-----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, HO4zBPh7pNIpI+OlspWwrRYWm4hDO/7qNCwOAeo/rXnZDKuKUS3y4pNEzTgWQVqC lm6T6kpHGMyMag3xzVIcPg== 0000950129-03-001809.txt : 20030402 0000950129-03-001809.hdr.sgml : 20030402 20030402131623 ACCESSION NUMBER: 0000950129-03-001809 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030402 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-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-06511 FILM NUMBER: 03636083 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: 77842-9010 FORMER COMPANY: FORMER CONFORMED NAME: OCEANOGRAPHY INTERNATIONAL CORP DATE OF NAME CHANGE: 19801205 10-K/A 1 h03431ae10vkza.txt O.I. CORPORATION - DATED 12/31/2002 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-K/A [X] Annual report pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 For the fiscal year ended: December 31, 2002 ----------------- [ ] 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: (979) 690-1711 Securities Registered Pursuant to Section 12(b) of the Act: NONE Securities Registered Pursuant to Section 12(g) of the Act: TITLE OF EACH CLASS NAME OF EACH ELECTRONIC SYSTEM ON WHICH QUOTED Common Stock, par value $0.10 per share National Association of Securities Dealers Automated Quotation System (NASDAQ)
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 10-K. [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act). Yes [ ] No [X] The aggregate market value, as of June 30, 2002, of the common stock (based on the average of the high and low trade prices of these shares on NASDAQ) of O. I. Corporation held by non-affiliates was approximately $11,693,704. The number of shares outstanding of the common stock as of March 17, 2003 was 2,759,273. DOCUMENTS INCORPORATED BY REFERENCE Proxy Statement for the 2003 Annual Meeting of Shareholders Part III information is incorporated by reference to the Proxy Statement EXPLANATORY NOTE O.I. Corporation is filing this amendment to Item 8 of its Annual Report on Form 10-K for the fiscal year ended December 31, 2002, to correct the quarterly financial information disclosure contained in Note 14 of the Consolidated Financial Statements for certain computational errors. This amendment does not affect the Company's historical results of operations, financial conditions or cash flows for any period presented. Other than this change to Note 14, there is no change to the consolidated financial statements, the notes to the consolidated financial statements, the report of the independent auditors or the report of management. Nor does this amendment change the Company's previously filed Quarterly Interim Consolidated Financial Statements or the notes thereto. 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. Management believes it has provided financial information (both audited and unaudited) that is representative of the Company's operations, reliable on a consistent basis throughout the periods presented, 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 qualified personnel implement policies and procedures. Management periodically reviews the Company's accounting and control systems. The Company's Audit Committee, composed of at least four 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. By authority of the Board of Directors, the Audit Committee has full authority and responsibility to oversee the appointment, termination, funding, evaluation, and independence of the independent auditors engaged by the Company. The independent accountants conduct an objective, independent examination of the financial statements. Their report appears as a part of this Annual Report on Form 10-K. 1 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS TO THE BOARD OF DIRECTORS OF O.I. CORPORATION: We have audited the accompanying consolidated balance sheet of O.I. Corporation (an Oklahoma corporation) and subsidiaries as of December 31, 2002, and the related consolidated statements of income, stockholders' equity, and cash flows for the year then ended. 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 audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of O.I. Corporation and subsidiaries as of December 31, 2002, and the results of their operations and their cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America. GRANT THORNTON LLP Houston, Texas February 28, 2003 2 REPORT OF INDEPENDENT ACCOUNTANTS THE BOARD OF DIRECTORS AND STOCKHOLDERS OF O. I. CORPORATION In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, stockholders' equity and cash flows present fairly, in all material respects, the financial position of O. I. Corporation and its subsidiaries at December 31, 2001, and the results of their operations and their cash flows for each of the two years in the period ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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. PRICEWATERHOUSECOOPERS LLP Houston, Texas February 15, 2002 3 O. I. CORPORATION CONSOLIDATED BALANCE SHEETS
December 31 ----------------------------- 2002 2001 ------------ ------------ ASSETS Current assets: Cash and cash equivalents $ 3,915,240 $ 3,140,078 Accounts receivable-trade, net of allowance for doubtful accounts of $282,620 and $153,222, respectively 3,774,430 4,417,776 Investment in sales-type leases 277,923 259,845 Investments 3,733,184 1,926,769 Inventories 4,138,123 4,573,358 Current deferred income tax assets 800,959 554,065 Other current assets 145,815 147,929 ------------ ------------ Total current assets $ 16,785,674 $ 15,019,820 Property, plant and equipment, net 3,414,739 3,394,277 Investment in sales-type leases, net of current 271,120 168,968 Long-term deferred income tax assets 310,140 237,706 Intangible assets, net 116,266 480,776 Other assets 84,477 89,047 ------------ ------------ Total assets $ 20,982,416 $ 19,390,594 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 1,312,568 $ 1,330,002 Accrued liabilities 3,118,557 2,211,697 ------------ ------------ Total current liabilities 4,431,125 3,541,699 ------------ ------------ Commitments and contingencies 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, 4,103,377 shares issued 410,338 410,338 Additional paid-in capital 4,330,876 4,329,379 Treasury stock, 1,345,212 and 1,351,874 shares, respectively, at cost (5,865,823) (5,893,761) Retained earnings 17,619,313 16,961,250 Accumulated other comprehensive income, net 56,587 41,689 ------------ ------------ 16,551,291 15,848,895 ------------ ------------ Total liabilities and stockholders' equity $ 20,982,416 $ 19,390,594 ============ ============
The accompanying notes are an integral part of these financial statements. 4 O. I. CORPORATION CONSOLIDATED STATEMENTS OF INCOME
Years Ended December 31 ---------------------------------------------- 2002 2001 2000 ------------ ------------ ------------ Net Revenues: Products $ 20,329,919 $ 22,479,688 $ 20,777,084 Services 3,353,075 3,389,082 3,624,288 ------------ ------------ ------------ Total net revenues $ 23,682,994 $ 25,868,770 $ 24,401,372 Cost of revenues: Products 10,863,221 10,856,462 10,991,176 Services 2,149,078 2,756,033 2,454,083 ------------ ------------ ------------ Total cost of revenues 13,012,299 13,612,495 13,445,259 ------------ ------------ ------------ Gross profit 10,670,695 12,256,275 10,956,113 Selling, general and administrative expenses 7,524,813 7,475,351 7,409,722 Research and development expenses 2,246,189 2,157,364 1,942,585 Impairment of intangible assets 346,000 -- 960,385 ------------ ------------ ------------ Operating income 553,693 2,623,560 643,421 Other income: Interest income, net 59,208 96,292 253,776 Other income 258,348 243,608 80,687 ------------ ------------ ------------ Income before income taxes 871,249 2,963,460 977,884 Provision for income taxes (213,186) (957,671) (361,647) ------------ ------------ ------------ Net income $ 658,063 $ 2,005,789 $ 616,237 ============ ============ ============ Basic earnings per share $ 0.24 $ 0.75 $ 0.21 ============ ============ ============ Diluted earnings per share $ 0.24 $ 0.74 $ 0.21 ============ ============ ============ Weighted average number of shares outstanding: Basic shares 2,755,634 2,659,844 2,895,615 Diluted shares 2,778,478 2,701,784 2,896,841
The accompanying notes are an integral part of these financial statements. 5 O. I. CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, ------------------------------------------- 2002 2001 2000 ----------- ----------- ----------- Cash flows from operating activities: Net income $ 658,063 $ 2,005,789 $ 616,237 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 487,317 581,142 713,894 Impairment of intangible assets 346,000 -- 960,385 Deferred income taxes (311,653) 47,183 (427,349) Stock compensation expense -- 73,680 -- Gain on disposition of property (26,948) (29,896) (43,119) Changes in assets and liabilities Accounts receivable 480,303 (1,351,334) 861,557 Inventories 435,235 1,325,032 (975,642) Other current assets and investments in sales-type leases 36,375 350,482 114,334 Accounts payable (17,434) (359,377) (609,676) Accrued liabilities 892,113 (207,494) (36,931) ----------- ----------- ----------- Net cash provided by operating activities 2,979,378 2,435,207 1,173,690 ----------- ----------- ----------- Cash flows from investing activities: Purchase of property plant, and equipment (480,148) (271,371) (293,553) Proceeds from sale of assets 36,949 57,958 102,596 Purchase of investments (2,683,843) (975,820) (893,283) Maturity of investments 900,000 550,000 1,753,000 Change in other assets (6,609) (16,109) 57,705 ----------- ----------- ----------- Net cash (used in) provided by investing activities (2,233,651) (655,342) 726,465 ----------- ----------- ----------- Cash flows from financing activities: Purchase of treasury stock -- (176,938) (1,375,435) Proceeds from issuance of common stock 29,435 93,068 32,320 ----------- ----------- ----------- Net cash used in financing activities 29,435 (83,870) (1,343,115) ----------- ----------- ----------- Net increase in cash and cash equivalents 775,162 1,695,995 557,040 Beginning of year 3,140,078 1,444,083 887,043 ----------- ----------- ----------- End of year $ 3,915,240 $ 3,140,078 $ 1,444,083 =========== =========== =========== Supplemental disclosures of cash flow information: Cash paid during year for: Interest $ -- $ -- $ 1,947 Income taxes 110,000 1,262,691 676,688 Non-cash investing and financing activities: Exercise of stock options -- 39,535 2,126
The accompanying notes are an integral part of these financial statements. 6 O. I. CORPORATION CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
Common Stock Additional -------------------- Paid-In Treasury Shares Amount Capital Stock --------- -------- ---------- ----------- Balance, December 31, 1999 4,103,377 $410,338 $4,381,089 $(4,597,732) Purchase of 380,332 shares of treasury stock (1,375,435) Issuance of 3,000 shares from treasury for exercise of stock options (750) 11,250 Issuance of 5,667 shares from treasury to Employee Stock Purchase Plan 569 21,251 Conversion of 15,903 outstanding mature shares for 17,000 new shares from treasury for exercise of stock options (2,126) 2,126 Comprehensive income (loss): Unrealized gain (loss) on investments, net of deferred tax benefit of $5,867 Net income Total comprehensive income (loss) --------- -------- ---------- ----------- Balance, December 31, 2000 4,103,377 410,338 4,378,782 (5,938,540) Purchase of 61,394 shares of treasury stock (176,938) Issuance of 19,634 shares from treasury for exercise of stock options 1,124 72,904 Issuance of 5,367 shares from treasury to Employee Stock Purchase Plan (960) 20,000 Conversion of 55,237 outstanding mature shares for 133,060 new shares from treasury for exercise of stock options (39,535) 39,535 Issuance of 24,000 shares from treasury stock to directors (15,598) 89,278 Deferred tax benefit for disqualifying employee stock option dispositions 5,566 Comprehensive income (loss): Unrealized gain on investments, net of deferred tax benefit of $12,597 Net income Total comprehensive income (loss) --------- -------- ---------- ----------- Balance, December 31, 2001 4,103,377 410,338 4,329,379 (5,893,761) Issuance of 3,100 shares from treasury for exercise of stock options (941) 13,073 Issuance of 3,562 shares from treasury to Employee Stock Purchase Plan 2,438 14,865 Comprehensive income (loss): Unrealized gain on investments, net of deferred tax benefit of $7,675 Net income Total comprehensive income (loss) --------- -------- ---------- ----------- Balance, December 31, 2002 4,103,377 $410,338 $4,330,876 $(5,865,823) ========= ======== ========== ============ Accumulated Other Com- Total Retained prehensive Stockholders' Earnings Income/(Loss) Equity ----------- ------------ ------------ Balance, December 31, 1999 $14,339,224 $ -- $ 14,532,919 Purchase of 380,332 shares of treasury stock (1,375,435) Issuance of 3,000 shares from treasury for exercise of stock options 10,500 Issuance of 5,667 shares from treasury to Employee Stock Purchase Plan 21,820 Conversion of 15,903 outstanding mature shares for 17,000 new shares from treasury for exercise of stock options -- Comprehensive income (loss): Unrealized gain (loss) on investments, net of deferred tax benefit of $5,867 (9,989) Net income 616,237 Total comprehensive income (loss) 606,248 ----------- ------- ---------- Balance, December 31, 2000 14,955,461 (9,989) 13,796,052 Purchase of 61,394 shares of treasury stock (176,938) Issuance of 19,634 shares from treasury for exercise of stock options 74,028 Issuance of 5,367 shares from treasury to Employee Stock Purchase Plan 19,040 Conversion of 55,237 outstanding mature shares for 133,060 new shares from treasury for exercise of stock options -- Issuance of 24,000 shares from treasury stock to directors 73,680 Deferred tax benefit for disqualifying employee stock option dispositions 5,566 Comprehensive income (loss): Unrealized gain on investments, net of deferred tax benefit of $12,597 51,678 Net income 2,005,789 Total comprehensive income (loss) 2,057,467 ----------- ------- ---------- Balance, December 31, 2001 16,961,250 41,689 15,848,895 Issuance of 3,100 shares from treasury for exercise of stock options 12,132 Issuance of 3,562 shares from treasury to Employee Stock Purchase Plan 17,303 Comprehensive income (loss): Unrealized gain on investments, net of deferred tax benefit of $7,675 14,898 Net income 658,063 Total comprehensive income (loss) 672,961 ----------- ------- ---------- Balance, December 31, 2002 $17,619,313 $56,587 16,551,291 =========== ======= ==========
The accompanying notes are an integral part of these financial statements. 7 O. I. CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES O. I. Corporation, an Oklahoma corporation, was organized in 1969. O.I. Corporation designs, manufactures, markets, and services analytical, monitoring, and sample preparation products, components, and systems used to detect, measure, and analyze chemical compounds. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES PRINCIPLES OF CONSOLIDATION The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and include the accounts of O.I. Corporation and its wholly owned subsidiary, (collectively, the "Company"). All significant intercompany transactions and balances have been eliminated in the consolidated financial statements. REVENUE RECOGNITION The Company derives revenues from three sources--system sales, parts sales, and services. For system sales and parts sales, revenue is generally recognized when persuasive evidence of an arrangement exists, delivery has occurred, the contract price is fixed or determinable, title and risk of loss has passed to the customer and collection is reasonably assured. The Company's sales are typically not subject to rights of return and, historically, sales returns have not been significant. System sales that do not involve unique customer acceptance terms or new specifications or technology with customer acceptance provisions, and that involve installation services are accounted for as multiple-element arrangements, where the larger of the contractual billing hold back or the fair value of the installation service is deferred when the product is delivered and recognized when the installation is complete. In all cases, the fair value of undelivered elements, such as accessories ordered by customers, is deferred until the related items are delivered to the customer. For certain other system sales that do involve unique customer acceptance terms or new specifications or technology with customer acceptance provisions, all revenue is generally deferred until customer acceptance. Deferred revenue from such system sales is presented, net of related deferred cost of sales, as unearned revenues in accrued liabilities in the accompanying consolidated balance sheets. Revenues from services are recognized upon provision of service to the customer. Our products generally carry one year of warranty. Once the warranty period has expired, the customer may purchase an extended product warranty typically covering an additional period of one year. Extended warranty billings are generally invoiced to the customer at the beginning of the contract term. Revenue from extended warranties is deferred and recognized ratably over the duration of the contract. Unearned extended warranty revenue is included in deferred revenues in accrued liabilities in the accompanying consolidated balance sheets. Revenues from bill and hold sales are recognized in accordance with the criteria specified in SAB 101. In addition to the criteria above, the customer must request that the transaction be on a bill and hold basis and have a substantial business purpose for ordering the goods on that basis, there must be a reasonable, fixed schedule for delivery consistent with the business purpose, the Company must no longer retain any performance obligations and the earnings process must be substantially complete, and the items sold are segregated from the rest of the Company's inventory and must be ready for final shipment to the customer. CASH AND CASH EQUIVALENTS The Company considers all highly liquid cash investment instruments with an original maturity of three months or less to be cash equivalents. INVESTMENTS The Company accounts for its investments that represent less than twenty percent ownership using Statement of Financial Accounting Standards No. 115 (FAS 115), Accounting for Certain Investments in Debt and Equity Securities. This standard requires that certain debt and equity securities be adjusted to market value at the end of each accounting period. The Company invests in debt securities and preferred stocks. The Company's 8 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. Company investments in bonds are reported at amortized cost. The Company's investments as of December 31, 2002 and 2001 consisted entirely of preferred stock investments. These investments were classified as available-for-sale and are stated at fair value at December 31, 2002 and 2001. The unrealized gain (loss) on preferred stock is reported net of tax as accumulated other comprehensive income (loss) in the accompanying consolidated statements of stockholders' equity. Realized gains and losses on sales of investments are included in the consolidated statements of income. INVESTMENT IN SALES-TYPE 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 typically expire over a four-year period. The Company recognizes as revenues the principal portion of sales-type leases upon initiation of the lease. Interest is deferred and recognized as revenues over the initial term of the lease. Security deposits are deferred until the lease expires and either recognized as revenues or returned to the customer, as appropriate. 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. The Company maintains a reserve for inventory obsolescence and regularly evaluates its inventory. Items with no movement in six months or more are reserved or written off. The Company also provides an obsolescence reserve for items that have impairments in their realizable value below cost. DEMONSTRATION EQUIPMENT The demonstration of the Company's products is often required prior to a customer's purchase. The Company makes available certain equipment for use in demonstrations believing that a successful demonstration will promote the customer's purchase of the equipment. Equipment used in demonstration is classified as inventory and is depreciated to a zero value in a six-month period from the date of being used in a customer demonstration. Product shipments, including those for demonstration or evaluation, are not recorded as revenues until a valid purchase order is received specifying fixed terms and prices. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment is recorded at cost and depreciated over the estimated useful lives of 3 to 40 years using the straight-line method. Repairs and maintenance are expensed as incurred. INTANGIBLE ASSETS Intangible assets primarily include acquired patents, trade names and trademarks, manufacturing rights and know-how that is amortized on a straight-line basis over their estimated useful lives as follows.
Life in Years Patents 17 Trademarks and trade names 15 Application notes 15 Manufacturing rights 5
US GAAP requires that long-lived assets to be held and used, including intangible assets, be reviewed for impairment whenever changes in circumstances indicate the carrying value may not be recoverable. The carrying value is considered impaired when the anticipated separately identifiable undiscounted cash flows from such an asset are less than the carrying value of the asset. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. PRODUCT WARRANTIES Products are sold with warranties ranging from 90 days to one year. Estimated expenses associated with these warranties are provided for at the time of revenue recognition in the accompanying consolidated financial statements. The Company makes estimates of these costs based on historical experience and on various other assumptions including historical and expected product failure rates, material usage, and service delivery costs incurred in correcting a product failure. RESEARCH AND DEVELOPMENT COSTS Research and development costs are expensed as incurred. INCOME TAXES The Company provides for deferred taxes in accordance with Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes, which requires the Company to use the asset and liability approach to account for income taxes. This approach requires the recognition of deferred income 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. The provision for income taxes is based on income before income taxes as reported in the accompanying consolidated statements of income. 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 9 funds, investment grade domestic corporate bonds, and highly-rated corporate preferred stocks. The Company's investments are subject to fluctuations based on interest rates and trading conditions prevailing in the marketplace. The Company sells its products primarily to large corporations, environmental testing laboratories, and governmental agencies. The majority of its customers are located in the U. S. and all sales are denominated in U.S. dollars. Credit risk with respect to trade receivables is 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, 2002 and 2001, the Company had no significant concentrations of credit risk related to accounts receivable. However, agencies of the U.S. government constitute a significant percentage of the Company's revenues (See Note 13). Any federal budget cuts or changes in regulations affecting the U.S. chemical warfare programs or the USEPA may have a negative impact on the Company's future revenues. EARNINGS PER SHARE The Company reports both basic earnings per share, which is based on the weighted average number of common shares outstanding, and diluted earnings per share, which is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Stock options are the only dilutive potential shares the Company has outstanding. The weighted average of shares used in the basic earnings per share calculation was 2,755,634 in 2002, 2,659,844 in 2001, and 2,895,615 in 2000. The weighted average number of shares used in the diluted earnings per share computation was 2,778,478 in 2002, 2,701,784 in 2001, and 2,896,841 in 2000. At December 31, 2002, 2001 and 2000, options to acquire 133,700, 128,900, and 260,600 shares at weighted average exercise prices of $5.88, $6.85, and $5.39, respectively, were not included in the computations of dilutive earnings per share as the options' exercise price was greater than the average market price of the common shares. COMPREHENSIVE INCOME (LOSS) Effective January 1, 1998, the Company adopted Statement No. 130 (FAS 130), Reporting Comprehensive Income. This Statement established standards for reporting and display of comprehensive income and its components. Net income and unrealized gains and losses on available-for-sale investments are the Company's only components of comprehensive income (loss). STOCK BASED COMPENSATION At December 31, 2002, the Company has three stock-based employee compensation plans, which are described more fully in Note 8. The company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if the company had applied the fair value recognition provisions of FAS Statement No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation.
Year ended December 31 --------------------------------- (in thousands) 2002 2001 2000 -------- -------- -------- Net income, as reported $ 658 $ 2,006 $ 616 Deduct: Total stock-based compensation expense determined under fair value based method for awards granted, modified, or settled, net of related tax effects $ 88 $ 73 $ 108 ======== ======== ======== Pro forma net income $ 570 $ 1,933 $ 508 ======== ======== ======== Earnings per share: Basic--as reported $ 0.24 $ 0.75 $ 0.21 ======== ======== ======== Basic--pro forma $ 0.21 $ 0.73 $ 0.18 ======== ======== ======== Diluted--as reported $ 0.24 $ 0.74 $ 0.21 ======== ======== ======== Diluted--pro forma $ 0.21 $ 0.72 $ 0.18 ======== ======== ========
The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions used for grants in 2002, 2001, and 2000, respectively: dividend yield of zero for each year; expected volatility of 37, 37, and 33 percent; risk-free interest rates of 1.30, 6.38, and 6.38 percent; and expected lives 10 of seven years. The weighted average fair value at the date of grant for options granted during 2002, 2001, and 2000 was $2.09, $1.90, and $1.90, respectively. USE OF ESTIMATES The preparation of the consolidated financial statements in accordance with accounting principles generally accepted in the U.S. requires the use of management's estimates. These estimates are subjective in nature and involve judgments that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at year end, and the reported amounts of revenues and expenses during the year. Actual results could differ from those estimates. RECLASSIFICATIONS Certain prior period amounts in the consolidated financial statements have been reclassified for comparative purposes. Such reclassifications had no effect on the net income or the overall financial condition of the Company. RECENT PRONOUNCEMENTS In September 2000, the FASB issued Statement No. 140 (FAS 140), Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. This Statement replaces FAS 125, issued in June of 1996. The new Statement will be effective for disclosures relating to securitization transactions and collateral for fiscal years ending after December 15, 2000, and for transfers occurring after March 31, 2001. Adoption of FAS 140 did not have a material effect on the Company's financial position or operating results. In June 2001, the FASB issued Statement No. 141 (FAS 141), Business Combinations. FAS 141 requires that all business combinations completed after June 30, 2001, be accounted for under the purchase method, eliminating the use of the pooling method. This Statement also establishes for all business combinations made after June 30, 2001, specific criteria for the recognition of intangible assets separately from goodwill. FAS 141 also requires that the excess of fair value of acquired assets over cost in a business combination (negative goodwill) be recognized immediately as an extraordinary gain, rather than deferred and amortized. In June 2001, the FASB issued Statement No. 142 (FAS 142), Goodwill and Other Intangibles. FAS 142 addresses the accounting for goodwill and other intangible assets after an acquisition. The most significant changes made by FAS 142 are goodwill and intangible assets with indefinite lives will no longer be amortized; goodwill and intangible assets with indefinite lives must be tested for impairment at least annually; and the amortization period for intangible assets with finite lives will no longer be limited to forty years. The Company adopted FAS 142 effective January 1, 2002, as required. A transitional impairment test was required for existing goodwill as of the date of adoption of this Standard; however, the Company did not have any goodwill on its books. Goodwill recorded after adoption of this Standard is to be tested for impairment at least annually and any resulting impairment is considered part of operating income. In June 2001, the FASB issued Statement No. 143 (FAS 143), Accounting for Obligations Associated with the Retirement of Long-Lived Assets. FAS 143 establishes a new accounting model for the recognition and measurement of retirement obligations associated with tangible long-lived assets. FAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The Company adopted this Statement effective January 1, 2003. Adoption of this Statement did not have a material effect on the Company's financial position and results of operations. In August 2001, the FASB issued Statement No. 144 (FAS 144), Accounting for the Impairment or Disposal of Long-Lived Assets, which establishes one accounting model to be used for long-lived assets to be disposed of by sale and broadens the presentation of discontinued operations to include more disposal transactions. FAS 144 supersedes FAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the accounting and reporting provisions of APB Opinion No. 30. FAS No. 144 is effective for fiscal years beginning after December 15, 2001. During the third quarter ended September 30, 2002, the Company performed an evaluation of future prospects of certain products and their related intangible assets. As a result of this evaluation, the Company recorded an impairment loss for those intangible assets totaling approximately $346,000 (See Note 5). 11 In April 2002, the FASB issued FAS 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections, which is effective for transactions occurring after May 15, 2002. FAS 145 rescinds FAS 4 and FAS 64, which addressed the accounting for gains and losses from extinguishment of debt. FAS 44 set forth industry-specific transitional guidance that did not apply to the Company. FAS 145 amends FAS 13 to require that certain lease modifications that have economic effects similar to sale-leaseback transactions be accounted for in the same manner as sale-leaseback transactions. FAS 145 also makes technical corrections to certain existing pronouncements that are not substantive in nature. The adoption of FAS 145 in the second quarter of fiscal year 2002 did not have a significant impact on the Company's financial condition or results of operations. In July 2002, the FASB issued FAS 146, Accounting for Exit or Disposal Activities. FAS 146 addresses the recognition, measurement, and reporting of costs associated with exit and disposal activities, including restructuring activities that are currently accounted for pursuant to the guidance set forth in Emerging Issues Task Force issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other costs to Exit an Activity (including Certain Costs Incurred in Restructuring). The Scope of FAS 146 includes costs related to terminating a contract that is not a capital lease, costs to consolidate facilities or relocate employees, and certain termination benefits provided to employees who are involuntarily terminated. FAS 146 is effective for exit or disposal activities initiated after December 31, 2002. The Company does not expect the adoption of FAS 146 to have a significant impact on its financial condition or results of operations. In 2003, the FASB, issued FAS 148, Accounting for Stock-Based Compensation Transition and Disclosure, an amendment of FAS 123. The disclosure requirements of FAS 123, Accounting for Stock-Based Compensation, which apply to stock compensation plans of all companies, are amended to require certain disclosures about stock-based employee compensation plans in an entity's accounting policy note. Those disclosures include a tabular format of pro forma net income and, if applicable, earnings per share under the fair value method if the intrinsic value method is used in any period presented. Pro forma information in a tabular format is also required in the notes to interim financial information if the intrinsic value method is used in any period presented. The amendments to the disclosure and transition provisions of FAS 123 are effective for fiscal years ending after December 15, 2002. The Company does not plan a change to the fair value based method of accounting for stock-based employee compensation and has included the disclosure requirements of FAS 148 in the accompanying financial statements. In November 2002, the Emerging Issues Task Force reached a consensus opinion on EITF 00-21, "Revenue Arrangements with Multiple Deliverables." The consensus provides that revenue arrangements with multiple deliverables should be divided into separate units of accounting if certain criteria are met. The consideration for the arrangement should be allocated to the separate units of accounting based on their relative fair values, with different provisions if the fair value of all deliverables are not known or if the fair value is contingent on delivery of specified items or performance conditions. Applicable revenue recognition criteria should be considered separately for each separate unit of accounting. EITF 00-21 is effective for revenue arrangements entered into in fiscal periods beginning after June 15, 2003. Entities may elect to report the change as a cumulative effect adjustment in accordance with APB Opinion 20, Accounting Changes. The Company has not determined the effect of adoption of EITF 00-21 on its financial statements or the method of adoption it will use. In November 2002, the Emerging Issues Task Force reached a consensus opinion on EITF 02-16, "Accounting by a Customer (including a reseller) for Certain Consideration Received from a Vendor." EITF 02-16 requires that cash payments, credits, or equity instruments received as consideration by a customer from a vendor should be presumed to be a reduction of cost of sales when recognized by the customer in the income statement. In certain situations, the presumption could be overcome and the consideration recognized either as revenue or a reduction of a specific cost incurred. The consensus should be applied prospectively to new or modified arrangements entered into after December 31, 2002. The Company has not yet determined the effects of EITF 02-16 on its financial statements. In November 2002, FASB Interpretation 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (FIN 45), was issued. FIN 45 requires a guarantor entity, at the inception of a guarantee covered by the measurement provisions of the interpretation, to record a liability for 12 the fair value of the obligation undertaken in issuing the guarantee. FIN 45 applies prospectively to guarantees the Company issues or modifies subsequent to December 31, 2002, but has certain disclosure requirements effective for interim and annual periods ending after December 15, 2002. The Company has historically issued guarantees only on in the form of product warranties and does not anticipate FIN 45 will have a material effect on its 2003 financial statements. Disclosures required by FIN 45 are included in the accompanying financial statements. In January 2003, the FASB issued FASB Interpretation 46 (FIN 46), Consolidation of Variable Interest Entities. FIN 46 clarifies the application of Accounting Research Bulletin 51, Consolidated Financial Statements, for certain entities that do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties, or in which equity investors do not have the characteristics of a controlling financial interest ("variable interest entities"). Variable interest entities within the scope of FIN 46 will be required to be consolidated by their primary beneficiary. The primary beneficiary of a variable interest entity is determined to be the party that absorbs a majority of the entity's expected losses, receives a majority of its expected returns, or both. FIN 46 applies immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company is in the process of determining what impact, if any, the adoption of the provisions of FIN 46 will have upon its financial condition or results of operations. NOTE 2. NET INVESTMENT IN SALES-TYPE LEASES The following lists the components of the net investment in sales-type leases as of December 31:
2002 2001 --------- --------- Total minimum lease payments to be received $ 549,043 $ 428,813 Less: Unearned income $ (67,030) $ (43,479) --------- --------- Net investment in direct financing and sales-type leases $ 482,013 $ 385,334 ========= =========
At December 31, 2002, minimum lease payments for each of the five succeeding fiscal years are as follows: $277,923 in 2003, $143,587 in 2004, $82,652 in 2005, $44,881 in 2006, and $0 in 2007. NOTE 3. INVENTORIES Inventories, which include material, labor, and overhead, on December 31, 2002 and 2001, consisted of the following:
2002 2001 ---------- ---------- Raw materials $3,215,760 $3,766,365 Work-in-process 220,666 567,475 Finished goods 701,697 239,518 ---------- ---------- $4,138,123 $4,573,358 ========== ==========
13 NOTE 4. PROPERTY, PLANT, AND EQUIPMENT Property, plant, and equipment on December 31, 2002 and 2001, consisted of the following:
Estimated Useful Lives 2002 2001 ---------------------- ----------- ----------- Land $ 40,462 $ 40,462 Buildings 33 to 40 years 3,842,960 3,835,294 Leasehold improvements 5 years 49,065 29,239 Furniture and equipment 3 to 10 years 2,664,065 2,355,163 ----------- ----------- 6,596,552 6,260,158 Less accumulated depreciation (3,181,813) (2,865,881) ----------- ----------- $ 3,414,739 $ 3,394,277 =========== ===========
Depreciation expenses totaled $449,108 and $460,205 for the years ended December 31, 2002 and 2001, respectively. NOTE 5. INTANGIBLE ASSETS Intangible assets on December 31, 2002 and 2001, consisted of the following:
2002 2001 ------------------------------ ----------------------------- Gross Gross Carrying Accumulated Carrying Accumulated Amount Amortization Amount Amortization ------------ ------------ ------------ ------------ Patents $ 138,189 $ (57,942) $ 115,083 $ (51,497) Alpkem trademarks & trade names 180,000 (180,000) 180,000 (68,488) Floyd patents 217,500 (217,500) 217,500 (106,940) Alpkem patents 5,000 (5,000) 5,000 (1,902) GAC patents 97,742 (61,723) 97,742 (24,384) Application notes 191,541 (191,541) 191,541 (72,879) ------------ ------------ ------------ ------------ $ 829,972 $ (713,706) $ 806,866 $ (326,090)
Amortization charged to operations amounted to approximately $38,209, $132,327, and $191,000, for the years ended December 31, 2002, 2001, and 2000, respectively. Estimated amortization expense: For year ended 12/31/03 $ 9,614 For year ended 12/31/04 $ 9,614 For year ended 12/31/05 $ 9,614 For year ended 12/31/06 $ 9,614 For year ended 12/31/07 $ 9,614
Consistent with the Company's accounting policies, during 2002, the Company performed an annual evaluation of the future prospects of certain products and their related inventory and intangible assets. As a result of this evaluation, the Company decided to discontinue manufacturing, sales, service, and support for certain sample preparation, gas chromatography, and ion analyzer products. The Company came to these decisions because purchase components are no longer available for support of certain products, and the Company's current or anticipated sales volume for certain other products no longer represent a viable business opportunity for the Company. 14 As a result of the determination to discontinue these products, the Company recorded an impairment loss for intangible assets and a loss for obsolete inventory related to those products. The impaired intangible assets consisted of acquired trade names and trademarks that are no longer used to market the Company's products, application notes for products that are no longer produced or sold, and patents on technology that is no longer used in the Company's products. To determine if any impairment existed, the Company compared the carrying amount of each intangible asset, separately, to the undiscounted cash flow stream over the remaining life of each intangible asset. To value the indicated impairment, the Company compared the carrying amount of each intangible asset, separately, to the fair value of those intangible assets. The Company determined the fair value of each intangible asset by estimating the future cash flows from the use and disposition of those intangible assets. The aggregate fair value of those intangible assets was less than the aggregate carrying value and resulted in an impairment loss totaling approximately $346,000, which is included in SG&A expense in the consolidated statements of income. The loss for obsolete inventory was determined by taking the total of the inventory related to these discontinued products and consistent with the Company's policy relating to obsolete inventory, the total of other inventory with no movement in six months, which the Company determined is no longer saleable based on available market information. The loss for obsolete inventory totaled approximately $200,000, and is included in cost of goods sold in the consolidated statements of income. On February 1, 1999, the Company acquired substantially all of the assets of General Analysis Corporation (GAC). GAC is a supplier of beverage monitors used to measure dissolved Brix (sugar), diet syrup and carbon dioxide in beverage streams. Assets acquired also included air and gas monitors that are used by the chiller/refrigerant industry for the rapid detection of low-level refrigerant leaks. The excess of the purchase price over fair market value of the underlying assets acquired of $1,078,000 was allocated to intangibles, including patents, non-compete agreements, trademarks, and goodwill based upon estimates of relative fair values. The intangible assets were being amortized over a 5 to 15 year period, dependent upon the nature of the assets and are included within the other intangible assets caption of the consolidated balance sheets. In the fourth quarter of 2000, the Company performed an analysis of intangible assets related to the acquisition of GAC and for a GC inlet product for which the manufacturing rights were acquired in 1999 and determined that part of the carrying value of these assets was not recoverable due to continuous delays in the introduction of a new product, resulting in deterioration of market presence. The Company evaluated the realizability of the intangible assets based on expectations of non-discounted cash flows and operating income for each product line having a material intangible asset balance. An impairment loss was recognized as the estimated future undiscounted cash flows expected to result from the use of the asset and its eventual disposition was less than its carrying amount. The impairment loss was measured as the difference between the carrying value of the asset and the discounted cash flows expected to be produced by the assets. As a result of this analysis, the Company recorded asset impairment charges in the fourth quarter of 2000 amounting to $960,000 before tax, which reduced net income by approximately $605,000, or $0.21 per share (diluted). The asset impairment charges consisted of $793,000 relating to the value of intangible assets acquired from GAC in February 1999, and $167,000 relating to the value of manufacturing rights acquired in 1999. NOTE 6. ACCRUED LIABILITIES Accrued liabilities on December 31, 2002 and 2001, consisted of the following:
2002 2001 ---------- ---------- Accrued compensation and other related expenses $ 769,672 $ 834,233 Accrued warranties 734,637 684,446 Unearned revenues 394,303 33,050 Unearned revenues - service contracts 348,231 319,603 Unearned revenues/deposits - sales-type leases 215,967 208,286 Other liabilities and accrued expenses 655,747 132,079 ---------- ---------- $3,118,557 $2,211,697 ========== ==========
15 NOTE 7. PRODUCT WARRANTY LIABILITIES The changes in the Company's product warranty liability on December 31, 2002 and 2001 are as follows:
2002 2001 --------- --------- Liabilities, beginning of year $ 684,446 $ 532,819 Expense for new warranties issued $ 54,678 $ 151,627 Warranty claims $ (4,487) $ 0 --------- --------- Liability, end of year $ 734,637 $ 684,446 ========= =========
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 expired in accordance with its terms on December 31, 1997. Options granted to purchase 33,766 shares remain outstanding under the 1987 Plan at December 31, 2002. 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 and generally vest over three or four years. The 1993 Plan was amended effective January 1, 2001 to also provide for the one-time award of 6,000 shares to directors upon their initial election to the Board. During 2001, 24,000 shares were awarded under this provision resulting in $73,680 in compensation expense. During 2002, the Company granted 135,000 share options under the 1993 Plan, with a weighted average exercise price based on the stock price of $5.20 at the date of grant. The 1993 Plan expired in accordance with its terms on December 2002. At such time, 409,134 of the 500,000 shares reserved for issuance had been granted and 90,866 shares expired ungranted. Both the 1987 Plan and the 1993 Plan allow for the exercise of options with mature shares. During 2001, 55,237 outstanding mature shares were used to exercise stock options for 133,060 shares of the Company's stock. Options outstanding under the 1987 Plan and the 1993 Plan have exercise prices equal to the market value on the date of grant. The 2003 Incentive Compensation Plan (the "Incentive Plan") was adopted by the Board of Directors on February 25, 2002, and approved by the Company's shareholders at the annual meeting of shareholders on May 6, 2002. The Incentive Plan became effective on January 1, 2003. Key personnel and non-employee directors of the Company are eligible to participate in the Incentive Plan. The purpose of the Incentive Plan is to attract, retain, and motivate key employees and non-employee directors of the Company by providing additional benefits to such employee and non-employee directors by way of granting stock options, stock appreciation rights ("SARs"), stock awards and performance awards. The Incentive Plan is administered by the Compensation Committee. Members of the Compensation Committee are not eligible to participate under the Incentive Plan, other than to receive stock option grants or awards of stock on a formula basis as set forth in the Plan. The 2003 Plan also provides that each non-employee director will be awarded 3,000 shares of restricted stock upon his initial election to the Board of Directors. The aggregate number of shares of the Company's common stock as to awards may be granted under the Incentive Plan is 350,000, subject to adjustments as described in the Incentive Plan; provided, however, that 150,000 shares of Common Stock shall be reserved for the grant of incentive stock options under the Incentive Plan. The Incentive Plan terminates on December 31, 2012. The option price for each stock option is determined by the Compensation Committee, but in no event may the 16 exercise price per share be less than the market value per share (as defined in the Plan) on the date of the grant; provided, however, that in the case of an employee who, at the time an incentive stock option is granted, owns (within the meaning of Section 424(d) of Code) more than 10% of the total combined voting power of all classes of stock of the Company or any subsidiary corporation, then the exercise price for the incentive stock option shall be at least 110% of the market value per share of Common Stock at the time of grant. The Company intends to register shares of Common Stock issuable pursuant to the Incentive Plan under the Securities Act of 1933, as amended. Activity under the 1987 Plan and the 1993 Plan for each of the three years in the period ended December 31, 2002 was as follows:
Weighted Average Shares Price Per Share Price per Share -------- --------------- ---------------- Options outstanding, December 31, 1999 387,700 $ 2.50 - 14.00 $ 4.60 Options granted 62,400 3.875 - 3.969 3.88 Options exercised (20,000) 3.50 - 3.63 3.61 Options forfeited or cancelled (24,500) 2.50 - 5.625 4.22 -------- Options outstanding, December 31, 2000 405,600 2.50 - 14.00 4.56 Options granted 77,400 2.90 - 4.90 3.82 Options exercised (152,694) 2.50 - 5.625 3.73 Options forfeited or cancelled (117,000) 2.50 - 5.625 3.99 -------- Options outstanding, December 31, 2001 213,306 2.50 - 6.06 4.18 Options granted 135,000 3.82 - 6.52 5.199 Options exercised (3,100) 3.125 - 3.94 3.914 Options forfeited or cancelled (20,900) 2.50 - 6.52 5.138 -------- Options outstanding, December 31, 2002 324,306 2.50 - 6.52 4.348
There were 114,852, 86,766, and 284,050 share options exercisable at December 31, 2002, 2001, and 2000, respectively. The following table summarizes significant ranges of outstanding and exercisable options at December 31, 2002:
Options Outstanding Options Exercisable ------------------------------------------ ------------------- Weighted Weighted Weighted Average Average Average Ranges of Remaining Life in Exercise Exercise Exercise Prices Shares Years Price Shares Price --------------- ------- ------------------- -------- ------ -------- $2.50 - $3.50 61,066 6.18 $ 3.247 31,867 $ 3.29 3.81 - 5.625 205,240 7.59 4.378 81,985 4.55 6.06 - 6.52 58,000 8.93 6.512 1,000 6.06
In 1989, the Company established an Employee Stock Purchase Plan, which the Board of Directors, in 1998, re-authorized to continue in its same format. 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 Compensation Committee of the Board of Directors administers the plan. Shares of common stock are purchased in the open market or issued from shares held in treasury. The Company pays all commissions and contributes an additional 15% for the purchase of shares that are distributed to eligible participating employees. The 17 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, 2002, 55,668 shares had been purchased under the plan. NOTE 9. STOCKHOLDERS' EQUITY 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, 2002, no preferred stock had been issued. The Company's Board of Directors has authorized the Company to repurchase shares of its common stock through open market purchases or privately negotiated transactions. Since 1995, the Company has repurchased an aggregate 1,727,378 shares related to these authorizations. The shares are held by the Company and accounted for using the cost method. The Company is authorized to purchase up to 47,622 additional shares as of December 31, 2002. NOTE 10. INCOME TAXES The Company's operations are only taxed under domestic jurisdictions. The provision for income taxes is summarized as follows:
Years Ended December 31 ------------------------------------ 2002 2001 2000 --------- --------- --------- Current provision: Federal $ 454,931 $ 800,544 $ 680,730 State 69,908 153,623 108,266 Deferred provision (benefit) (311,653) 3,504 (427,349) --------- --------- --------- $ 213,186 $ 957,671 $ 361,647 ========= ========= =========
The provision for income taxes differs from the amount computed by applying the federal statutory rates for the following reasons:
Years Ended December 31 ------------------------------ 2002 2001 2000 ------ ------ ------ Tax at statutory rate 34.0% 34.0% 34.0% State income taxes, net of federal benefit 5.6 4.0 5.8 Future research and development credits (5.2) (5.9) -- Dividends received deduction (5.7) -- -- Reduction in valuation allowance -- (1.7) -- Other, net (4.3) 1.9 (2.9) ------ ------ ------ 24.4% 32.3% 36.9% ====== ====== ======
18 Deferred tax assets (liabilities) are comprised of the following at December 31, 2002 and 2001:
2002 2001 ----------- ----------- Current: Warranty reserve $ 293,855 $ 240,044 Bad debt allowance 101,438 50,730 Inventory reserve 126,492 37,692 Uniform capitalization 144,875 158,873 Accrued vacation 101,449 49,587 Other 32,850 17,139 ----------- ----------- Total current $ 800,959 $ 554,065 =========== =========== Noncurrent: Depreciation $ 146,016 $ 151,432 Deferred compensation 47,447 17,975 Intangibles 213,969 182,148 Other (97,292) (113,849) ----------- ----------- Total noncurrent 310,140 237,706 Net tax asset before valuation allowance 1,111,099 791,771 Valuation allowance -- -- ----------- ----------- Net deferred tax asset $ 1,111,099 $ 791,771 =========== ===========
NOTE 11. EMPLOYEE BENEFIT PLANS The Company maintains a Retirement Savings Plan (the 401(k) Plan) for its employees, which allows participants to make contributions by salary reduction pursuant to Section 401(k) of the Internal Revenue Code. The Company's contributions to the 401(k) Plan are discretionary. Employees vest immediately in their contributions and vest in the Company's contributions ratably over five years. The Company accrued contributions of $55,000, $150,000, and $80,000 to the 401(k) Plan for the years ended December 31, 2002, 2001, and 2000, respectively. NOTE 12. COMMITMENTS AND CONTINGENCIES On February 1, 1999, the Company acquired substantially all of the assets of General Analysis Corporation (GAC). GAC is a supplier of beverage monitors used to measure dissolved Brix (sugar), diet syrup, and carbon dioxide in beverage streams. Assets acquired also included air and gas monitors that are used by the chiller/refrigerant industry for the rapid detection of low-level refrigerant leaks. The Company acquired GAC for $259,459 in cash and the assumption of approximately $1,100,000 in liabilities. In addition, the Company may be obligated to make earn-out payments to the former owner of GAC based upon the achievement of potential future revenue targets. The earn-out provision is based upon a percentage of equipment sales, as defined in the purchase agreement, in excess of certain thresholds through 2003. The sales thresholds approximate $1,000,000 for 1999 and increase ratably each year to a total sales threshold of at least $5,000,000 in 2003. No earn-out payments were earned for the years ended December 31, 2002, 2001, or 2000. Any earn-out payments will be recorded as an adjustment to the purchase price of the acquisition because the earn-out payments are based upon the future performance of the Company and not upon continued employment of the former owners. As of December 31, 2002, the maximum aggregate amount of the potential earn-out payments is approximately $3,500,000. The Company has an agreement with the former owner of Floyd Associates, Inc. to pay a royalty equal to 5% of the net revenue earned from certain microwave-based products up to a maximum amount of $1,182,500. The contingent liability arose as a result of the acquisition of Floyd in 1994. No minimum payments are required in the agreement. The Company recognized royalty expense related to this agreement of $24,249, $34,860, and $41,764 in 2002, 2001, and 2000, respectively. 19 The Company leases approximately 20,000 sq.ft. of office, engineering, laboratory, production, and warehouse space in Pelham, Alabama, a suburb of Birmingham, under a lease expiring in October 2006. The Company also leases 500 sq. ft of office space in Edgewood, Maryland, which can be automatically renewed annually up to three years. Rental expense recognized in 2002, 2001, and 2000, was $201,220, $150,000, and $157,000, respectively. Future minimum rental payments under these leases for each year of the next five successive years are $192,904, $193,093, $188,785, $171,050, and $-0-. NOTE 13. SEGMENT DATA The Company adopted Statement of Financial Accounting Standards No. 131 (FAS 131), Disclosures about Segments of an Enterprise and Related Information. FAS 131 designates the internal reporting that is used by management for making operating decisions and assessing performance as the source of the Company's reportable segments. FAS 131 also requires disclosure about products and sources, geographic areas and major customers. The Company operates its business as a single segment. Revenues related to operations in the U.S. and foreign countries for the years ended December 31, 2002, 2001, and 2000, are presented below. The basis for attributing revenues from external customers to individual countries is based upon locations to which the product is shipped. Long-lived assets related to continuing operations in the U.S. and foreign countries as of the years ended December 31, 2002, 2001, and 2000, are as follows:
Years Ended December 31 ----------------------------------------- 2002 2001 2000 ----------- ----------- ----------- Net revenues from unaffiliated customers: United States $17,699,135 $21,230,585 $19,402,106 Foreign 5,983,859 4,638,185 4,999,266 Long-lived assets at end of year: United States $ 3,414,739 $ 3,394,277 $ 3,606,028
One customer accounted for approximately 10% of revenues in 2002, 12% of revenues in 2001, and no single customer accounted for more than 10% of revenues in 2000. Sales to federal, state, and municipal governments accounted for 17% of total revenues in 2002, 13% of total revenues in 2001, and 31% of total revenues in 2000. NOTE 14. QUARTERLY INFORMATION (UNAUDITED) Quarterly financial information for 2002 and 2001 is summarized as follows:
($ in thousands, except per share amounts) First Second Third Fourth 2002 Qtr. Qtr. Qtr. Qtr. - ------------------------------------------ ------ ------ ------ ------ Net revenues $5,059 $5,560 $6,688 $6,376 Gross profit 2,170 2,691 2,952 2,858 Net income (174) 256 172 404 Basic earnings per share $(0.06) $ 0.09 $ 0.06 $ 0.15 Diluted earnings per share $(0.06) $ 0.09 $ 0.06 $ 0.15
($ in thousands, except per share amounts) First Second Third Fourth 2001 Qtr. Qtr. Qtr. Qtr. - ------------------------------------------ ------ ------ ------ ------ Net revenues $6,585 $6,920 $5,872 $6,492 Gross profit 3,012 3,288 2,833 3,123 Net income 410 643 395 558 Basic earnings per share $ 0.15 $ 0.24 $ 0.15 $ 0.21 Diluted earnings per share $ 0.15 $ 0.24 $ 0.15 $ 0.20
20 PART IV ITEM 15. 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 ................................................................... 2-3 Consolidated Balance Sheets at December 31, 2002 and 2001 ........................................... 4 Consolidated Statements of Income for the years ended December 31, 2002, 2001, and 2000 ............. 5 Consolidated Statements of Cash Flows for the years ended December 31, 2002, 2001, and 2000 ......... 6 Consolidated Statements of Stockholders' Equity for the years ended December 31, 2002, 2001, and 2000 ................................................................................... 7 Notes to Consolidated Financial Statements .......................................................... 8-20
(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 (filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference). 21 3.2 Amended and restated Bylaws of the Company. *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, 1996 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 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). 10.6 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). *10.7 2003 Incentive Compensation Plan (filed as Exhibit A to the Company's Proxy Statement dated April 5, 2002, and incorporated herein by reference). 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Grant Thornton LLP. 99.1 The O. I. Corporation definitive Proxy Statement, dated April 9, 2003, 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. 99.2 Certifications of Chief Executive Officer. 99.3 Certifications of Chief Financial Officer. * Management contract or compensatory plan or arrangement. (b) Reports on Form 8-K. Form 8-K, Change in Registrant's Certifying Accountants was filed November 1, 2002. 22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. O. I. CORPORATION /s/ William W. Botts --------------------------- Date: April 2, 2003 By: William W. Botts ------------------ President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this amendment has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date --------- ----- ---- /s/ William W. Botts President, Chief Executive Officer, April 2, 2003 - -------------------------- Director William W. Botts /s/ Juan M. Diaz Corporate Controller, April 2, 2003 - -------------------------- Principal Accounting Officer Juan M. Diaz /s/ Jack S. Anderson Director April 2, 2003 - ------------------------- Jack S. Anderson /s/ Richard W. K. Chapman Director April 2, 2003 - ------------------------- Richard W. K. Chapman /s/ Edwin B. King Director April 2, 2003 - ------------------------- Edwin B. King /s/ Craig R. Whited Director April 2, 2003 - ------------------------- Craig R. Whited
23 CERTIFICATIONS I, William W. Botts, certify that: 1. I have reviewed this annual report on Form 10-K/A of O.I. Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this annual report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 2, 2003 /s/ William W. Botts ---------------------------------- William W. Botts, Chairman of the Board of Directors, President, and Chief Executive Officer (Principal Executive Officer) 24 CERTIFICATIONS I, Juan M. Diaz, certify that: 1. I have reviewed this annual report on Form 10-K/A of O.I. Corporation; 2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report; 3. Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this annual report (the "Evaluation Date"); and c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: April 2, 2003 /s/ Juan M. Diaz ----------------------------- Juan M. Diaz Corporate Controller (Principal Financial Officer) 25 INDEX TO EXHIBITS
EXHIBIT NUMBER DESCRIPTION - ------- ----------- 3.1 Articles of Incorporation of the Company, as amended (filed as Exhibit 3.1 to the Company's Annual Report on Form 10-K for the year ended December 31, 2001 and incorporated herein by reference). 3.2 Amended and restated Bylaws of the Company. *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, 1996 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 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). 10.6 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). 10.7 2003 Incentive Compensation Plan (filed as Exhibit A to the Company's Proxy Statement dated April 5, 2002, and incorporated herein by reference). 23.1 Consent of PricewaterhouseCoopers LLP. 23.2 Consent of Grant Thornton LLP. 99.1 The O.I. Corporation definitive Proxy Statement, dated April 9, 2003 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. 99.2 Certification of Chief Executive Officer. 99.3 Certification of Chief Financial Officer.
- ---------- * Management contract or compensatory plan or arrangement. EX-3.2 3 h03431aexv3w2.txt ARTICLES OF INCORPORATION EXHIBIT 3.2 BYLAWS OF O. I. CORPORATION ARTICLE I. OFFICES The principal office of the Corporation in the State of Oklahoma shall be located in the city of Oklahoma City, County of Oklahoma. The Corporation may have such other offices, either within or without the State of Oklahoma, as the Board of Directors may designate or as the business of the Corporation may require from time to time. ARTICLE II. SHAREHOLDERS SECTION 1. Annual Meeting. The annual meeting of the shareholders shall be held on the first Tuesday in the month of May at the hour of three o'clock p.m., or such other time as may be determined by resolution of the Board of Directors, beginning with the year 1986, for the purpose of electing Directors and for the transaction of such other business as may come before the meeting. If the day fixed for the annual meeting shall be a legal holiday in the State of Oklahoma, such meeting shall be held on the next succeeding business day. If the election of Directors shall not be held on the day designated herein for any annual meeting of the shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of the shareholders as soon thereafter as conveniently may be. SECTION 2. Special Meeting. Special meetings of the shareholders for any purpose or purposes, unless otherwise prescribed by statute, may be called by the President or by the Board of Directors. SECTION 3. Place of Meeting. The Board of Directors may designate any place, either within or without the State of Oklahoma, unless otherwise prescribed by statute, as the place of meeting for any annual meeting or for any special meeting called by the Board of Directors. A waiver of notice signed by all shareholders entitled to vote at a meeting may designate any place, either within or without the State of Oklahoma, unless otherwise prescribed by statute, as the place for the holding of such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the Corporation in the State of Oklahoma. SECTION 4. Notice of Meeting. Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting or if otherwise required by law, the purpose or purposes for which the meeting is called, shall be delivered not less than three nor more than sixty (60) days before the date of the meeting either personally or by mail, by or at the direction of the President or the Secretary, or the office or persons calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his address as it appears on the transfer books of the Corporation, with postage thereon prepaid. SECTION 5. Fixing of Record Date. For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof, or shareholders entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purpose, the Board of Directors may fix a time, not exceeding sixty (60) days preceding the date of any meeting of shareholders or the day fixed for the payment of any dividend or distribution or the date for the allotment of rights or the date when any change or conversion or exchange of shares shall be made or go Bylaws of O.I. Corporation 2 into effect, as a record date for the determination of the shareholders entitled to notice of and to vote at such meeting or entitled to receive payments of any such dividend, distribution, or allotment of rights, or to exercise rights in respect to any such change, conversion, or exchange of shares. In the event a record date shall have been fixed as aforesaid for any specified purpose, the stock transfer books of the Corporation shall not be closed in connection therewith. SECTION 6. Voting Lists. The officer or agent having charge of the stock ledger of the Corporation shall make, at least two full days before each meeting of the shareholders, a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each shareholder, which list, together with the stock ledger, or a duplicate thereof, shall be kept at the place of such meeting for a period of one full day prior to the convening of such meeting, and shall be subject to inspection at any time during such period by any shareholder or person representing any shareholder. Notwithstanding the foregoing, in the event the original or duplicate stock ledger reasonably shows in understandable form all persons entitled to represent shares at such meeting with the number of shares entitled to be voted by each shareholder, it shall not be necessary to prepare and produce the list of shareholders herein above referred to. SECTION 7. Quorum. A majority of the outstanding shares of the Corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of shareholders. If less than a majority of the outstanding shares are represented at meeting, a majority of the shares so represented may adjourn the meeting from time to time for not more than a total of twenty-nine (29) days without further notice. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The shareholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough shareholders to leave less than a quorum. Any previously scheduled annual or special meeting, may be postponed by resolution of the Board of Directors upon public notice given prior to the date previously scheduled for such meeting. In addition, annual or special meetings of the shareholders may be adjourned, whether or not a quorum is present, by the President or pursuant to a resolution of the Board of Directors. A share shall be treated as being present at a meeting if the holder of such share is (i) present in person at the meeting; or (ii) represented at the meeting by a valid proxy, whether the instrument granting such proxy is marked as casting of vote or abstaining, is left blank or does not empower such proxy to vote with respect to some or all matters to be voted upon at the meeting. SECTION 8. Proxies. At all meetings of shareholders, a shareholder may vote in person or by proxy in a dated, written appointment signed by the shareholder, which appointment shall be filed with the Secretary of the Corporation at or before the meeting at which the shares are to be voted. SECTION 9. Voting of Shares. Each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at meeting of shareholders. The voting of shares held otherwise than by an individual shall be governed by the provisions of the Oklahoma Business Corporation Act. 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. SECTION 10. Consent and Waiver of Notice. (a) Any transactions of the shareholders of the Corporation at any meeting thereof, regardless how or whether call was made or notice given, shall be as valid as though transacted at a meeting duly held after regular call and notice: Bylaws of O.I. Corporation 3 (i) if such transactions have been or are thereafter approved and ratified at a regular or special shareholders' meeting held upon regular call or notice; or (ii) if a quorum be present either in person or by proxy and if, either before or after the meeting, each of the shareholders entitled to vote and not present in person or by proxy sign a written waiver of notice, or a consent to the holding of such meeting, or any approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the Secretary or made a part of the records of the meeting. (b) A waiver of notice, in writing, signed by the person or persons entitled to such notice, whether signed before or after the time stated therein, shall be deemed equivalent to the actual giving of any such notice required by the Oklahoma Business Corporation Act, the Articles of Incorporation of this Corporation or by these Bylaws. (c) Any action which pursuant to the Oklahoma Business Corporation Act, the Articles of Incorporation of this Corporation or these Bylaws which might be taken at a meeting of the shareholders, may be taken without a meeting if a record or memorandum thereof be made in writing and signed by all of the holders of shares who would be entitled to vote at meeting for such purpose and such record or memorandum be filed with the Secretary of the Corporation and made a part of the corporate records. SECTION 11. Notice of Shareholder Business and Nomination of Directors (a) Annual Meetings of Shareholders. (i) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the shareholders shall only be made at an annual meeting of shareholders (A) by or at the direction of the Board of Directors or (B) by any shareholder of the Corporation who was a shareholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting and who has complied with the notice procedures set forth in this Section 11. (ii) For nominations or other business to be properly brought before an annual meeting by a shareholder pursuant to clause (B) of paragraph (a)(i) of this Section 11, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not less than 60 days nor more than 90 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is advanced by more than 30 days or delayed by more than 60 days from such anniversary date, notice by the shareholder to be timely must be so delivered not earlier than the 90th day prior to such annual meeting and not later than the close of business on the later of (x) the 60th day prior to such annual meeting, and (y) the 10th day following the day on which public announcement of the date of such meeting is first made. Such shareholders' notice shall set forth: (A) as to each person whom the shareholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected; (B) as to any Bylaws of O.I. Corporation 4 other business that the shareholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting and any material interest in such business of such shareholders and the beneficial owner, if any, on whose behalf the proposal is made; (C) as to the shareholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (I) the name and address of such shareholder, as they appear on the Corporation's books, and of such beneficial owner and (II) the class and number of shares of the Corporation which are owned beneficially and of record by such shareholder and such beneficial owner. (iii) Notwithstanding anything in the second sentence of paragraph (a)(ii) of this Section 11 to the contrary, in the event that any person nominated by the Board of Directors of the Corporation for election as a director (other than a person nominated to fill a vacancy created by the death of a director) was not a director or nominee named (A) in the Corporation's proxy statement for the preceding annual meeting or (B) in a public announcement made by the Corporation at least 70 days prior to the first anniversary of the preceding year's annual meeting (a "New Nominee"), a shareholder's notice required by this Section 11 shall also be considered timely if it shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the 10th day following the day on which public announcement is first made by the Corporation of the election or nomination of such New Nominee to the Board of Directors. (iv) The Corporation shall set forth in its proxy statement for each annual meeting of shareholders a summary of the notice provisions of these Bylaws relating to annual meetings of shareholders. (b) Special Meeting of Shareholders. Only such business shall be conducted at a special meeting of shareholders as shall have been brought before the meeting pursuant to the notice of meeting. Nominations of persons for election to the Board of Directors may be made at a special meeting of shareholders at which directors are to be elected pursuant to the notice of meeting (i) by or at the direction of the Board of Directors or (ii) by any shareholder of the Corporation who (A) is a shareholder of record at the time of giving of the notice provided for in this Section 11, (B) is entitled to vote at the meeting and (C) complies with the notice procedures set forth in this Section 11. Shareholders desiring to nominate persons for election to the Board of Directors at such a special meeting of shareholders shall deliver the shareholder's notice required by paragraph (a)(ii) of this Section 11 to the Secretary of the Corporation at the principal executive offices of the Corporation not earlier than the 90th day prior to such special meeting and not later than the close of business on the later of (x) the 60th day prior to such special meeting and (y) the 10th day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors, if any, to be elected at such meeting. (c) General. (i) Only persons who are nominated in accordance with the procedures set forth in this Section 11 shall be eligible to serve as directors. Only such business shall be conducted at a meeting of shareholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 11. The chairman of the meeting shall have the power and duty to determine whether a nomination or any Bylaws of O.I. Corporation 5 business proposed to be brought before the meeting was made in accordance with the procedures set forth in this Section 11 and, if any proposed nomination or business is not in compliance with this Section 11, to declare that such defective proposal shall be disregarded. (ii) For purposes of this Section 11, "public announcement" shall mean disclosure (i) in a press release reported by the Dow Jones New Service, Associated Press or comparable national news service, (ii) in a notice contained in the Wall Street Journal or other comparable national financial newspaper, (iii) in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act or (iv) in a general mailing by the Corporation to its shareholders of record given in accordance with these Bylaws. (iii) Notwithstanding the foregoing provisions of this Section 11, a shareholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Section 11. SECTION 12. Conduct of Meeting. Meetings of the shareholders shall be presided over by one of the following officers in the order of seniority and if present and acting -- the chairman of the board, the chief executive officer, the president, or a vice president. The secretary of the Corporation, or in his absence, an assistant secretary, shall act as secretary of every meeting, but if neither the secretary nor an assistant secretary is present, the chairman of the meeting shall appoint a secretary of the meeting. ARTICLE III. BOARD OF DIRECTORS SECTION 1. General Powers. The business and affairs of the Corporation shall be managed by its Board of Directors. SECTION 2. Number, Election, Term of Office and Qualification. The Board of directors shall be composed of five (5) members who shall be elected annually by the shareholders. Each director elected shall hold office until his successor shall be elected and qualified at an appropriate annual meeting of the shareholders. Subject to any limitations specified by law or in the Articles of Incorporation, the number of Directors may be increased to as many as (13) or decreased to as few as three (3) by resolutions adopted 80% or more of the members of the Board. No decrease in the number of Directors shall have the effect of shortening the term of any incumbent Director. SECTION 3. Regular Meeting. A regular meeting of the Board of Directors shall be held without other notice than this bylaw immediately after, and at the same place as, the annual meeting of shareholders. The Board of Directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution. SECTION 4. Special Meetings. Special meetings of the Board of Directors may be called by or at the request of the President or any two directors. The person or persons authorized to call special meetings of the Board of Directors may fix the place for holding any special meeting of the Board of Directors called by them. Bylaws of O.I. Corporation 6 SECTION 5. Notice. Notice of any special meeting shall be given at least three days prior thereto by written notice delivered personally or mailed to each director at his business address, or by telegram. Such notice shall specify the time, place and purpose of the meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. Any director may waive notice of any meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. SECTION 6. Quorum. A majority of the number of directors fixed by Section 2 of this Article III shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, but if less than such majority is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice. SECTION 7. Manner of Acting. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors. SECTION 8. Vacancies. Any vacancy occurring in the Board of Directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors, unless otherwise provided by law. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office. Any directorship to be filled by reason of an increase in the number of directors may be filled by the Board of Directors for a term of office continuing only until the next selection of one or more Directors by the shareholders or may be filled by election at an annual meeting or at a special meeting of shareholders called for that purpose. SECTION 9. Compensation. By resolution of the Board of Directors, the Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. SECTION 10. Presumption of Assent. A Director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the Secretary of the Corporation within two days after the adjournment of the meeting. No director who voted in favor of such action at the meeting shall have any right to dissent from such action. SECTION 11. Executive Committee. The Board of Directors, by resolution adopted by a majority of the entire Board, may designate two or more directors to constitute an Executive Committee, which committee shall have and exercise all of the authority of the Board of Directors in the management of the Corporation, subject only to such limitations as may be provided by law or by the Board of Directors, and to the further limitation that the Executive Committee shall act only in the interval between meetings of the Board of Directors, and shall be subject at all times to the control and direction of the Board of Directors. Bylaws of O.I. Corporation 7 SECTION 12. Action Without Meeting. Any action which might be taken at a meeting of the Board of Directors or of the Executive Committee may be taken without a meeting if a record or memorandum thereof be made in writing and signed by all of the members of the Board of Directors or the Executive Committee, as the case may be, and such record or memorandum is filed with and made a part of the permanent records of the Corporation. SECTION 13. Other Committees. In addition to the Executive Committee which may be established pursuant to Section 11 of this Article III, the Board of Directors, by resolution adopted by a majority of the entire Board, may establish other committees of the Board of Directors. Each such committee shall consist of two or more directors. The authority of each committee established by the Board of Directors will be limited to that granted to such committee by the Board of Directors and permitted by applicable law. SECTION 14. Minutes. Each committee established by the Board of Directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. SECTION 15. Vacancies. The Board of Directors shall have the power at any time to fill vacancies in, to change the membership of, and to dissolve, any committee of the Board of Directors. ARTICLE IV. OFFICERS SECTION 1. Number. The officers of the Corporation shall be a President, Vice President, a Secretary, a Treasurer and such additional Vice Presidents, other officers, assistant officers and agents as the Board of Directors may designate, deeming the same necessary for the transactions of the business of the Corporation. SECTION 2. Election and Term of Office. The officers of the Corporation shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as conveniently may be. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided. SECTION 3. Removal. Any officer or agent elected or appointed by the Board of Directors may be removed by the Board of Directors whenever in its judgment the best interests of the Corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed. SECTION 4. Vacancies. A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the Board of Directors for the unexpired portion of the term. SECTION 5. President. The President shall be the principal executive officer of the Corporation and, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. He shall, when present, preside at all meetings of the shareholders and of the Board of Directors, unless the Board of Directors shall designate another person to so preside. He may sign, with the Secretary or any other proper officer of the Corporation thereunto authorized by the Bylaws of O.I. Corporation 8 Board of Directors, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these Bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. SECTION 6. Vice President. In the absence of the President or in event of his death, inability or refusal to act, the Vice President shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. The Vice President shall perform such other duties as from time to time may be assigned to him by the President or by the Board of Directors. If there be more than one Vice President, this Section shall apply to such Vice Presidents in the same order in which they appear in the list of officers last elected by the Board of Directors, unless the Board of Directors shall otherwise specifically provide by resolution. SECTION 7. Secretary. The Secretary shall: (a) keep the minutes of the shareholders' and of the Board of Directors' meetings in one or more books provided for that purpose; (b) see that all notices are duly given in accordance with the provisions of these Bylaws or as required by law; (c) be custodian of the corporate records and of the seal of the Corporation and see that the seal of the Corporation is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (d) keep a register of the post office address of each shareholder which shall be furnished to the Secretary by such shareholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform all duties incident to the office of Secretary and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. SECTION 8. Treasurer. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the Board of Directors shall determine. He shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; receive and give receipts for moneys due any payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies or other depositaries as shall be selected in accordance with the provisions of Article V of these Bylaws; and (b) in general perform all of the duties incident to the office of Treasurer and such other duties as from time to time may be assigned to him by the President or by the Board of Directors. SECTION 9. Salaries. The salaries of the officers shall be fixed from time to time by the Board of Directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the Corporation. ARTICLE V. CONTRACTS, LOANS, CHECKS AND DEPOSITS SECTION 1. Contracts. The Board of Directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the Corporation, and such authority may be general or confined to specific instances. SECTION 2. Loans. No loans shall be contracted on behalf of the Corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the Board of Directors. Such authority may be general or confined to specific instances. Bylaws of O.I. Corporation 9 SECTION 3. Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by resolution of the Board of Directors. SECTION 4. Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies or other depositaries as the Board of Directors may select. ARTICLE VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER SECTION 1. Certificates for Shares. Certificates representing shares of the Corporation shall be in such form as shall be determined by the Board of Directors. Such certificates shall be signed by the President and by the Secretary or by such other officers authorized by law and by the Board of Directors so to do and shall bear the impression of the Corporate Seal provided for in Article IX of these Bylaws; provided, however, that in the event the Board of Directors has appointed a Transfer Agent or Registrar, or both, for its shares, the certificates for shares shall bear the name of such Transfer Agent or Registrar, or both, and bear the manual signature of an authorized person of such Transfer Agent or Registrar, or both of them, prior to issuance and the delivery, then and in that event, the signatures and impression of the Corporate Seal referred to herein above may be placed upon such certificates by facsimile. All certificates for shares shall be consecutively numbered or otherwise identified and each certificate shall bear the name or names of the registered owner or owners thereof and the number of shares represented thereby. The certificate number, the date of its issue, the number of shares represented thereby and the name and address of the person or persons to whom the shares were issued, shall be entered on the share ledger of the Corporation. All certificates surrendered to the Corporation or its authorized agent for transfer shall be cancelled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and cancelled, except that in the case of a lost, destroyed or mutilated certificate, a new certificate may be issued therefor upon such terms and indemnity to the Corporation and its agent or agents as the Board of Directors may prescribe. SECTION 2. Transfer of Shares. Transfer of shares of the Corporation shall be made only on the stock transfer books of the Corporation by the holder of record thereof or by his legal representative, who shall furnish proper evidence of authority to transfer, or by his attorney thereunto authorized by power of attorney duly executed and filed with the Secretary of the Corporation, and on surrender for cancellation of the certificate for such shares. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes. ARTICLE VII. FISCAL YEAR The fiscal year of the Corporation shall begin on the first day of January and end on the last day of December in each year. Bylaws of O.I. Corporation 10 ARTICLE VIII. DIVIDENDS The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in the manner and upon such terms and conditions as may be provided by law and its Articles of Incorporation. ARTICLE IX. SEAL The Board of Directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the Corporation and the state of incorporation and the words, "Corporate Seal." ARTICLE X. AMENDMENTS The Board of Directors shall have the power to adopt, alter or repeal these Bylaws subject to the power of the shareholders to alter or repeal such Bylaws, provided, however, that the Board of Directors shall not adopt or alter any Bylaw fixing their qualifications, classifications or term of office. These Bylaws may be altered, amended or repealed and new Bylaws may be adopted by a vote of the shareholders representing a majority of all shares entitled to vote, at any annual or special shareholders' meeting when the proposed amendment has been set out in the notice of such meeting. ARTICLE XI. INDEMNIFICATION SECTION 1. Indemnification of Directors and Officers. a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Corporation) by reason of the fact that such person is or was, at any time prior to or during which this Article XI is in effect, a director, officer, employee or agent of the Corporation, or is or was, at any time prior to or during which this Article XI is in effect, serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust, other enterprise or employee benefit plan against reasonable expenses (including attorneys' fees), judgments, fines, penalties, amounts paid in settlement and other liabilities actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, has no reasonable cause to believe that his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful. b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Corporation to procure judgment in its favor by reason of the fact that such person is or was, at any time prior to or during which this Article XI is in effect, a director, officer, employee or agent of the Corporation, or is or was, at any time prior to or during which this Article XI is in effect, serving at the request of the Corporation as a Bylaws of O.I. Corporation 11 director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against expenses (including attorneys' fees), actually and reasonably incurred by such person in connection with the defense or settlement of such action or suit if such person acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Corporation; provided, that no indemnification shall be made under this sub-section (b) in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the Corporation unless and only to the extent that a court of appropriate jurisdiction shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity of such expenses which the court of appropriate jurisdiction shall deem proper. c) Any indemnification under sub-sections (a) or (b) (unless ordered by a court of appropriate jurisdiction) shall be made by the Corporation only as authorized in the specific case upon a determination that indemnification of such person is proper in the circumstances because he has met the applicable standard of conduct set forth in sub-sections (a) and (b). Such determination shall be made (1) by the Board of Directors by a majority vote of a quorum consisting of directors not parties to such action, suit or proceeding; or (2) if such a quorum is not obtainable, or, even if obtainable a quorum of disinterested directors so directs, by independent legal counsel, in written opinion, selected by the Board of Directors; or (3) by the shareholders. In the event a determination is made under this sub-section (c) that the director, officer, employee or agent has met the applicable standard of conduct as to some matters but not as to others, amounts to be indemnified may be reasonably prorated. d) Expenses incurred by a person who is or was a director or officer of the Corporation in appearing at, participating in or defending any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, shall be paid by the Corporation at reasonable intervals in advance of the final disposition of such action, suit or proceeding upon receipt of any undertaking by or on behalf of the director or officer to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized by this Article XI. e) It is the intention of the Corporation to indemnify the persons referred to in this Article XI to the fullest extent permitted by law and with respect to any action, suit or proceeding arising from events which occur at any time prior to or during which this Article XI is in effect. The indemnification provided herein shall be applicable whether or not negligence or gross negligence of the persons referred to in this Article XI is alleged or proven. The indemnification and advancement of expenses provided by this Article XI shall not be deemed exclusive of any other rights to which those seeking indemnification or advancement of expenses may be or become entitled under any laws, the Certification of Incorporation, these Bylaws, agreement, the vote of shareholders or disinterested directors or otherwise, or under any policy or policies of insurance purchased and maintained by the Corporation on behalf of any such person, both as to action in his official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such person. f) The indemnification provided by this Article XI shall be subject to all valid and applicable laws, and, in the event this Article or any of the provisions hereof or the indemnification contemplated hereby are found to be inconsistent with or contrary to any such valid laws, the latter shall be deemed to control and this Article XI shall be regarded as modified accordingly, and, as so modified, to continue in full force and effect. EX-23.1 4 h03431aexv23w1.txt CONSENT OF PRICEWATERHOUSECOOPERS LLP EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (File No. 33-24505, File No. 33-62209, File No. 33-66822) of O.I. Corporation of our report dated February 15, 2002, relating to the financial statements, which appears in this Form 10-K/A. PRICEWATERHOUSECOOPERS LLP Houston, Texas April 1, 2003 EX-23.2 5 h03431aexv23w2.txt CONSENT OF GRANT THORNTON LLP EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We consent to the incorporation by reference in this Annual Report on Form 10-K/A for the year ended December 31, 2002, of our report dated February 28, 2003, appearing in the Registration Statement on Form S-8 (File No. 33-24505, effective October 3, 1988, File No. 33-62209, effective December 20, 1988, and File No. 33-66822, effective August 2, 1993) of O.I. Corporation filed with the Securities and Exchange Commission pursuant to the Securities Act of 1933. GRANT THORNTON LLP Houston, Texas April 1, 2003 EX-99.2 6 h03431aexv99w2.txt CERTIFICATION OF CEO PURSUANT TO SECTION 906 EXHIBIT 99.2 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of O.I. Corporation (the "Company") on Form 10-K/A for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, William W. Botts, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is made for the purpose of complying with 18 U.S.C. Section 1350 and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to O.I. Corporation and will be retained by O.I. Corporation and furnished to the Securities and Exchange Commission or its staff upon request. /s/ William W. Botts ---------------------------- Date: April 2, 2003 William W. Botts President and Chief Executive Officer EX-99.3 7 h03431aexv99w3.txt CERTIFICATION OF CFO PURSUANT TO SECTION 906 EXHIBIT 99.3 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of O.I. Corporation (the "Company") on Form 10-K/A for the period ending December 31, 2002 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Juan M. Diaz, Corporate Controller and Principal Accounting Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: (1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and (2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. This certification is made for the purpose of complying with 18 U.S.C. Section 1350 and not for any other purpose. A signed original of this written statement required by Section 906 has been provided to O.I. Corporation and will be retained by O.I. Corporation and furnished to the Securities and Exchange Commission or its staff upon request. Date: April 2, 2003 /s/ Juan M. Diaz ---------------------------- Juan M. Diaz Corporate Controller and Principal Accounting Officer -----END PRIVACY-ENHANCED MESSAGE-----