject to the requirements of the Antitrust Improvements
Act and the regulations thereunder, which provide that certain acquisition
transactions (including the Merger) may not be consummated until certain
information has been furnished to the Antitrust Division of the Department of
Justice (the "Antitrust Division") and the Federal Trade Commission (the "FTC"),
and certain waiting period requirements have been satisfied. OCLI and OCA have
filed the required information and material with the Antitrust Division and the
FTC, but, as of the date of this Proxy Statement/Prospectus, the applicable
waiting period has not yet expired. There can be no assurance that the waiting
period will expire without a challenge to the Merger from the Antitrust Division
or the FTC. Termination of the waiting period does not preclude the Antitrust
Division, the FTC or any other party from challenging or seeking to delay or
enjoin the Merger on antitrust or other grounds. There can be no assurance that
any such challenge, if made, would not be successful; however, neither OCLI nor
OCA believes that the Merger will violate the antitrust laws. Any such action
taken or threatened prior to the consummation of the Merger could relieve OCLI
or OCA of their respective obligations to consummate the Merger.
Resale of OCLI Common Stock Received in the Merger; Affiliates
Certain officers, directors and principal Shareholders of OCA have
entered into an agreement with OCA and with OCLI, in the form attached as
Exhibit C to the Merger Agreement, pursuant to which they have agreed that,
until such time as financial results covering at least thirty days of combined
operations of OCA and OCLI have been published by OCLI, they will not sell,
transfer or otherwise dispose of, or offer or agree to sell, transfer or
otherwise dispose of any shares of OCLI Common Stock received by them pursuant
to the Merger or any securities which may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor. Legends restricting the transfer of such shares of
OCLI Common Stock will be placed on all certificates representing such shares.
The shares of OCLI Common Stock to be issued in the Merger to the OCA
Shareholders pursuant to the Merger Agreement have been registered under the
Securities Act, thereby allowing such shares to be freely traded without
restriction by persons who
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are not deemed to be "affiliates," as that term is defined in the Securities
Act, of OCLI or of OCA. Certain officers, directors and principal Shareholders
of OCA may be deemed to be affiliates of OCA and thus "underwriters" within the
meaning of Rule 145 under the Securities Act. Such persons will not be able to
resell the OCLI Common Stock received by them in the Merger except pursuant to
an effective registration statement under the Securities Act or pursuant to
another applicable exemption therefrom. All persons who may be deemed to be
affiliates should carefully consider the limitations imposed by Rules 144 and
145 under the Securities Act prior to effecting resales of the OCLI Common
Stock.
Termination, Amendments and Expenses
The Merger Agreement may be terminated and the Merger contemplated
thereby abandoned at any time prior to the consummation of the Merger by the
mutual consent of OCLI and OCA. The Merger Agreement may be terminated by OCLI
or OCA acting alone if any of the conditions precedent to their obligations to
consummate the Merger have not been met or waived. The Merger Agreement may also
be terminated by OCLI or OCA acting alone if (i) there shall be an order of a
court in effect preventing consummation of the Merger or (ii) there shall be any
action taken, or any statute, rule, regulation or order enacted, promulgated,
issued or deemed applicable to the Merger, by a governmental entity that would
make consummation of the Merger illegal; or by OCLI or OCA if the Shareholders
disapprove the Merger or if the Closing does not occur by September 30, 1996.
In the event that the Merger is terminated in accordance with the terms
of the Merger Agreement, each party will be responsible for the costs incurred
by it in connection with the transactions contemplated by the Merger Agreement.
Certain Effects of the Merger
Upon consummation of the Merger, the holders of OCA Common Stock (other
holders of shares with respect to which statutory dissenters' rights are
perfected) will receive an equity interest in a larger diversified company of
which OCA will be a small part. OCLI will continue to be subject to the periodic
reporting requirements of the Exchange Act and, under current regulations
promulgated thereunder, will continue to furnish information to the Commission
so long as any securities of OCLI are listed on a national securities exchange
or held of record by at least 300 holders. See "AVAILABLE INFORMATION" and
"INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE." It is a condition to OCA's
and OCLI's obligations under the Merger Agreement that the shares of OCLI Common
Stock to be issued in
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connection with the Merger be listed on the Nasdaq National Market System. See
"THE MERGER -- Conditions to Consummation of the Merger."
The OCA Common Stock is not presently, and will not be after the
Merger, listed or traded in any established market.
It is expected that, following the Merger, the business and operations
of OCA will be continued by OCLI in substantially the same manner as it has been
operating. However, OCLI will continue to evaluate OCA's business and operations
following the Merger and will make such changes as are deemed appropriate.
Once the Merger is consummated, the holders of OCA Common Stock (other
than Perkin-Elmer and holders of shares with respect to which statutory
dissenters' rights are perfected) will exchange their shares of OCA Common Stock
for OCLI Common Stock. The rights of OCA Shareholders, which are presently
governed by Massachusetts law and by the Articles of Organization and By-Laws of
OCA, will be governed by Delaware law and the Amended and Restated Certificate
of Incorporation and By-Laws of OCLI. Certain differences in the rights of OCA
Shareholders will arise as a result of this change in governing law as well as
from distinctions between the Articles of Organization and By-Laws of OCA and
the Amended and Restated Certificate of Incorporation and By-Laws of OCLI. "THE
MERGER -- Certain Effects of the Merger" and "COMPARISON OF RIGHTS OF HOLDERS OF
OCLI COMMON STOCK AND OCA COMMON STOCK."
Interests of Certain Persons in the Merger
Shareholders should be aware that certain officers and directors of OCA
have interests, described below, which may present them with potential conflicts
of interest in connection with the transaction.
Upon consummation of the Merger, all members of OCA's Board of
Directors will resign, and OCLI intends to name Herbert M. Dwight, Jr., Donald
A. Johnson and Joseph C. Zils to OCA's Board. OCLI expects Mr. Dwight, who is
Chairman and President of OCLI, to serve as Chairman of OCA's Board. OCLI
currently intends that certain of the existing officers of OCA will retain their
offices after the Effective Date, but may appoint additional officers of OCA
from time to time.
OCLI does not presently intend to change the base cash compensation of
OCA's management. As of the date of this Proxy Statement/Prospectus, whether the
changes described above will have the effect of enhancing or reducing the
overall compensation of
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OCA's management cannot be determined. See "OCLI AND OCA MANAGEMENTS --
Executive Officers and Directors of OCA."
It is not anticipated that the directors of OCA will receive separate
compensation for serving in such capacities.
Certain Employee Benefits Matters
OCLI currently intends to maintain all material OCA employee benefit
plans or programs without significant modification after the Effective Date.
However, OCLI has reserved the right to modify or terminate any such benefit
plans or programs, including those described above, at any time or from time to
time after the Effective Date.
RIGHTS OF DISSENTING SHAREHOLDERS
The rights of holders of shares of OCA Common Stock who object to the
Merger are governed by Sections 86 to 98 of the Massachusetts Business
Corporation Law. The following is a summary of the applicable provisions and is
not intended to be a complete statement of such provisions and is qualified in
its entirety by reference to the full text of Sections 86 to 98, which is set
forth as APPENDIX I.
A SHAREHOLDER WHO ELECTS TO EXERCISE DISSENTERS' RIGHTS SHOULD MAIL OR OTHERWISE
DELIVER HIS WRITTEN NOTICE TO OPTICAL CORPORATION OF AMERICA, 170 LOCKE DRIVE,
MARLBOROUGH, MA 01752, ATTENTION: CLERK.
Once a Shareholder who proposes to claim his statutory rights to an
appraisal of the "fair value" of his shares of OCA Common Stock has given notice
to OCA as provided above and does not vote in favor of the Merger at the Special
Meeting, the following steps must occur (with careful attention to the time
limits imposed by the statute) for such dissenting Shareholder to perfect his
rights to be paid the "fair value" of his shares: (1) the Merger must be
approved by the required vote of the other Shareholders of OCA; (2) within ten
days after the Effective Date of the Merger, OCA must give notice that the
Merger has become effective to each Shareholder from whom it received written
notice of his election to dissent and demand payment for his shares and who did
not vote in favor of the Merger; (3) within twenty days of the date OCA mailed
such notice, the dissenting Shareholder must submit his written demand to OCA
for payment of the "fair value" of his shares; (4) within a further period of
thirty days (following the close of such twenty day period), OCA and the
dissenting Shareholder
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must attempt to agree on the "fair value" of his shares and, if they do, such
payment may be made by OCA; (5) if no agreement is reached, either OCA or the
dissenting Shareholder has a further period of four months (following the close
of such thirty day period ), in which to commence an action in the Superior
Court for Middlesex County of the Commonwealth of Massachusetts, demanding a
determination of the "fair value" of the shares of all Dissenting Shareholders
with whom OCA has been unable to agree; (6) only a single action may be
commenced and the parties must include OCA and all dissenting Shareholders with
whom OCA has been unable to agree; (7) the Superior Court then determines the
"fair value" of the OCA shares as of the day preceding the date of the vote at
the Special Meeting, and that value must exclude any element of value arising
from the expectation or accomplishment of the Merger. Finally, upon such
determination of value, OCA makes payment to the dissenting Shareholder for his
shares.
COMPARISON OF RIGHTS OF HOLDERS OF
OCLI COMMON STOCK AND OCA COMMON STOCK
The rights of the OCA Shareholders are governed by the laws of the
Commonwealth of Massachusetts, including the Massachusetts Business Corporation
Law (the "Massachusetts Law"), and by OCA's Articles of Organization, as amended
(the "OCA Articles"), and OCA's By-Laws, as amended (the "OCA By-Laws"). Upon
consummation of the Merger, the OCA Shareholders will become stockholders of
OCLI and their rights as stockholders and the internal affairs of OCLI will be
governed by the laws of the State of Delaware, including the General Corporation
Law of the State of Delaware (the "Delaware Law"), and by OCLI's Amended and
Restated Certificate of Incorporation (the "OCLI Certificate"), and OCLI's
By-Laws (the "OCLI By-Laws"), which differ in certain material respects from
Massachusetts Law, the OCA Articles and the OCA By-Laws. The following is a
summary of certain differences between the rights of OCA Shareholders compared
with those of OCLI Stockholders.
The following summary does not purport to be a complete description of
the rights of Shareholders of OCA or the rights of Stockholders of OCLI or a
comprehensive comparison of such rights, and is qualified in its entirety by
reference to the governing law, to the OCLI Certificate and By-Laws and to the
OCA Articles and By-Laws, to which Shareholders are referred. For more
information regarding reviewing or obtaining a copy of either company's charter
documents or by-laws, see "AVAILABLE INFORMATION."
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Amendment of Charter and By-Laws
Section 242 of the Delaware Law provides that stockholders may amend
their corporation's certificate of incorporation if a majority of the
outstanding stock entitled to vote thereon, and a majority of the outstanding
stock of each class entitled to vote thereon as a class, has been voted in favor
of the amendment. The Delaware Law also provides that after a corporation has
received any payment for its stock, the power to adopt, amend or repeal by-laws
resides with the stockholders entitled to vote. A corporation may, however,
grant to its board of directors in its certificate of incorporation concurrent
power to adopt, amend or repeal by-laws.
Under Massachusetts Law, amendments to a corporation's articles of
organization relating to changes in capital or its corporate name require the
vote of at least a majority of each class of stock outstanding and entitled to
vote thereon. Amendments relating to other matters require a vote of at least
two-thirds of each class outstanding and entitled to vote thereon; provided that
(i) the articles of organization or by-laws may provide for a greater proportion
and (ii) the articles of organization may provide for a lesser proportion but
not less than a majority of the outstanding shares of each class. Section 17 of
the Massachusetts Law provides that the stockholders have the power to make,
amend or repeal by-laws and, if authorized in the articles of organization of
the corporation, the by-laws may provide that directors may also make, amend or
repeal by-laws, except with respect to any provision thereof which by law, the
articles of organization or the by-laws requires action by the stockholders. Any
by-law adopted by the directors of the corporation may be amended or repealed by
the stockholders. In the event the directors make, amend or repeal any by-law,
notice of such action stating the substance of the change to the by-laws must be
given to all stockholders entitled to vote on by-law amendments not later than
the time of the giving of notice of the meeting of stockholders next following
the action by the directors.
OCLI. OCLI's Certificate expressly provides that the Board of Directors
is authorized to adopt, repeal, alter, amend or rescind OCLI's By-Laws.
OCA. OCA's Articles expressly provide that the Board of Directors is
authorized to adopt, repeal, alter, amend or rescind OCA's By-Laws.
Certain Actions Requiring Supermajority Votes
Both Delaware Law and Massachusetts Law set certain minimum voting
requirements for selected corporate actions that may be changed by appropriate
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provisions contained in a corporation's certificate of incorporation, articles
of organization and/or by-laws.
OCLI. Under the OCLI Certificate, any of the following actions shall
require the prior approval of not less than the indicated percentage of the
voting power of the outstanding shares of each class or series entitled to vote
thereon, notwithstanding that applicable law would otherwise permit such actions
with the approval of a lesser percentage: (i) removal of a director without
cause, pursuant to Section 141(k) of the Delaware Law: 90%; (ii) approval of a
merger or consolidation, pursuant to Subchapter IX of the Delaware Law: 66 2/3%.
The principal terms of a merger or consolidation may, however, be approved by a
majority of the outstanding shares of each class of the corporation, provided
the reorganization shall have been approved by all authorized directors when no
vacancies exist on the Board pursuant to Section 251 of the Delaware Law.
OCA. OCA's Articles contain no provision which changes the minimum
voting requirements established by the Massachusetts Business Corporation Law.
Board of Directors
Under both Delaware Law and Massachusetts Law, a corporation's board of
directors must consist of one or more individuals, with the number fixed by (or
in the manner provided in) the corporation's by-laws or its certificate of
incorporation or articles of organization, respectively.
OCLI. OCLI's By-Laws state that the Board shall consist of five
directors, until changed by an amendment of the By-Laws duly adopted by the
Board of Directors or by the Stockholders.
OCA. OCA's By-Laws state that the Board shall consist of such number of
directors as shall be fixed by a vote of the Shareholders at an Annual Meeting
thereof or Special Meeting called and held in lieu thereof, provided that the
number of directors shall not be less than three unless the number of
Shareholders is less than three, in which event the number of directors may
equal the number of Shareholders.
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Removal of Directors
Delaware Law permits any director or the entire board of directors to
be removed, with or without cause, by the vote of the holders of a majority of
the shares entitled to vote. Directors of a corporation with a classified board
of directors, however, can be removed only for cause unless the certificate of
incorporation provides otherwise.
Under Section 51 of the Massachusetts Law, unless the articles of
organization or by-laws provide otherwise, (i) directors and officers selected
by stockholders may be removed from their respective offices with or without
cause by the vote of the holders of a majority of the shares entitled to vote in
the election of directors or such officers, as the case may be, provided that
the directors of a class elected by a particular class of stockholders and
officers elected by a particular class of stockholders may be removed only by
the vote of the holders of a majority of the shares of the particular class of
stockholders entitled to vote for the election of such directors or officers, as
the case may be; (ii) officers elected or appointed by the directors may be
removed from their respective offices, with or without cause, by vote of a
majority of the directors then in office; and (iii) any director and any officer
elected by the stockholders, may be removed from office for cause by vote of a
majority of the directors then in office. A director or officer may be removed
for cause only after reasonable notice and an opportunity to be heard before the
body proposing to remove such director or officer.
OCLI. OCLI's By-Laws provide that any director may be removed from
office for cause only by the affirmative vote of the holders of at least eighty
percent (80%) of the combined voting power of the then outstanding shares of
stock entitled to vote generally in the election of directors, voting together
as a single class at an annual or special meeting of stockholders of the
corporation called for such purpose. Under the OCLI Certificate, removal of a
director without cause, pursuant to Section 141(k) of the Delaware Law would
require a 90% vote, with such action requiring the prior approval of not less
than the indicated percentage of the voting power of the outstanding shares of
each class or series entitled to vote thereon, notwithstanding that applicable
law would otherwise permit such action with the approval of a lesser percentage.
OCA. OCA's By-Laws provide that a director may be removed from office
(i) with or without cause by vote of the holders of a majority of the shares of
stock entitled to vote in the election of directors, or (ii) for cause by a
majority of the directors then in office. A director may be removed for cause
only after reasonable notice and an opportunity to be heard before the body
proposing removal.
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Special Meeting of the Stockholders
Under both Delaware Law and Massachusetts Law, special meetings of
stockholders may be called by the board of directors and by such other person or
persons authorized to do so by the corporation's certificate of incorporation or
articles of organization or by-laws. Under Delaware Law, if an annual meeting is
not held within 30 days of the date designated for such a meeting, or is not
held for a period of 13 months after the last annual meeting, the Delaware Court
of Chancery may summarily order a meeting to be held upon the application of any
stockholder or director.
Under Massachusetts Law, stockholders in case none of the officers is
able and willing to call a special meeting, the supreme judicial or superior
court, upon application of one or more stockholders who hold at least 10% in
interest, of the capital stock entitled to vote thereat, has jurisdiction to
authorize one or more of such stockholders to call a meeting by giving such
notice as is required by law.
OCLI. Pursuant to OCLI's By-Laws, special meetings of the stockholders
may be called by either (i) the Chairman, if there be one, or (ii) the
President, and shall be called by any such officer at the request in writing of
a majority of the Board of Directors.
OCA. OCA's By-Laws provide that special meetings of stockholders may be
called by the Board of Directors, by the Chairman or by the President. They may
also be called by the Clerk, or in case of the death, absence, incapacity or
refusal of the Clerk, by any other officer of OCA, upon receipt of written
application of one or more stockholders who hold at least 10% of the capital
stock entitled to vote at a meeting of stockholders.
Actions by Stockholders Without a Meeting
Unless a corporation's certificate of incorporation or articles of
organization provide otherwise, Delaware Law and Massachusetts Law allow any
action required to be taken, or which may be taken, at an annual or special
meeting of stockholders to be taken without prior notice and without a vote so
long as the written consent of stockholders is obtained.
OCLI. The OCLI Certificate provides that "Any action required or
permitted to be taken by the stockholders of the Corporation must be effected at
a duly called annual or special meeting of such holders and may not be effected
by any consent in writing by such holders unless such consent in writing shall
be signed either by the holders of 80% of the shares entitled to vote thereon,
or by
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the holders of the majority of the shares entitled to vote thereon, or by the
holders of the majority of the shares entitled to vote thereon where such action
has been approved by all authorized directors when no vacancies exist on the
Board."
OCA. The OCA By-Laws provide that any action required or permitted to
be taken by the Shareholders may be taken without a meeting if all Shareholders
entitled to vote on the matter consent to the action in writing and the written
consent is filed with the records of the meetings of Shareholders.
Cumulative Voting
Under Delaware Law, cumulative voting in the election of directors is
available only if specifically provided for in a corporation's certificate of
incorporation.
Under Massachusetts Law, it is generally understood that cumulative
voting is not permitted in Massachusetts corporations although Massachusetts Law
does not expressly prohibit it.
Neither the OCLI Certificate nor the OCA Articles provide for
cumulative voting.
Vote Required for Certain Mergers and Consolidations
Delaware Law, insofar as it relates to mergers and other corporate
reorganizations, does not differ substantially from Massachusetts Law. Both
Massachusetts Law and Delaware Law provide for a stockholder vote (except as
indicated below) of both the acquiring and acquired corporation to approve
mergers. In addition, while both Massachusetts Law and Delaware Law require a
stockholder vote of the selling corporation for the sale by a corporation of all
or substantially all of its assets, Massachusetts Law requires such a vote only
if the sale is not in the regular course of business. Both Massachusetts Law and
Delaware Law provide for a stockholder vote to approve the dissolution of a
corporation.
Both Massachusetts Law and Delaware Law do not require a stockholder
vote of the surviving corporation in a merger provided certain conditions are
satisfied. Massachusetts Law requires that after the merger (i) the articles of
organization of the surviving corporation will not differ from its articles
before the merger (except for amendments authorized absent shareholder
approval); and (ii) the shares to be delivered
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pursuant to the agreement of merger do not exceed 15% of the shares of the
Issuer of the same class outstanding immediately and to the effective date of
the merger; and (iii) the issue of such shares by the directors has been
authorized in accordance with Massachusetts Law. Delaware Law does not require a
shareholder vote of the surviving corporation in a merger if (i) the merger
agreement does not amend the existing certificate of incorporation; (ii) each
outstanding or treasury share of the surviving corporation before the merger is
unchanged after the merger; and (iii) the number of shares to be issued by the
surviving corporation in the merger does not exceed 20% of the shares
outstanding immediately prior to such issuance.
Both Massachusetts Law and Delaware Law do not require a stockholder
vote for certain "short-form mergers" between a parent company and its
subsidiary. Both Massachusetts Law and Delaware Law require that the subsidiary
be 90% owned by the parent.
Class Vote for Certain Reorganizations
Generally, neither Massachusetts Law nor Delaware Law require class
voting. However, Massachusetts Law provides that class or series voting as a
separate voting group is required (i) on a plan of merger if the plan contains a
provision which, if contained in a proposed amendment to the articles of
organization, would entitle the class or series to vote as a separate voting
group on the proposed amendment; or (ii) on a plan of share exchange if the
shares of such class or series of shares are to be converted or exchanged under
such plan or if the plan contains any provisions which, if contained in a
proposed amendment to articles of organization, would entitle the class or
series to vote as a separate voting group on the proposed amendment. Delaware
Law requires class voting where the transaction involves an amendment to the
certificate of incorporation which would increase or decrease the aggregate
number of authorized shares of the class, increase or decrease the par value of
the shares of the class, or alter or change the powers, preferences or special
rights of the shares of the class so as to affect them adversely.
Dissenters' Rights
Under both Massachusetts Law and Delaware Law, a dissenting stockholder
of a corporation participating in certain transactions, under varying
circumstances, may receive cash in the amount of the fair value of his or her
shares (as determined by a court) in lieu of the consideration otherwise
receivable in any such transaction. Under Delaware Law, dissenters' rights are
not available with respect to a plan of merger or share exchange or a proposed
sale or exchange of property to holders of shares of any class or series which,
on the record date fixed to determine the stockholders entitled to vote at the
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meeting of stockholders at which such action is to be acted upon or to consent
to any such action without a meeting, were either (i) listed on a national
securities exchange or designated as a national market system security on an
interdealer quotation system by the National Association of Securities Dealers,
Inc., or (ii) held of record by more than 2,000 stockholders. In addition, under
Delaware Law, dissenters' rights are not available for any shares of stock of
the constituent corporation surviving a merger if the merger did not require
stockholder approval of the surviving corporation. However, they are available
for the shares of stock of the constituent corporation which are not owned by
the parent corporation merging into itself a subsidiary of which is owns at
least 90% of the shares of each class of stock outstanding.
Massachusetts Law also provides dissenters' rights in connection with
(i) sales of substantially all of a corporation's assets, (ii) amendments to the
articles of organization that may adversely affect certain rights of preferences
of stockholders and (iii) control-share acquisitions. Delaware Law does not
provide dissenters' rights with respect to any sale of assets, reclassification
of stock or amendment to the certificate of incorporation.
Anti-Takeover Statutes
OCLI. OCLI is subject to Section 203 of the Delaware Law ("Section
203"), which regulates large accumulations of shares, including those made by
tender offers. Section 203 may have the effect of significantly delaying a
purchaser's ability to acquire the entire interest in OCLI if such acquisition
is not approved by OCLI's Board of Directors. In general, Section 203 prevents
an "Interested Stockholder" (defined generally as a person with 15% or more of a
corporation's outstanding voting stock) from engaging in a "Business
Combination" (defined below) with a Delaware corporation for three years
following the date such person became an Interested Stockholder. For purposes of
Section 203, the term "Business Combination" includes sales, or other
dispositions to the Interested Stockholder (except proportionately with the
corporation's other stockholders) of assets of the corporation or a subsidiary
equal to 10% or more of the aggregate market value of the corporation's
consolidated assets or its outstanding stock; the issuance or transfer by the
corporation or a subsidiary of stock of the corporation or such subsidiary to
the Interested Stockholder (except for transfers in a conversion or exchange or
a pro rata distribution or certain other transactions, none of which increase
the Interested Stockholder's proportionate ownership of any class or series of
the corporation's or such subsidiary's stock); or receipt by the Interested
Stockholder (except proportionately as a stockholder), directly or indirectly,
of any loans, advances, guarantees, pledges or other financial benefits provided
by or through the corporation or a subsidiary.
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The three-year moratorium imposed on Business Combinations by Section
203 does not apply if: (a) prior to the date on which such stockholder becomes
an Interested Stockholder the Board of Directors approves either the Business
Combination or the transaction which resulted in the person becoming an
Interested Stockholder; (b) the Interested Stockholder owns 85% of the
corporation's voting stock upon consummation of the transaction which made him
or her an Interested Stockholder (excluding from the 85% calculation shares
owned by directors who are also officers of the target corporation and shares
held by employee stock plans which do not permit employees to decide
confidentially whether to accept a tender or exchange offer); or (c) on or after
the date such person becomes an Interested Stockholder, the Board approves the
Business Combination and it is also approved at a stockholder meeting by holders
of two-thirds of the voting stock not owned by the Interested Stockholder.
Under Section 203, the restrictions described above do not apply if,
among other things, the corporation's original certificate of incorporation
contains a provision expressly electing not to be governed by Section 203.
OCLI's Certificate does not contain such a provision. OCLI could, at its option,
exclude itself from the coverage of Section 203 by amending its Certificate or
By-Laws at any time to exempt itself from coverage; but a by-law or charter
amendment may not become effective for a period of twelve months after the
amendment is adopted. The restrictions described above do not apply to certain
Business Combinations proposed by an Interested Stockholder following the
announcement or notification of one of certain extraordinary transactions
involving the corporation and a person who had not been an Interested
Stockholder during the previous three years or who became an Interested
Stockholder with the approval of a majority of the corporation's directors.
Section 203 is currently under challenge in lawsuits arising out of
ongoing takeover disputes, and it is not yet clear whether and to what extent
its constitutionality will be upheld by the courts. Although the United States
District Court of Delaware has consistently upheld Section 203, the Delaware
Supreme Court has not yet considered the issue. OCLI believes that, so long as
the enforceability of Section 203 is upheld, Section 203 will encourage any
potential acquirer to negotiate with OCLI's Board of Directors prior to
effecting any takeover attempt. Section 203 also should have the effect of
limiting the ability of a potential acquirer to make a two-tiered bid in which
all of OCLI's stockholders would not be treated equally. Section 203 should also
discourage certain potential acquirers unwilling to comply with its provisions.
Stockholders should note that the application of Section 203 to OCLI will confer
upon the Board the power to reject a proposed Business Combination, even though
a potential acquirer may be offering a substantial premium for OCLI's shares
over the then-current market price.
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OCA. Massachusetts Law prohibits a corporation with 200 or more
stockholders from engaging in a "Business Combination" (as defined in
Massachusetts Law) with an "Interested Stockholder" (defined generally as a
person who, together with affiliates and associates, owns 5% or more of such
corporation's outstanding voting stock, or as an affiliate or associate of such
corporation who, together with affiliates and associates, owned 5% or more of
such corporation's outstanding voting stock at any time within the immediately
preceding three-year period) for three years following the date such person
became an Interested Stockholder. The provision is not applicable when (i) prior
to the date the stockholder became an Interested Stockholder, the board of
directors of the corporation approved either the Business Combination or the
transaction that resulted in the stockholder becoming an Interested Stockholder,
(ii) upon consummation of the transaction that resulted in the stockholder
becoming an Interested Stockholder, such Interested Stockholder owned at least
90% of the outstanding voting stock of the corporation, not including shares
owned by directors who are also officers and by certain employee stock plans or
(iii) on or subsequent to the date the stockholder becomes an Interested
Stockholder, the Business Combination is approved by the board of directors of
the corporation and authorized at a meeting of stockholders, and not by written
consent, by the affirmative vote of the holders of at least two-thirds of the
outstanding voting stock entitled to vote thereon, excluding shares owned by the
Interested Stockholder. These restrictions generally do not apply to Business
Combinations with an Interested Stockholder that are proposed subsequent to the
public announcement of, and prior to the consummation or abandonment of, certain
mergers, sales of a majority of a corporation's assets or tender offers for 50%
or more of a corporation's voting stock. The Massachusetts Law allows
corporations to elect not to be subject to the preceding provisions of the
Massachusetts Law.
Stockholder Rights Plan
OCLI. In November 1987, OCLI adopted a Stockholder Rights Plan which
expires in November 1997, under which OCLI declared a dividend of preferred
stock purchase rights which only become exercisable, if not redeemed, ten days
after a person or group has acquired 20% or more of OCLI's Common Stock or the
announcement of a tender offer which would result in a person or group acquiring
30% or more of OCLI's Common Stock. Under certain circumstances, the plan allows
stockholders, other than the acquiring person or group, to purchase OCLI's
Common Stock or the common stock of the acquirer having a market value of twice
the exercise price.
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These rights, commonly referred to as a "poison pill," may have certain
anti-takeover effects. See "DESCRIPTION OF OCLI'S CAPITAL STOCK --Preferred
Stock and Stockholder Rights Plan."
OCA. OCA does not have a comparable stockholder rights agreement.
Preemptive Rights
OCLI. Delaware Law generally permits a Delaware corporation to provide
its stockholders with the preemptive right to subscribe to capital stock or
securities convertible into stock in its certificate of incorporation. The OCLI
Certificate does not provide for preemptive rights.
OCA. Massachusetts Law generally provides that no stockholder shall
have any preemptive right to acquire stock of the corporation except to the
extent provided in the articles of organization or in a by-law adopted by and
subject to amendment only by the stockholders.
Dividends
OCLI. Delaware Law provides that a corporation, unless otherwise
restricted by its certificate of incorporation, may declare and pay dividends
out of surplus, or if no surplus exists, out of net profit for the fiscal year
in which the dividend is declared or the preceding fiscal year (provided that
the amount of capital of the corporation following the declaration and payment
of the dividend is not less than the aggregate amount of the capital represented
by the issued and outstanding shares of all classes having preference upon the
distribution of assets). Additionally, Delaware Law provides that, in general, a
corporation may redeem or repurchase its shares only out of surplus.
OCA. Massachusetts Law describes no special sources for distributions.
It specifies instead the liabilities which can result from an improper
distribution by a corporation, both for the directors who authorize the
distribution and the stockholders who receive it. Generally, an improper
distribution is one made when a corporation is insolvent or would be rendered
insolvent by part or all of the distribution. To the extent of the damage to the
corporation, the directors who authorize it and the stockholders who receive it
are jointly and severally liable to the corporation.
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Limitation on Directors' Liability; Indemnification
In general, Delaware Law contains more extensive indemnification
provisions than does Massachusetts Law. Under Delaware Law, the corporation may
include in its certificate of incorporation a provision eliminating or limiting
the personal liability of a director to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director under a broad range
of circumstances. OCLI's Certificate includes a provision which eliminates the
directors' liability for monetary damages for a breach of the directors' duty of
care to OCLI or its stockholders (the "Delaware Duty of Care Provision"). As a
result of the Delaware Duty of Care Provision, no director of OCLI will be
liable for monetary damages for negligence or gross negligence occurring after
the Merger. Each director will remain personally liable to OCLI for failure to
act in good faith or to comply with his or her duty of loyalty to OCLI. The
directors will continue to be subject to equitable remedies, although such
remedies in some circumstances may not be available as a practical matter. In
addition, under Delaware Law, each director will remain liable for engaging in a
transaction from which such director derives an improper personal benefit or for
engaging in intentional misconduct or a knowing violation of law. Moreover, the
Delaware Duty of Care Provision also will not limit directors' liability for
violations of the federal securities laws. With regard to directors who are also
officers of OCLI, these persons would be insulated from liability only with
respect to their conduct as directors and would not be insulated from liability
for acts or omissions in their capacity as officers.
Section 67 of the Massachusetts Law provides that indemnification of
directors, officers, employees and other agents of a corporation, and persons
who serve at its request as directors, officers, employees or other agents of
another organization, may be provided by it to whatever extent specified in or
authorized by (i) the articles of organization, (ii) a by-law adopted by the
stockholder or (iii) a vote adopted by the holders of a majority of the shares
of stock entitled to vote on the election of directors. OCA's By-Laws provide
for indemnification of its directors, officers and employees to the full extent
permitted by the Massachusetts Law. Section 13(b) of the Massachusetts Law
allows a corporation to include in its articles of organization a provision that
limits or eliminates the personal liability of directors to the corporation and
its Shareholders for monetary damages for breach of fiduciary duty as a
director. OCA's Articles include provisions eliminating the personal liability
of OCA's directors for monetary damages resulting from breaches of their
fiduciary duty except (i) for any breach of the director's duty of loyalty to
OCA or its Shareholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Sections 61 and 62 of
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the Massachusetts Law, or any amendatory or successor provisions thereto, or
(iv) with respect to any transaction from which the director derived an improper
personal benefit.
Delaware Law authorizes the corporation to indemnify any person or
party to any threatened, pending or completed action, suit or proceeding, other
than an action by or in the right of the corporation, by reason of the fact that
he or she was serving as a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation at a like
position of another corporation (the "Indemnitee") against expenses, judgments,
fines and amounts paid in settlement actually and reasonably incurred in
connection with such action if the Indemnitee acted in good faith and in a
manner he or she reasonably believed to be in, or not opposed to, the best
interests of the corporation (or, with respect to a criminal action, had no
reasonable cause to believe his or her conduct was unlawful). Massachusetts Law
contains a similar provision which authorizes the corporation to indemnify such
person against liability incurred in connection with such action if he or she
acted with the same requisite conduct.
Delaware Law also authorizes the corporation to indemnify such person
in connection with any threatened, pending or completed action by or in the
right of the corporation to procure a judgment in its favor against expenses
actually and reasonably incurred by him or her in connection with the defense or
settlement of such action if he or she acted with the requisite conduct.
In Massachusetts, the absence of an express provision for
indemnification does not limit any right of indemnification which exists
independently of the Massachusetts Law. Thus, the stockholders control
indemnification of personnel selected by them and the directors control
indemnification of all other personnel unless such indemnification is restricted
by the corporation's articles of organization or by-laws.
Under both Massachusetts Law and Delaware Law, the corporation must
provide for indemnification on a case by case basis after a determination that
the Indemnitee met the applicable standard of conduct. Similarly, both laws
provide that the determination is made in the first instance by the board of
directors by a majority vote of a quorum consisting of directors who were not
parties to such proceeding. However, under Massachusetts Law, if such a quorum
is not obtainable, or, even if obtainable if the board of directors (including
directors who are parties) so directs, the determination must be made by
majority vote of a committee duly designated by the board of directors
consisting solely of two or more directors not at the time parties to the
proceeding, by independent legal counsel or finally by the stockholders. Under
Delaware Law, if a quorum is not obtainable, or, even if obtainable a quorum of
disinterested directors so
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directs, the determination must be made by independent legal counsel in a
written opinion or by the stockholders.
Furthermore, both Massachusetts Law and Delaware Law provide that a
corporation may make other or further indemnification or advancement of expenses
of any of its directors, officers, employees or agents under any by-law,
agreement, vote of stockholders or disinterested directors, or otherwise both as
to action in an official capacity and as to action in another capacity while
holding such office. OCLI has indemnification agreements with its directors and
officers that provide for the maximum indemnification allowed by law.
OCLI's Certificate takes advantage of the permissive Delaware
indemnification laws and provides that: (i) OCLI is required to indemnify its
officers and directors to the full extent permitted by law; and (ii) expenses
incurred in defending a civil or criminal action, suit or proceeding may be paid
by OCLI in advance of the final disposition of such action, suit or proceeding
upon receipt of an undertaking by or on behalf of the director or officer to
repay such amount if it shall ultimately be determined that he is not entitled
to be indemnified by OCLI.
OCA's Articles contain no specific provision regarding indemnification.
OCA's By-Laws grant the right to indemnification to each person elected or
appointed a director, officer, employee or agent of the corporation except under
circumstances where such individual shall be determined, as provided in the
By-Laws, not to have acted in the best interest of OCA.
Loans to Officers and Employees
Both Massachusetts Law and Delaware Law provide that a corporation may
make loans to, or guarantee the obligations of, or otherwise assist, its
officers and other employees and those of its subsidiaries when such action, in
the judgment of the corporation's board of directors, may reasonably be expected
to benefit the corporation. However, while Massachusetts Law authorizes the
corporation to make a loan to, or guarantee the obligations of, or otherwise
assist a director as well, Delaware Law applies only to those directors who also
are officers or employees of the corporation or subsidiary.
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Voting By Ballot
Under Delaware Law, each stockholder has the right to require a vote by
written ballot for the election of directors at a stockholder meeting unless
otherwise restricted as provided in the certificate of incorporation.
There is no similar voting provision in the Massachusetts Law.
Inspection of Shareholder Lists
Massachusetts Law provides that a stockholder may inspect the
stockholders' list if (i) his demand is made in good faith and for a proper
purpose; (ii) he describes with reasonable particularity his purpose; and (iii)
the stockholders' list is directly connected with his purpose. Additionally,
Massachusetts Law provides to any stockholder an absolute right of inspection of
the stockholders' list for a ten-day period preceding a stockholder meeting.
Delaware Law provides to any stockholder of record the right to inspect the
stockholder list of the corporation for any purpose germane to the meeting for a
ten-day period preceding a stockholder meeting.
DESCRIPTION OF OCLI'S CAPITAL STOCK
The authorized capital stock of OCLI as of the Record Date consisted of
30,000,000 shares of authorized common stock, $.01 par value ("OCLI Common
Stock"), of which 9,728,129 shares were issued and outstanding, and 100,000
shares of authorized preferred stock, $.01 par value, ("OCLI Preferred Stock")
of which 12,000 shares of 8% Series C Convertible Redeemable Preferred Stock(the
"Series C Preferred Stock") were issued and outstanding.
Common Stock
Holders of OCLI Common Stock are entitled to one vote per share on all
matters to be voted upon by the stockholders. There are no cumulative voting
rights. The holders of OCLI Common Stock have no preemptive rights or rights to
convert their OCLI Common Stock into any other securities. The OCLI Common Stock
is not subject to redemption. Upon any liquidation, distribution or sale of
assets, dissolution or winding up of OCLI, the holders of OCLI Common Stock are
entitled to share pro rata in the assets of OCLI available for distribution
after provision for the payment of creditors and subject to the preferential
rights of any then outstanding OCLI Preferred Stock. The outstanding shares of
OCLI Common Stock are fully paid and nonassessable. There are no restrictions on
transferability contained in OCLI's Certificate or OCLI's By-Laws.
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Subject to preferences that may be applicable to any outstanding shares of OCLI
Preferred Stock, holders of OCLI Common Stock are entitled to receive ratably
such dividends as may be declared by the Board of Directors out of funds legally
available therefor. The OCLI Common Stock is listed on the Nasdaq National
Market System.
As of the Record Date, there were outstanding 9,728,129 shares of OCLI
Common Stock. Additional information concerning the rights of holders of OCLI
Common Stock, is set forth under "COMPARISON OF RIGHTS OF HOLDERS OF OCLI COMMON
STOCK AND OCA COMMON STOCK."
Preferred Stock
OCLI has authorized 100,000 shares of preferred stock, $.01 par value,
of which 10,000 shares were designated Series A Preferred Stock in connection
with OCLI's Stockholder Rights Plan. None of the Series A Preferred Stock is
issued. Additionally, 15,000 shares were designated Series B Preferred Stock, of
which 8,350 shares were issued and subsequently converted to OCLI Common Stock.
None of the Series B Preferred Stock is currently issued and outstanding.
In May 1995, as part of the financing of the acquisition of a
controlling interest in Flex Products, Inc., OCLI issued 12,000 shares of Series
C Preferred Stock in consideration for $1,000 per share. The Series C Preferred
Stock is convertible into OCLI Common Stock at any time by the holders at a
conversion price of $10.50 per common share (subject to adjustment in certain
circumstances). The Series C Preferred Stock is redeemable by OCLI commencing
two years from the date of issuance (if the OCLI Common Stock is trading at $17
per share or more for any 20 consecutive day period) and, after three years,
unconditionally, at 108% of the purchase price per share, declining to 100% over
four years. The holders of the Series C Preferred Stock are entitled to receive
a cumulative annual dividend of $80 per share, which is payable quarterly and
has preference to any other dividends being paid by OCLI.
The holders of shares of Series C Preferred Stock are not entitled to
notice of any stockholders' meetings or to vote on any matter, except as
provided by law or as otherwise specified in the Series C Preferred Stock
Certificate of Designation, Preferences and Rights. If, however, dividends on
the Series C Preferred Stock are in arrears in an amount equal to four quarterly
dividends, a default period would begin in which the holders of the Series C
Preferred Stock, voting as a class, would have the right to elect the greater of
two directors or a number of directors not less than 25% of the total number of
authorized directors. Such right terminates upon expiration of the default
period. The holders of the Series C Preferred Stock are entitled to a
liquidation
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preference equal to $1,000 per share plus accrued and unpaid dividends. OCLI may
not create any series or class of capital stock ranking prior or equal to the
Series C Preferred Stock unless the terms of any such series or class is
approved by the holders of not less than two-thirds of the outstanding shares of
Series C Preferred Stock voting separately as a class.
Pursuant to the terms of a Stock Purchase Agreement entered into with
the holders of the Series C Preferred Stock, OCLI may not pay any dividends or
make any other distributions in respect of, or redeem or repurchase any,
securities of OCLI to the extent such payments exceed 25% of the difference
between (a) aggregate "Net Income" (as such term is defined in the Stock
Purchase Agreement) of OCLI after January 31, 1995 and (b) all losses suffered
by OCLI during such period.
Stockholder Rights Plan
OCLI. In November 1987, OCLI adopted a Stockholder Rights Plan which
expires in November 1997, under which OCLI declared a dividend of preferred
stock purchase rights which only become exercisable, if not redeemed, ten days
after a person or group has acquired 20% or more of OCLI Common Stock or the
announcement of a tender offer which would result in a person or group acquiring
30% or more of OCLI Common Stock. Under certain circumstances, the plan allows
stockholders, other than the acquiring person or group, to purchase OCLI Common
Stock or the common stock of the acquirer having a market value of twice the
exercise price.
RELATIONSHIP AND TRANSACTIONS BETWEEN OCLI AND OCA
OCLI and OCA have worked together on several projects over the past six
years. Beginning in 1990, OCLI subcontracted with OCA for the coating of missile
domes for the U.S Department of Defense. Under this arrangement, OCA fabricated
the missile domes in its facilities in Garden Grove, California and sent them to
OCLI to be coated at it facilities in Santa Rosa. Since the initial order, OCLI
has received several follow-up orders from OCA for the coating of the missile
domes in addition to several other smaller coating subcontracts for which OCLI
has received orders worth approximately $657,000 since 1992, including
approximately $40,000 of sales after the second quarter of 1996.
Beginning in 1995, OCA subcontracted with OCLI for the supply of
optical subassemblies and optical fabrication. In fiscal 1995 OCLI placed orders
with OCA worth approximately $75,000 and orders year-to-date in fiscal 1996 are
worth $407,000,
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including approximately $200,000 of open orders at the end of the second quarter
of 1996.
In addition to being both suppliers and customers to each other over
the last several years, OCA and OCLI have both competed for optical filter
business in the defense, aerospace, medical instrumentation and office
automation market segments along with other companies including, but not limited
to, Barr Associates, Optical Filter Corporation, Varo, and Deposition Sciences,
Inc.
BUSINESS OF OCA
General
OCA develops, manufactures and markets optical and electro-optical
products, components and subsystems for a wide range of applications in the
medical, telecommunication, industrial, scientific, aerospace and defense
industries. OCA focuses on four categories of product and related services: (1)
Optical Filters, (2) Electro-Optical Sensors and Cameras, (3) Optical
Correlators and (4) Fiber Optics Communications Devices. OCA also enjoys a
significant business in optical components and subsystems for commercial and
governmental markets.
Products and Services
Optical Filters
OCA designs, manufactures and markets optical filters which incorporate
proprietary technology or multilayer thin film coatings. Optical thin film
coatings control and enhance light energy by altering the transmission,
reflection and absorption of the various wavelengths of light to achieve a
desired optical effect. OCA has developed and patented a thin-film coating
process called MicroPlasmaAE which permits OCA a distinct competitive advantage
in providing high quality optical filters to customers in various industries.
Optical filters are used as components in instruments and systems manufactured
by original equipment manufacturers, principally to bio-medical instrument
manufacturers. OCA has steadily increased its production capacity in this area
and has achieved a high level of automation. OCA expects that an increasing
share of the filters which it manufactures will be used in the production of its
Fiber Optic Communication Devices.
OCA's line of optical filters runs from the ultraviolet through the
visible and into the infrared spectrum of light. OCA also makes filters which
block certain wavelengths of light for eye-safe laser protection devices, and
passive intrusion filters which detect
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heat from bodies approaching a field of view and will activate a switching
mechanism. These products are often termed motion detection devices but in fact
rely on heat transmitted by a source at an infrared wavelength. Optical filters
are produced for a highly competitive market.
Electro-Optical Sensors and Cameras
OCA believes that it is recognized by its customers as an important
supplier of lightweight electro-optical sensor systems for airborne and
spaceborne applications. This recognition stems from OCA's participation in the
Brilliant Pebbles and Clementine Programs in the late 1980s and early 1990s
sponsored by the Strategic Defense Initiative/Ballistic Missile Division, which
allowed OCA to enhance its already strong opto-mechanical background with
state-of-the-art, in-house electronics design and fabrication capabilities.
OCA's color video cameras set a new standard for performance and low
mass. OCA plans to encourage use of this product and technology in both space
related and commercial applications.
OCA's experience with lightweight sensors positions it to capitalize
upon the shift from small numbers of large, costly spacecraft to much larger
numbers of small, relatively inexpensive spacecraft for both government and
commercial applications. OCA anticipates that a substantial fraction of its
future business can be derived from this technology base.
Optical Correlators
OCA has an established reputation in the field of Optical Processing.
Beginning in 1985, OCA became one of the original system hardware innovators in
this field, transforming theoretical analysis and scientific research into
development efforts for field deployable hardware which could be used for target
recognition and target tracking in missile systems. The fundamentals of the
technology employ the inherent strength of optics to process an entire scene of
data instantaneously (at the speed of light). Analytical speed combined with
relatively low power and packaging requirements, yields an attractive technology
for programs which incorporate optical processing. OCA will continue to support
government applications using optical processing for guidance and navigation and
radar imagery analysis; in particular, because optical processing provides the
foundation of its commercial correlator line.
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The potential for commercial applications is found in factory
automation, security, medical imagery and remote sensing imagery. OCA is
developing solutions for each of these applications. For example, OCA will
introduce in 1996 a commercial optical processor. The flash 256 Optical Fourier
Processor is an entirely new product for the image processing industry, with
significant competitive implications.
Fiber Optic Communications Devices
OCA has recently introduced a new line of optical devices for use in
the fiber optic communications market. OCA manufactures four devices
incorporating filters produced by OCA using its patented MicroPlasma(R) coating
process. These devices are (a) a Channel Add/Drop Filter, (b)a Tunable Bandpass
Fiber Optic Filter, (c) a 4 Channel Dense Wavelength Division Multiplexer (DWDM)
and (d) an 8 Channel Dense Wavelength Division Multiplexer (DWDM). These devices
generally operate in the 1530 to 1560 nanometer (nm) range and are unique
because of their ability to operate in a passive mode.
In addition to their narrow bandwidths, their low cross-talk (the
result of OCA's ability to produce 3 cavity and 5 cavity filter designs), low
insertion loss and durability, these devices also demonstrate high wavelength
stability and minimal temperature shift (less than .001 nm/"C temperature
shift). This minimal shift is the result of OCA's MicroPlasma(R) process.
OCA believes its devices are enabling technology which will accommodate
significantly increased data transmission over the existing installed base of
fiber optic cable. While other DWDM devices exist which might compete with those
manufactured by OCA, to date OCA believes its devices are the most advanced, and
filter based devices appear to have a technical advantage over alternative
technologies.
Optical Components and Subsystems
OCA plays significant role in the design and manufacture of leading
edge optical products. OCA has been selected repeatedly by leading commercial,
scientific and defense organizations to work cooperatively under formal teaming
agreements and strategic alliances to develop innovative solutions to optical
design, packaging and manufacturing problems for a wide range of product
applications. The importance of the technologies developed during these projects
continues to grow with the emergence of the small satellite industry for
commercial applications such as Earthwatch. OCA is currently developing the
telescope for the Earthwatch remote sensor which is expected to provide 3 meter
resolution photographs of the earth for commercial users.
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OCA's development of advanced infrared search and track (IRST) and
missile launch detection systems in cooperation with Westinghouse and Lockheed
Martin addresses a growing market for the protection and improvement of our
nation's existing air defense capabilities.
Research and Development
OCA focuses its research and development activities on the development
of new proprietary products, enhancements to existing products, and enhancements
of core technologies. OCA funds these activities from both internal sources and
external contracts.
Manufacturing
OCA's approach is to identify and perform internally those functions
which enable it to maintain control over critical portions of the production
process and which add value to its products. At the same time, OCA's purchasing
departments make every effort to insure that qualified suppliers are available
for functions which are better or more economically performed by others. Both
OCA's California and Massachusetts operations have complete, stand alone
capabilities appropriate to the support of the varying requirements of its
Business and customers. Engineering, manufacturing, sales and marketing
personnel are available at both locations.
In California, OCA designs, manufactures, costs, assembles and tests
electro-optical subsystems and complex electro-optical assemblies for customer
use in infrared, visible and ultraviolet systems. OCA's fabrication capabilities
are sophisticated and include Single Point Diamond Turning, electroless nickel
plating and Beryllium Hot Isostatic Pressing, and allow OCA to produce compact
and lightweight subsystems without the degree of subcontracting required by most
of its competitors.
In Massachusetts, OCA is a leading provider of thin film products for
OEM customers. OCA's state-of-the-art coatings, combined with its proprietary
automation processes, assure a solid market presence. Additional capacity is
being added to meet the forecasted demand for OCA's new products in the fiber
optic communications marketplace. The enabling technology is the optical filter
and OCA produces filters routinely that equate to over $10 million in annual
sales. The packaging capability to support the DWDM product growth is fully
operational.
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Sales, Marketing and Customer Support
The major products of OCA, as well as the Commercial and Government
Optics, are all supported by a direct technical sales force located at OCA's
California and Massachusetts operations. On an international basis, OCA
maintains representatives throughout Europe, Asia and South America.
Patents and Intellectual Property
OCA believes the success of its business depends more upon the technical
competence and creativity of its employees than on its patents, trademarks and
copyrights. Nevertheless, OCA seeks patents, when appropriate, on inventions
concerning new products and improvements as part of its ongoing research,
development and manufacturing activities. OCA also relies upon trade secret
protection for its confidential and proprietary information. OCA routinely
enters into confidentiality agreements with other entities and individuals.
Changes In and Disagreements with Accountants
OCA has not had any changes in or disagreements with accountants during
the periods presented.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF OCA
Overview
Current OCA management has been responsible for operations since March of
1990. In the past six years, the management team has devoted its attention to
the transformation of a diverse operation, with heavy emphasis on government
contracts, into a unified business with significant commercial product lines.
OCA has materially improved its ability to withstand the fluctuations of
revenues and profits ordinarily expected from reliance on government contracts.
Nine Months ended March 31, 1996 and March 31, 1995
Net Sales. Net sales for the nine months ended March 31, 1996 were
$21.6 million as compared to $19.7 million for the corresponding period a year
ago, representing a 9% increase. This increase was primarily attributable to
increased sales of optical filter products used in biomedical instruments,
expanded sales of commercial optical components and subsystems used in high
precision semiconductor machinery and analytical instruments and sales from our
new product line of fiber optic products used by the telecommunications
industry. Sales of fiber optic products, mainly wavelength division multiplexer
devices, commenced with a low volume of prototype quantities
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during the nine months ended March 31, 1996. During this period OCA began to
ramp up for production of fiber optic products by adding personnel and
equipment.
During the nine months ended March 31, 1996 the combined revenues from
government optical components and subsystems and government electro-optical
sensors and cameras were virtually unchanged from the corresponding period a
year ago.
Gross Profit. Gross profit as a percentage of net sales was 27.6%
during the nine months ended March 31, 1996, a 3.0% improvement over 24.6% in
the corresponding period in 1995. In 1996 the gross profit percentage improved
as a result of increased sales of optical filter products incorporating our
patented MicroPlasma(R) coating process which result in higher margins, and more
favorable pricing of government contracts for optical components and subsystems.
Research and Development. Research and development expenditures for the
nine months ended March 31, 1996 increased by $244,000, or 248%, compared to the
corresponding period a year ago. As a percentage of net sales, research and
development expenditures for the same periods were 5.4% in 1996 compared to 1.7%
in 1995. The increased research and development expenditures relate to our
ongoing development of fiber optic products for the telecommunications industry.
Selling and Administrative. Selling and administrative expenses for the
nine months ended March 31, 1996 increased by $244,000 or 7%, compared to the
corresponding period a year ago. As a percentage of net sales, these
expenditures for the same periods were 17.4% in 1996 compared to 17.8% in 1995,
representing a slight decrease.
Earnings from Operations. The increased gross profit from additional
volume as well as improved product mix and pricing was almost entirely offset by
a higher level of research and development. Therefore, earnings from operations
remained virtually unchanged, at $1.0 million, for the nine month period ended
March 31, 1996 versus the same period in 1995.
Interest Expense. Interest expense increased during the nine months
ended March 31, 1996 by $76,000, or 14%, compared to the corresponding period a
year ago. The increase is due to a higher level of borrowings, and specifically
relate to $56,000 of interest accrued on the obligation to redeem common stock
held by The Perkin-Elmer Corporation, and $20,000 for other borrowings.
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Provision For Income Taxes. OCA has a net operating loss carryforward
for federal and state income tax purposes, thus the effective tax rate is not
material. The income taxes for both periods shown are comparable.
Net Income. OCA had net income of $384,000 for the nine months ended
March 31, 1996 compard to $435,000 for the corresponding period a year ago, a
decrease of $51,000. This reduction in net income is principally a result of
increased research and development expenditures and interest expense, offset by
higher gross profit arising from increased sales.
Twelve Months ended June 30, 1995 and June 30, 1994
Net Sales. Net sales for the year ended June 30, 1995 were $26.5
million as compared to $25.2 million for the prior year, representing a 5%
increase. OCA concentrated its efforts on the development of the commercial
segments of its business with the result that commercial revenues increased by
$6.7 million in 1995. The increase is attributable to an expanded customer base
for commercial optical components and subsystems used in high precision
semiconductor machinery and analytical instruments, and increased sales of
optical filter products used in biomedical instruments. Revenues generated from
government contracts decreased to $10.8 million in 1995 compared to $16.2
million in 1994.
Gross Profit. Gross profit as a percentage of net sales was 25.0% in
1995, a 1.4% improvement over 23.6% in 1994. This improvement is a result of a
more favorable product mix caused by the Company's increased concentration on
commercial business.
Research and Development. Research and development expenditures in 1995
increased by $469,000, or 474%, compared to 1994. As a percentage of revenues,
research and development expenditures in 1995 were 2.1% compared to 0.4% in
1994. The increased research and development expenditures relate to ongoing
development of fiber optic products for the telecommunications industry.
Selling and Administrative. Selling and administrative expenses for
1995 decreased $401,000, or 8%, compared to 1994. As a percentage of revenues
these expenditures were 18.1% in 1995 compared to 20.7% in 1994. The decrease
for 1995 was primarily attributable to a $430,000 charge related to a bad debt
in 1994. The customer filed for Chapter 11 protection and was subsequently
liquidated.
74
<PAGE>
Earnings From Operations. Earnings from operations doubled from
$623,000 in 1994 to $1.3 million in 1995. The increased gross profit from
additional sales volume and a more favorable product mix and lower selling and
administrative expenses resulted in a significant improvement despite a higher
level of research and development.
Interest Expense. Interest expense remained virtually even from 1994 to
1995, and there was no increase in the level of borrowings.
Provision For Income Taxes. OCA had a net operating loss carryforward
for federal and state income tax purposes, thus the effective tax rate is not
material.
Net Income. OCA had net income of $508,000 in 1995 compared to a net
loss of $147,000 in 1994. The improvement was a result of increased sales
coupled with improved margins in 1995.
Twelve Months ended June 30, 1994 and June 30, 1993
Net Sales. Net sales for the year ended June 30, 1994 were $25.2
million as compared to $27.4 million for the prior year, representing an 8%
decrease. The decrease is directly related to a softening of government
contracts for optical and electro-optical components and subsystems. Revenues
generated from government contracts decreased to $16.2 million in 1994 compared
to $20.6 million in 1993. With the ongoing shrinkage of the defense budget, OCA
concentrated on increasing the commercial segments of its business and exploring
opportunities for new proprietary products. The results of these efforts are
expected to show a continuing improvement in product mix in future years.
Gross Profit. Gross profit as a percentage of net sales was 23.6% in
1994, a 4.1% improvement over 19.5% in 1993. In 1994, the gross profit
percentage improved as a result of a more favorable product mix, as well as
improvements in optical filter margins from manufacturing cost reductions and
improved productivity.
Research and Development. Research and development expenditures in 1994
decreased by $392,000, or 80%, compared to 1993. As a percentage of revenues,
research and development expenditures in 1994 were 0.4% compared to 1.8% in
1993. However, in 1994 and 1993, the Company received Small Business Innovative
Research (SBIR) Program Contracts. These contracts provide the Company with
government sponsored funds for research and development in specific areas. The
revenue related to the SBIR contracts has been included in net sales and was
approximately $1,453,000 in
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<PAGE>
1994 and $355,000 in 1993. Related expenses have been included in cost of goods
sold and were approximately $1,114,000 in 1994 and $254,000 in 1993.
Selling and Administrative. Selling and administrative expenses for
1994 decreased by $680,000, or 12% compared to 1993. As a percentage of revenues
these expenditures were 20.7% in 1994 compared to 21.5% in 1993. This decrease
is attributable to OCA's efforts to reduce costs in light of lower anticipated
revenues.
Restructuring Expenses. In 1993, OCA restructured its East Coast
operations by consolidating substantially all of its Westward facility into its
Marlborough facility. As a result of this restructuring, OCA incurred costs of
$833,000 related to a partial termination of the facility lease and a related
sublease, the write-off of certain assets and associated costs of the
restructuring. Concurrently, OCA also restructured its work force, resulting in
$408,000 of severance costs.
Earnings From Operations. Earnings from operations improved in 1994 to
$623,000 compared to a loss of $2.3 million in 1993. This is the result of
improved margins and reductions in expenses, as well as the non-recurring
restructuring charge only affecting 1993.
Interest Expense. Interest expense increased in 1994 by $85,000
compared to 1993. The increase is due to a higher level of borrowings.
Provision For Income Taxes. Due to the net loss in 1993, OCA has a net
operating loss carryforward for federal and state tax purposes. In 1993, a
portion of the tax loss was carried back to prior years resulting in a tax
benefit in 1993.
Net Income. The Company experienced a net loss of $147,000 in 1994 as
compared to a net loss of $2.6 million in 1993.
Liquidity and Capital Resources
76
<PAGE>
Capital Expenditures during the years ended June 30, 1993, 1994 and
1995 were approximately $1.3 million, $580,000 and $1.2 million, respectively.
These expenditures were principally for machinery and equipment to upgrade
production capabilities. OCA's capital equipment purchases for the nine months
ended March 31, 1996 equaled $2.3 million and included approximately $1.1
million for the fiber optics products. OCA expects capital expenditures in
future quarters to continue to be significant as production capacity for fiber
optics products is added to OCA's current manufacturing facility.
At March 31, 1996, OCA had a positive working capital of approximately
$2.1 million, which excludes the amount owed to The Perkin-Elmer Corporation for
the repurchase of the shares of OCA's redeemable common stock. See Note 5 to
OCA's Financial Statements elsewhere herein. OCA also had approximately $2.6
million of indebtedness for money borrowed from its bank at March 31, 1996.
OCA's availability for further borrowing, based upon 80% of eligible accounts
receivable, was approximately $600,000 at the same date. The bank's commitment
to its line of credit expires November 1, 1996, and OCA anticipates no
difficulty in being able to obtain a renewal thereof.
In the absence of the proposed Merger transaction, OCA's present
capital resources would be inadequate for its projected needs. OCA would need to
raise additional equity capital in order to be able to satisfy its obligation to
redeem the shares of common stock presently owned by The Perkin-Elmer
Corporation and at the same time remain in compliance with the terms of its
agreements with its lenders. In addition, OCA has a significant amount of
subordinated indebtedness which will mature between July 1, 1997 and June 30,
1999. It is possible that the holders of this subordinated indebtedness might
elect to use a portion of the principal of their notes to pay the exercise price
of the Common Stock Purchase Warrants which they also hold. However, based upon
discussions with its investment advisors, OCA believes that its current levels
of operations and revenues will support its ability to raise such equity and
refinance such indebtedness.
77
<PAGE>
OCLI AND OCA MANAGEMENTS
Executive Officers and Directors of OCA
After the Merger, the executive officers and directors of OCA are
expected to be as follows:
Executive Officers
Donald A. Johnson, Chief Executive Officer
M.J. Devlin, President and Chief Operating Officer
J. Viggiano, Executive Vice President and General Manager,
East Coast Operations
Directors
Herbert M. Dwight, Jr., Chairman of the Board
Donald A. Johnson, Chief Executive Officer and Director
Joseph C. Zils, Director
Each director is elected to hold office until the next annual meeting
of Shareholders and until his successor is elected and qualified. The term of
office of each officer is one year or until a successor is chosen and qualified.
There are no family relationships among any of the executive officers or
directors.
OCLI Executive Officers and Directors and Executive Compensation
For information concerning the directors and executive officers of OCLI
and the compensation of the directors and executive officers of OCLI, see
"AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE."
OWNERSHIP OF OCA COMMON STOCK AND OCLI COMMON STOCK
Ownership of OCA Common Stock
The following table sets forth, as of the Record Date, the beneficial
ownership of OCA Common Stock (including, on a pro forma basis, the beneficial
ownership of shares of OCLI Common Stock into which such shares of OCA Common
Stock are convertible upon consummation of the Merger) by (i) all persons known
to OCA to own beneficially five percent or more of the outstanding OCA Common
Stock, (ii) the directors of OCA, (iii) each of the executive officers of OCA
and (iv) the directors and all executive officers
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<PAGE>
of OCA together as a group. The addresses of each such persons are shown below.
The pro forma number of shares of OCLI Common Stock assumes an exchange ratio of
2.042 shares of OCLI Common Stock for each share of OCA Common Stock and assumes
the purchase by OCA, prior to the Effective Date, of the 46,875 shares of OCA
Common Stock held on the Record Date by Perkin-Elmer pursuant to a put option
previously exercised by Perkin-Elmer.
<TABLE>
<CAPTION>
Pro Forma
Ownership of Ownership of OCLI
OCA Common Stock Common Stock
-------------------------- ------------------------
Number of Percentage Number of Percentage
Shares of Shares of
Name and Address of Beneficially Outstanding Beneficially Outstanding
Beneficial Owner Title Owned Shares Owned Shares
<S> <C> <C> <C> <C> <C>
F. Sherman Hoyt Director 115,907 15.50% 236,682 2.07%
39 Main Street
Hollis, NH 03049
Stephen B. Loring Director 93,436 12.50% 190,796 1.67%
61 Lexington Circle
Holden, MA 01520
Donald A. Johnson Chairman, 83,580 11.18% 170,670 1.49%
18 Captain Brown's Lane Director & CEO
Acton, MA 01720
George Olmsted Director 67,349 9.01% 135,842 1.20%
62 Chase Street
Chatham, MA 02633-2404
Edward M. Muller Director 55,413 7.41% 113,153 .99%
190 Sherman Street
Fairfield, CT 06430
Glen Wegner, M.D., J.D. Director 25,585(1) 3.42% 52,245 0.46%
22 Lathrop Road
Wellesley, MA 02181
Michael J. Devlin Director, 20,000 2.67% 40,840 0.36%
19596 Elmridge Lane President & COO
Huntington Beach, CA 92648
79
<PAGE>
Pro Forma
Ownership of Ownership of OCLI
OCA Common Stock Common Stock
-------------------------- ------------------------
Number of Percentage Number of Percentage
Shares of Shares of
Name and Address of Beneficially Outstanding Beneficially Outstanding
Beneficial Owner Title Owned Shares Owned Shares
John D. Viggiano Director, 19,500 2.61% 39,819 0.35%
84 Emer Road Executive VP
Marlborough, MA 01752 & GM-East Coast
George B. Whelton, Jr. Director 11,510 1.54% 23,503 0.21%
615 Route 13 South
Milford, NH 03055
Directors and Executive
Officers as a group 492,280 65.84% 1,005,236 8.79%
</TABLE>
Ownership of OCLI Common Stock
After giving effect to the Merger, assuming the purchase of the
Perkin-Elmer shares, full participation in the Merger by all OCA Shareholders
and the prior exercise of OCA Warrants to purchase 86,000 shares of OCA Common
Stock, there will be approximately 11,430,548 shares of OCLI Common Stock
outstanding. After giving effect to the Merger, OCA Shareholders would own in
the aggregate approximately 14.9% of the issued and outstanding shares of OCLI
Common Stock.
For information concerning the ownership of OCLI Common Stock,
including OCLI Common Stock owned by directors and executive officers of OCLI,
see "AVAILABLE INFORMATION" and "INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE."
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
OCLI and OCA have worked together on several projects over the past six
years. Beginning in 1990, OCLI subcontracted with OCA for the coating of missile
domes for the U.S Department of Defense. Under this arrangement, OCA fabricated
the missile
80
<PAGE>
domes in its facilities in Garden Grove, California and sent them to OCLI to be
coated at it facilities in Santa Rosa. Since the initial order, OCLI has
received several follow-up orders from OCA for the coating of the missile domes
in addition to several other smaller coating subcontracts for which OCLI has
received orders worth approximately $657,000 since 1992, including approximately
$40,000 of sales after the second quarter of 1996.
Beginning in 1995, OCA subcontracted with OCLI for the supply of
optical subassemblies and optical fabrication. In fiscal 1995 OCLI placed orders
with OCA worth approximately $75,000 and orders year-to-date in fiscal 1996 are
worth $407,000, including approximately $200,000 of open orders at the end of
the second quarter of 1996.
In addition to being both suppliers and customers to each other over
the last several years, OCA and OCLI have both competed for optical filter
business in the defense, aerospace, medical instrumentation and office
automation market segments along with other companies including, but not limited
to, Barr Associates, Optical Filter Corporation, Varo, and Deposition Sciences,
Inc.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a summary of the principal federal income tax
consequences of the Merger and is based upon the applicable provisions of the
Internal Revenue Code of 1986, As Amended (the "Code"), regulations thereunder,
and published rulings and court decisions. Neither OCA nor OCLI intend to seek a
ruling from the Internal Revenue Service with regard to the tax consequences of
the Merger.
Under present law, the Merger and the conversion of each share of OCA
Common Stock into OCLI Common Stock should have the following consequences for
federal income tax purposes:
1. The Merger will qualify as a "reorganization" as defined in Code
Sections 368(a)(1)(A) and 368(a)(2)(E).
2. No gain or loss will be recognized by OCA as a result of the Merger.
3. No gain or loss will be recognized by OCA Shareholders who exchange
all of their OCA Common Stock solely for OCLI Common Stock in the Merger.
Shareholders who exercise dissenters' rights will recognize gain or loss upon
the receipt of cash for their shares measured by the difference between the cash
received and the basis of their stock, provided they own no shares of OCLI
Common Stock.
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<PAGE>
4. The aggregate basis of the OCLI Common Stock received by an OCA
Shareholder will be the same as the aggregate basis of such Shareholder in the
OCA Common Stock converted in the Merger.
5. The holding period of the OCLI Common Stock received by an OCA
Shareholder will include the period during which such Shareholder held the OCA
Common Stock converted in the Merger, provided that such stock was held as a
capital asset on the Effective Date.
6. An OCA Shareholder who receives a cash payment in lieu of a
fractional share of OCLI Common Stock will be treated as if such fractional
share were distributed in the Merger and then redeemed by OCLI, and should
recognize capital gain or loss measured by the difference between the amount of
cash received and the Shareholder's basis in the fractional share (which will be
a pro rata portion of the Shareholder's basis in the OCLI Common Stock received
in the Merger), provided that such Shareholder's OCA Common Stock is held as a
capital asset on the Effective Date.
7. No gain or loss for federal income tax purposes will be recognized
by the holder of an option to purchase shares of OCA Common Stock solely as a
result of the conversion of such options into options to purchase OCLI Common
Stock.
In order for the Merger to qualify as a tax-free reorganization, the
OCA Shareholders must have the requisite "continuity of interest" through
ownership of the OCLI Common Stock. It is the ruling position of the Internal
Revenue Service that the "continuity of interest" requirement is satisfied if
there is a continuing interest through stock ownership in the acquiring
corporation on the part of the former shareholders of the acquired corporation,
without any plan or intention by the former shareholders of the acquired
corporation to sell, exchange or otherwise dispose of stock of the acquiring
corporation, that is equal in value, as of the effective date of the
reorganization, to at least 50% of the value of all the formerly outstanding
stock of the acquired corporation as of the same date. There can be no assurance
that the former Shareholders of OCA will not, pursuant to a present plan or
intention, sell or otherwise dispose of the OCLI Common Stock in a sufficient
amount to violate this requirement. However, the holders of a majority of such
shares have represented that they have no such present plan or intention.
Holders of OCA Common Stock are urged to consult with their tax
advisers as to the effect under state, local and foreign income and other tax
laws of the Merger.
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<PAGE>
EXPERTS
The consolidated financial statements and the related financial
statement schedule incorporated in this Registration Statement by reference from
Optical Coating Laboratory, Inc.'s Annual Report on Form 10-K for the year ended
October 31, 1995 have been audited by Deloitte & Touche LLP, independent
auditors, as stated in their report, which is incorporated herein by reference,
and have been so incorporated in reliance on the report of such firm given upon
their authority as experts in accounting and auditing.
With respect to the unaudited interim financial information of Optical
Coating Laboratory, Inc. for the three month periods ended January 28, 1996 and
January 31, 1995 and the three and six month periods ended April 28, 1996 and
April 30, 1995, which is incorporated herein by reference, Deloitte & Touche LLP
have applied limited procedures in accordance with professional standards for a
review of such information. However, as stated in their reports included in the
Optical Coating Laboratory, Inc.'s Quarterly Reports on Form 10-Q for the
quarters ended January 28, 1996 and April 28, 1996 and incorporated by reference
herein, they did not audit and they do not express an opinion on that interim
financial information. Accordingly, the degree of reliance on their reports on
such information should be restricted in light of the limited nature of the
review procedures applied. Deloitte & Touche LLP are not subject to the
liability provisions of Section 11 of the Securities Act of 1933 for their
reports on the unaudited interim financial information because those reports are
not "reports" or a "part" of the registration statement prepared or certified by
an accountant within the meaning of Sections 7 and 11 of the Act.
The consolidated financial statements of Optical Corporation of America
as of June 30, 1995 and 1994 and for each of the three years in the period ended
June 30, 1995 included in this Registration Statement have been audited by
Deloitte & Touche LLP, independent auditors, as stated in their report, which is
included and have been so included in reliance upon the report of such firm
given upon their authority as experts in accounting and auditing.
LEGAL OPINIONS
The validity of the OCLI Common Stock to be issued pursuant to the
Merger will be passed upon for OCLI by Collette & Erickson LLP, counsel to OCLI.
Partners in Collette & Erickson LLP own shares of OCLI Common Stock the fair
market value of which exceeds $50,000.
83
<PAGE>
OTHER MATTERS
OCA is not aware of any other matters to be presented at the Special
Meeting of Shareholders other than as specified in the notice of such meeting
and this Proxy Statement/Prospectus.
84
<PAGE>
OPTICAL CORPORATION OF AMERICA
FINANCIAL STATEMENTS FOR THE YEARS
ENDED JUNE 30, 1993, 1994 AND 1995
AND INDEPENDENT AUDITORS' REPORT
85
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders of
Optical Corporation of America:
We have audited the accompanying balance sheets of Optical Corporation of
America as of June 30, 1994 and 1995, and the related statements of operations,
stockholders' equity and cash flows for each of the three years in the period
ended June 30, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Optical Corporation of America as of June
30, 1994 and 1995, and the results of its operations and its cash flows for each
of the three years in the period ended June 30, 1995, in conformity with
generally accepted accounting principles.
Costa Mesa, California
August 30, 1995, except for Notes 5 and 13,
which are as of June 28, 1996
86
<PAGE>
<TABLE>
OPTICAL CORPORATION OF AMERICA
BALANCE SHEETS
AS OF JUNE 30, 1994 AND 1995 AND MARCH 31, 1996 (Unaudited)
- ---------------------------------------------------------------------------------------------------------------------
<CAPTION>
June 30, March 31,
--------------------------------------- 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 480,000 $ 466,000 $ 134,000
Accounts and notes receivable, net of allowances
of $435,000 and $54,000 as of June 30, 1994 and
1995, respectively, and $87,000 as of March 31,
1996 (Note 1) 5,684,000 4,201,000 4,158,000
Unbilled receivables 3,055,000 2,219,000 2,361,000
Inventories (Notes 1 and 2) 1,885,000 2,621,000 2,856,000
Other current assets 52,000 48,000 66,000
----------- ----------- -----------
Total current assets 11,156,000 9,555,000 9,575,000
EQUIPMENT AND IMPROVEMENTS, net
(Note 3) 4,134,000 4,298,000 5,694,000
OTHER ASSETS 79,000 49,000 41,000
----------- ----------- -----------
$15,369,000 $13,902,000 $15,310,000
=========== =========== ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
87
<PAGE>
<TABLE>
OPTICAL CORPORATION OF AMERICA
BALANCE SHEETS
AS OF JUNE 30, 1994 AND 1995 AND MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------------------------------------------------
<CAPTION>
June 30, March 31,
--------------------------------------- 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES:
Note payable (Note 4) $ 2,900,000 $ 1,600,000 $ 2,550,000
Accounts payable 2,009,000 1,632,000 1,697,000
Accrued expenses 1,520,000 1,413,000 1,854,000
Billings in excess of costs and estimated profits
(Note 1) 527,000 1,095,000 88,000
Current maturities of subordinated debt (Note 4) 375,000
Current maturities of long-term debt (Note 4) 741,000 783,000 950,000
------------ ------------ ------------
Total current liabilities 7,697,000 6,523,000 7,514,000
LONG-TERM DEBT, net of current maturities
(Note 4) 2,747,000 1,946,000 2,225,000
SUBORDINATED DEBT, net of current maturities
(Notes 4 and 5) 2,250,000 2,250,000 1,869,000
REDEEMABLE COMMON STOCK (Note 5) 753,000 850,000 857,000
COMMITMENTS (Note 8)
STOCKHOLDERS' EQUITY (Note 5):
Common stock, $.01 par value; authorized,
2,000,000 shares; issued and outstanding, 765,277
shares in 1994 and 1995, and 783,577 shares as
of March 31, 1996 8,000 8,000 8,000
Additional paid-in capital 4,264,000 4,264,000 4,399,000
Deficit (2,350,000) (1,939,000) (1,562,000)
------------ ------------ ------------
Total stockholders' equity 1,922,000 2,333,000 2,845,000
------------ ------------ ------------
$ 15,369,000 $ 13,902,000 $ 15,310,000
============ ============ ============
<FN>
See notes to financial statements.
</FN>
</TABLE>
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<PAGE>
<TABLE>
OPTICAL CORPORATION OF AMERICA
STATEMENTS OF OPERATIONS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1995 (Unaudited) AND 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine months ended
Years ended June 30, March 31,
---------------------------------------------------- -----------------------------------
1993 1994 1995 1995 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Net sales (Note 9) $ 27,397,000 $ 25,174,000 $ 26,537,000 $ 19,735,000 $ 21,600,000
Cost of goods sold
(Note 9) 22,048,000 19,237,000 19,905,000 14,880,000 15,644,000
------------ ------------ ------------ ------------ ------------
5,349,000 5,937,000 6,632,000 4,855,000 5,956,000
Selling and administrative
expenses (Note 8) 5,895,000 5,215,000 4,814,000 3,514,000 3,758,000
Research and development
expenses (Note 9) 491,000 99,000 568,000 335,000 1,167,000
Restructuring expenses
(Note 10) 1,241,000
------------ ------------ ------------ ------------ ------------
Total expenses 7,627,000 5,314,000 5,382,000 3,849,000 4,925,000
------------ ------------ ------------ ------------ ------------
Earnings (loss) from
operations (2,278,000) 623,000 1,250,000 1,006,000 1,031,000
Interest expense (Note 4) 680,000 764,000 734,000 551,000 627,000
------------ ------------ ------------ ------------ ------------
Earnings (loss) before
provision (benefit) for
income taxes (2,958,000) (141,000) 516,000 455,000 404,000
Provision (benefit) for
income taxes, current
(Note 7) (372,000) 6,000 8,000 20,000 20,000
------------ ------------ ------------ ------------ ------------
Net earnings (loss) $ (2,586,000) $ (147,000) $ 508,000 $ 435,000 $ 384,000
============ ============ ============ ============ ============
<FN>
See notes to financial statements.
</FN>
</TABLE>
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<PAGE>
<TABLE>
OPTICAL CORPORATION OF AMERICA
STATEMENTS OF STOCKHOLDERS' EQUITY
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited)
- -----------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Common stock Additional Retained
-------------------------- paid-in Deferred earnings
Shares Amount capital compensation (deficit) Total
<S> <C> <C> <C> <C> <C> <C>
BALANCES, July 1, 1992 768,000 $8,000 $ 4,294,000 $ (93,000) $ 577,000 $ 4,786,000
Amortization of deferred compensation 93,000 93,000
Accretion of redeemable common stock (97,000) (97,000)
Repurchase of common stock (3,000) (30,000) (30,000)
Net loss (2,586,000) (2,586,000)
------- ------ ----------- ----------- ----------- -----------
BALANCES, June 30, 1993 765,000 8,000 4,264,000 (2,106,000) 2,166,000
Accretion of redeemable common stock (97,000) (97,000)
Net loss (147,000) (147,000)
------- ------ ----------- ----------- ----------- -----------
BALANCES, June 30, 1994 765,000 8,000 4,264,000 (2,350,000) 1,922,000
Accretion of redeemable common stock (97,000) (97,000)
Net earnings 508,000 508,000
------- ------ ----------- ----------- ----------- -----------
BALANCES, June 30, 1995 765,000 8,000 4,264,000 (1,939,000) 2,333,000
Repurchase of common stock (4,100) (41,000)
Issuance of common stock 22,677 176,000 135,000
Accretion of redeemable common stock (7,000) (7,000)
Net earnings 384,000 384,000
------- ------ ----------- ----------- ----------- -----------
BALANCES, March 31, 1996 (unaudited) 783,577 $8,000 $ 4,399,000 $ -- $(1,562,000) $ 2,845,000
======= ====== =========== =========== =========== ===========
<FN>
See notes to financial statements.
</FN>
</TABLE>
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<PAGE>
<TABLE>
OPTICAL CORPORATION OF AMERICA
STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1995 (Unaudited) AND 1996 (Unaudited)
- --------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine months
ended
Years ended June 30, March 31,
----------------------------------------------- ----------------------------------
1993 1994 1995 1995 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net earnings (loss) $(2,586,000) $ (147,000) $ 508,000 $ 435,000 $ 384,000
Adjustments to reconcile net earnings
(loss) to net cash (used in) provided by
operating activities:
Depreciation and amortization 1,116,000 913,000 1,052,000 763,000 901,000
Gain on disposal of equipment 32,000 (28,000) (15,000) (15,000) (3,000)
Deferred income taxes (68,000)
Changes in assets and liabilities:
Accounts and notes receivable (73,000) (883,000) 1,483,000 928,000 43,000
Unbilled receivables 630,000 (316,000) 836,000 1,119,000 (142,000)
Inventories (491,000) 207,000 (736,000) (994,000) (235,000)
Other assets 68,000 (35,000) (30,000)
Accounts payable and
accrued expenses 831,000 (470,000) (484,000) (606,000) 506,000
Billings in excess of costs
and estimated profits 459,000 568,000 1,118,000 (1,007,000)
Income taxes receivable, net (453,000) 412,000
----------- ---------- ----------- ---------- -----------
Total adjustments 1,592,000 259,000 2,704,000 2,313,000 33,000
----------- ---------- ----------- ---------- -----------
Net cash (used in)
provided by operating
activities (994,000) 112,000 3,212,000 2,748,000 417,000
CASH FLOWS FROM
INVESTING ACTIVITIES:
Additions to equipment and
improvements (1,152,000) (580,000) (1,193,000) (775,000) (1,622,000)
Proceeds from disposal of
equipment 144,000 34,000 25,000 25,000 3,000
----------- ---------- ----------- ---------- -----------
Net cash used in investing
activities (1,008,000) (546,000) (1,168,000) (750,000) (1,619,000)
----------- ---------- ----------- ---------- -----------
<FN>
See notes to financial statements.
</FN>
</TABLE>
91
<PAGE>
<TABLE>
OPTICAL CORPORATION OF AMERICA
STATEMENTS OF CASH FLOWS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1995 (Unaudited) AND 1996 (Unaudited) (Continued)
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
Nine months
ended
Years ended June 30, March 31,
-------------------------------------------------- ---------------------------------
1993 1994 1995 1995 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM
FINANCING ACTIVITIES:
Repurchase of common stock $ (30,000) $ $ $ $ (41,000)
Issuance of common stock 176,000
Proceeds from note payable 2,575,000 3,585,000 4,700,000 2,850,000 4,150,000
Payments on note payable (1,400,000) (4,220,000) (6,000,000) (4,450,000) (3,200,000)
Proceeds from subordinated
debt 6,000 500,000
Proceeds from long-term debt
issuance 1,100,000 1,900,000 259,000
Payments on long-term debt (317,000) (1,049,000) (666,000) (491,000) (340,000)
Payments on capital lease
obligations (176,000) (82,000) (92,000) (65,000) (134,000)
----------- ----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities 1,758,000 634,000 (2,058,000) (2,156,000) 870,000
----------- ----------- ----------- ----------- -----------
NET (DECREASE) INCREASE
IN CASH AND CASH
EQUIVALENTS (244,000) 200,000 (14,000) (158,000) (332,000)
CASH AND CASH
EQUIVALENTS, beginning
of year 524,000 280,000 480,000 480,000 466,000
----------- ----------- ----------- ----------- -----------
CASH AND CASH
EQUIVALENTS, end of year $ 280,000 $ 480,000 $ 466,000 $ 322,000 $ 134,000
=========== =========== =========== =========== ===========
NONCASH INVESTING AND
FINANCING ACTIVITIES:
Equipment purchased by
execution of capital leases
or long-term debt $ 139,000 $ -- $ -- $ -- $ 655,000
Conversion of notes payable
to subordinated debt $ 250,000 $ -- $ -- $ -- $ --
<FN>
See notes to financial statements.
</FN>
</TABLE>
92
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited)
- --------------------------------------------------------------------------------
1. BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Optical Corporation of America (OCA or the Company) is engaged in the
design, manufacture and marketing of optical and electro-optical
products, components and subsystems for a wide range of applications in
the medical, telecommunications, industrial, scientific, aerospace and
defense industries. OCA is a Massachusetts corporation and is registered
to do business in California as OCA Applied Optics.
Interim Financial Data - The interim financial data as of March 31, 1996
and for the nine months ended March 31, 1995 and 1996 is unaudited. The
information reflects all adjustments, consisting only of normal
recurring entries, that, in the opinion of management, are necessary to
present fairly the financial position and results of operations of the
Company for the periods indicated. Results of operations for the interim
periods are not necessarily indicative of the results of operations for
the full fiscal year.
Fiscal Year - The Company utilizes a 4-4-5 week reporting period for its
quarterly and annual reporting. The financial statements included herein
reflect the twelve-month periods ended June 28, 1993, July 3, 1994 and
July 2, 1995, and the nine-month periods ended April 2, 1995 and March
31, 1996. For convenience, the accompanying financial statements are
described as ending as of June 30 and March 31.
Revenue Recognition - Sales and profits under cost-plus-type contracts,
small business innovative research program contracts (Note 9) and
certain fixed price contracts requiring substantial performance over
more than one year are accounted for under the percentage of completion
method using the ratio of costs incurred to estimated costs at
completion. Sales and profits under other contracts are recorded as
goods are shipped. Provisions for anticipated losses on contracts are
recognized in full as they are identified. Unbilled receivables
represent recoverable costs and accrued income that are anticipated to
be billable under terms of the contracts. Billings in excess of costs
and estimated profits consist of progress billings in excess of sales
made on various contracts.
Inventories - Inventories are stated at the lower of cost or market.
Cost is determined using the first-in, first-out (FIFO) method.
Equipment and Improvements - Equipment and improvements are recorded at
cost. Depreciation and amortization are computed using the straight-line
method over the shorter of the lease term or the estimated useful lives
of the assets which range from three to seven years. Costs of
maintenance and repairs are charged to expense while costs of
significant renewals and betterments are capitalized.
93
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Other Assets - Other assets consist principally of deposits and debt
issuance costs. Debt issuance costs are being amortized over the term of
the related debt.
Income Taxes - The Company follows Statement of Financial Accounting
Standards (SFAS) No. 109, Accounting for Income Taxes. This statement
requires the recognition of deferred tax liabilities and assets for the
future consequences of events that have been recognized in the Company's
financial statements or tax returns. In the event the future
consequences of differences between financial reporting bases and the
tax bases of the Company's assets and liabilities result in a deferred
tax asset, SFAS No. 109 requires an evaluation of the probability of
being able to realize the future benefits indicated by such asset. A
valuation allowance related to a deferred tax asset is recorded when it
is more likely than not that some portion or all of the deferred tax
asset will not be realized. The measurement of the deferred items is
based on enacted tax laws. The effect of initially adopting SFAS No. 109
was not significant to the June 30, 1993 financial statements and
therefore has been included in the benefit for income taxes for fiscal
1993.
Reclassifications - Certain prior year amounts have been reclassified to
conform to the current year presentation.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting periods. Actual
results could differ from those estimates.
2. INVENTORIES
Inventories consist of the following:
June 30, March 31,
---------------------------------- 1996
1994 1995 (unaudited)
Raw materials $ 342,000 $ 394,000 $ 589,000
Work in process 1,222,000 1,745,000 1,805,000
Finished goods 321,000 482,000 462,000
---------- ---------- ----------
$1,885,000 $2,621,000 $2,856,000
========== ========== ==========
94
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
3. EQUIPMENT AND IMPROVEMENTS
Equipment and improvements consist of the following:
<CAPTION>
June 30, March 31,
------------------------------------ 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
Machinery and equipment $ 7,042,000 $ 7,985,000 $ 9,986,000
Computer equipment 607,000 742,000 991,000
Furniture and fixtures 127,000 134,000 142,000
Leasehold improvements 219,000 292,000 311,000
------------ ------------ --------------
7,995,000 9,153,000 11,430,000
Less accumulated depreciation and
amortization (3,861,000) (4,855,000) (5,736,000)
------------ ------------ --------------
$ 4,134,000 $ 4,298,000 $ 5,694,000
============ ============ ==============
</TABLE>
<TABLE>
4. DEBT
Note payable consists of the following:
<CAPTION>
June 30, March 31,
------------------------------------ 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
Revolving bank credit facility available
until November 1, 1996 (maximum
$4,000,000 or 80% of eligible accounts
receivable, approximately $2,761,000
as of June 30, 1995) with interest payable at
2% above prime rate (9% at
June 30, 1995) (b) (c) $ 2,900,000 $ 1,600,000 $ 2,550,000
============ ============ ============
</TABLE>
95
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
Long-term debt consists of the following:
<CAPTION>
June 30, March 31,
------------------------------------ 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
Note payable to Massachusetts Business
Development Corporation (MBDC),
repaid in December 1995 $ 271,000 $ 125,000 $
Note payable to MBDC, repaid in
December 1995 930,000 810,000
Note payable to GE Capital payable in
60 monthly principal installments of $25,000
plus interest at 3.66% above the 30-day
commercial paper rate (6.06% at June 30,
1995) (a) 1,500,000 1,200,000 975,000
Notes payable to GE Capital payable in
60 monthly principal and interest payments
of $38,860 with interest at 9.93% per annum
through April 30, 2001 (a) 1,820,000
Promissory note payable to The Perkin-Elmer
Corporation (a stockholder) with quarterly
payments of interest at a rate of 10%; five
principal installments of $80,000 payable
quarterly commencing on February 1, 1996
with final payment on February 1, 1997 400,000 400,000 320,000
</TABLE>
96
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, March 31,
------------------------------------ 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
Unsecured noninterest-bearing note paid in
full to an individual at April 15, 1995 $ 100,000 $ $
Capital lease obligations (Note 8) 287,000 194,000 60,000
------------ ------------ ------------
3,488,000 2,729,000 3,175,000
Less current maturities (741,000) (783,000) (950,000)
------------ ------------ ------------
$ 2,747,000 $ 1,946,000 $ 2,225,000
============ ============ ============
</TABLE>
<TABLE>
Subordinated debt consists of the following:
<CAPTION>
June 30, March 31,
------------------------------------ 1996
1994 1995 (unaudited)
<S> <C> <C> <C>
Note payable to Massachusetts Capital
Resource Company (MCRC) due June 30,
1999, payable in quarterly principal payments
of $125,000 beginning September 30, 1996;
interest at 11% payable quarterly (a) (c)
(Note 5) $ 1,500,000 $ 1,500,000 $ 1,500,000
Notes payable to stockholders and others,
payable in one principal payment of $187,500
on July 1, 1996 plus interest at 11% with
balance due July 1, 1997 750,000 750,000 744,000
------------ ------------ ------------
2,250,000 2,250,000 2,244,000
Less current maturities (375,000)
------------ ------------ ------------
$ 2,250,000 $ 2,250,000 $ 1,869,000
============ ============ ============
</TABLE>
97
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
(a) Substantially all assets of the Company serve as collateral to
the revolving bank credit facility, with the bank having first
priority with respect to accounts receivable and inventories and
GE Capital having first priority with respect to equipment and
improvements. The bank has a second priority with respect to
equipment and improvements. MCRC was granted a security interest
during 1994 with a third priority with respect to accounts
receivable, inventories and equipment located in Massachusetts,
and a fourth priority in equipment located in California.
(b) The revolving bank credit facility contains various covenants
with respect to levels of working capital and net worth,
allowable additional indebtedness, additional investments, and
payment of dividends. The Company was in compliance with all debt
covenants as of June 30, 1995 and March 31, 1996.
(c) The notes contain various covenants with respect to levels of
working capital and net worth, allowable additional indebtedness,
additional investments and payment of dividends. The Company was
in compliance with certain debt covenants or obtained applicable
waivers as of June 30, 1995 and March 31, 1996.
The following is a schedule of maturities of long-term debt and
subordinated debt for each of the next five years:
Year ending June 30:
1996 $ 783,000
1997 2,016,000
1998 1,380,000
1999 800,000
------------
$ 4,979,000
============
Interest paid was $653,022, $774,455 and $777,169, of which $0, $68,000
and $98,000 was paid to stockholders for the years ended June 30, 1993,
1994 and 1995, respectively. Interest paid for the nine months ended
March 31, 1996 was $386,000, of which $30,000 was paid to stockholders.
98
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
5. COMMON STOCK
In connection with issuance of the subordinated notes payable to MCRC
and stockholders and others, the Company issued common stock purchase
warrants allowing the purchase of up to 76,000 and 24,000 shares of
common stock of the Company before June 30, 1999 and July 1, 1997,
respectively, at the estimated fair market value of the Company's stock
at the date of issuance of $11.00 per share. In conjunction with the
credit facility (Note 4), the Company issued a common stock purchase
warrant providing for the purchase of up to 10,000 shares of common
stock at the estimated fair market value of the Company's stock at the
date of issuance of $11.00 per share which expires May 31, 1999.
In July 1990, the Perkin-Elmer Corporation (Perkin-Elmer) converted a
$375,000 subordinated note into 46,875 shares of common stock of the
Company. At the option of the Company or Perkin-Elmer, the Company can
or may be required to repurchase the 46,875 shares at a purchase price
of $18.30 per share after July 23, 1995, but before October 23, 1995.
Perkin-Elmer exercised its option in August 1995 requiring the Company
to repurchase these shares. The Company was not able to repay this
obligation because of restrictions of its loan covenants. As of March
31, 1996, these shares have not been repurchased. In May 1996,
Perkin-Elmer filed an action in Connecticut court demanding repayment of
this obligation. Thereafter, the parties amended the original terms of
the repurchase agreement to reflect the refusal of the Company's lenders
to permit the redemption of stock except from the proceeds of the sale
of additional shares of the Company's stock. This amendment permits the
Company to settle the obligation for the redeemable common stock
subsequent to the Company's merger with Optical Coating Laboratory, Inc.
(Note 13). The required repurchase amount of these shares is $857,000 as
of March 31, 1996.
Under the Company's employee stock option plans, options may be granted
to an employee of the Company at an exercise price not less than the
fair market value per share at the date of grant. The options are
exercisable immediately upon issuance and expire either five or ten
years from the date of grant. Common stock option activity is summarized
as follows:
99
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Shares Option
under option price range
Balance, July 1, 1992 92,000 $ 5.50 - $11.00
Canceled or expired (1,000) $10.00
-------
Balance, June 30, 1993 91,000 $ 5.50 - $11.00
Granted 20,000 $11.00
Canceled or expired (13,000) $ 8.00 - $11.00
-------
Balance, June 30, 1994 98,000 $ 5.50 - $11.00
Granted 2,000 $12.50
-------
Balance, June 30, 1995 100,000 $ 5.50 - $12.50
Granted 10,000 $20.00
Exercised (22,000) $ 8.00
Canceled or expired (36,000) $ 8.00 - $11.00
-------
Balance, March 31, 1996 (unaudited) 52,000 $ 5.50 - $20.00
=======
At June 30, 1995, the Company had reserved an additional 33,000 shares
for stock option issuance.
The Company and its stockholders are party to an agreement which
restricts the transfer of shares of common stock without the Company's
approval. The Company is obligated to purchase the shares of
stockholders upon death at a price determined in accordance with a
formula outlined in the agreement. Deferred compensation represents the
difference between the estimated fair market value of stock issued to
employees and the price paid by the employees. Such amounts were
amortized over a three-year vesting period.
6. EMPLOYEE BENEFITS
The Company has a noncontributory defined benefit pension plan covering
eligible employees of the West Coast division. The Company's funding
policy is consistent with funding requirements of government
regulations. Effective October 1993, this pension plan was "frozen" with
respect to all present and future employees of the Company.
100
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
Net periodic pension costs consist of the following:
Year ended June 30,
-------------------------------------------
1993 1994 1995
Service cost $ 457,000 $ 140,000 $
Interest cost 83,000 129,000 134,000
Return on assets (94,000) (120,000) (125,000)
Other (2,000)
Adjustment to reflect curtailment (175,000)
---------- ---------- ---------
$ 446,000 $ (26,000) $ 9,000
========== ========== =========
<TABLE>
The following table sets forth the funded status of the pension plan and
the amount recognized:
<CAPTION>
June 30,
-----------------------------------------------------
1993 1994 1995
<S> <C> <C> <C>
Actuarial present value of benefit obligation,
including vested benefits of $734,000,
$1,395,000 and $1,575,000 for 1993, 1994
and 1995, respectively $ 1,284,000 $ 1,503,000 $ 1,703,000
============ ============ ============
Projected benefit obligation for service
rendered to date $ 1,703,000 $ 1,503,000 $ 1,436,000
Plan assets 1,718,000 1,290,000 1,315,000
------------ ------------ ------------
Projected benefit obligation (under) over plan
assets (15,000) 213,000 121,000
Unrecognized net loss (75,000) (28,000) 90,000
Additional minimum liability 28,000
------------ ------------ ------------
Accrued (prepaid) pension cost at June 30 $ (90,000) $ 213,000 $ 211,000
============ ============ ===========
The assumptions used in the actuarial valuations were a discount rate of
9%, 9% and 8.6% for 1993, 1994 and 1995, respectively, compensation
increase rate of 4% prior to the curtailment and 0% subsequent to the
curtailment, and expected long-term rate of return on assets of 9%.
</TABLE>
101
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
The Company maintains a profit-sharing 401(k) plan for the benefit of
eligible employees. The Company may make discretionary contributions to
the profit-sharing trust. The Company made contributions of $0, $20,587
and $84,169 to the 401(k) plan during the years ended June 30, 1993,
1994 and 1995, respectively.
<TABLE>
7. INCOME TAXES
The provision for income taxes is comprised of the following:
<CAPTION>
Nine months ended
Year ended June 30, March 31,
-------------------------------------------- --------------------------------
1993 1994 1995 1995 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Current:
Federal $(326,000) $ -- $ -- $ 8,000 $ 8,000
State 22,000 6,000 8,000 12,000 12,000
--------- --------- --------- --------- ---------
Total current (304,000) 6,000 8,000 20,000 20,000
Deferred:
Federal (534,000) 224,000 65,000 52,000 124,000
State (99,000) (59,000) (58,000) (61,000) 38,000
Change in valuation
allowance 565,000 (165,000) (7,000) 9,000 (162,000)
--------- --------- --------- --------- ---------
Total deferred (68,000) -- -- -- --
--------- --------- --------- --------- ---------
Total (benefit) provision $(372,000) $ 6,000 $ 8,000 $ 20,000 $ 20,000
========= ========= ========= ========= =========
</TABLE>
102
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
A reconciliation of the Company's effective tax rate compared to the
statutory federal tax rate is as follows:
<CAPTION>
Nine months ended
Year ended June 30, March 31,
------------------------------- ---------------------
1993 1994 1995 1995 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Statutory federal income tax rate (35.0)% (35.0)% 35.0 % 35.0 % 35.0 %
State taxes, net of federal benefit (2.6) 4.3 7.0 7.0 7.0
Increase (decrease) in valuation allowance 19.1 (117.0) (1.4) 2.0 (40.0)
Change in net operating loss carryforwards 23.0 (39.2) (36.4)
Change in purchase accounting adjustment 5.9 129.0
Other 3.1 0.2 3.3 3.0
----- ------ ----- ----- -----
Total (12.6) 4.3 1.6 4.3 5.0
===== ====== ===== ===== =====
</TABLE>
At June 30, 1995, the Company had net operating loss carryforwards of
approximately $1,576,000 for federal income tax purposes, $567,000 for
California state income tax purposes and $1,104,000 for Massachusetts
state income tax purposes. In addition, the Company had approximately
$33,000 in federal alternative minimum tax credits available to offset
future taxable income and income tax liability for financial reporting
and income tax purposes. The Company also has approximately $203,000 in
federal and $229,000 in state alternative minimum tax operating loss
carryforwards.
103
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
<TABLE>
The components of deferred tax assets and liabilities are as follows:
<CAPTION>
Nine months ended
Year ended June 30, March 31,
------------------------------------------- -----------------------------
1993 1994 1995 1995 1996
(unaudited)
<S> <C> <C> <C> <C> <C>
Operating loss carryforwards $ 704,000 $ 764,000 $ 693,000 $ 696,000 $ 465,000
Depreciation (595,000) (646,000) (621,000) (622,000) (612,000)
Vacation accrual 134,000 166,000 121,000 132,000 165,000
Lease termination reserve 82,000 64,000 50,000 53,000 46,000
Accounts receivable allowance 57,000 23,000 62,000 38,000
Inventory reserve 127,000 95,000 135,000
Purchase accounting
adjustments 182,000
Other 58,000 (5,000) (7,000) (6,000)
--------- --------- --------- --------- ---------
565,000 400,000 393,000 409,000 231,000
Valuation allowance (565,000) (400,000) (393,000) (409,000) (231,000)
--------- --------- --------- --------- ---------
$ -- $ -- $ -- $ -- $ --
========= ========= ========= ========= =========
</TABLE>
The Company's valuation allowance decreased during the three years ended
June 30, 1995, primarily due to the utilization of purchase accounting
adjustments and net operating loss carryforwards.
Net income tax refunds of $411,000 and $34,000 were received during the
years ended June 30, 1994 and 1993, respectively. Income tax payments of
$12,000 were made during the year ended June 30, 1995. Tax payments of
$9,000 and $5,000 were made during the nine months ended March 31, 1995
and 1996, respectively.
104
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
8. COMMITMENTS
Capital Leases - The Company leases certain computer equipment and
machinery under capital leases. Future minimum lease commitments and the
related present value of the leases are as follows:
Year ending June 30:
1996 $ 119,000
1997 79,000
1998 20,000
----------
Total minimum lease payments 218,000
Less amount representing interest (24,000)
----------
Present value of net minimum lease
obligation at June 30, 1995 $ 194,000
==========
The leased equipment is included in equipment and improvements and has a
cost of $495,000 and $477,000, with a net book value of $257,000 and
$317,000, for the years ended June 30, 1995 and 1994, respectively.
Operating Leases - The Company leases its facilities in Massachusetts
and California under operating leases. The Massachusetts leases extend
through August 1997 and September 2000, and the California lease through
December 2001. A Massachusetts facility is leased from a real estate
trust; certain minority owners of the trust are also stockholders and
directors of the Company. A portion of this facility is subleased to a
third party; the sublease expires in August 1997. The California
facility is leased from The Perkin-Elmer Corporation (a stockholder).
Minimum lease commitments, net of sublease income (exclusive of
escalation clauses which are dependent on contingencies), are as
follows:
Lease
obligations Sublease Net
Year ending June 30:
1996 $ 1,297,000 $ (55,000) $ 1,242,000
1997 1,146,000 (55,000) 1,091,000
1998 980,000 (5,000) 975,000
1999 908,000 908,000
2000 653,000 653,000
Thereafter 287,000 287,000
------------ ----------- ------------
$ 5,271,000 $ (115,000) $ 5,156,000
============ =========== ============
105
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
In addition, the Company pays real estate taxes, insurance and all
operating expenses of the facilities. Rent expense was $1,403,000,
$1,102,000 and $1,117,000 for the years ended June 30, 1993, 1994 and
1995, respectively, and $689,000 and $676,000 for the nine months ended
March 31, 1995 and 1996, respectively, of which $716,000, $850,000,
$867,000, $505,000 and $491,000 was expense related to facilities leased
from stockholders for the years ended June 30, 1993, 1994 and 1995 and
the nine months ended March 31, 1995 and 1996, respectively.
9. RESEARCH AND DEVELOPMENT EXPENSES
In 1993, 1994 and 1995, the Company received Small Business Innovative
Research (SBIR) Program Contracts. These contracts provide the Company
with government-sponsored funds for research and development in specific
areas. The revenue related to the SBIR contracts has been included in
net sales and was approximately $355,000, $1,453,000 and $1,069,000 for
the years ended June 30, 1993, 1994 and 1995, respectively, and $790,000
and $485,000 for the nine months ended March 31, 1995 and 1996,
respectively. Related expenses have been included in cost of goods sold
and were approximately $254,000, $1,114,000 and $829,000 for the years
ended June 30, 1993, 1994 and 1995, respectively, and $599,000 and
$406,000 for the nine months ended March 31, 1995 and 1996,
respectively.
10. RESTRUCTURING EXPENSES
In the year ended June 30, 1993, the Company restructured its East Coast
operations by consolidating substantially all of its Westford facility
into its Marborough facility. As a result of this restructuring, the
Company incurred costs of $833,000 related to a partial termination of
the facility lease and a related sublease, the write-off of certain
assets and associated costs of the restructuring. Concurrently, the
Company also restructured its work force, resulting in $408,000 of
severance costs.
11. MAJOR CUSTOMERS
Sales to major customers as a percentage of total product revenue were
as follows:
Year ended June 30, Nine months ended
------------------------- March 31, 1996
1993 1994 1995 (unaudited)
Customer A 4% 13% 7%
Customer B 16% 18% 8%
Customer C 10%
106
<PAGE>
OPTICAL CORPORATION OF AMERICA
NOTES TO FINANCIAL STATEMENTS
FOR EACH OF THE THREE YEARS IN THE PERIOD ENDED JUNE 30, 1995 AND THE
NINE MONTHS ENDED MARCH 31, 1996 (Unaudited) (Continued)
- --------------------------------------------------------------------------------
A decision by a significant customer to substantially decrease or delay
purchases from the Company or the Company's inability to collect
receivables from these customers could have a material adverse effect on
the Company's financial condition and results of operations.
Revenues generated from governmental contracts were approximately
$20,639,000, $16,224,000 and $10,799,000 for the years ended June 30,
1993, 1994 and 1995, respectively, and $7,811,000 and $8,806,000 for the
nine months ended March 31, 1995 and 1996, respectively.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company's balance sheet includes the following financial
instruments: cash equivalents, accounts receivable, notes receivable,
notes payable and redeemable common stock. The Company considers the
carrying amount in the financial statements to approximate fair value
for the accounts receivable and notes receivable because of the
relatively short period of time between origination of the instruments
and their expected realization. The Company believes the carrying value
of its long-term debt approximates its fair value or the interest rate
approximates a rate the Company could obtain under similar terms at the
balance sheet date.
13. SUBSEQUENT EVENTS
On June 28, 1996, the Company signed an Agreement and Plan of Merger.
Pursuant to such agreement, the Company will become a wholly-owned
subsidiary of Optical Coating Laboratory, Inc. (OCLI), a publicly-held
company, accounted for using the pooling-of-interest method. In the
transaction, approximately 1,931,000 shares of OCLI will be issued for
all of the outstanding stock of the Company.
107
<PAGE>
APPENDIX I
Massachusetts Business Corporation Law
Mass. Ann. Laws ch. 156B (1996)
S 85. Rights of Minority Stockholder, etc.
A stockholder in any corporation organized under the laws of Massachusetts
which shall have duly voted to consolidate or merge with another corporation or
corporations under the provisions of sections seventy-eight or seventy-nine who
objects to such consolidation or merger may demand payment for his stock from
the resulting or surviving corporation and an appraisal in accordance with the
provisions of sections eighty-six to ninety-eight, inclusive, and such
stockholder and the resulting or surviving corporation shall have the rights and
duties and follow the procedure set forth in those sections. This section shall
not apply to the holders of any shares of stock of a constituent corporation
surviving a merger if, as permitted by subsection (c) of section seventy-eight,
the merger did not require for its approval a vote of the stockholders of the
surviving corporation.
HISTORY: 1964, 723, S 1; 1969, 392, S 22.
S 86. Applicability of S 87 to 98; Prerequisites of Objecting Stockholder's
Right to Demand Payment for Shares and Appraisal Thereof.
If a corporation proposes to take a corporate action as to which any section
of this chapter provides that a stockholder who objects to such action shall
have the right to demand payment for his shares and an appraisal thereof,
sections eighty-seven to ninety-eight, inclusive, shall apply except as
otherwise specifically provided in any section of this chapter. Except as
provided in sections eighty-two and eighty-three, three, no stockholder shall
have such right unless (1) he files with the corporation before the taking of
the vote of the shareholders on such corporate action, written objection to the
proposed action stating that he intends to demand payment for his shares if the
action is taken and (2) his shares are not voted in favor of the proposed
action.
HISTORY: 1964, 723, S 1; 1965, 685, S 40; 1973, 749, S 1.
A1
<PAGE>
S 87. Notice of Certain Stockholders' Meetings to Contain Statement of Rights of
Objecting Stockholders; Effect of Giving Notice; Form.
The notice of the meeting of stockholders at which the approval of such
proposed action is to be considered shall contain a statement of the rights of
objecting stockholders. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock, and the directors may authorize the inclusion in any such notice of a
statement of opinion by the management as to the existence or non-existence of
the right of the stockholders to demand payment for their stock on account of
the proposed corporate action. The notice may be in such form as the directors
or officers calling the meeting deem advisable, but the following form of notice
shall be sufficient to comply with this section:
"If the action proposed is approved by the stockholders at the meeting and
effected by the corporation, any stockholder (1) who files with the corporation
before the taking of the vote on the approval of such action, written objection
to the proposed action stating that he intends to demand payment for his shares
if the action is taken and (2) whose shares are not voted in favor of such
action has or may have the right to demand in writing from the corporation (or,
in the case of a consolidation or merger, the name of the resulting or surviving
corporation shall be inserted), within twenty days after the date of mailing to
him of notice in writing that the corporate action has become effective, payment
for his shares and an appraisal of the value thereof. Such corporation and any
such stockholder shall in such cases have the rights and duties and shall follow
the procedure set forth in sections 88 to 98, inclusive, of chapter 156B of the
General Laws of Massachusetts."
HISTORY: 1964, 723, S 1; 1973, 749, S 2.
S 88. Corporation Taking Action, etc., to Notify Certain Objecting Stockholders
that Certain Approved Action Has Become Effective, etc.
The corporation taking such action, or in the case of a merger or
consolidation the surviving or resulting corporation, shall, within ten days
after the date on which such corporate action became effective, notify each
stockholder who filed a written objection meeting the requirements of section
eighty-six and whose shares were not voted in favor of the approval of such
action, that the
A2
<PAGE>
action approved at the meeting of the corporation of which he is a stockholder
has become effective. The giving of such notice shall not be deemed to create
any rights in any stockholder receiving the same to demand payment for his
stock. The notice shall be sent by registered or certified mail, addressed to
the stockholder at his last known address as it appears in the records of the
corporation.
HISTORY: 1964, 723, S 1; 1973, 749, S 3.
S 89. Corporation to Pay to Certain Objecting Stockholders Fair Value of Their
Shares on Demand, etc.
If within twenty days after the date of mailing of a notice under subsection
(e) or section eighty-two, subsection (f) of section eighty-three, or section
eighty-eight, any stockholder to whom the corporation was required to give such
notice shall demand in writing from the corporation taking such action, or in
the case of a consolidation or merger from the resulting or surviving
corporation, payment for his stock, the corporation upon which such demand is
made shall pay to him the fair value of his stock within thirty days after the
expiration of the period during which such demand may be made.
HISTORY: 1964, 723, S 1; 1973, 749, S 4.
S 90. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.
If during the period of thirty days provided for in section eighty-nine the
corporation upon which such demand is made and any such objecting stockholder
fail to agree as to the value of such stock, such corporation or any such
stockholder may within four months after the expiration of such thirty-day
period demand a determination of the value of the stock of all such objecting
stockholders by a bill in equity filed in the superior court in the county where
the corporation in which such objecting stockholder held stock had or has its
principal office in the commonwealth.
HISTORY: 1964, 723, S 1.
S 91. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Parties to Bill, etc.; Service of Bill
on Corporation; Notice to Stockholder Parties, etc.
A3
<PAGE>
If the bill is filed by the corporation, it shall name as parties respondent
all stockholders who have demanded payment for their shares and with whom the
corporation has not reached agreement as to the value thereof. If the bill is
filed by a stockholder, he shall bring the bill in his own behalf and in behalf
of all other stockholders who have demanded payment for their shares and with
whom the corporation has not reached agreement as to the value thereof and
service of the bill shall be made upon the corporation by subpoena with a copy
of the bill annexed. The corporation shall file with its answer a duly verified
list of all such other stockholders, and such stockholders shall thereupon be
deemed to have been added as parties to the bill. The corporation shall give
notice in such form and returnable on such date as the court shall order to each
stockholder party to the bill by registered or certified mail, addressed to the
last known address of such stockholder as shown in the records of the
corporation, and the court may order such additional notice by publication or
otherwise as it deems advisable. Each stockholder who makes demand as provided
in section eighty-nine shall be deemed to have consented to the provisions of
this section relating to notice, and the giving of notice by the corporation to
any such stockholder in compliance with the order of the court shall be a
sufficient service of process on him. Failure to give notice to any stockholder
making demand shall not invalidate the proceedings as to other stockholders to
whom notice was properly given, and the court may at any time before the entry
of a final decree make supplementary orders of notice.
HISTORY: 1964, 723, S 1.
S 92. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Entry of Decree Determining Value of
Stock; Date on Which Value is to Be Determined.
After hearing the court shall enter a decree determining the fair value of
the stock of those stockholders who have become entitled to the valuation of and
payment for their shares, and shall order the corporation to make payment of
such value, together with interest, if any, as hereinafter provided, to the
stockholders entitled thereto upon the transfer by them to the corporation of
the certificates representing such stock if certificated or, if uncertificated,
upon receipt of an instruction transferring such stock to the corporation. For
this purpose, the value of the shares shall be determined as of the day
preceding the date of the vote approving the proposed corporate action
A4
<PAGE>
and shall be exclusive of any element of value arising from the expectation or
accomplishment of the proposed corporate action.
HISTORY: 1964, 723, S 1.
Amended by 1983, 522, S 22, approved November 29, 1983; by S 24, effective
March 1, 1984.
S 93. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Court May Refer Bill, etc., to Special
Master to Hear Parties, etc.
The court in its discretion may refer the bill or any question arising
thereunder to a special master to hear the parties, make findings and report the
same to the court, all in accordance with the usual practice in suits in equity
in the superior court.
HISTORY: 1964, 723, S 1.
S 94. Bill in Equity to Determine Value of Stock of Objecting Stockholders
Upon Failure to Agree Thereon; Notation of Pendancy of Bill on Stock
Certificates; Notation of Pendancy of Bill in Corporate Records Relative to
Uncertified Shares.
On motion the court may order stockholder parties to the bill to submit their
certificates of stock to the corporation for the notation thereon of the
pendancy of the bill and may order the corporation to note such pendancy in its
records with respect to any uncertificated shares held by such stockholder
parties, and may on motion dismiss the bill as to any stockholder who fails to
comply with such order.
HISTORY: 1964, 723, S 1.
Amended by 1983, 522, S 23, approved November 29, 1983; by S 24, effective
March 1, 1984.
S 95. Bill in Equity to Determine Value of Stock of Objecting Stockholders on
Failure to Agree on Value Thereof, etc.; Taxation of Costs, etc.; Interest on
Award, etc.
The costs of the bill, including the reasonable compensation and expenses of
any master appointed by the court, but exclusive of fees of counsel or of
experts retained by any party, shall be determined by the court and taxed upon
the parties to the bill, or any of them, in such
A5
<PAGE>
manner as appears to be equitable, except that all costs of giving notice to
stockholders as provided in this chapter shall be paid by the corporation.
Interest shall be paid upon any award from the date of the vote approving the
proposed corporate action, and the court may on application of any interested
party determine the amount of interest to be paid in the case of any
stockholder.
HISTORY: 1964, 723, S 1; 1965, 685, S 41.
S 96. Stockholder Demanding Payment for Stock Not Entitled to Notice of
Stockholders' Meetings or to Vote Stock or to Receive Dividends, etc.;
Exceptions.
Any stockholder who has demanded payment for his stock as provided in this
chapter shall not thereafter be entitled to notice of any meeting of
stockholders or to vote such stock for any purpose and shall not be entitled to
the payment of dividends or other distribution on the stock (except dividends or
other distributions payable to stockholders of record at a date which is prior
to the date of the vote approving the proposed corporate action) unless:
(1) A bill shall not be filed within the time provided in section ninety;
(2) A bill, if filed, shall be dismissed as to such stockholder; or
(3) Such stockholder shall with the written approval of the corporation, or
in the case of a consolidation or merger, the resulting or surviving
corporation, deliver to it a written withdrawal of his objections to and an
acceptance of such corporate action.
Notwithstanding the provisions of clauses (1) to (3) , inclusive, said
stockholder shall have only the rights of a stockholder who did not so demand
payment for his stock as provided in this chapter.
HISTORY: 1964, 723, S 1.
Amended by 1982, 149, approved June 14, 1982, effective 90 days thereafter.
S 97. Certain Shares Paid for by Corporation to Have Status of Treasury Stock,
etc.
The shares of the corporation paid for by the corporation pursuant to the
provisions of this chapter shall have the status of treasury stock, or in the
case of a consolidation or merger the shares or the securities of the resulting
or surviving corporation into which the shares of such objecting stockholder
would have been converted had he not
A6
<PAGE>
objected to such consolidation or merger shall have the status of treasury stock
or securities.
HISTORY: 1964, 723, S 1; 1965, 685, S 42.
S 98. Enforcement by Stockholder of Right to Receive Payment for His Shares to
Be Exclusive Remedy; Exception.
The enforcement by a stockholder of his right to receive payment for his
shares in the manner provided in this chapter shall be an exclusive remedy
except that this chapter shall not exclude the right of such stockholder to
bring or maintain an appropriate proceeding to obtain relief on the ground that
such corporate action will be or is illegal or fraudulent as to him.
HISTORY: 1964, 723, S 1; 1965, 685, S 43.
A7
<PAGE>
APPENDIX II
FORM OF PROXY
OPTICAL CORPORATION OF AMERICA
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Robert DeN. Cope and Donald A. Johnson,
or either of them, with full power of substitution as proxies of the undersigned
and hereby authorizes them to represent the undersigned and to vote all shares
of Optical Corporation of America ("OCA") held by undersigned at the Special
Meeting of Shareholders to be held at OCA's corporate offices located at 170
Locke Drive, Marlborough, Massachusetts 01752, on September 10, 1996, beginning
at 10:00 A.M., and at any adjournment or postponement thereof, in the following
manner:
ITEM 1. APPROVAL OF THE PRINCIPAL TERMS OF THE MERGER DESCRIBED IN THE
PROXY STATEMENT WHICH ACCOMPANIED THIS PROXY. THIS PROPOSAL INVOLVES MERGING A
WHOLLY-OWNED SUBSIDIARY OF OPTICAL COATING LABORATORY, INC. ("OCLI") WITH AND
INTO OCA. UPON CONSUMMATION OF THE MERGER, EACH SHARE OF COMMON STOCK OF OCA
HELD ON THE RECORD DATE SHALL BE CONVERTED INTO SHARES OF COMMON STOCK OF OCLI
DETERMINED PURSUANT TO THE EXCHANGE RATIO DESCRIBED IN THE PROXY STATEMENT.
(MANAGEMENT RECOMMENDS A VOTE FOR ITEM 1.)
[ ] FOR [ ] AGAINST [ ] ABSTAIN
ITEM 2. In their discretion, upon such other matters as may properly be brought
before the meeting or any adjournment thereof;
with all powers that the undersigned would possess if personally present, and
hereby ratifies and confirms all that said proxies may do in the premises.
(Continued and to be signed on reverse side)
IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1.
This proxy when properly executed, will be voted in the manner directed therein
by the undersigned Stockholder.
If the stock is issued in the names of two or more persons, only one of them
needs to sign the proxy. A proxy executed by a corporation should be signed in
its name by an authorized officer. Executors, administrators and trustees should
so indicate when signing.
Dated: , 1996
Signature of Stockholder
Signature of Stockholder
Please sign exactly as name
or names appear hereon.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Section 145 of the General Corporation Law of the State of Delaware, as
amended, gives Delaware corporations the power to indemnify each of their
present and former directors or officers under certain circumstances, if such
person acted in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation.
Article Fourteen of the Registrant's Amended and Restated Certificate
of Incorporation and OCLI's By-Laws provide that OCLI will indemnify its
directors and officers to the fullest extent permitted under Delaware law,
including circumstances in which indemnification is otherwise discretionary. The
Company submitted these charter and By-Law provisions to its stockholders, who
approved them in March 1987. In addition, OCLI has entered into separate
Indemnification Agreements with its directors and officers to the full extent
permitted by applicable law and OCLI's Certificate of Incorporation. The general
effect of the indemnification provisions of the By-Laws and the Indemnification
Agreements is to require OCLI, among other things, to indemnify its directors
and officers against certain liabilities that may arise by reason of their
status or service as directors or officers (provided the officer or director
acted in good faith and in a manner he or she believed to be in or not opposed
to the best interests of OCLI and, with respect to a criminal proceeding,
provided he or she had no reasonable cause to believe that the conduct was
unlawful), and to advance their expenses (including attorneys' fees) incurred as
a result of any proceeding against them as to which they could be indemnified.
The Company believes that its charter and By-law provisions and the separate
Indemnification Agreements are necessary to attract and retain qualified persons
as directors and officers.
At present, OCLI is not aware of any threatened litigation or
proceeding which could result in a claim for indemnification by any director or
officer.
Section 145 of the Delaware General Corporation Law provides for the
indemnification of officers, directors and other corporate agents in terms
sufficiently broad to indemnify such persons, under certain circumstances, for
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act of 1933.
II-1
<PAGE>
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling OCLI
pursuant to the foregoing provisions, OCLI has been informed that in the opinion
of the Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
The Registrant maintains officers' and directors' insurance covering
certain liabilities that may be incurred by officers and directors in the
performance of their duties.
Item 21. Exhibits and Financial Statement Schedules.
See the Exhibit Index included immediately preceding the exhibits to
this Registration Statement.
Item 22. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
II-2
<PAGE>
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes as follows: that prior to
any public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), the
issuer undertakes that such reoffering prospectus will contain the information
called for by the applicable registration form with respect to reofferings by
persons who may be deemed to be underwriters, in addition to the information
called for by the other Items of the applicable form.
The Registrant undertakes that every prospectus (i) that is filed
pursuant to the immediately preceding undertaking or (ii) that purports to meet
the requirements of section 10(a)(3) of the Act and is used in connection with
an offering of securities subject to Rule 415, will be filed as a part of an
amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether
II-3
<PAGE>
such indemnification by it is against public policy as expressed in the Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11, or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
The undersigned Registrant hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Santa Rosa, California,
on this 9th day of August, 1996.
Optical Coating Laboratory, Inc.
By: /s/ Joseph C. Zils
--------------------------------
Joseph C. Zils
Vice President, General Counsel
and Corporate Secretary
<TABLE>
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated:
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
Chairman of the Board, President,
and Chief Executive Officer
/s/ Herbert M. Dwight, Jr. (Principal Executive and
- -------------------------------- Operating Officer) August 9, 1996
Herbert M. Dwight, Jr.
Vice President, Finance
and Chief Financial Officer
/s/ John M. Markovich (Principal Financial and
- -------------------------------- Accounting Officer) August 9, 1996
John M. Markovich
/s/ John McCullough
- -------------------------------- Director and Vice President August 9, 1996
John McCullough
/s/ Douglas C. Chance
- -------------------------------- Director August 9, 1996
Douglas C. Chance
/s/ Julian Schroeder
- -------------------------------- Director August 9, 1996
Julian Schroeder
/s/ Renn Zaphiropoulos
- -------------------------------- Director August 9, 1996
Renn Zaphiropoulos
</TABLE>
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
2 Agreement and Plan of Merger by and among Optical Coating Laboratory,
Inc., a Delaware corporation, OCA Acquisition Corp., a Delaware
corporation, and Optical Corporation of America, a Massachusetts
corporation, dated June 28, 1996.
3.1 Articles of Organization of Optical Corporation of America dated May
13. 1985, as amended, June 18, 1985, July 24, 1986 and October 29,
1990.
3.2 By-Laws of Optical Corporation of America.
4.1 Rights Agreement between the Registrant and First Interstate Bank of
California dated November 25, 1987. Incorporated by reference to
Exhibit (4) of the Registrant's Form 10-K for the year ended October
31, 1987.
4.2 Note Purchase Agreement(s) dated as of May 27, 1994 for the private
placement of $18,000,000 of 8.71% Senior Notes due June 1, 2002 between
the Registrant and Connecticut Mutual Life Insurance Company, Modern
Woodman of America and American Life and Casualty Insurance Company.
Incorporated by reference to Exhibit (4)(a) of the Registrant's Form
10-Q for the quarter ended July 31, 1994.
4.3 Stock Purchase Agreement dated as of February 8, 1995 by and between
the Registrant, Netra Corporation and the Sellers as identified on the
signature page of said agreement, each a shareholder of Netra
Corporation, for the purchase by the Registrant of all of the shares of
common and preferred stock of Netra Corporation. Incorporated by
reference to Exhibit (4) of the Registrant's Form 10-Q for the quarter
ended April 30, 1995.
4.4 Optical Coating Laboratory, Inc. 12,000 shares of 8% Series C
Convertible Redeemable Preferred Stock Purchase Agreement among the
Registrant and the investors named therein dated as of May 1, 1995.
Incorporated by reference to Exhibit 4(e) of Registrant's Form S-8
dated July 6, 1995.
4.5 Certificate of Designation, Preferences and Rights of Series C
Convertible Redeemable Preferred Stock of Optical Coating Laboratory,
Inc. dated May 2, 1995. Incorporated by reference to Exhibit 4(f) of
Registrant's Form S-8 dated July 6, 1995.
5* Opinion and consent of Collette & Erickson.
10(a) Loan and Security Agreement between Silicon Valley Bank and Optical
Corporation of America dated May 27, 1994, as amended November 27,
1995.
II-6
<PAGE>
10(b) Warrant to Purchase Stock issued to Silicon Valley Bank by Optical
Corporation of America dated May 27, 1994.
10(c) Registration Rights Agreement between Silicon Valley Bank and Optical
Corporation of America dated May 27, 1994.
10(d) Anti-Dilution Agreement between Silicon Valley Bank and Optical
Corporation of America dated May 27, 1994.
10(e) Collateral Assignment, Patent Mortgage and Security Agreement between
Silicon Valley Bank and Optical Corporation of America dated May 27,
1994.
10(f) Promissory Note between General Electric Capital Corporation and
Optical Corporation of America dated June 23, 1994.
10(g) Master Security Agreement between General Electric Capital Corporation
and Optical Corporation of America dated June 21, 1994.
10(h) Inter-Creditor Agreement between General Electric Capital Corporation
and Optical Corporation of America dated June 21, 1994.
10(i) Promissory Note between General Electric Capital Corporation and
Optical Corporation of America dated December 28, 1995.
10(j) Cross-Collateral and Cross-Default Agreement between General Electric
Capital Corporation and Optical Corporation of America dated December
28, 1995.
10(k) Promissory Note between Perkin-Elmer Corporation and Optical
Corporation of America dated February 1, 1994.
10(l) Subordinated Note and Warrant Purchase Agreement between Massachusetts
Capital Resource Company and Optical Corporation of America dated May
28, 1992, as amended on March 14, 1994, June 30, 1994, September 30,
1994, July 20, 1995 and August 30, 1995.
10(m) Subordinated Note Due 1999 Issued to Massachusetts Capital Resource
Company By Optical Corporation of America dated May 28, 1992.
10(n) Common Stock Purchase Warrant Issued to Massachusetts Capital Resource
Company By Optical Corporation of America dated May 28, 1992.
10(o) Security Agreement between Massachusetts Capital Resource Company and
Optical Corporation of America dated March 15, 1994.
10(p) Subordinated Note and Warrant Purchase Agreement between Massachusetts
Capital Resource Company and Optical Corporation of America dated June
30, 1993.
II-7
<PAGE>
10(q) Patent Licensing Agreement between John Wilbur Hicks and Optical
Corporation of America dated May 30, 1995.
10(r) Agreement between John Wilbur Hicks and Optical Corporation of America
dated February 21, 1995.
10(s) Inter-Creditor Agreement between General Electric Capital Corporation
and Optical Corporation of America dated December 28, 1995.
11 Computation of per share earnings. Incorporated by reference to Exhibit
11 of Optical Coating Laboratory, Inc.'s Form 10-Q for the quarter
ended April 28, 1996.
13(a) Registrant's 1995 Annual Report to Stockholders for the fiscal year
ended October 31, 1995, not deemed to be filed herein except for
certain portions which have been incorporated herein by reference.
Incorporated by reference to the Registrant's Form 10-K for the year
ended October 31, 1995.
13(b) Registrant's Quarterly Report on Form 10-Q for the quarter ended
January 28, 1996 incorporated herein by reference.
13(c) Registrant's Quarterly Report on Form 10-Q for the quarter ended April
28, 1996 incorporated herein by reference.
23(a)+ Consent of Deloitte & Touche LLP, San Francisco, California.
23(b)+ Consent of Deloitte & Touche LLP, Costa Mesa, California.
23(c)* Consent of KPMG Peat Marwick LLP, San Francisco, California.
23(d)* Consent of Counsel, Collette & Erickson, San Francisco, California
(included in Exhibit 5).
27 Not applicable.
99 Form of proxy.
+ Items not previously filed.
* To be filed by amendment.
II-8
Exhibit 23(a)
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
We consent to the incorporation by reference in this Registration
Statement of Optical Coating Laboratory, Inc. ("OCLI" or "the Company") on Form
S-4 of our report dated December 18, 1995, appearing in the Annual Report on
Form 10-K of OCLI for the year ended October 31, 1995 ("Form 10-K") and to the
references to Deloitte & Touche LLP under the headings "Selected Financial
Information" and "Experts" in the Prospectus, which is part of this Registration
Statement.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedule of OCLI
listed in Item 14(A)(2) of Form 10-K. The financial statement schedule is the
responsibility of the Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, the financial statement schedule,
when considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information set forth therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
San Francisco, California
August 15, 1996
Exhibit 23(b)
INDEPENDENT AUDITORS' CONSENT AND REPORT ON SCHEDULE
We consent to the use in this Registration Statement of Optical Coating
Laboratory, Inc. on Form S-4 of our report on the balance sheets of Optical
Corporation of America as of June 30, 1994 and 1995, and the related statements
of operations, stockholders' equity and cash flows for each of the three years
in the period ended June 30, 1995, dated August 30, 1995, except for Notes 5 and
13, which are as of June 28, 1996, appearing in the Prospectus, which is a part
of this Registration Statement, and to the references to us under the headings
"Selected Financial Data" and "Experts" in such Prospectus.
Our audits of the consolidated financial statements referred to in our
aforementioned report also included the financial statement schedule of Optical
Corporation of America for the years ended June 30, 1994 and 1995. The financial
statement schedule is the responsibility of the Corporation's management. Our
responsibility is to express an opinion based on our audits. In our opinion,
such financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly, in all material
respects, the information set forth therein.
/s/ Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Costa Mesa, California
August 15, 1996
