-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Igm6O2ZpJ4mesMm+vrJ5+lFtiU9n9IXvSEwKgwIUzCT9bnrO7vvhWveYKN0eEyaL InkSLFRj3nPW73kFtzlwLQ== 0000950129-96-000348.txt : 19960314 0000950129-96-000348.hdr.sgml : 19960314 ACCESSION NUMBER: 0000950129-96-000348 CONFORMED SUBMISSION TYPE: 10-K405 PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960313 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: OI CORP CENTRAL INDEX KEY: 0000073773 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 730728053 STATE OF INCORPORATION: OK FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K405 SEC ACT: 1934 Act SEC FILE NUMBER: 000-06511 FILM NUMBER: 96534153 BUSINESS ADDRESS: STREET 1: P O BOX 9010 STREET 2: 151 GRAHAM RD CITY: COLLEGE STATION STATE: TX ZIP: 778429010 BUSINESS PHONE: 4096901711 MAIL ADDRESS: STREET 1: 151 GRAHAM RD STREET 2: P O BOX 9010 CITY: COLLEGE STATION STATE: TX ZIP: 778429010 FORMER COMPANY: FORMER CONFORMED NAME: OCEANOGRAPHY INTERNATIONAL CORP DATE OF NAME CHANGE: 19801205 10-K405 1 O.I. CORPORATION - FORM 10-K - DATED 12/31/95 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-K [X] Annual report pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the fiscal year ended December 31, 1995 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Commission file number 0-6511. O. I. CORPORATION (Exact name of registrant as specified in its charter) OKLAHOMA 73-0728053 (State of Incorporation) (IRS Employer Identification No.) 151 GRAHAM ROAD, BOX 9010 COLLEGE STATION, TEXAS 77842-9010 (Address of principal executive offices) (Zip Code) Registrant's Telephone Number, including area code: (409) 690-1711 Securities Registered Pursuant to Section 12(b) of the Act: NONE Securities Registered Pursuant to Section 12(g) of the Act: Common Stock ---------------- (Title of class) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO --- --- Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10K. X --- The aggregate market value of the voting stock (based upon the March 1, 1996 average of the high and low trade prices of these shares from the National Association of Securities Dealers) of O.I. Corporation held by non-affiliates was approximately $12,225,168. Number of shares outstanding of each of the issuer's classes of common stock, as of March 1, 1996: 3,942,750 shares. Item 9 and Part III information are incorporated by reference to the proxy statement for the annual meeting of shareholders to be held May 7, 1996. 2 PART I ITEM 1. BUSINESS O. I. Corporation (the Company) was organized as a corporation in 1963, in accordance with the Business Corporation Act of the State of Oklahoma, as Clinical Development Corporation, a builder of medical and research laboratories. In 1969, the Company headquarters were moved from Oklahoma City, Oklahoma to College Station, Texas, where the Company became involved in commercializing technology developed in the School of Oceanography at Texas A&M University. In July 1969, the Company's name was changed to Oceanography International Corporation. In July 1980, the Company's name was changed to O.I. Corporation, and in January 1989, to better align the company name with the products offered and markets served, the Company began doing business as O.I. Analytical. On January 4, 1994, the Company acquired all the stock of CMS Research Corporation (CMS) of Birmingham, Alabama and accounted for the transaction as a pooling of interests. As a result of this accounting treatment, the Company's financial statements have been restated for 1992 and 1993. See Note 2 to the Consolidated Financial Statements contained herein. On June 24, 1994, the Company purchased substantially all of the assets and assumed certain liabilities of Floyd Associates, Incorporated (Floyd) of Lake Wylie, South Carolina and accounted for the transaction as an asset purchase. On February 9, 1995, the Company acquired all the stock of Laboratory Automation, Inc. (LAI) of Columbia, Missouri, and accounted for the transaction as a purchase. The Company develops, manufactures, markets and services analytical, monitoring, and sample preparation products, components, and systems used to detect, measure, and analyze chemical compounds. The Company's analytical instruments and systems are used primarily in testing and research laboratories that are involved in the regulation, testing, and disposal of environmental contaminants in air, water, and soil. CMS, founded in 1986, develops, manufactures, and markets instruments used as continuous emissions monitoring systems (CEM) or continuous monitoring systems (CMS), thus the origin of the company name. The systems are used for monitoring for volatile organic compounds (VOCs) and chemical warfare agents. LAI, formed from the divestment of ABC Laboratories, of Columbia, Missouri, develops, manufactures, and markets gel permeation chromatography (GPC) systems, Soxhlet extraction, liquid/liquid extraction, and solvent purification systems. The Company also manufactures expendables and accessories required to support its products. The Company entered an agreement on June 1, 1994 to distribute a Thermal Extraction (ThermEx(TM)) device and cryogenic cooling device, both inlet systems for gas chromatography. The Company and supplier mutually agreed to terminate the Agreement effective December 6, 1995. The supplier purchased from the Company all supplier products in the Company's inventory, and agreed to provide warranty and service relating to products sold under the contract by the Company. Sales under the agreement were not material to the Company's operating results for the period December 31, 1995 nor for the period ending December 31, 1994. Gas Chromatography Instruments The Company designs, manufactures, markets, and services components for gas chromatography, including detectors and sample introduction instruments. Gas chromatography, developed in 1952, is an analytical technique that separates organic compounds based on their unique physical and chemical properties. The use of gas chromatography in a number of diverse applications has lead to the continuous development of a broad range of sample introduction and detector devices. Advances in the field are based on technology improvements which provide sample introduction, faster analysis, lower level detection, and ease of use. Set forth below are descriptions of certain gas chromatograph instruments (GCs) currently manufactured by the Company. - - The Electrolytic Conductivity Detector (ELCD) selectively detects trace quantities of organic halogen, sulfur, and nitrogen. It is primarily used for analyzing volatile organic compounds, pesticides, and poly-chlorinated biphenyls (PCBs) in drinking water, wastewater, soil, and air as required in U.S. Environmental Protection Agency (EPA) Methods 502.2 and 601. 2 3 - - The Photoionization Detector (PID) selectively detects trace quantities of aromatic and olefinic compounds, which are ionized by an ultra-violet light source. It is primarily used in VOC analysis, as required in U.S. EPA Methods 502.2 and 601, underground storage tank monitoring, and pharmaceutical applications. - - The Flame Ionization Detector (FID) selectively detects materials that ionize in an air/hydrogen flame. - - The Tandem PID/ELCD Detector combines the PID and ELCD for detection of VOCs in soil, water, and air. The unique tandem design requires only one GC detector port, increasing GC capability. - - The Tandem PID/FID Detector combines the PID and FID to detect aromatic hydrocarbons. It is primarily used to analyze water, soil, or waste samples for aromatics associated with fuels and underground storage tank monitoring. - - The Purge-and-Trap Sample Concentrator (P&T) concentrates trace amounts of a liquid, solid, or gaseous sample for introduction into a GC. Autosamplers sequentially transfer samples to the P&T for automated sampling and increased laboratory productivity. - - The Headspace Sampler concentrates trace amounts from a gaseous sample for introduction into a GC. GC Analyzer Systems The Company integrates its gas chromatography components with a GC and a GC column to form GC analyzer systems. The Company's VOC Analyzer System, BTEX Analyzer System (Benzene, Toluene, Ethylbenzene, and Xylenes), Pesticide Analyzer System, and HF (Hydrogen Fluoride) Analyzer System are available in different configurations to meet market needs. Organic Carbon Analyzer Systems The Company designs, manufactures, markets, and services Total Organic Carbon (TOC) Analyzers that are primarily used to measure organic and inorganic carbon levels in ultrapure water, drinking water, groundwater, wastewater, soils, and solids. The Company's TOC Analyzer is used in testing required by the U.S. EPA. The TOC Analyzer is also used in testing associated with U.S. pharmaceutical methods, the manufacture of semiconductors, power generation, and oceanographic research. Continuous Emissions Monitoring (CEM) Systems The Company designs, manufactures, markets, and services a continuous air monitoring analyzer for monitoring VOCs. The U.S. Government has been the largest buyer of the Company's CEM analyzer with the primary application being monitoring of chemical warfare agents. The Company is involved in an ongoing attempt to position CEM products to serve the commercial market. The Company believes the commercial market segments of potential applications include VOC monitoring of incineration of hazardous waste, landfill gases, Clean Air Act compliance and industrial hygiene. The CEM analyzer design is based on gas chromatography technology and includes a variety of configurations including a GC mainframe, sample inlets, separation, detectors, and data handling: - - Sample Inlets include injectors, sample loops, concentrators, and autosamplers. - - Separation is accomplished using a gas chromatographic column. The Company's modular design includes detector(s), electronics, sampling system, and gas supplies. The quick disconnect design provides for rapid column and detector replacement. - - Detection includes flame-ionization, photoionization, flame photometric, and electrolytic conductivity. - - Data Handling and Reporting is accomplished with proprietary software that provides for sequencing multiple sample inlet lines, integration of detector signals, alarm parameters, data calculation, and report conditions. Sample Preparation Products and Systems The Company designs, manufactures, markets, and services sample 3 4 preparation instrumentation used to prepare sample matrices for analysis. The most time-consuming part of chemical analysis is sample preparation. Procedures, techniques, and instruments that can reduce total sample preparation time are highly desirable in analyzing chemical compounds. Several methods for use of microwave techniques in the preparation of samples for metals analysis are pending approval by the EPA. Microwave digestion serves multiple markets, including environmental, biological, metallurgical, geological, and industrial. Applications include acid digestion of aqueous inorganic samples in accordance with proposed EPA and other defined methods. The Company's microwave product features a modular design, including mainframe oven, both integrated and separate temperature and pressure control systems, and an external exhaust system. Through the use of specially designed digestion vessels, the Company's microwave system can process up to twelve samples simultaneously. The Company's patented digestion vessels' safety features include a disk for pressure relief and double-wall construction. By acquiring LAI, the Company broadened its sample preparation product line to include the following: - - Automated Gel Permeation Chromatography (GPC) systems are used for preparation of tissue, food, industrial and environmental samples prior to analysis. Systems process up to 23 samples with unattended operation. The GPC system is widely recognized in regulatory methods for sample cleanup, including FDA, USDA and EPA. - - ExCell Liquid/Liquid Extractors provide electronically assisted extractions for up to six, one-liter aqueous samples in less than two hours. Programmable microprocessor controls automate all steps of sample handling, extraction and system rinsing. These ExCell extractors provide for the fastest possible sample preparation with minimal labor and enhanced recoveries. - - Soxtherm Soxhlet Extractors automate all traditional soxhlet methods for preparing solid samples. They extract up to six samples simultaneously five times faster than manual techniques. All extraction functions are automated, including solvent evaporation and recovery. The Soxtherm extractor conforms to current EPA methods. The Company is a value-added reseller (VAR) for analytical instruments manufactured by Hewlett-Packard Company (HP). Under the terms of the Company's VAR agreement with HP, the Company purchases HP analytical instruments, including GCs, and integrates them with Company-manufactured components and markets these analytical systems for environmental analysis to comply with EPA 500, 600, and 8000 Series Methods, and for other non-environmental chemical analysis. The VAR agreement provides that HP will forward to the Company sales leads for systems comprising the Company's products. The Company also conducts its own marketing to generate sales leads. The Company obtains orders, configures systems, ships, installs, and provides support to products sold pursuant to the VAR agreement. The VAR agreement is renewable annually; however, there are no assurances that the agreement will be renewed. Management believes that there are alternative means of distributing the Company's products and obtaining similar GC products as those now purchased from HP. The Company and HP annually evaluate the benefits of continuing the agreement. In 1994, HP began offering a product that competes with one component sold by the Company; accordingly, the Company continues to measure the value of the arrangement. Should the Company choose to pursue alternative sales strategies, GCs typically can be purchased at a more favorable discount in an original equipment manufacturers' (OEM) arrangement with HP, as well as other GC suppliers. All of the Company's assets are located in the United States and all sales are conducted in U.S. dollars. There have been no sales or transfers between industry segments or geographic areas during the last five fiscal years. Estimated 4 5 net revenue attributable to the United States, export revenue as a group, and the number of countries in which export revenue was made are as follows:
($ in thousands) 1995 1994 1993 1992 1991(1) - ----------------------------------------------------------------------------------------------------- Net Revenue: United States $ 15,110 $ 16,794 $ 16,860 $ 19,239 $ 16,633 Export 2,832 1,562 1,552 1,540 1,309 ---------- ---------- ---------- --------- --------- Total $ 17,942 $ 18,356 $ 18,412 $ 20,779 $ 17,942 ========== ========== ========== ========= ========= % of Revenue: United States 84% 91% 92% 93% 93% Export 16% 9% 8% 7% 7% ---------- ---------- ---------- --------- --------- Total 100% 100% 100% 100% 100% ========== ========== ========== ========= ========= Number of countries - export 31 26 28 28 23
(1) The 1991 amounts do not include the operations of CMS. MANUFACTURING The Company manufactures products at three locations. The Company's manufacturing capabilities include electro-mechanical assembly, testing, integration of components and systems and calibration of configured systems. The Company believes that its manufacturing processes are documented as it understands the requirements to meet applicable domestic and international regulations and standards. The Company's policy has been to have its products certified to safety standards by one or more of the following agencies: Underwriters Laboratories (UL), Canadian Standards Association (CSA) and/or the European Committee for Electrotechnical Standardization (CE). These agencies and others also certify that instruments meet certain performance standards and that advertised specifications are accurate. As of January 1, 1996, instruments imported in Europe are required to have a CE mark. During 1995, the Company incurred expenses relating to product modification and certification testing to ensure that certain of its products typically sold in Europe comply with CE requirements. MARKETING The Company markets and sells analytical components and systems that it produces and purchases for resale, provides on-site support services, and distributes expendables and accessories required to support the operation of products sold. The Company markets its analytical instruments through a direct sales staff and through domestic and international independent manufacturers' representatives and distributors. The Company's marketing program includes advertising, direct mail, seminars, trade shows, and telemarketing. The Company also benefits in the selling process from marketing assistance received from HP in connection with the VAR agreement. TECHNICAL SUPPORT The Company's technical support staff provides support after the sale to ensure customer satisfaction. The Company offers training courses and publishes technical information for its customers. Products sold by the Company generally include a 90-day to one-year warranty. Customers may also purchase service contracts that provide coverage after the expiration of the initial warranty. Service work not performed under warranty or service contract is charged on a time, travel, and material basis. The Company installs and services its products through its field service personnel in the United States and Canada and through distributors and manufacturers' representatives internationally. RESEARCH AND DEVELOPMENT The analytical instrumentation industry is subject to rapid changes in technology. The Company's success is heavily dependent on its ability to continually improve its existing products and to introduce new products. Research and development costs, relating to both present and future products, are expensed as incurred. Research and development expenses were $1,937,000 in 1995, $1,809,000 in 1994, and $1,051,000 in 5 6 1993. The Company actively pursues development of potential new products, including custom configured GC systems and components, instrument control and data reporting software systems, dedicated analyzers, microwave systems, and other sample preparation products. PATENTS The Company holds both United States and international patents and has United States and international patent applications pending. The Company currently holds 14 patents, 1 of which expires before the year 2000, and 13 of which expire between the years 2001 and 2011. As a matter of policy, the Company vigorously pursues and protects its proprietary technology positions and seeks patent coverage on all technology developments that it regards as material and patentable. The Company's general policy has been to seek patent protection when possible for those inventions and improvements likely to be incorporated into its products. While the Company believes that all of its patents and applications have value, no single patent or application is in itself essential to the Company's existence. COMPETITION The Company encounters aggressive competition in all aspects of its business activity. The Company competes with many firms in the design, manufacture, and sale of analytical instruments, principally on the basis of product technology and performance, quality and reliability, sales and marketing ability, product support, delivery, and price. Most of the Company's competitors have significantly greater financial resources, broader market coverage and global distribution, greater breadth of product line and other resources than the Company. EMPLOYEES As of December 31, 1995, the Company had a total of 134 full-time employees. The Company employs scientists and engineers who perform research and development on potential new products. To protect the Company's proprietary information, the Company has employment and confidentiality agreements with its employees who come in contact with such information. None of the Company's employees are covered by a collective bargaining agreement. Management believes that relations between the Company and its employees are excellent. EXECUTIVE OFFICERS OF THE REGISTRANT The executive officers of the Company, their ages, positions, and offices, as of March 1, 1996, are as follows:
Name Age Position Date Elected to Position ---- --- -------- ------------------------ William W. Botts 53 President, Chief Executive Officer and 1985 Chairman of the Board 1986 William R. Hart 59 Vice President/Director of Marketing 1991 Dr. Gary D. Sides 48 Vice President 1994 Jane A. Smith 47 Vice President/Corporate Secretary 1990 Dennis D. Schupp 51 Vice President 1995
Prior to joining the Company, William W. Botts was Executive Vice President and Chief Operating Officer of The Brandt Company, a privately owned oil field service company headquartered in Houston, Texas, which was sold to TRW, Inc. in August 1982. He was named Vice President and General Manager of the Brandt Division of TRW Inc, a position he held until he joined the Company as President and Chief Operating Officer on February 1, 1985. Mr. Botts was named Chief Executive Officer of the Company on July 19, 1985, and Chairman of the Board of Directors of the Company on May 26, 1986. Prior to joining the Company, William R. Hart was Division Sales Manager for the Hewlett-Packard Company's Avondale Division from 1976 to 1980. In 1980, he was named Product Marketing Manager for the Gas 6 7 Chromatography Product Line at the Avondale Division. In 1982, he moved to Houston, Texas as Hewlett-Packard's Analytical Product's Group Sales Manager for the Southwest District. Mr. Hart joined the Company in October of 1991 as Vice President/Director of Marketing. Gary D. Sides, Ph.D., was employed with Southern Research Institute, a not-for-profit group in Birmingham, Alabama from 1977 to 1986. He founded CMS in June 1986, and served as the President and Chairman of the Board from 1986 to 1994. On January 4, 1994, he was named Vice President of the Company and continues his role as President of CMS. Jane A. Smith has been employed with the Company since 1973. She was named Assistant Corporate Secretary in 1976 and Corporate Secretary in 1986. On May 22, 1990, Mrs. Smith was named Vice President/Corporate Secretary. Dennis D. Schupp was employed with Amtrak from 1972 to 1976. From 1976 to 1982 he held various positions with Marnon Industries of Grain Valley, Missouri. In 1982 he was employed by Solna, Inc. of Joplin and Kansas City, Missouri, where he served as Vice President-Manufacturing from 1982-1983, Executive Vice President (1983-1984) and President (1984-1989). In May 1989 he joined Sunglo Products of Kansas City, Missouri as General Manager. In February, 1990, Mr. Schupp joined ABC Laboratories as Chief Operating Officer. On September 15, 1993, LAI was organized as an independent company at which time he became president of LAI. On May 2, 1995, he was named Vice President of the Company and continues his role as President of LAI. ENVIRONMENTAL REGULATIONS The Company believes it is in compliance with federal, state, and local laws and regulations involving the protection of the environment. The Company routinely handles small amounts of materials that may be deemed hazardous. Hazardous materials are primarily introduced into the Company's products by end users rather than by the Company. The Company believes there will be no material effect upon its capital expenditures, earnings, and competitive position caused by its compliance with federal, state, or local provisions regulating the discharge of materials into the environment or relating to the protection of the environment. SOURCES OF RAW MATERIALS The Company produces its products from raw materials, component parts, and other supplies that are generally available from a number of different sources. The Company has few long-term contracts with suppliers. For certain of its purchased materials, the Company has developed preferred sources on the basis of quality and service. There are several purchased components that are supplied by single source suppliers. There can be no assurance that these preferred or single sources will continue to make materials available in sufficient quantities, at prices, and on other terms and conditions that are adequate for the Company's needs. However, there is no indication that any of these preferred or single sources will cease to do business with the Company. The Company believes that in the event of any such cessation, adequate alternate sources will be available, although perhaps at increased costs to the Company. In addition, substitute components may require reconfiguration of certain products and may cause delays in filling customer orders. Although the Company occasionally uses subcontractors, such arrangements are not material to its business. BACKLOG - OPEN ORDERS The Company's backlog of orders on December 31, 1995 was approximately $1,458,000, compared to $1,693,000 as of December 31, 1994, and $2,249,000 as of December 31, 1993. The Company's policy is to include in its backlog only purchase orders or production releases that have firm delivery dates within one year. Recorded backlog may not result in sales because of purchase order changes, cancellations, or other factors. The Company anticipates that substantially all of its present backlog of orders will be shipped or completed during 1996. MAJOR CUSTOMERS No single customer accounted for more than 10% of revenue in 1995, 1994 or 1993. Federal, state and municipal governments accounted for 26% of revenue in 1995, 33% in 1994 and 24% in 1993. Export sales accounted for 16% of revenue in 1995, an increase from 9% in 1994 and 8% in 1993. 7 8 - ------------------------------------------------------------------------------- ITEM 2. PROPERTIES The Company's headquarters, research, and manufacturing operations occupy approximately 28,650 square feet of space located on 11.29 acres of land in College Station, Texas. The Company rents and uses for storage a 4,500 square foot facility on a separate tract of land within one quarter mile from the Company's headquarters. CMS' headquarters, including research and development, customer service, and manufacturing operations, occupy approximately 9,490 square feet, located in Hoover, a subdivision of Birmingham, Alabama. This space is leased until October 1998. LAI's headquarters, research and development, customer service and manufacturing operations occupy 11,700 square feet located in Columbia, Missouri. This space is leased until July 1997. Facilities are well suited and adequate to meet the Company's present operational requirements. - ------------------------------------------------------------------------------- ITEM 3. LEGAL PROCEEDINGS On March 3, 1995, the Company filed a patent infringement complaint against a competitor in the Galveston Division of the U.S. District Court. The Company alleges that a product manufactured and sold by the competitor infringes on U.S. Patent No. 5,358,557 and 5,470,380 issued to the Company. The suit seeks to enjoin the manufacture and sale of the alleged infringing product and like products sold under different name designations and seeks unspecified damages. Trial date has been set for July 22, 1996. On February 13, 1996, the Company settled its lawsuit against a vendor and received approximately $290,000 in consideration thereof. - ------------------------------------------------------------------------------- ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS No matters were submitted to a vote of the security holders of the Company, through solicitation of proxies or otherwise, during the fourth quarter of 1995. - ------------------------------------------------------------------------------- PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS COMMON STOCK MARKET INFORMATION The Company's common stock trades on the Nasdaq Stock Market under the symbol: OICO. Information below is contained in a statistical report provided to the Company by the National Association of Securities Dealers, Inc. (NASD). The range of high and low trade prices for the Company's common stock for 1995 and 1994 was as follows:
1995 1994 ------------------------------------- High Low High Low ---- --- ---- --- First Quarter 4 5/8 3 3/4 5 5/8 4 3/8 Second Quarter 4 1/2 3 1/4 5 1/4 4 1/4 Third Quarter 4 2 3/4 5 4 Fourth Quarter 3 3/4 2 1/2 5 3 3/4
NOTE: The above quotations represent prices between dealers and do not include retail markup, markdown, or commission and may not necessarily represent actual transactions. 8 9 DIVIDENDS The Company has never paid dividends. Management does not anticipate paying any dividends in the near future. APPROXIMATE NUMBER OF HOLDERS OF COMMON STOCK As of March 1, 1996, there were approximately 1,230 holders of record of the Company's common stock. - ------------------------------------------------------------------------------- ITEM 6. SELECTED FINANCIAL DATA
($ in thousands except per share amounts) 1995 1994 1993 1992 1991(1) - ------------------------------------------------------------------------------------------------------------ Income statement data: - ---------------------- Net revenue $ 17,942 $ 18,356 $ 18,412 $ 20,779 $ 17,942 Income before income taxes 1,507 2,131 2,257 3,003 2,753 Net income 1,023 1,545 1,405 1,950 1,825 Earnings per share $ 0.24 $ 0.37 $ 0.34 $ 0.47 $ 0.52 Balance sheet data: - ------------------- Total assets $ 17,700 $ 15,979 $ 14,706 $ 12,470 $ 9,550 Working capital 11,855 11,156 9,876 7,784 4,927 Shareholders' equity 14,212 12,882 11,150 9,485 6,806 Common size income statement data: - ---------------------------------- Net revenue 100.0% 100.0% 100.0% 100.0% 100.0% Cost of revenue 51.5 55.2 54.4 53.7 50.5 --------- ---------- --------- --------- --------- Gross profit 48.5 44.8 45.6 46.3 49.5 Selling, general and administrative 32.3 25.5 29.1 25.7 27.8 Research and development 10.8 9.9 5.7 7.3 7.1 --------- ---------- --------- --------- --------- Operating income 5.4 9.4 10.8 13.3 14.6 Other income (expense), net 3.0 2.2 1.5 1.1 0.7 --------- ---------- --------- --------- --------- Income before income taxes 8.4 11.6 12.3 14.4 15.3 Provision for income taxes 2.7 3.2 4.7 5.0 5.1 --------- ---------- --------- --------- --------- Net income 5.7% 8.4% 7.6% 9.4% 10.2% ========= ========== ========= ========= =========
(1) The 1991 amounts do not include the operations of CMS. - ------------------------------------------------------------------------------- ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS On February 9, 1995, the Company acquired Laboratory Automation, Inc. (LAI), d.b.a. ABC Instruments, an environmental instruments company headquartered in Columbia, Missouri. Under the terms of the agreement, the Company made a $1,000,000 capital investment in LAI, which was used to retire outstanding long-term debt, and the Company subsequently acquired all of the remaining shares of LAI stock in exchange for 76,479 shares of the Company's common stock and $117,000. The acquisition was recorded using the purchase method of accounting and, accordingly, the acquired operations of LAI have been included in the results of operations since the date of 9 10 acquisition. The purchase price has been allocated to the net assets acquired based on estimated fair market values at the date of acquisition. For the twelve months ended November 30, 1994, LAI reported sales of $3,300,000 and a net loss of $151,000. On December 6, 1995, The Company and Ruska Instruments Corporation of Houston, Texas, mutually agreed to terminate a marketing agreement, which began June 1, 1994. Sales under the agreement were not material to the Company's operating results for the period ending December 31, 1995 nor for the period ending December 31, 1994. SUMMARY Net revenue decreased 2% in 1995, compared to 1994, while net income was down 34% for the same period. Net revenue was affected by volume decreases in most of the Company's products, resulting from adverse market conditions in the environmental testing markets served by the Company. The volume decreases were partially offset by sales of LAI's products. During 1995, the Company achieved income before income taxes of 8% of revenue, as compared to 12% in 1994. The Company's financial position as of December 31, 1995 reflects an increase in working capital of 6% compared to 1994, with cash and cash equivalents of $5,503,000. Earnings per share were $0.24 in 1995 and $0.37 in 1994. RESULTS OF OPERATIONS Net revenue was $17,942,000 in 1995, compared to $18,356,000 in 1994, and $18,412,000 in 1993. Export revenue increased by 81% to $2,832,000 in 1995, while domestic revenue decreased 10% to $15,110,000. The Company believes its operations were impacted by adverse market conditions which affected all companies serving the environmental instruments market. Market conditions of the commercial testing labs industry have been significantly influenced by continued consolidation among environmental testing laboratories. This consolidation has resulted in fewer testing labs and, as a result thereof, excess equipment which has been sold at discounted prices to end users. Sales of TOC Analyzers, GC Detectors, field service, and microwave digestion systems increased in 1995 over sales in 1994. The Company introduced and began shipping in the second quarter of 1995 a new TOC Analyzer Model 1010 and autosampler accessory Model 1051 both replacing prior generation products. Sales of TOC analyzers increased due to the new product and efforts to sell to non-environmental industries, such as pharmaceutical and semiconductor. Microwave product sales were higher in 1995 due to a full year of sales compared to six months of sales in 1994, and sales of sample preparation products acquired in the acquisition of LAI were higher in 1995, compared to no such sales in the prior year. Sales of GC sample introduction products declined in 1995 due to a competitor selling an alleged infringing product and shrinking demand in the environmental market. Sales of GC analyzer systems, including VOC systems and BTEX systems, were lower in 1995 as compared to 1994. These declines were partially offset by sales of HF analyzers. The HF analyzer, which is used in the petrochemical industry, is an example of the Company using its existing products to perform new applications that serve non-environmental markets. Sales of CEM systems decreased in 1995 compared to 1994 due primarily to the timing of the U.S. government purchase of chemical warfare agent monitoring systems. Repositioning the CEM product platform so that it can perform applications in the commercial market has taken longer than the Company anticipated. Management remains optimistic about achieving growth in new markets by use of the CEM product platform and continues to work to position the product to benefit from such new opportunities. In January 1995, the Company introduced a program that allows customers to rent and lease equipment, as an alternative to buying. The rental program aids customers who have a short-term sample analysis demand that 10 11 exceeds the capacity of their current instruments. Revenue from rentals was immaterial in 1995. Leases are generally three to five years and allow customers to manage their cash out flow against the income generated by their instruments. Sales under leasing arrangements accounted for approximately $600,000 of revenue in 1995. International revenues increased by 81% to $2,832,000, or 16% of total revenue in 1995 compared to $1,562,000, or 9% of total revenue in 1994, and $1,552,000, or 8% of total revenue in 1993. The Company has 35 distributors and representatives in 38 countries at December 31, 1995, compared to 33 distributors and representatives in 37 countries at December 31, 1994. Gross profit was 48% in 1995, compared to 45% in 1994, and 46% in 1993. During 1995, gross profit increased due to decreased warranty costs and decreased depreciation expense related to demonstration equipment. Selling, general, and administrative (SG&A) expenses were $5,797,000 in 1995, or 32% of revenue, compared to $4,688,000, or 26% of revenue in 1994, and $5,358,000, or 29% of revenue in 1993. The increase in SG&A expenses from 1994 to 1995 resulted from increased legal expenses, increased sales expense relating to international travel and the addition of direct sales people. Other expenses, such as salaries, rent, utilities and telephone increased due to the acquisition of LAI. The Company has and will continue to incur significant legal expenses related to the patent infringement complaint it filed against a competitor on March 3, 1995. The trial date for this complaint is currently set for July 22, 1996. While legal expenses to date have been significant, Management expects these costs to increase in preparation for trial. Management believes it is in the best interest of the stockholders to pursue this litigation in order to protect the Company's intellectual property. Research and development (R&D) expenditures amounted to $1,937,000, or 11% of revenue in 1995, compared to $1,809,000, or 10% of revenue in 1994, and $1,051,000, or 6% of revenue in 1993. The increased amount of R&D expense from 1994 to 1995 was the result of increased salaries, partially offset by a decrease in consulting fees and a decrease in the purchase of supplies and equipment. Additionally, the Company incurred expenses relating to product redesign and certification to qualify certain of its products for the CE mark. After the acquisition of CMS in January 1994, its founder and president, together with support personnel, commenced efforts to develop new products, and their related salaries and expenses were accordingly accounted for as R&D expense. Interest income increased 32% to $483,000 in 1995 from $366,000 in 1994, which increased 62% from $226,000 in 1993. The increase in interest income is due to an increase in cash during 1995, higher interest rates in 1995 as compared to 1994, and interest income relating to sales type leases of $31,000 for 1995, compared to none in 1994. Income before income taxes declined 29% to $1,507,000 or 8% of revenue in 1995 from $2,131,000 or 12% of revenue in 1994, which decreased 6% from $2,257,000, or 12% of revenue in 1993. Income before tax declined in 1995 compared to 1994 due to decreased sales, increased SG&A expenses and increased R&D expenses, offset in part by increased gross margin and interest income. The Company's effective income tax rate was 32% in 1995, compared to 28% in 1994, and 38% in 1993. The effective income tax rate for 1995 increased from 1994 primarily due to an increase in state tax expense, a decrease in the tax credit relating to research and development, and the receipt of a federal income tax refund in 1994 relating to an amendment of the Company's 1992 return. The R&D tax credit decreased because the credit expired on June 30, 1995. Net income decreased 34% to $1,023,000, or 6% of revenue for 1995 compared to $1,545,000, or 8% of revenue for 1994, which increased 10% from $1,405,000, or 8% of revenue for 1993. Earnings per share was $0.24 for 1995, compared to $0.37 for 1994 and $0.34 for 1993. 11 12 LIQUIDITY AND CAPITAL RESOURCES The Company considers a number of liquidity measures that aid in measuring the Company's ability to meet its financial obligations. Such ratios, working capital, and changes in cash and cash equivalents as of the end of the Company's last three years are as follows:
($ in thousands) 1995 1994 1993 - ---------------------------------------------------------------------------- LIQUIDITY MEASURES Ratio of current assets to current liabilities 4.8 4.9 4.1 Total liabilities to equity 25% 24% 32% Days sales in accounts receivable 67 65 43 Average annual inventory turnover 4.0 4.7 4.6 Working capital $ 11,855 $ 11,156 $ 9,876 CHANGES IN CASH AND CASH EQUIVALENTS Net cash provided (used) by: Operating activities $ 1,561 $ 146 $ 2,264 Investing activities 1,094 (5,870) (141) Financing activities 0 130 216 Net increase (decrease) in: Cash and cash equivalents $ 2,655 $ (5,594) $ 2,339 Cash and cash equivalents: Beginning of year 2,848 8,442 6,103 End of year 5,503 2,848 8,442
Working capital increased 6%, or $699,000 to $11,855,000 in 1995, compared to $11,156,000 in 1994. The current ratio of 4.8 for 1995 was down slightly from 4.9 for 1994. The Company's cash position increased to $5,503,000 in 1995 from $2,848,000 in 1994. Average annual inventory turnover was lower at 4.0 in 1995, compared to 4.7 in 1994 due to the decline in sales and higher inventory levels at LAI. The number of days of sales in accounts receivable increased to 67 days in 1995, from 65 days in 1994, due to an increase in international sales, which typically have more extended term arrangements than domestic sales. Current liabilities increased to $3,137,000 in 1995 from $2,845,000 in 1994 due to an increase in unearned revenue and accrued expenses relating to state taxes. Total liabilities represented 25% of equity in 1995, compared to 24% in 1994. Net cash flow provided by operating activities for 1995 was $1,561,000, compared to $146,000 in 1994. The increase in cash flow from operations in 1995 was primarily due to a decrease in accounts receivable and inventory, offset in part by an increase in accrued liabilities and a decrease in net income. All working capital account changes are net of the effect of the purchase of LAI. Net cash flow provided by (used in) investing activities for 1995 was $1,094,000, compared to ($5,870,000) in 1994. The increase in cash flow from investing activities was primarily due to the maturity of investments, offset in part by the acquisition of LAI. Net cash flow provided by financing activities was $-0- in 1995, compared to $130,000 in 1994. The cash flow provided by financing activities in 1994 was due to the exercise of employee stock options, while none were exercised in 1995. The Company has historically been able to fund working capital and capital expenditures from operations, and expects to be able to finance its 1996 working capital requirements from cash on hand and funds generated from operations. The Company has no material capital commitments in 1996. CHANGING PRICES/EFFECT OF INFLATION Inflation has not had a material impact on the Company's operations. The prices of some components purchased by the Company have increased in the past several years due in part to decreased volume. Certain other material and labor costs have increased, but the Company believes that such increases are approximately consistent with inflation rates generally. The Company believes that competition based 12 13 on price is the significant factor affecting its customers' buying decisions. There is no assurance that the Company can pass along cost increases in the form of price increases or sustain profit margins that have been achieved in prior years. - ------------------------------------------------------------------------------- ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA MANAGEMENT RESPONSIBILITY FOR FINANCIAL REPORTING Management is responsible for the integrity and objectivity of the data included in this report. We believe we have provided financial information (both audited and unaudited) that is representative of the Company's operations, reliable on a consistent basis, and relevant for a meaningful appraisal of the Company. The financial statements have been prepared in accordance with generally accepted accounting principles. Where necessary, they reflect estimates based on management's judgment. Established accounting procedures and related systems of internal control provide reasonable assurance that assets are safeguarded, that the books and records properly reflect all transactions, and that policies and procedures are implemented by qualified personnel. Management periodically reviews the accounting and control systems. The Company's Audit Committee, composed of at least two members of the Board of Directors who are not employees of the Company, meets regularly with representatives of management and the independent accountants to monitor the functioning of the accounting and control systems and to review the results of the audit performed by the independent accountants. The independent accountants and Company employees have full and free access to the Audit Committee without the presence of management. The Audit Committee recommends independent accountants for appointment by the Board. The independent accountants conduct an objective, independent examination of the financial statements. Their report appears as a part of the Company's Annual Report on Form 10-K. /s/ Julie A. Wright ------------------------------------ Julie A. Wright, Controller /s/ William W. Botts ------------------------------------ William W. Botts, President/CEO 13 14 REPORT OF INDEPENDENT ACCOUNTANTS The Board of Directors and Stockholders of O. I. Corporation In our opinion, the consolidated financial statements listed in the index appearing under Item 14(a)(1) on page 29 present fairly, in all material respects, the financial position of O.I. Corporation and its subsidiaries at December 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 1995, in conformity with generally accepted accounting principles. 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 of these statements in accordance with generally accepted auditing standards which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Houston, Texas February 5, 1996 14 15 CONSOLIDATED BALANCE SHEET
December 31 -------------------------------------- 1995 1994 - -------------------------------------------------------------------------------------------------------------------- ASSETS Current assets: Cash and cash equivalents $ 5,503,322 $ 2,848,032 Investments held to maturity 2,621,160 5,138,889 Accounts receivable-trade, net of allowance for doubtful accounts of $270,018 and $194,092, respectively 3,273,170 3,292,359 Investment in sales-type leases 245,632 Inventories 2,422,849 2,160,355 Deferred tax assets 735,000 243,333 Other current assets 191,174 317,837 -------------- ------------------- Total current assets 14,992,307 14,000,805 Property, plant and equipment, net 1,590,804 1,503,891 Investment in sales-type leases, net of current 363,072 Other assets 753,391 474,681 -------------- ------------------- Total assets $ 17,699,574 $ 15,979,377 ============== =================== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 849,697 $ 993,409 Accrued liabilities 2,287,263 1,851,774 -------------- ------------------- Total current liabilities 3,136,960 2,845,183 -------------- ------------------- Deferred income taxes 351,000 251,722 -------------- ------------------- Commitments and contingencies (Note 11) -------------- ------------------- Stockholders' equity: Preferred stock, $0.10 par value, 3,000,000 shares authorized, no shares issued and outstanding Common stock, $0.10 par value, 10,000,000 shares authorized, 4,116,129 and 4,039,650 shares issued and outstanding, respectively 411,613 403,965 Additional paid-in capital 4,730,669 4,432,401 Retained earnings 9,069,332 8,046,106 -------------- ------------------- 14,211,614 12,882,472 -------------- ------------------- Total liabilities and stockholders' equity $ 17,699,574 $ 15,979,377 ============== ===================
15 16 CONSOLIDATED STATEMENT OF INCOME
Years Ended December 31, --------------------------------------------------------- 1995 1994 1993 - ----------------------------------------------------------------------------------------------------------------- (Restated) Net revenue $ 17,942,343 $ 18,356,194 $ 18,412,092 Cost of revenue 9,240,786 10,135,286 10,021,509 ------------- ------------ ---------------- Gross profit 8,701,557 8,220,908 8,390,583 Selling, general and administrative expenses 5,796,883 4,688,486 5,357,861 Research and development expenses 1,936,792 1,809,190 1,050,712 ------------- ------------ ---------------- Operating income 967,882 1,723,232 1,982,010 Other income (expense): Interest income 483,499 366,091 225,908 Other income 60,494 42,944 56,223 Interest expense (4,649) (1,043) (7,438) ------------- ------------ ---------------- Income before income taxes 1,507,226 2,131,224 2,256,703 Provision for income taxes (484,000) (586,536) (851,451) ------------- ------------ ---------------- Net income $ 1,023,226 $ 1,544,688 $ 1,405,252 ============= ============ ================ Earnings per share $ 0.24 $ 0.37 $ 0.34 ============= ============ ================
16 17 CONSOLIDATED STATEMENT OF CASH FLOWS
Years Ended December 31, -------------------------------------------------------- 1995 1994 1993 - ---------------------------------------------------------------------------------------------------------------- (Restated) Cash flows from operating activities: Net income $ 1,023,226 $ 1,544,688 $ 1,405,252 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 447,527 399,700 388,115 Deferred income taxes (242,000) (19,673) (101,061) Gain on disposition of property (16,039) (2,743) (29,168) Amortization of unearned compensation and other compensation 47,634 27,263 Changes in assets and liabilities, net of the effect of the purchase of LAI: Accounts receivable 370,013 (1,110,122) 6,765 Inventories 593,363 12,182 80,408 Other assets (186,547) (243,901) (11,262) Accounts payable (501,477) (103,346) (342,892) Accrued liabilities 72,541 (377,842) 840,572 ------------- ------------- ---------------- Net cash provided by operating activities 1,560,607 146,577 2,263,992 ------------- ------------- ---------------- Cash flows from investing activities: Purchase of property, plant and equipment (251,781) (369,502) (131,104) Proceeds from sale of assets 36,150 10,206 38,315 Purchase of LAI (1,173,706) Purchase of investments (3,425,359) (7,526,026) Maturity of investments 5,917,000 2,300,000 Investment in patents and other intangibles (7,621) (284,966) (47,771) ------------- ------------- ---------------- Net cash provided by (used in) investing activities 1,094,683 (5,870,288) (140,560) ------------- ------------- ---------------- Cash flows from financing activities: Principal payments on capital lease obligations (16,532) Proceeds from issuance of common stock 129,760 232,430 ------------- ------------- ---------------- Net cash provided by financing activities 0 129,760 215,898 ------------- ------------- ---------------- Net increase (decrease) in cash and cash equivalents 2,655,290 (5,593,951) 2,339,330 Cash and cash equivalents: Beginning of year 2,848,032 8,441,983 6,102,653 ------------- ------------- ---------------- End of year $ 5,503,322 $ 2,848,032 $ 8,441,983 ============= ============= ================ Supplemental disclosures of cash flow information: Cash paid during year for: Interest $ 4,705 $ 301 $ 1,682 Income taxes 621,135 646,561 885,259
17 18 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
Unearned Compensation Common Stock Additional and ----------------------- Paid-in Stockholder Retained Shares Amount Capital Loans Earnings - --------------------------------------------------------------------------------------------------------------- Balance, December 31, 1992, 3,953,983 $ 395,398 $ 4,180,865 $ (187,237) $ 5,096,166 as restated Amortization of unearned compen- sation charged to operations and repayment of stockholder loans 63,681 Exercise of stock options 64,667 6,467 189,545 Net income 1,405,252 --------- ---------- ----------- ----------- ------------ Balance, December 31, 1993, as restated 4,018,650 401,865 4,370,410 (123,556) 6,501,418 Amortization of unearned compen- sation charged to operations and repayment of stockholder loans 123,556 Exercise of stock options and employee stock awards 21,000 2,100 51,738 Tax benefit associated with exercised options 10,253 Net income 1,544,688 --------- ---------- ----------- ------------ ----------- Balance, December 31, 1994 4,039,650 403,965 4,432,401 0 8,046,106 Issuance of shares in conjunction with the acquisition of LAI 76,479 7,648 298,268 Net income 1,023,226 --------- ---------- ----------- ------------ ----------- Balance, December 31, 1995 4,116,129 $ 411,613 $ 4,730,669 $ 0 $ 9,069,332 ========= ========== =========== ============ ===========
18 19 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- NOTE 1: ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES O.I. Corporation (the Company) was organized in 1963. The Company develops, manufactures, markets and services analytical, monitoring, and sample preparation products, components, and systems used to prepare sample for analysis and to detect, measure, and analyze chemical compounds. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Financial statements for the year ended December 31, 1993 have been restated to give effect to an acquisition which was accounted for as a pooling of interests (See Note 2). All significant intercompany transactions have been eliminated in consolidation. REVENUE RECOGNITION Revenue and the related cost of sales are generally recognized upon shipment of goods with no substantial right of return. CASH AND CASH EQUIVALENTS For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. INVESTMENTS In January 1994, the Company adopted Statement of Financial Accounting Standards (FAS) No. 115, Accounting for Certain Investments in Debt and Equity Securities. The adoption of FAS No. 115 did not have a material effect on the Company's financial position or results of operations. The Company's investments in debt securities are classified as held to maturity as the Company has the positive intent and ability to hold the investments until maturity. These investments are reported at amortized cost. LEASES The Company's leasing operations consist of the leasing of analytical instruments. The majority of the Company's leases are classified as sales-type leases. These leases expire over the next five years. INVENTORIES Inventories consist of electronic equipment and various components and are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment is recorded at cost and depreciated over the estimated useful lives using the straight-line method. PRODUCT WARRANTIES Products are sold with warranties ranging from 90 days to one year. Estimated expenses associated with these warranties are accrued in the accompanying financial statements. The Company also sells extended product warranties typically covering a period of nine months. Revenue from extended warranties is recorded ratably over the period and warranty charges are expensed as incurred. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. INCOME TAXES In January 1993, the Company adopted FAS No. 109, Accounting for Income Taxes. The adoption of FAS 109 changed the Company's method of accounting for income taxes from the deferred method to an asset and liability approach. Previously, the Company deferred the past tax effects of timing differences between financial reporting and taxable income. The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and liabilities. BUSINESS SEGMENT AND MAJOR CUSTOMERS The Company operates in a single segment. No single customer 19 20 accounted for more than 10% of revenue in 1995, 1994, or 1993. Federal, state and municipal governments accounted for 26% of revenue in 1995, 33% in 1994, and 24% in 1993. For the year ended December 31, 1995, export sales accounted for approximately 16% of total revenue. The information relating to 1993 has been restated to include the operations of CMS. OTHER ASSETS Other assets primarily include acquired patents, licenses, customer lists, and trademarks that are amortized on a straight-line basis over 10-17 years. EARNINGS PER SHARE Earnings per share is calculated using the weighted-average number of shares outstanding assuming exercise of dilutive stock options. The number of shares that would be issued from the exercise of stock options has been reduced by the number of shares that could have been purchased from the proceeds at the estimated fair market value of the Company's common stock. For purposes of the earnings per share calculation, the 650,000 shares issued in exchange for all of the outstanding shares of common stock of CMS have been treated as if they had been issued and outstanding for all periods presented. The weighted-average number of shares used in the computation was 4,287,556 in 1995, 4,156,922 in 1994, and 4,172,317 in 1993. CONCENTRATION OF CREDIT RISK Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of investments and trade receivables. The Company places its available cash in money market funds and short-term investment grade domestic corporate bonds. The Company's short-term investments are subject to fluctuations based on interest rates prevailing in the market place. The Company sells its products to large corporations, environmental testing laboratories, and governmental agencies. The majority of its customers are located in the United States and all sales are denominated in the U.S. dollar. Concentrations of credit risk with respect to trade receivables are limited due to the financial stability of the customers comprising the Company's customer base. The Company performs ongoing credit evaluations of its customers to minimize credit risk. As of December 31, 1995 and 1994, the Company had no significant concentrations of credit risk related to accounts receivable. However, the U.S. government does constitute a significant percent of the Company's sales. Because of the recent budget problems, the Company may experience slower than usual payment from its U.S. government accounts. Any budget cuts affecting the chemical warfare programs or the U.S. Environmental Protection Agency may have a negative impact on the Company's future sales. USE OF ESTIMATES The preparation of financial statements in accordance with generally accepted accounting principles requires the use of management estimates and judgments. RECENT ACCOUNTING DEVELOPMENTS In the fourth quarter of 1995, the Company adopted FAS No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of. The adoption of FAS 121 did not have a material effect on the Company. In October 1995, the FASB issued FAS No. 123, Accounting for Awards of Stock-based Compensation to Employees. The Statement encourages but does not require the fair value based method of accounting for stock compensation awards at the date the awards are granted. Companies that continue to measure compensation cost for plans using the existing standards will have to disclose the effect on net income had the company recognized expense for options based on the fair market value method. FAS 123 is effective for transactions entered into in fiscal years beginning after December 15, 1995. The Company is currently unable to determine the effects, if any, that the adoption of FAS 123 will have on the Company's future results of operations. RECLASSIFICATIONS Certain prior year amounts have been reclassified to conform to current year presentation. 20 21 - ------------------------------------------------------------------------------- NOTE 2: ACQUISITIONS On February 9, 1995, the Company acquired LAI, an environmental instruments company headquartered in Columbia, Missouri. Under the terms of the agreement, the Company made a $1,000,000 capital investment in LAI, which was used to retire outstanding long-term debt, and acquired all of the shares of LAI stock in exchange for 76,479 shares of the Company's common stock and $117,000. In addition, $880,000 of liabilities of LAI were reflected on the Company's consolidated balance sheet as of the closing date. The acquisition was recorded using the purchase method of accounting and, accordingly, the acquired operations of LAI have been included in the results of operations since the date of acquisition. The purchase price has been allocated to the net assets acquired based on estimated fair market values at the date of acquisition. Pro forma results of operations for 1994 as if the acquisition had occurred at the beginning of 1994 are as follows:
(Unaudited) (In 000's) -------------- Revenues $ 21,632 Net income $ 1,469 Earnings per Share $ 0.35 ==============
On January 4, 1994, the Company acquired CMS, a Birmingham, Alabama based company which specializes in the design, manufacture, and sale of air quality monitoring and analysis devices. In connection with the acquisition, the Company issued 650,000 shares of its common stock in exchange for all of the common stock of CMS. This acquisition was accounted for as a pooling of interests. Accordingly, the financial statements for 1993 have been restated to include the accounts of CMS. There were no intercompany transactions between the Company and CMS prior to the acquisition. The Company reports its financial results on a calendar year-end basis, whereas CMS operated on a May 31 fiscal year-end basis. For the purposes of applying pooling-of-interests accounting, CMS' financial statements were restated for the year ended December 31, 1993 and combined with the Company's operations in subsequent years. The following summarizes the revenues and net income of the separate companies for the periods preceding the acquisition:
1993 -------------- Revenues: Company $ 15,357,092 CMS 3,531,000 Adjustments (476,000) ------------- Combined $ 18,412,092 ============= Net income: Company $ 1,418,252 CMS 63,000 Adjustments (76,000) ------------- Combined $ 1,405,252 =============
The combined financial information of the Company and CMS contains adjustments to conform the revenue recognition, product warranty costs, and certain other accounting policies of the two companies. Certain reclassifications have also been made to make classifications for certain items consistent between the companies. On June 24, 1994, the Company purchased substantially all of the assets of Floyd, a North Carolina corporation headquartered in Lake Wylie, South Carolina. Floyd manufactures and markets microwave products used to prepare chemical compounds for analysis. The acquisition was for cash and royalties on future sales. 21 22 - ------------------------------------------------------------------------------- NOTE 3: INVESTMENTS Investments considered held to maturity at December 31, 1995, consist of the following:
Gross Gross Amortized Market Unrealized Unrealized Cost Value Holding Gains Holding Losses ----------- ------------ -------------- -------------- Corporate bonds $ 2,621,160 $ 2,621,662 $ 1,330 $ (828)
All of the investments at December 31, 1995 are scheduled to mature within one year. Market value is based upon quoted market prices for the investments. Short-term investments at December 31, 1994, consist of the following:
Gross Gross Amortized Market Unrealized Unrealized Cost Value Holding Gains Holding Losses ------------ ------------- ------------- -------------- Corporate bonds $ 4,662,714 $ 4,648,240 $ 97 $ 14,571 U.S. Treasury Notes 1,000,939 998,902 2,037 ----------- Total 5,663,653 Less investments classified as cash equivalents 524,764 ----------- $ 5,138,889 ===========
- ------------------------------------------------------------------------------- NOTE 4: NET INVESTMENT IN SALES-TYPE LEASES The following sets forth the components of the net investment in sales-type leases as of December 31, 1995: Future minimum lease payments to be received are: 1996 $ 245,632 1997 $ 201,318 1998 $ 100,850 1999 $ 41,088 2000 $ 19,816 ------------ 608,704 Less: amount relating to interest 89,218 ------------ Present value of minimum lease payments to be received $ 519,486 ============
The Company had no sales-type leases as of December 31, 1994. 22 23 - ------------------------------------------------------------------------------- NOTE 5: INVENTORIES Inventories, which include material, labor, and overhead, on December 31, 1995 and 1994, consist of the following:
1995 1994 ----------------------------------------------------------------------------- Raw materials $ 1,116,559 $ 1,262,262 Work-in-process 531,388 369,827 Finished goods 774,902 528,266 ------------- ------------ $ 2,422,849 $ 2,160,355 ============= ============
- ------------------------------------------------------------------------------- NOTE 6: PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment on December 31, 1995 and 1994, consists of the following:
Estimated Useful lives 1995 1994 ------------------------------------------------------------------------------ Land $ 41,221 $ 41,221 Buildings 33-40 years 1,474,391 1,474,391 Furniture and equipment 3-10 years 2,049,542 1,969,845 ------------ ----------- 3,565,154 3,485,457 Less accumulated depreciation and amortization (1,974,350) (1,981,566) ------------ ----------- $ 1,590,804 $ 1,503,891 ============ ===========
- ------------------------------------------------------------------------------- NOTE 7: ACCRUED LIABILITIES Accrued liabilities on December 31, 1995 and 1994, consist of the following:
1995 1994 --------------------------------------------------------------------------- Accrued compensation $ 482,515 $ 545,216 Accrued warranties 639,438 633,570 Accrued acquisition expenses 54,867 225,000 Accrued legal expenses 209,483 11,000 Unearned revenue 209,717 114,765 Other liabilities and accrued expenses 691,243 322,223 ------------- ------------ $ 2,287,263 $ 1,851,774 ============= ============
- ------------------------------------------------------------------------------- NOTE 8: STOCK OPTION AND STOCK PURCHASE PLAN In 1987, the Company established a stock option and stock appreciation rights plan (1987 Plan) qualified under Section 422 of the Internal Revenue Code of 1986. The 1987 Plan provides for the granting of options for the 23 24 purchase of up to 500,000 shares of common stock of the Company with the options having an exercise price of not less than the par value of such stock. Employees of the Company are eligible for such grants. The options generally expire ten years from the date of grant and generally vest over three years from the date of grant. During 1991, the stockholders approved an amendment to the 1987 Plan allowing restricted stock grants. As a result of such amendment, the 1987 Plan allows for stock grants subject to vesting requirements that may be determined at the time of such grant. During 1995, the Company granted 10,500 options under the 1987 Plan. During 1992, the Company's Board of Directors, and during 1993, the Company's stockholders, approved the O.I. Corporation 1993 Incentive Compensation Plan (1993 Plan). The 1993 Plan provides for the granting of options to purchase up to 500,000 shares of the Company's common stock with the options having an exercise price of not less than the par value of such stock. Employees and non-employee directors of the Company are eligible for such grants. The options generally expire ten years from the date of grant. During 1995, the Company granted 74,000 options under the 1993 Plan. The 1993 Plan also allows for the granting of stock appreciation rights (SARs) and stock awards, although none have been granted. Options outstanding under the 1987 Plan and the 1993 Plan have exercise prices equal to the market value on the date of grant, except for 120,000 nonqualified options granted under the 1987 Plan. Outstanding options under the 1987 Plan, and the 1993 Plan, as of December 31, 1995, 1994, and 1993, are summarized as follows:
1995 1994 1993 ---------------------------------------------------------------------------------------------- (Restated) Outstanding, beginning of year 401,101 356,500 426,500 Granted 84,500 71,100 27,000 Exercised -0- (21,000) (64,667) Forfeited or cancelled (26,701) (5,499) (32,333) --------- --------- --------- Outstanding, end of year 458,900 401,101 356,500 ========= ========= ========= Exercisable, end of year 268,304 250,175 243,505 ========= ========= =========
Exercise prices of options outstanding at December 31, 1995 ranged from $0.10 to $14.00, of which the average exercise price was $3.85. Options forfeited or cancelled during 1995 ranged from $3.94 to $6.00. During 1994, options were exercised at a price of $0.56, and options forfeited or cancelled ranged from $3.63 to $6.00. During 1993, options were exercised at prices ranging from $0.81 to $4.00, and options forfeited or cancelled ranged from $3.63 to $14.00. In 1989, the Company established an Employee Stock Purchase Plan. Under the plan provisions, employees may purchase shares of the Company's common stock on a regular basis through payroll deductions. Any person who is a full-time employee of the Company is eligible to participate in the plan, with each participant's purchases limited to 10% of annual gross compensation. The plan is administered by the Compensation Committee of the Board of Directors. Shares of common stock are purchased in the open market. The Company pays all commissions and contributes an additional 15% for the purchase of shares that are distributed to eligible participating employees. The Company's contribution to the plan was not significant in any of the years reported. The aggregate number of shares of common stock available for purchase under this plan is 200,000. As of December 31, 1995, 25,184 shares had been purchased under the plan. 24 25 - ------------------------------------------------------------------------------- NOTE 9. PREFERRED STOCK The Company's Articles of Incorporation authorize the issuance of up to 3,000,000 shares of preferred stock with $0.10 par value per share. The voting rights, dividend rate, redemption price, rights of conversion, rights upon liquidation, and other preferences are subject to determination by the Board of Directors. As of December 31, 1995, no preferred stock had been issued. - ------------------------------------------------------------------------------- NOTE 10. INCOME TAXES The Company adopted FAS No. 109, Accounting for Income Taxes, in 1993. The adoption had no material effect on the Company's consolidated financial position. The Company's operations are only taxed under domestic jurisdictions. The provision for income taxes is summarized as follows:
Years Ended December 31 -------------------------------------------------- 1995 1994 1993 -------------------------------------------------------------------------------------------- (Restated) Current provision: Federal $ 587,000 $ 541,503 $ 796,003 State 139,000 64,706 65,270 Deferred provision (242,000) (19,673) (9,822) --------- ---------- ----------- $ 484,000 $ 586,536 $ 851,451 ========= ========== ===========
The provision for income taxes differs from the amount computed by applying the federal statutory rates for the following reasons:
Years Ended December 31 -------------------------------------------------- 1995 1994 1993 -------------------------------------------------------------------------------------------- (Restated) Tax at statutory rate 34.0% 34.0% 34.0% State income taxes, net of federal benefit 3.1 2.0 1.9 Research and development credit (5.9) (0.1) Permanent differences 6.3 Changes in valuation allowance (13.8) Other, net 2.5 (2.6) 1.9 ---------- ---------- ---------- 32.1% 27.5% 37.7% ========== ========== ==========
25 26 Deferred tax liabilities (assets) are comprised of the following at December 31, 1995 and 1994:
December 31, ------------------------------ 1995 1994 ------------------------------ Noncurrent: Depreciation $ (255,369) $ (260,320) Deferred compensation 73,548 62,475 Intangibles (113,224) Other (4,475) (2,560) ----------- ----------- Total noncurrent $ (299,520) $ (200,405) =========== =========== Current: Warranty reserve $ 242,731 $ 172,330 Accrued acquisition expenses 18,645 76,500 Bad debt allowance 100,812 65,991 Inventory reserve 203,508 65,464 Uniform capitalization 63,184 48,492 Accrued commissions 5,694 11,900 Accrued legal 56,700 Accrued vacation 43,763 10,960 ----------- ----------- Total current $ 735,037 $ 451,637 ----------- ----------- Net tax asset before valuation allowance 435,517 251,232 Valuation allowance (51,517) (259,621) ----------- ----------- Net deferred tax liability (asset) $ 384,000 $ (8,389) =========== ===========
In connection with the acquisition of LAI in February 1995, the future tax effects of the differences between the tax bases and the fair values of acquired net assets were recorded, resulting in a net increase in deferred tax assets of approximately $150,000. The net change in the valuation allowance for deferred tax assets during 1995 is a decrease of $208,000. The change results from management's change in judgment about the realizability in future years of the related deferred tax assets. - ------------------------------------------------------------------------------- NOTE 11: EMPLOYEE BENEFIT PLANS The Company maintains a Retirement Savings Plan (the Plan) for its employees that allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The Company's contributions to the Plan are discretionary. Employees vest immediately in their contributions and vest in the Company's contributions ratably over five years. The Company contributed $90,000, $90,000 and $90,950 to the Plan for the years ended December 31, 1995, 1994, and 1993, respectively. - ------------------------------------------------------------------------------- NOTE 12: COMMITMENTS AND CONTINGENCIES The Company has agreed to pay the former owner of Floyd Associates, Incorporated a royalty equal to 5% of the net revenue earned from microwave based products up to a maximum amount of $1,182,500. No minimum payments are required in the agreement. The Company recognized royalty expense of $28,233 and $9,000 in 1995 26 27 and 1994, respectively. The Company has entered into operating leases for certain of its facilities. These operating leases expire in 1997 and in 1998. Rental expense recognized in 1995, 1994, and 1993 was $184,000, $133,000 and $130,000, respectively. Future minimum rental payments under these leases for the years 1996, 1997, and 1998 are $198,502, $156,745, and $94,109, respectively. During 1995, the Company filed two separate complaints; one against a competitor alleging patent infringement and the other against a vendor alleging breach of contract. In February 1996, the Company settled the breach of contract lawsuit and expects to receive approximately $290,000 in consideration thereof. - ------------------------------------------------------------------------------- NOTE 13: RELATED PARTY TRANSACTION In January 1996, the Company purchased from Gary D. Sides, Vice President of the Company, 162,658 shares of the Company's common stock at a price of $2.75 per share. The Company also purchased 10,721 shares from an employee of CMS at the same price. Pursuant to a consulting agreement, the Company paid a former officer $25,000 in 1995. This agreement was terminated in June 1995; however, the former employee continues to provide consulting services at the request of the Company. - ------------------------------------------------------------------------------- NOTE 14: QUARTERLY INFORMATION (UNAUDITED) Quarterly financial information for 1995 and 1994, is summarized as follows:
($ in thousands, except per share amounts) First Second Third Fourth 1995 Qtr. Qtr. Qtr. Qtr. ------------------------------------------------------------------------------------- Net revenue $ 4,702 $ 4,425 $ 4,450 $ 4,365 Gross profit 2,184 2,113 2,158 2,247 Net income 203 221 300 299 Earnings per share $ 0.05 $ 0.05 $ 0.07 $ 0.07
($ in thousands, except per share amounts) First Second Third Fourth 1994 Qtr. Qtr. Qtr. Qtr. ------------------------------------------------------------------------------------- Net revenue $ 4,829 $ 4,632 $ 4,437 $ 4,458 Gross profit 2,108 2,082 2,016 2,015 Net income 391 390 320 444 Earnings per share $ 0.09 $ 0.09 $ 0.08 $ 0.11
- ------------------------------------------------------------------------------- ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE NONE. 27 28 - ------------------------------------------------------------------------------- PART III - ------------------------------------------------------------------------------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT The information relating to the identification, business experience, and directorships of each director and nominee for director of the Company, required by Item 401 of Regulation S-K and presented in the section entitled "Election of Directors-Nominees for Board of Directors" of the Company's Proxy Statement for the annual meeting of shareholders on May 7, 1996, is hereby incorporated by reference. See Item 1 for information relating to the identification and business experience of the Company's executive officers. - ------------------------------------------------------------------------------- ITEM 11. EXECUTIVE COMPENSATION The information relating to the cash compensation of directors and officers, required by Item 402 of Regulation S-K and presented in the section entitled "Election of Directors-Compensation of Directors" and "Election of Directors- Compensation of Officers" of the Company's Proxy Statement for the annual meeting of shareholders on May 7, 1996, is hereby incorporated by reference. - ------------------------------------------------------------------------------- ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The information relating to security ownership required by Item 403 of Regulation S-K, which is presented in the sections entitled "Security Ownership of Certain Beneficial Owners" and "Election of Directors-Directors and Executive Officers" of the Company's Proxy Statement for the annual meeting of shareholders on May 7, 1996, is hereby incorporated by reference. - ------------------------------------------------------------------------------- ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS The information relating to relationships and transactions required by Item 404 of Regulation S-K, which is presented in the section, "Election of Directors -- Executive Compensation -- Certain Transactions, Employment Contracts, Termination of Employment and Change-in-Control Arrangements" of the Company's Proxy Statement for the annual meeting of shareholders on May 7, 1996, is hereby incorporated by reference. 28 29 - ------------------------------------------------------------------------------- PART IV - ------------------------------------------------------------------------------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a) 1. Consolidated Financial Statements of O.I. Corporation and its subsidiary that are included in Part II, Item 8:
Page Report of Independent Accountants 14 Consolidated Balance Sheet 15 Consolidated Statement of Income 16 Consolidated Statement of Cash Flows 17 Consolidated Statement of Stockholders' Equity 18 Notes to Consolidated Financial Statements 19
(a) 2. Financial Statement Schedules required to be filed by Item 8 of this Form: All schedules are omitted as they are not required, or are not applicable, or the required information is included in the financial statements or notes thereto. (a) 3. Exhibits 3.1 Articles of Incorporation of the Company, as amended (filed as Exhibit 4.1 to the Company's Registration Statement on Form S-8 (No. 33-24505) and incorporated herein by reference). 3.2 Bylaws of the Company (filed as Exhibit 4.2 to the Company's Registration Statement on Form S-8 (No. 33-24505) and incorporated herein by reference). *10.1 Amended and Restated 1987 Stock Option and SAR Plan (filed as Exhibit 4.3 to the Company's Registration Statement on Form S-8 (No. 33-24505) and incorporated herein by reference). *10.2 Employee Stock Purchase Plan (filed as Exhibit 4.3 to the Company's Registration Statement on Form S-8 (No. 33-62209) and incorporated herein by reference). *10.3 Employment Agreement between the Company and William W. Botts (filed as Exhibit 10.3 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989, and incorporated herein by reference). 10.4 Value-Added Reseller Agreement between the Company and Hewlett-Packard Company (filed as Exhibit 10.5 to the Company's Annual Report on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference). *10.5 Nonqualified Stock Option Agreement between the Company and William R. Hart (filed as Exhibit 10.6 to the Company's Annual Report on Form 10-K for the year ended December 31, 1992 and incorporated herein by reference). 29 30 *10.6 1993 Incentive Compensation Plan (filed as Exhibit 10.7 to the Company's Annual Report on Form 10-K for the year ended December 31, 1993 and incorporated herein by reference). 10.7 Registration Rights Agreement among O.I. Corporation and the former shareholders of CMS Research Corporation dated January 4, 1994 (filed as Exhibit 10.8 to the Company's Annual Report on Form 10-K for the year ended December 31, 1994 and incorporated herein by reference). 24.1 Consent of Price Waterhouse LLP 99.1 The O.I. Corporation definitive Proxy Statement, dated March 25, 1996 is incorporated by reference as an Exhibit hereto for the information required by the Securities and Exchange Commission, and, except for those portions of such definitive proxy statement specifically incorporated by reference elsewhere herein, such definitive proxy statement is deemed not to be filed as a part of this report. (b) Reports on Form 8-K. No Form 8-K was filed for the quarter ended December 31, 1995. - ----------- * Management contract or compensatory plan or arrangement. 30 EX-24.1 2 CONSENT OF PRICE WATERHOUSE 1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 33-24505 and No. 33- 62209 and NO. 33-66822) of O.I. Corporation of our report dated February 5, 1996 appearing on page 14 of this Form 10-K. PRICE WATERHOUSE LLP Houston, Texas February 28, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
5 YEAR DEC-31-1995 JAN-01-1995 DEC-31-1995 5,503,322 2,621,160 3,543,188 270,018 2,422,849 14,992,307 3,565,154 1,974,350 17,699,574 3,136,960 0 411,613 0 0 13,800,001 17,699,574 17,942,343 17,942,343 9,240,786 3,877,118 3,856,557 0 4,649 1,507,226 484,000 1,023,226 0 0 0 1,023,226 .24 .24
EX-99.1 4 NOTICE & PROXY STATEMENT 1 SCHEDULE 14 INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No. ) Filed by the Registrant [ ] Filed by a Party other than the Registrant [X] Check the appropriate box: [X] Preliminary Proxy Statement [ ] Definitive Proxy Statement [ ] Definitive Additional Materials [ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12 O.I. CORPORATION ------------------------------------------------ (NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) Bowne of Houston ------------------------------------------ (NAME OF PERSON(S) FILING PROXY STATEMENT) Payment of Filing Fee (Check the appropriate box): [X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2). [ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-6(i)(3). [ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. 1) Title or each class of securities to which transaction applies: -------------------------------------------------------------------- 2) Aggregate number of securities to which transaction applies: -------------------------------------------------------------------- 3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11;(1) -------------------------------------------------------------------- 4) Proposed maximum aggregate value of transaction: -------------------------------------------------------------------- (1) Set forth the amount on which the filing fee is calculated and state how it was determined. [ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. 1) Amount Previously Paid: --------------------------------------------- 2) Form, Schedule or Registration Statement No.: --------------------------------------------- 3) Filing Party: --------------------------------------------- 4) Date Filed: --------------------------------------------- 2 O.I. CORPORATION O.I. CORPORATION BUILDING 151 GRAHAM ROAD, P.O. BOX 9010 COLLEGE STATION, TEXAS 77842-9010 (409) 690-1711 March 25, 1996 Dear Shareholder: You are invited to attend the annual meeting of shareholders which will be held at the Hyatt Regency Hotel, 1200 Louisiana Street, Houston, Texas on Tuesday, May 7, 1996, at 3:00 p.m. The matters to be considered at the meeting are described in the formal notice and proxy statement accompanying this letter. Such matters consists of: (i) the election of directors; (ii) the ratification of the appointment of independent auditors; (iii) the transaction of such other business as may properly come before the meeting. After completing the business of the meeting, we will discuss fiscal year 1995 results and the current outlook for the Company. There will be a period for questions and discussion with the Company's officers and directors. If you plan to be present, please notify the Secretary of the Company so that the necessary arrangements can be made for your attendance. Regardless of whether you plan to personally attend, it is important that your shares be represented at the meeting; therefore, please date, sign and return your postage-paid proxy card at your earliest convenience. William W. Botts President and Chief Executive Officer 3 O.I. CORPORATION 151 GRAHAM ROAD, P.O. BOX 9010 COLLEGE STATION, TEXAS 77842-9010 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS MAY 7, 1996 To the Shareholders of O.I. Corporation: You are hereby notified that the Annual Meeting of Shareholders of O. I. Corporation will be held on Tuesday, May 7, 1996 at 3:00 p.m. at the Hyatt Regency Hotel, 1200 Louisiana Street, Houston, Texas, for the purposes of considering and voting upon the following matters proposed by the Board of Directors: (i) the election of directors; (ii) the ratification of the appointment of independent auditors; (iii) the transaction of such other business as may properly come before the meeting. The stock transfer books will not be closed, but only shareholders of record at the close of business on March 11, 1996, will be entitled to notice of and to vote at the meeting. You are cordially invited to attend the meeting. Even if you plan to attend, you are requested to date, sign and return the enclosed proxy at your earliest convenience on the enclosed card. You may revoke your proxy at any time prior to exercise. By Order of the Board of Directors Jane A. Smith Vice President-Corporate Secretary March 25, 1996 4 O.I. CORPORATION 151 GRAHAM ROAD, P.O. BOX 9010 COLLEGE STATION, TEXAS 77842-9010 PROXY STATEMENT This Proxy Statement is furnished to the shareholders of O.I. Corporation (the "Company") in connection with the solicitation of proxies to be used in voting at the annual meeting of shareholders to be held on May 7, 1996. It is first being mailed to shareholders on or about March 25, 1996. The enclosed proxy is solicited on behalf of the Board of Directors of the Company. The person giving the enclosed proxy has the power to revoke it by giving notice to the Secretary in person, or by written notification actually received by the Secretary, at any time prior to its being exercised. The Company will bear the cost of the solicitation of the proxies, including the charges and expenses of brokerage firms and others for forwarding solicitation material to beneficial owners of stock. It is possible that further solicitation of proxies will be made by telephone or oral communication with some shareholders of the Company following the original solicitation. All further solicitations will be made by either the Company's transfer agent or by regular employees of the Company, neither of whom will be additionally compensated therefor. GENERAL INFORMATION The mailing address of the Company's principal executive offices is O.I. Corporation, P.O. Box 9010, College Station, Texas 77842-9010. The Company's telephone number is (409) 690-1711, and its FAX number is (409) 690-0440. VOTING SECURITIES OUTSTANDING As of March 11, 1996, there were 3,942,750 shares of common stock, par value $0.10 per share, ("Common Stock"), of the Company issued and outstanding, and each share is entitled to one vote. Only holders of Common Stock of record at the close of business on March 11, 1996, will be entitled to vote at the meeting. In determining the number of shares entitled to vote on any matter, shares not voted on a matter (including elections) will not be treated as entitled to vote. A share shall be treated as being present at the meeting whether or not such shares are voted. In the absence of a quorum (1,971,376 shares) at the meeting, either in person or by proxy, the meeting may be adjourned from time to time for not more than 29 days, without notice, other than announcement at the meeting, until a quorum shall be formed. 1 5 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth the beneficial ownership of the Company's Common Stock with respect to each person known by the Company to be the beneficial owner of more than five percent of the Company's currently outstanding shares as of December 31, 1995.
NAME AND BUSINESS ADDRESS AMOUNT AND NATURE OF PERCENT OF BENEFICIAL OWNERS BENEFICIAL OWNERSHIP OF CLASS -------------------- -------------------- -------- William W. Botts . . . . . . . . . . . . . . . . . . 296,000(1) 7.2% P.O. Box 9010 College Station, Texas 77842-9010
_______________ (1) Includes 190,000 shares subject to presently exercisable options. ELECTION OF DIRECTORS PROPOSAL 1: THE BOARD OF DIRECTORS HAS NOMINATED AND URGES YOU TO VOTE FOR THE FIVE NOMINEES LISTED BELOW. PROXIES SOLICITED HEREBY WILL BE SO VOTED UNLESS SHAREHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A PLURALITY OF THE SHARES OF COMMON STOCK PRESENT IN PERSON OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED FOR APPROVAL OF THIS PROPOSAL. At the meeting, five (5) directors are to be elected to serve for the ensuing year and until their respective successors are elected and qualified, in accordance with the provisions of the bylaws. The shareholders are being asked to vote for the election of Messrs. Anderson, Botts, Heath, King, and Whited. Each of such nominees is currently a member of the Board of Directors, with the exception of Mr. Whited. Unless otherwise marked, the shares represented by the enclosed proxy will be voted "FOR" the election as directors of the five (5) nominees named above. The proxy cannot be voted for a greater number of persons than the number of nominees named. If any nominee becomes unavailable for any reason, or if a vacancy should occur before the election (which events are not anticipated), the shares represented by the enclosed proxy may be voted for such person as may be determined by the holders of such proxy. NOMINEES FOR BOARD OF DIRECTORS The nominees to serve as directors of the Company until the next annual meeting of shareholders and until their successors are elected and qualified, and certain information with respect to the business experience of each nominee during the last five years, is set forth below. WILLIAM W. BOTTS. Mr. Botts has served on the Board of Directors since 1985. Prior to joining the Company, Mr. Botts was Executive Vice-President and Chief Operating Officer of The Brandt Company, a privately owned oil field service company headquartered in Houston, Texas until it was sold to TRW, Inc. in August 1982. At the time of such sale, he was named Vice-President and General Manager of the Brandt Division of TRW Inc. Mr. Botts served in that position until he was elected President and Chief Operating Officer of the Company on February 1, 1985, Chief Executive Officer on July 19, 1985, and Chairman of the Board of Directors on May 26, 1986. JACK S. ANDERSON. Mr. Anderson has served on the Board of Directors since 1980. Prior to joining the Company, Mr. Anderson was Senior Vice President of NL Petroleum Services in Houston, Texas from June 1969 to September 1980. He was Executive Vice President and Director of GEO International, Houston, Texas from October 1980 to October 1983, and from October 1983 until the present, he has served as President of Jasada 2 6 Corporation, an investment firm located in Houston, Texas. Mr. Anderson has served since November 1983 as President of Anlo Energy, Inc., a mining company. Mr. Anderson serves as an executive officer and director of Califone International located in Los Angeles, California and Virosafe Inc. located in Houston, both of which are privately owned companies. J. LESTER HEATH. Mr. Heath has served on the Board of Directors since 1985. Prior to joining the Company, Mr. Heath was President of the Vector Cable Company, Sugarland, Texas from 1972 until his retirement in 1981. Vector Cable Company, a manufacturer of cable, is a wholly-owned subsidiary of Schlumberger, Inc., a diversified oil field service company. From 1983 to 1988, Mr. Heath served as President of National Line Products, Inc., of Houston, Texas, an industrial products distributor. He currently serves as President of Lester Heath Consultants, Inc., and Secretary and Director of Virosafe, Inc., Houston, Texas. EDWIN B. KING. Mr. King has served on the Board of Directors since February 1995. Prior to joining the Company, Mr. King was President of Gulf Chemical & Metallurgical Co., of Texas City, Texas, a chemical and metallurgical processing company from 1969 to 1984. From 1984 to the present, Mr. King has held the position of President and director of Asoma Instruments, Inc. of Austin, Texas, an analytical instrument manufacturer; and President, co-owner, and director of Jumbo Mining Company, a mining company whose principal operations are located in Winnemucca, Nevada and Delta, Utah. He also serves as director of Asoma (Utah) Inc. He was elected as a director of the Company on February 13, 1995. CRAIG R. WHITED. From 1975 to the present, Mr. Whited has held numerous financial and consulting positions. From 1975 to 1979, he was a CPA, management consultant, and supervisor for the auditing firm of Deloitte, Haskins & Sells CPAs, Los Angeles, California. From 1979 to 1986, he served as Vice President of Finance for Penberthy Lumber Company, a major hardwood lumber products manufacturer and importer, Los Angeles, California. From 1986 to 1988, he served as President and Chief Financial Officer of Connor Forest Industries, Inc., a major domestic hardwood lumber products grower and manufacturer, with offices in California, Michigan and Texas. From 1987 to 1988, he served as Senior Vice President and Chief Financial Officer of Bridgewater Resources Corporation, the domestic holding company of a European conglomerate engaged in the manufacture of lumber products, electronics, and real estate development, with offices in California, Michigan, New York, and Texas. From 1988 to the present, Mr. Whited has served as President and Chief Executive Officer of The Oxford Group, Inc., a management and financial consulting firm, with offices in both Los Angeles, California and Las Vegas, Nevada. DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth information with respect to (i) the name and age of each director and nominee for director, (ii) the total number of shares of common stock of the Company beneficially owned by each director and nominee for director, by each of the executive officers named below under "Compensation of Executive Officers--Summary Compensation Table," and by all directors and executive officers as a group and (iii) the percentage of the outstanding common stock so owned by each, as of March 1, 1996. Unless otherwise indicated, each person named in the table owns the shares listed below and has sole voting and investment power with respect to such shares.
AMOUNT AND NATURE PERCENT OF CLASS D IRECTOR OF BENEFICIAL OF COMMON NAME AND TITLE AGE SINCE OWNERSHIP STOCK William W. Botts 53 1986 296,000(1) 7.2 President, Chairman of the Board Chief Executive Officer Jack S. Anderson 70 1980 18,000(2) * Director
3 7 J. Lester Heath 74 1985 14,000(2) * Director Edwin B. King 68 1995 13,000(3) * Director Craig R. Whited 49 88,600 2.2 Director Nominee William R. Hart 59 44,794(4) 1.1 Vice President/Director of Marketing Gary D. Sides 48 4,000(5) -- Vice President Dennis D. Schupp 51 12,120 * Vice President Directors and executive officers as a group 508,714(6) 12.4%
_______________ * Beneficial ownership of less than 1% of the class is omitted. 1. Includes 90,000 shares subject to presently exercisable options. 2. Includes 3,000 shares subject to presently exercisable options. 3. Includes 1,000 shares subject to presently exercisable options. 4. Includes 38,001 shares subject to presently exercisable options. 5. Shares subject to presently exercisable options. 6. Includes 149,501 shares subject to presently exercisable options. THE BOARD OF DIRECTORS AND ITS COMMITTEES Directors are elected at each annual meeting of shareholders and serve until a successor shall be elected and qualified at an appropriate annual meeting of the shareholders. Vacancies may be filled by a majority of the remaining directors. The Company's Board of Directors met five times during 1995. The Board of Directors has a standing Executive Committee, Stock Option and Compensation Committee, Finance and Audit Committee and a special Product Technology Committee. The Company does not have a Nominating Committee. During 1995, the Executive Committee met once, the Stock Option and Compensation Committee met once, and the Finance and Audit Committee met twice. Each member of the Board of Directors attended all the meetings of the Board of Directors and the committees of which such person was a member during 1995. EXECUTIVE COMMITTEE. The Executive Committee consists of Messrs. Anderson and Botts. During intervals between meetings of the Board of Directors, this committee may exercise all the powers and authority of the Board of Directors, subject only to such limitations as may be provided by law or by the Board of Directors, in the management of the business and affairs of the Company. STOCK OPTION AND COMPENSATION COMMITTEE. The Stock Option and Compensation Committee (the "Compensation Committee") consists of Messrs. Anderson, Heath and King. Functions of this committee are to approve and recommend to the Board of Directors the approval of remuneration arrangements of directors and senior management personnel, adopting, subject to Board approval, compensation plans for officers and directors and administering and granting benefits pursuant to such plans. FINANCE AND AUDIT COMMITTEE. The Finance and Audit Committee consists of Messrs. Anderson, Heath, and King. The function of this committee is to (A) investigate and study matters relating to the operations and finances 4 8 of the Company, (B) meet periodically with the Company's management and its independent public accountants to review (i) their reports relating to their examination of the financial statements and of the internal accounting control systems of the Company, (ii) their recommendations for strengthening internal controls and improving operating procedures and (iii) compliance by Company personnel with Company policies relating to various governmental laws and regulations dealing with ethics, conflicts of interest and disbursements of corporate funds, and (C) to give advice and make recommendations with respect to such matters. COMPENSATION OF DIRECTORS Non-employee directors received a fee of $1000 for each Board of Directors meeting attended and $500 for each committee meeting attended. Directors who are also officers or employees of the Company receive no additional compensation for attendance at such Board or committee meetings. For the fiscal year ended December 31, 1995, directors fees paid were: Mr. Anderson, $7,000; Mr. Botts, $0; Mr. Heath, $7,000; and Mr. King, $6,500. As a result of shareholder approval of the Company's 1993 Incentive Compensation Plan, each non-employee director was granted a stock option for 1,000 shares at an exercise price of $3.50 (the fair market value of a share of Common Stock on May 2, 1995, the day of grant). The options (i) have an exercise price equal to the fair market value of a share of Common Stock on the date of grant; (ii) vest six months from the date of grant, (iii) are exercisable to the extent vested for a period of (a) three months following termination of service as a director for reasons other than retirement, disability, death or cause and (b) generally, twelve months following termination of service as a director for retirement, disability or death; (iv) have a term of ten years and; (v) are exercisable in full following a "change in control" event (as defined in the Incentive Plan). COMPENSATION OF EXECUTIVE OFFICERS The following table lists, for the year ended December 31, 1995, cash compensation paid by the Company to each of the most highly compensated executive officers whose cash compensation exceeded $100,000 during 1995. SUMMARY COMPENSATION TABLE
Long-Term Compensation Annual Compensation Awards ---------------------------------- ------------- All Other Options/ Compen- Name and Salary Bonus SARs sation Principal Position Year ($) ($)(1) (#)(2) ($)(3) - ------------------ ---- ---------- ---------- ------ ---------- William W. Botts 1995 $ 134,962 $ -0- 50,000 $ 21,046 President/Chief 1994 $ 145,000 $ -0- -0- $ 21,459 Executive Officer 1993 $ 145,000 $ 10,000 -0- $ 24,965 Dr. Gary D. Sides 1995 $ 94,423 $ 12,231 (5) 5,000 $ 4,716 Vice President 1994 $ 101,859 $ 12,231 (5) 20,000 $ 1,809 William R. Hart 1995 $ 90,170 $ -0- 5,000 $ 7,323 Vice President/ 1994 $ 100,000 $ -0- 8,000 $ 8,828 (4) Director of Marketing 1993 $ 96,808 $ 10,000 8,000 $ 10,315
_______________ 1. The above amounts include bonuses paid in January for the previous year. 5 9 2. No SARs were granted to the named executives. 3. The amounts in this column represent contributions to the 401K Plan for each of the named executives as well as a life insurance premium in the amount of $15,000 per year for Mr. Botts. 4. This amount includes $780 for the Company's contribution to the Employee Stock Purchase Plan. 5. This amount reflects an annual bonus that is paid to Dr. Sides as a result of an agreement with CMS Research Corporation. The following table sets forth certain information with respect to stock options granted to the indicated persons between January 1, 1995 and December 31, 1995. OPTION/SAR GRANTS IN THE LAST FISCAL YEAR
Individual Grants - -------------------------------------------------------------------------------- % of Total Number of Options/ Potential Securities SARs Realizable Value Underlying Granted to at Assumed Annual Options/ Employees Exercise or Rates of Stock SARs in Fiscal Base Price Expiration Price Appreciation Name Granted(#)(1) Year ($/Sh) Date for Option Term (2) - ------------------- ------------- ----------- ------------ --------------- --------------------- 5% ($) 10% ($) ------- --------- Gary D. Sides 5,000 6% $2.50 Dec. 6, 2005 $ 20,361 $ 32,422 William W. Hart 5,000 6% $2.50 Dec. 6, 2005 $ 20,361 $ 32,422 William W. Botts 50,000 62% $2.50 Dec. 6, 2005 $ 203,612 $ 324,218
_______________ 1. Options vest 33-1/3% annually from date of grant. No SARs were granted. Exercisability may be accelerated upon the occurrence of a "change in control event" (as defined in the Company's 1987 Stock Option and SAR Plan). 2. The Securities and Exchange Commission requires disclosure of the potential realizable value. The disclosure assumes the option will be held for the full ten-year term prior to exercise. Such option may be exercised prior to the end of such ten-year term. CERTAIN TRANSACTIONS, EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS. Under the terms of an employment agreement with the Company effective May 17, 1995 and terminating May 17, 1996, Mr. Botts, a Director of the Company, is performing executive duties as President and Chief Executive Officer of the Company. Compensation paid pursuant to this agreement includes an annual salary as determined by the Board of Directors (such amount is included in the Cash Compensation Table above), a life insurance policy and an automobile allowance. The employment agreement remains in effect until its expiration date, unless Mr. Botts dies, becomes disabled or violates his duty of loyalty to the Company following a change in control of the Company. If Mr. Botts is terminated for any reason, other than as set forth in the preceding sentence, following a change in control of the Company, he will be entitled to up to three years of salary continuation. As a result of the acquisition of CMS Research Corporation ("CMS"), the Company entered into an employment agreement with Gary D. Sides, effective January 4, 1994 and terminating January 4, 1997. Pursuant to the agreement, Dr. Sides was appointed Vice President of O.I. Corporation and performs executive duties as President of CMS Research Corporation. Compensation paid to Dr. Sides pursuant to the agreement includes an annual salary as determined by the Board of Directors and an automobile allowance. If Dr. Sides is terminated under the agreement, for reason other than breach of the agreement, he will be entitled to up to three years of salary continuation. 6 10 COMPENSATION COMMITTEE REPORT COMPENSATION PHILOSOPHY The Company's primary business objective is to maximize shareholder value over the long term. To help accomplish this objective, the Committee has developed an overall executive compensation philosophy with goals as follows: o Attract, retain, and motivate key executives; o Reward performance rather than create a sense of entitlement; o Align executive and shareholder interests by stock ownership; o Assure that objectives for corporate and individual performance are established and measured. For comparison of peer performance, and in order to maintain consistency in the Company's method of determining executive compensation for 1995, the Company used a method for selecting comparable companies, which included searches in various data bases from the NASDAQ National Market System, Media General Financial Services, and Standard Industrial Classification (SIC) Codes 382 (Laboratory and Analytical Instruments) and 3823 (Process Control Instruments), as shown in the graph on Page 9 hereof. Management believes that SIC Code 382 contains companies which most closely represent an established grouping of which the Company may be called a peer. The Company was not able to obtain compensation information for all of the companies in SIC Code 382; however, certain companies within such classification (including Andros, Arizona Instruments, CEM, Dionex, Isco, Perkin Elmer, TSI, and Thermo Instruments) were compared to the Company in terms of growth in revenue, operating profit, net income, earnings per share, average return on assets and equity and compensation of executive management. Compensation of Company executives was set to correspond to a range of what is believed to be between the mid-to-high end of compensation ranges for executives in such companies, with further consideration based on the Company's performance compared to such companies. It should be noted, however, that the CEO and other executive officers are at risk for compensation through both bonuses and stock option appreciation, as reflected in the 1994 and 1995 compensation. BASE SALARIES The Committee reviews annually each executive's base salary. Base salaries are targeted at median levels for public companies of O.I. Corporation's relative size, as discussed above, but are determined primarily by individual performance relative to achieving Company goals. It is believed that base salaries paid in 1995 to the named executive and the CEO were consistent with such policy. When evaluating individual performance, the Committee considers the executive's efforts in promoting Company values; contribution to the Company's financial performance; developing and executing a strategic plan for growth in revenues and net income; improving product quality; specific job responsibilities, prior experience, job knowledge, and written performance appraisals for each executive. No specific weights have been assigned to the various factors. The base salary of Mr. William W. Botts (Chairman of the Board, CEO, and President of the Company) and other executives of the Company were reviewed at the December 1995 meeting of the Compensation Committee. In view of the Company failing to meet certain predetermined financial goals relating to growth in sales, net income, earnings per share, return on assets, and shareholders' equity for the 1995 fiscal year, Mr. Botts and Mr. Hart, as reflected in the Summary Compensation Table on page 5 of this proxy statement, voluntarily reduced their base salary as part of a cost containment program initiated in June 1995. Until such reduction, Mr. Botts' salary had remained substantially at the same level since December 1991. Mr. Hart's compensation plan includes a base salary and a sales commission plan, which provides for a sales commission paid on the amount of sales of certain products. Some officers of the Company did receive salary increases based on individual performance during 1995. 7 11 ANNUAL CASH INCENTIVES Annual cash bonuses provide executives with direct financial incentives to achieve corporate and individual performance goals. Written individual performance appraisals and the extent to which the Company met its financial goals for growth in revenue, operating profit, net income, earnings per share, and average return on assets and equity are used in determining bonuses for each executive. Performance is also judged on the achievement of business plan goals relating to improving product quality and productivity and growth through new product development and acquisitions. No specific weights have been assigned to the various factors. During 1995, the markets served by the Company remained soft, substantial consolidation occurred among the buyers to whom the Company sells its products, and therefore, management performance was evaluated on an officer's ability to change strategy and cope with such market conditions, including his or her ability to hold market share, contain cost, and maintain customer satisfaction, as well as develop new products and acquire additional products or businesses. No bonuses were awarded for 1995 despite the development and implementation of a strategy which maintained profitability in spite of a declining market demand for the Company's products. As shown in the Summary Compensation Table on page 5 of this proxy statement, Mr. Botts and Mr. Hart did not receive bonuses. Dr. Sides received a bonus in accordance with an agreement with CMS, which was entered prior to the merger of CMS and the Company. Such agreement provides that Dr. Sides will receive a bonus of $3,057 per quarter until June, 1997. LONG-TERM INCENTIVES (STOCK OPTIONS) Long-term incentives are provided pursuant to the Company's 1993 Incentive Compensation Plan. The Committee determines annually the total amount of options that will be made available to the Company's executives. The amount of options granted each year are based on the executive's total compensation package and reflect the desire of the Compensation Committee to encourage equity ownership by the Company's executives in order to provide an appropriate link to the interest of the stockholders, to reward prior performance, and to provide long-term incentive award opportunities. The stock option grants for 1995 were determined based on the performance of each executive with respect to their contribution to the Company's financial performance, measured as discussed above, together with an appraisal of the extent to which pre-established objectives were achieved, as well as the Committee's perception of the executive's ability and potential to contribute to the growth and profitability of the Company, to identify changing business conditions (such as market changes and competitive threats), and to respond with appropriate business strategies. No specific weights have been assigned to the foregoing factors. In 1995, grants covering 50,000 shares were made to Mr. Botts, 5,000 to Mr. Hart, 5,000 to Dr. Sides (granted in accordance with the terms of the Company's acquisition of CMS and the Company), and a total of 20,500 shares to other employees. Mr. Botts, as reflected in the Summary Compensation Table on page 5 of this proxy statement, received stock options for 50,000 shares for the year ended 1995. This decision was based on both the Company's achievement of certain predetermined goals for the 1995 fiscal year as well as the Committee's consideration of Mr. Botts' failure to receive stock option grants in 1992, 1993, and 1994. The 1995 grants are designed to insure Mr. Botts' long-term perspective for Company and stock price performance. SUMMARY The Committee believes that the incentive compensation program for the executives of the Company is comparable to the compensation programs provided by comparable companies and serves the best interest of the shareholders of the Company. The Committee also believes that annual performance pay is appropriately linked to individual performance, the Company's annual financial performance, and shareholder value. The Company intends to continue its program for setting executive compensation as outlined above. 8 12 The report of the Compensation Committee shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act of 1933, as amended (the "Securities Act"), or under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), except to the extent that the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such acts. The foregoing report is given by the following members of the Compensation Committee: Jack S. Anderson J. Lester Heath Edwin B. King 9 13 FIVE-YEAR CUMULATIVE TOTAL RETURN AMONG O.I. CORPORATION, NASDAQ MARKET INDEX AND PEER GROUP INDEX Set forth below are a line graph and a table comparing the yearly percentage change in the cumulative total shareholder return (change in year-end stock price plus reinvested dividends) on the Company's Common Stock against the cumulative total return of the NASDAQ Market Index and a peer group index consisting of public companies with the Company's Standard Industrial Classification ("SIC") Code (Laboratory and Analytical Instruments) for the period of five years beginning at the beginning of fiscal year 1991. The SIC Code for Laboratory and Analytical Instruments includes over ninety (90) issuers, such as Andros, Arizona Instrument, CEM, Dionex, Isco, Perkin Elmer, Thermo Instrument and TSI.
=================================================================================== COMPANY 1990 1991 1992 1993 1994 1995 - ----------------------------------------------------------------------------------- O.I. CORPORATION 100 431 153 128 97 73 - ----------------------------------------------------------------------------------- SIC CODE 382 100 144 158 182 187 278 - ----------------------------------------------------------------------------------- NASDAQ MARKET INDEX 100 128 130 156 163 212 ===================================================================================
The foregoing stock price performance comparisons shall not be deemed incorporated by reference by any general statement incorporating by reference this Proxy Statement into any filing under the Securities Act or under the Exchange Act, except to the extent that the Company specifically incorporates this graph by reference, and shall not otherwise be deemed filed under such acts. There can be no assurance that the Company's stock performance will continue into the future with the same or similar trends depicted in the graph above. The Company will not make or endorse any predictions as to future stock performance. 10 14 RATIFICATION OF INDEPENDENT AUDITORS PROPOSAL 2: THE BOARD OF DIRECTORS HAS UNANIMOUSLY SELECTED PRICE WATERHOUSE AND URGES YOU TO VOTE FOR THE RATIFICATION OF THE APPOINTMENT OF SUCH FIRM, AS INDEPENDENT AUDITORS OF THE COMPANY FOR THE YEAR 1996. PROXIES SOLICITED HEREBY WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN THEIR PROXIES. THE AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK PRESENT IN PERSON OR BY PROXY AT THE MEETING AND ENTITLED TO VOTE IS REQUIRED FOR APPROVAL OF THIS PROPOSAL. By action of the Board of Directors, Price Waterhouse has been selected as independent auditors of the Company for the year ending December 31, 1996, and the Board of Directors proposes the ratification of such selection. Price Waterhouse was chosen as independent auditors for the Company during 1995 for the year ended December 31, 1995. A member or members of the firm of Price Waterhouse will be present at the annual meeting of shareholders and will be available to respond to appropriate questions. During the Company's two most recent fiscal years and the subsequent period preceding March 17, 1992, there were not any disagreements with the former accountants on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. SHAREHOLDERS PROPOSALS No shareholder's proposals were received for inclusion in this Proxy Statement. The Company has also adopted Bylaw provisions which require the nominations of persons for election to the Board of Directors and the proposal of business by shareholders at an annual meeting of shareholders must fulfill certain requirements which include the requirement that notice of such nominations or proposals must be delivered to the Secretary of the Company not less than 60 days nor more than 90 days prior to the anniversary of the prior annual meeting. In order to be timely for next year's annual meeting such notice must be delivered between February 7, 1997 and March 8, 1997. OTHER MATTERS Management knows of no other matters to be brought before the annual meeting of shareholders at the time and place indicated in the notice thereof; however, if any additional matters are properly brought before the meeting, the persons named in the enclosed proxy shall vote the proxies in their discretion in the manner they believe to be in the best interest of the Company. The accompanying form of proxy has been prepared at the direction of the Board of Directors of the Company, of which you are a shareholder, and is sent to you at the request of the Board of Directors. The proxies named therein have been designated by your Board of Directors. The Management of the Company urges you, even if you presently plan to attend the meeting in person, to execute the enclosed proxy and mail it immediately. You may revoke your proxy and vote in person if you are able to attend. O.I. CORPORATION By Order of the Board of Directors Jane A. Smith Vice President-Corporate Secretary March 25, 1996 11 15 PROXY O.I. CORPORATION PROXY THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoint(s) William W. Botts and Jane A. Smith, and each of them, lawful attorneys and proxies of the undersigned to vote as Proxy at the Annual Shareholders' Meeting of O.I. Corporation (herein the "Company") to be held on Tuesday, May 7, 1996, and any adjournment(s) thereof according to the number of votes owned by the undersigned as follows: THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1 AND 2. PROPOSAL 1: The Election of Directors. [ ] FOR all nominees [ ] FOR all nominees (except as listed below) [ ] WITHHOLD AUTHORITY to vote for all nominees Jack S. Anderson J. Lester Heath Craig R. Whited William W. Botts Edwin B. King (INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.) _________________________________________________________________________________________________________________________ FOR AGAINST ABSTAIN PROPOSAL 2: The Ratification of the Appointment of Auditors. [ ] [ ] [ ] In accordance with their discretion, said Attorneys and Proxies are authorized to vote upon such other matters or proposals not known at the time of solicitation of this proxy which may properly come before the meeting. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER. If no direction is made, this proxy will be voted for Proposals 1 and 2. Any prior proxy is hereby revoked. , 1996 ----------------------------------------------------------------------------- ----------------------------------------------------------------------------------- Signature ----------------------------------------------------------------------------------- Signature if held jointly PLEASE SIGN EXACTLY AS YOUR NAME APPEARS AT THE LEFT. WHEN SHARES ARE HELD BY JOINT TENANTS, BOTH SHOULD SIGN. WHEN SIGNING AS ATTORNEY, EXECUTOR, ADMINISTRATOR, TRUSTEE OR GUARDIAN, PLEASE GIVE FULL TITLE AS SUCH. IF A CORPORATION, PLEASE SIGN IN FULL CORPORATE NAME BY PRESIDENT OR OTHER AUTHORIZED PERSON. IF A PARTNERSHIP, PLEASE SIGN IN PARTNERSHIP NAME BY AUTHORIZED PERSON. PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE. THANK YOU.
-----END PRIVACY-ENHANCED MESSAGE-----