-----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, T9qklZM6t7nVf/7Ux0KBT6AJ23rrYTA0/oyKmy2rzzD4lPjvo0vhRKl7u5G8SkbB Ej68Kpe/L6vqdyGDxIRhWQ== 0000950129-04-008837.txt : 20041110 0000950129-04-008837.hdr.sgml : 20041110 20041110141451 ACCESSION NUMBER: 0000950129-04-008837 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041110 DATE AS OF CHANGE: 20041110 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-06511 FILM NUMBER: 041132533 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-Q 1 h19951e10vq.txt O. I. CORPORATION - DATED 9/30/2004 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended September 30, 2004 [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ____________ to _________________ Commission File Number: 0-6511 O. I. CORPORATION ---------------------------------------------- (Exact name of registrant as specified in its charter) OKLAHOMA 73-0728053 - --------------------- ---------------------------------- State of Incorporation I.R.S. Employer Identification No. 151 Graham Road P. O. Box 9010 College Station, Texas 77842-9010 --------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (979) 690-1711 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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [ X ] As of November 5, 2004, there were 2,801,009 shares of the issuer's common stock, $.10 par value, outstanding. Page 1 INDEX PART I - FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets - September 30, 2004 (Unaudited) and December 31, 2003 3 Condensed Consolidated Statements of Earnings and Comprehensive Income (Unaudited) - Three and Nine Months Ended September 30, 2004 and 2003 4 Condensed Consolidated Statements of Cash Flows (Unaudited) - Nine Months Ended September 30, 2004 and 2003 5 Notes to Unaudited Condensed Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 Item 4. Controls and Procedures 18 PART II - OTHER INFORMATION 18
Page 2 PART I - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS O.I. CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS, EXCEPT PAR VALUE)
SEPT. 30, 2004 DEC. 31, 2003 ------------- ------------- (Unaudited) ASSETS Current assets: Cash and cash equivalents $ 2,883 $ 2,869 Accounts receivable-trade, net of allowance for doubtful accounts of $310 and $217, respectively 4,975 4,360 Investment in sales-type leases 280 235 Investments 7,612 6,135 Inventories 4,111 3,075 Current deferred income tax assets 745 727 Other current assets 551 172 ------------- ------------- TOTAL CURRENT ASSETS 21,157 17,573 Investment in unconsolidated investee (Note 8) - 976 Property, plant and equipment, net 3,391 3,434 Investment in sales-type leases, net of current 267 222 Long-term deferred income tax assets 647 296 Intangible assets, net 95 107 Other assets 43 99 ------------- ------------- TOTAL ASSETS $ 25,600 $ 22,707 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable, trade $ 1,902 $ 1,306 Accrued liabilities 4,039 3,162 ------------- ------------- Total current liabilities 5,941 4,468 Commitments and contingencies --- --- STOCKHOLDERS' EQUITY: Preferred stock, $0.10 par value, 3,000 shares authorized, no shares issued and outstanding --- --- Common stock, $0.10 par value, 10,000 shares authorized, 4,103 shares issued, 2,797 shares and 2,748 shares outstanding, respectively 410 410 Additional paid in capital 4,327 4,338 Treasury stock, 1,307 shares and 1,355 shares respectively, at cost (5,707) (5,930) Retained earnings 20,550 19,254 Accumulated other comprehensive income 79 167 ------------- ------------- TOTAL STOCKHOLDERS' EQUITY 19,659 18,239 ------------- ------------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 25,600 $ 22,707 ============= =============
See notes to unaudited condensed consolidated financial statements Page 3 O.I. CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED SEPT 30 SEPT 30 --------------------------- ---------------------------- 2004 2003 2004 2003 ------------ ------------ ------------ ------------ Net revenues: Products $ 7,091 $ 5,998 $ 19,326 $ 16,645 Services 665 713 2,153 2,261 ------------ ------------ ------------ ------------ 7,756 6,711 21,479 18,906 Cost of revenues: Products 3,420 3,001 9,403 8,366 Services 264 470 949 1,243 ------------ ------------ ------------ ------------ 3,684 3,471 10,352 9,609 Gross profit 4,072 3,240 11,127 9,297 Research and development expenses 735 661 2,201 1,960 Selling, general & administrative expenses 2,231 1,870 6,444 5,820 ------------ ------------ ------------ ------------ Operating income 1,106 709 2,482 1,517 Other income, net 105 131 318 329 Loss from unconsolidated investee 46 --- 208 --- Impairment of investment in unconsolidated investee (Note 8) 768 --- 768 --- ------------ ------------ ------------ ------------ Income before income taxes 397 840 1,824 1,846 Provision for income taxes 46 305 528 684 ------------ ------------ ------------ ------------ Net income $ 351 $ 535 $ 1,296 $ 1,162 ============ ============ ============ ============ Other comprehensive income, net of tax: Unrealized gains (losses) on investments, available-for-sale 134 (116) (87) 78 ------------ ------------ ------------ ------------ Comprehensive income $ 482 $ 419 $ 1,209 $ 1,240 ============ ============ ============ ============ Earnings per share: Basic $ 0.13 $ 0.19 $ 0.47 $ 0.42 Diluted $ 0.12 $ 0.19 $ 0.45 $ 0.42 Shares used in computing earnings per share: Basic 2,793 2,758 2,780 2,757 Diluted 2,872 2,805 2,859 2,785
See notes to unaudited condensed consolidated financial statements Page 4 O.I. CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED)
NINE MONTHS ENDED SEPTEMBER 30, ---------------------------- 2004 2003 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 1,296 $ 1,162 Depreciation & amortization 401 341 Impairment of investment in unconsolidated investee 768 -- Loss from unconsolidated investee 208 -- Deferred income taxes 420 (57) Loss on disposition of property (8) (23) Change in working capital (1,370) 666 ------------ ------------ Net cash flows provided by operating activities 1,715 2,089 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of investments (2,605) (3,056) Maturities of investments 977 840 Purchase of property, plant and equipment (353) (252) Proceeds from sales of assets 10 14 Change in other assets 58 -- ------------ ------------ Net cash flows (used in) investing activities (1,913) (2,454) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of common stock pursuant to exercise of employee stock options and employee stock purchase plan 212 65 Purchase of treasury stock -- (142) ------------ ------------ Net cash flows provided by (used in) financing activities 212 (77) ------------ ------------ NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 14 (442) Cash and cash equivalents at beginning of period 2,869 3,915 ------------ ------------ Cash and cash equivalents at end of period $ 2,883 $ 3,473 ============ ============
See notes to unaudited condensed consolidated financial statements Page 5 O.I. CORPORATION NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES. O.I. Corporation (the "Company"), an Oklahoma corporation, was organized in 1963. The Company designs, manufactures, markets, and services analytical, monitoring and sample preparation products, components, and systems used to detect, measure, and analyze chemical compounds. The accompanying unaudited condensed consolidated financial statements have been prepared by O.I. Corporation and include all adjustments that are, in the opinion of management, necessary for a fair presentation of financial results pursuant to the rules and regulations of the Securities and Exchange Commission. All adjustments and provisions included in these statements are of a normal recurring nature. All intercompany transactions and balances have been eliminated in the financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended December 31, 2003. 2. INVENTORIES. Inventories are stated at the lower of first-in, first-out cost or market (in thousands):
Sept. 30, 2004 Dec. 31, 2003 -------------- -------------- Raw Materials $ 3,194 $ 2,261 Work in Process 389 207 Finished Goods 529 607 -------------- -------------- $ 4,112 $ 3,075 ============== ==============
3. COMPREHENSIVE INCOME. Comprehensive income refers to revenues, expenses, gains and losses that under generally accepted accounting principles are recorded as an element of stockholders' equity. The Company's components of comprehensive income are net income and unrealized gains and losses on available-for-sale investments. 4. EARNINGS PER SHARE. The Company reports both basic earnings per share, which is based on the weighted average number of common shares outstanding, and diluted earnings per share, which is based on the weighted average number of common shares outstanding and all dilutive potential common shares outstanding. Stock options are the only dilutive potential common shares the Company has outstanding. Weighted average shares for the three and nine months ended September 30, 2004 were 2,793,000 and 2,780,000, respectively. Weighted average shares for the three and nine months ended September 30, 2003 were 2,758,000 and 2,757,000, respectively. Incremental shares from assumed exercise of dilutive options for the three and nine months ended September 30, 2004 of 79,000 and 80,000, respectively, were added to the weighted average shares used to calculate diluted EPS. Incremental shares from assumed exercise of dilutive options for the three and nine months ended September 30, 2003 of 47,000 and 28,000, respectively, were added to the weighted average shares used to calculate diluted EPS. There were no adjustments made to net income as reported to calculate basic or diluted earnings per share. For the nine months ended September 30, 2003, options to acquire 133,000 shares of common stock, at a weighted average exercise price of $5.75 per share, were not included in the computation of dilutive earnings per share as Page 6 their effect would be anti-dilutive. There were no anti-dilutive options outstanding for the three and nine months ending September 30, 2004. 5. STOCK-BASED COMPENSATION. At September 30, 2004, the Company has three stock-based employee compensation plans: the 2003 Incentive Stock Option Plan from which stock options may be granted, and two expired plans which have options outstanding but under which no further stock options may be granted. 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 have 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.
Three Months Nine Months Ended Sept 30 Ended Sept 30 ------------------------ ------------------------ (in thousands) 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Net income, as reported $ 351 $ 535 $ 1,296 $ 1,162 Deduct: Total stock-based compensation expense determined under fair value based method for awards granted, modified, or settled, net of related tax effects 4 3 50 34 ---------- ---------- ---------- ---------- Pro forma net income $ 347 $ 532 $ 1,246 $ 1,128 Earnings per share: Basic -- as reported $ 0.13 $ 0.19 $ 0.47 $ 0.42 Basic -- pro forma $ 0.12 $ 0.19 $ 0.45 $ 0.41 Diluted -- as reported $ 0.12 $ 0.19 $ 0.45 $ 0.42 Diluted -- pro forma $ 0.12 $ 0.19 $ 0.44 $ 0.41
6. INTANGIBLE ASSETS, NET. Intangible assets, net, consisted of patents relating to technology used in the Company's products. Intangible assets, net, as of September 30, 2004 and December 31, 2003 were approximately $95,000 and $107,000, net of accumulated amortization of $149,000 and $129,000, respectively. Total amortization expense on intangible assets for the three and nine months ended September 30, 2004 and 2003 was approximately $14,000, including $12,000 expense due to abandonment of two patents, and $2,000, and $7,000 and $13,000, respectively. The estimated aggregate amortization expense for the remainder of 2004 and each of the five succeeding fiscal years 2005 to 2008 is approximately $1,000, $5,000, $5,000, $4,000, and $4,000, respectively. 7. PRODUCT WARRANTY LIABILITIES. The changes in the Company's product warranty liability on September 30, 2004 were as follows: Liabilities, beginning of year $707 Warranty claims (4) ---- Liabilities, September 30, 2004 $703
8. INVESTMENT IN UNCONSOLIDATED INVESTEE On October 26, 2004, the Company signed a Letter of Intent to acquire substantially all of the assets of Intelligent Ion, Inc. ("III"), its unconsolidated investee. The acquisition is contingent on satisfactory Page 7 completion of due diligence by the Company and the negotiation, execution and delivery of a definitive agreement approved by the independent members of the boards of the respective parties and the shareholders of III. The purchase price payment will be reduced by the amount III owes the Company under secured promissory notes. The amount due under such notes as of September 30, 2004 is approximately $280,000. The acquisition would end the Company's strategic alliance with III to develop and supply products for the Company. Under the contemplated transaction, the Company would acquire the assets, assume development of the product which III was to develop under the strategic alliance, and III would cease its development operations. There can be no assurance that the Company will consummate the acquisition of III assets. The Company owns 24% of the Series A Preferred Stock of III, which it purchased on December 11, 2003. The original investment in III preferred stock was $1,000,000 and equaled 13.8% ownership of III common shares on a fully diluted basis. The Company accounts for its investment in III using the equity method of accounting. During the nine months ended September 30, 2004, the Company recorded approximately $208,000 in losses from its share of the results of operations of III. The Company decided to write off the remaining book value of its investment in III, totaling $768,000 as of September 30, 2004 in recognition of an other than temporary decline in its fair value. The Company based its conclusion primarily on III's inability to meet development milestones in a timely manner, and its inability to raise funds necessary for working capital. These conditions along with the potential sale of III's assets to the Company were sufficient to convince the Company that it would not recover any of its remaining equity investment in III. Other than promissory notes for the $280,500 in prepaid product advances, no other amounts remain on the Company's consolidated balance sheet related to III, as of September 30, 2004. The write-off is a non-cash charge. 9. RECENT PRONOUNCEMENTS. In December, the FASB issued Interpretation No. 46 (revised December 2003) ("FIN 46R"), "Consolidation of Variable Interest Entities, an interpretation of ARB 51". The primary objectives of FIN 46R are to provide guidance on the identification of entities for which control is achieved through means other than through voting rights ("variable interest entities" or "VIEs") and how to determine if a business enterprise should consolidate the VIEs. This new model for consolidation applies to an entity for which either: the equity investors (if any) do not have a controlling financial interest; or the equity investment at risk is insufficient to finance the entity's activities without receiving additional subordinated financial support from other parties. In addition, FIN 46R requires that all enterprises with a significant variable interest in a VIE make additional disclosures regarding their relationship with the VIE. The interpretation requires public entities to apply FIN 46R to all entities that are considered Special Purpose Entities in practice and under the FASB literature that was applied before the issuance of FIN 46R by the end of the first reporting period that ends after December 15, 2003. Application of the accounting requirements of the interpretation to all other entities is required by the end of the first reporting period that ends after March 15, 2004. The adoption of FIN 46R had no effect on the Company's financial statements. Page 8 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, concerning, among other things, (i) possible or assumed future results of operations, contained in "Management's Discussion and Analysis of Financial Condition and Results of Operations," (ii) prospects for the Company's business or products; and (iii) other matters that are not historical facts. These forward-looking statements are identified by their use of terms and phrases such as "believes," "expects," "anticipates," "intends," "estimates," "plans" and similar terms and phrases. These statements are based on certain assumptions and analyses made by the Company in light of its experience and its perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate in the circumstances. The Company's business and results of operations are subject to a number of assumptions, risks and uncertainties, many of which are beyond the Company's ability to control or predict. Because of these risks and uncertainties, actual results may differ materially from those expressed or implied by forward-looking statements, and investors are cautioned not to place undue reliance on such statements, which are not guarantees of future performance and which speak only as of the date thereof. Factors that could cause actual results to differ materially include, but are not limited to, - - The Company and Intelligent Ion, Inc. (III) may not reach agreement on the announced purchase and sale of III assets. - - The Company's purchase of III assets, if consumated, may not result in anticipated new products. - - The Company's ability to execute new product development plans and realize expected returns on the cost of such developments. - - The Company's ability to retain existing customers and to attract and retain new customers. - - The financial condition and spending practices of its customers. - - The Company's ability to provide products that meet the needs of the Company's customers. - - Advancements or changes in technology that may render the Company's products less valuable or obsolete. - - Conditions in the environmental instrument market. - - The Company's ability to obtain financing in the event it is needed. - - The Company's ability to maintain products that meet customer expectations in a rapidly changing competitive market. - - The Company's retention of an arrangement with Agilent or a suitable similar supplier for the supply of gas chromatographs and mass spectrometers to configure systems for the analysis of various air and water matrices to determine the presence of volatile organic compounds. - - Acts of war, terrorism, natural disasters and outbreaks of disease or potentially fatal sicknesses. - - Underutilization of the Company's existing facilities possibly resulting in inefficiencies. - - Delays in new product research, development, and engineering products resulting in delays in the market introduction of such products. - - The increased cost of health insurance and subsequent increased cost to the Company and employees. - - Economic slowdowns, or unforeseen price reductions in the Company's global market segments, with adverse effects on profit margins. - - The unanticipated expenses of assimilating newly acquired businesses into the Company's business structure, as well as the impact of unusual expenses from business strategies, asset valuations, acquisitions, divestitures and organizational structures. - - Unpredictable delays or difficulties in the development of key new product programs, and the risk of not recovering major research and development expenses, and/or the risks of major technological shifts away from the Company's technologies and core competencies. Page 9 The cautionary statements contained or referred to herein should be considered in connection with any written or oral forward-looking statements that may be issued by the Company or persons acting on the Company's behalf. The Company does not undertake any obligation to release any revisions to or to update publicly any forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. When considering forward-looking statements, you should also keep in mind the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2003. The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and the notes thereto. OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO SEPTEMBER 30,2003 Revenues. Total net revenues for the three months ended September 30, 2004 increased $1,045,000 or 16% to $7,756,000, compared to $6,711,000 for the same period of the prior year. Net revenues increased due to strong sales of the Company's new Eclipse Purge-and-Trap Sample Concentrator, sales of the MINICAMS air-monitoring systems, continuous flow analyzers, the LAN 9000 beverage analyzer, and total organic carbon analyzers (TOC). We believe some portion of these increased sales can be attributed to an increase in the rate of capital spending of our customers in the environmental testing market. Both domestic revenues and international revenues increased for the quarter ended September 30, 2004, compared to the same period of the prior year. International revenues increased as a percentage of total revenues, as revenues from sales of products into Europe and Asia increased for the three months ended September 30, 2004, compared to the same period of the prior year. During the second quarter of 2004, the Company increased its presence in Asia by opening a representative office in China. We believe that China is a growing market and opening this office will better position to the Company to compete for business in China. Increases in revenues from products were partially offset by decreases in revenues from services. Revenues from services decreased $48,000 or 7% to $665,000, compared to $713,000 for the same period of the prior year. Revenues from services decreased, compared to the same period of the prior year, primarily due to lower demand for field repair and installation services and the use of third party service providers. Although we believe that there may have been an increase in the rate of capital spending on the part of our customers in the environmental instrument market for the three months ended September 30, 2004, compared to the same period of the prior year, it is likely that this is a temporary change rather than a fundamental change in direction of a market that has been flat or declining over the past several years. We remain cautiously optimistic about future sales and have identified a number of products and strategies we believe will allow us to grow our business despite this decline, including the acquisition of complementary businesses, the development of new products, development of new applications for our technologies, and the strengthening of our presence in selected geographic markets. No assurance can be given that we will be able to successfully implement these strategies, or if successfully implemented, that these strategies will result in growth of the Company's business. Gross Profit. Gross profit for the three months ended September 30, 2004 increased $832,000, or 26% to $4,072,000, compared to $3,240,000 for the same period of the prior year. Gross profit represented 53% of revenues for the three months ended September 30, 2004, and 48% for the same period of the prior year. The increase in gross profit for the three months ended September 30, 2004, compared to the same period of the prior year, was primarily due to an increase in revenues and improved product mix with more sales of higher Page 10 margin products manufactured by the Company and less sales of gas chromatography equipment purchased under an original equipment manufacturers supply agreement. Research and development. R&D expenses for the three months ended September 30, 2004 increased $74,000, or 11% to $735,000, compared to expenses of $661,000 for the same period of the prior year. R&D expenses represented 9% of revenues for the three months ended September 30, 2004 and 10% of revenues for the same period of the prior year. The increase in R&D expenses for the three months ended September 30, 2004 is due to a plan to focus on product development which was announced in the second quarter of 2003. The plan stated our intention to intensify our R&D efforts on updating existing products and to develop new products to serve markets with growth potential greater than the environmental testing market. As stated previously R&D spending will likely increase over historical levels as a dollar amount, and as a percentage of revenues, however, at this time we plan to remain committed to this plan even at the risk of incurring an operating loss on a quarterly or annual basis. Selling, general, and administrative. SG&A expenses for the three months ended September 30, 2004 increased $361,000, or 19% to $2,231,000, compared to $1,870,000 for the same period of the prior year, primarily due to increases in commissions and sales-related activities, general repairs and maintenance, legal fees related to our investment in III, and advertising activities. Despite the increase in SG&A expense in dollars, SG&A expense remains unchanged as a percentage of revenues for the three months ended September 30, 2004 and 2003 at 28%. Operating Income. Operating income for the three months ended September 30, 2004 increased $397,000, or 56% to $1,106,000, compared to $709,000 for the same period of the prior year. The increase in operating income for the three months ended September 30, 2004 is primarily due to the increase in revenues from product sales partially offset by an increase in R&D and SG&A expenditures. Other Income, net. Other income, net, which is comprised of interest and dividend income from investments, interest income from customer leases, and gain/loss from dispositions of Company property, decreased by $26,000, or 20% to $105,000, compared to $131,000 for the same period of the prior year, primarily due to fewer asset sales in the current period. Loss From Unconsolidated Investee. We incurred a loss from an unconsolidated investee, III, which amounted to $46,000 for the three months ended September 30, 2004. The loss from this unconsolidated investment, accounted for on the equity method, represents our share of the results of operations from our investment in the Series A Preferred Shares of III. The Company also wrote off the remaining book value of its $1,000,000 investment in III Series A Preferred Stock, resulting in a $768,000 impairment charge to the investment in unconsolidated investee during the three months ended September 30, 2004, due to an other than temporary decline in its fair value. (See Note 8 to Unaudited Condensed Consolidated Financial Statements). The Company has offered, pursuant to a non-binding letter of intent, to buy the assets of III and assume development. Should the contemplated transaction be completed, development work relating to the completion of a product would be classified under R&D expenses, in the company's consolidated income statement. Upon completion of the contemplated transaction the Company plans to offer employment to certain III employees, assume certain consultant contracts, and purchase sublicense rights to certain intellectual property of III; however, this research and development involves experimental technology in the field of mass spectrometry and there is substantial risk that R&D efforts might not result in a commercially viable product. Furthermore, there can be no assurance that the Company will be able to complete the acquisition of III's assets. Page 11 Income Before Income Taxes. Income before income taxes for the three months ended September 30, 2004 decreased $443,000, or 53% to $397,000, compared to income of $840,000 for the same period of the prior year. The decrease in income before income taxes for the three months ended September 30, 2004 was primarily due to losses from expense relating to the Company's investment in III offsetting the increase in operating income. Provision For Income Taxes. Provision for income taxes decreased $259,000 for the three months ended September 30, 2004 to a provision of $46,000 compared to $305,000 for the same period of the prior year. The effective tax rate was 12% for the three months ended September 30, 2004, compared to 36% for the same period of the prior year, primarily due to a decrease in taxable income from an increase in income tax credits for R&D expenditures, foreign sales, and dividends received deductions on income from investments. Net Income. Net income for the three months ended September 30, 2004 decreased $154,000, or 34% to $351,000, compared to net income of $535,000 in the same period of the prior year. Basic earnings per share was $0.13 and diluted earnings per share was $0.12 for the three months ended September 30, 2004, compared to basic and diluted earnings of $0.19 per share for the same period of the prior year. The decrease in net income for the three months ended September 30, 2004 was primarily due to losses from the investment in III offsetting the increase in operating income. FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2004 COMPARED TO SEPTEMBER 30,2003 Revenues. Net revenues for the nine months ended September 30, 2004 increased $2,573,000, or 14% to $21,479,000, compared to $18,906,000 for the same period of the prior year. Sales for the three months ended March 31, 2004 were essentially flat, but sales during the three months ended June 30, 2004 and September 30, 2004 increased due to continued demand for the Eclipse Purge-and-Trap Sample Concentrator, MINICAMS air-monitoring systems, continuous flow analyzers, LAN9000 beverage analyzers and TOC analyzers, attributable, in part we believe, to an increase in the rate of capital spending of our customers. Domestic and international revenues for the nine months ended September 30, 2004 increased compared to the same period of the prior year. Year-to-date international revenues increased primarily due to an increase in sales to Asia. Gross Profit. Gross profit for the nine months ended September 30, 2004 increased $1,830,000, or 20% to $11,127,000, compared to $9,297,000 for the same period of the prior year primarily due to an increase in revenues and to improved product mix relating to sales of the higher margin products manufactured by the Company, such as MINICAMS and the Eclipse and less sales of gas chromatography equipment purchased under an original equipment manufacturers supply agreement. Gross profit represented 52% for the nine months ended September 30, 2004, compared to 49% of revenues for the same period of the prior year and September 30, 2003, respectively. Research and Development. R&D expenses for the nine months ended September 30, 2004 increased $241,000, or 12% to $2,201,000, compared to $1,960,000 for the same period of the prior year. R&D expenses represented 10% of revenues for the nine months ended September 30, 2004 and September 30, 2003. The increase in R&D expenses for the nine months ended September 30, 2004 is due to a plan to focus on product development. Selling, General, and Administrative. SG&A expenses for the nine months ended September 30, 2004, increased $624,000, or 11% to $6,444,000, compared to $5,820,000 for the same period of the prior year primarily due to increases in commissions and sales-related activities, general repairs and maintenance, legal fees related to our investment in III and advertising activities. Despite the increase in SG&A expense in dollars, SG&A expenses decreased as a percentage of revenues to 30% from 31% of revenues for the same period of the Page 12 prior year, primarily due to the increase in revenues over the same periods. Operating Income. Operating income for the nine months ended September 30, 2004 increased $965,000 to $2,482,000, compared to $1,517,000 for the same period of the prior year. The increase in operating income for the nine months ended September 30, 2004 was primarily due to an increase in revenues and gross profit from sales of products, including MINICAMS and Eclipse, partially offset by an increase in R&D and SG&A expenses. Other Income, Net. Other income, net, which is comprised of interest and dividend income from investments, interest income from customer leases, and gain/loss from dispositions of Company property decreased $11,000, or 3% to $318,000, for the nine months ended September 30, 2004, compared to $329,000 for the same period of the prior year. Loss From Unconsolidated Investee. We incurred a loss from an unconsolidated investee, III, which amounted to $208,000 for the nine months ended September 30, 2004. The loss from this unconsolidated investment represents our share of the results of operations from our investment in the Series A Preferred Shares of III accounted for on the equity method. In addition, an impairment of $768,000 was incurred due to an other than temporary decline in fair value of the investment in III preferred stock (See Note 8 to Unaudited Condensed Consolidated Financial Statements). Income Before Income Taxes. Income before income taxes decreased $22,000, or 1% to $1,824,000 for the nine months ended September 30, 2004, compared to $1,846,000 for the same period of the prior year. The increase in income before income taxes for the nine months ended September 30, 2004 was primarily due to an increase in product revenues, partially offset by losses from the investment in III. Provision For Income Taxes. Provision for income taxes decreased $156,000 for the nine months ended September 30, 2004 to a provision of $528,000, compared to $684,000 for the same period of the prior year. The effective tax rate was 29% for the nine months ended 2004, compared to 37% for the nine months ended September 30, 2003, primarily due to income tax credits for R&D expenditures, foreign sales and dividends received deductions for income from investments. Net Income. Net income for the nine months ended September 30, 2004 increased $134,000, or 12% to $1,296,000, compared to net income of $1,162,000 in the same period of the prior year. Basic earnings per share was $0.47 per share, and diluted earnings per share was $0.45 per share for the nine months ended September 30, 2004, compared to basic and diluted earnings of $0.42 per share for the same period of the prior year. The increase in net income for the nine months ended September 30, 2004 was primarily due to an increase in revenues from sales of products compared to the same period of the prior year, offset by losses from the investment in III. LIQUIDITY AND CAPITAL RESOURCES Cash and cash equivalents totaled $2,883,000 as of September 30, 2004, compared to $2,869,000 as of December 31, 2003. Working capital as of September 30, 2004, increased to $15,216,000, compared to $13,105,000 as of December 31, 2003 primarily due to increases in inventory, cash and cash equivalents, and accounts receivable. Working capital, as a percentage of total assets, was 59% as of September 30, 2004 and 58% at December 31, 2003. The current ratio was 3.56 at September 30, 2004 and 3.93 at December 31, 2003. Total liabilities-to-equity ratio increased to 30% as of September 30, 2004, compared to 25% as of December 31, 2003. Net cash flows provided by operating activities for the nine months ended September 30, 2004 was $1,715,000, compared to $2,089,000 for the same period of the prior year. The decrease in cash flows provided by operating activities for the first nine months in 2004 was primarily due to an increase in accounts receivable and inventory, resulting from an increase in sales volumes. Net Page 13 cash flows (used in) investing activities for the nine months ended September 30, 2004 was $(1,145,000), compared to $(2,454,000) for the same period of the prior year. The decrease in cash flows (used in) investing activities resulted from a decrease in purchase of investments and impairment of investment in III. Net cash flows provided by (used in) financing activities for the nine months ended September 30, 2004 was $212,000, compared to $(77,000) for the same period of the prior year. The increase in cash provided by financing activities was primarily due to the issuance of stock to employees pursuant to an increase in the number of employees exercising stock option awards. We have historically been able to fund working capital and capital expenditures from operations, and expect to be able to finance our 2004 and 2005 working capital requirements from cash on hand and funds generated from operations. However, demand for our products is influenced by the overall condition of the economy in which we sell our products, by the capital spending budgets of our customers and by our ability to successfully meet our customers' expectations. The environmental instrument market in which we compete has been flat or declining over the past several years. Any further decline in our customers' markets or in general economic conditions would likely result in a further reduction in demand for our products and services and could harm our results of operations and, therefore, harm the primary source of our cash flows. Other matters that could affect the extent of funds required within the short-term and long-term include future acquisitions of other businesses or product lines, extensive investment in product R&D activities, or spending to develop markets for the our products. We may engage in discussions with third parties to acquire new products or businesses or to form strategic alliances and joint ventures. These types of transactions may require additional funds from sources other than current operations. Should the need arise, we would attempt to obtain such funds from traditional institutional debt financing or other third party financing. In December 2003, the Company, in a private placement, purchased $1,000,000 of Series A Preferred Stock of III. The investment was made concurrently with the Company's entering into a Product Purchase Agreement with III which was entered into to gain access to technology for use in potential new products and not as an income-earning asset, such as the Company's other investment grade preferred stocks. The Company has recorded losses amounting to $208,000 for the nine months ended September 30, 2004 in these condensed, consolidated financial statements to reflect its share of the results of operations from its investment in III preferred shares. As of September 30, 2004 this investment has been written off as III has ceased its development activities and the Company does not expect to recover any of its original investment. (See Note 8 to Unaudited Condensed Consolidated Financial Statements). In addition to the investment in III preferred shares, the Company was to provide, pursuant to the Product Purchase Agreement, $1,350,000 for the completion by III of certain product developments according to agreed upon milestones. III met the first three milestones, and the Company paid $280,000 in prepaid product advances, which is included in other current assets in the condensed consolidated balance sheet. As noted, the Company has entered into a non-binding letter of intent to acquire the assets of III. Should this acquisition be consummated, the Company anticipates that prepaid product advances will be credited against the purchase price. If successful in the acquisition, the Company anticipates spending at $1,350,000 the amount anticipated in the product development agreement with III to complete the development of III's product through its own efforts. If the contemplated transaction is completed, the Company will offer employment to certain III employees and attempt to complete the product development originally intended. Such research efforts are experimental and may cost more than planned. Nevertheless, we believe that we have the working capital to maintain our commitment to this development effort. In the second quarter of 2003, we announced a plan to undertake a more Page 14 extensive research, development, and engineering effort with the intent of developing products with innovative technologies. The major goals in our efforts are (i) to position the Company to serve new markets, (ii) to increase our position in the beverage market, and (iii) to broaden our product offering in the process analytical instruments market. Our plan to increase research and development will increase R&D expenses. Such expenses will include hiring additional personnel, purchasing supplies and component products for experimental use, outsourcing certain work, and using consulting services. We expect that such expenses will fluctuate quarterly based on the specific activity during the quarter. Increases in R&D efforts may also result in investments in the external development by other third parties in which funding the Company may participate. Such fluctuating expenditures, together with fluctuating revenues, may result in a quarterly or annual operating loss. We believe we have sufficient cash on hand and funds from operations to maintain our commitment to this plan. The Company invests excess funds generated from operations in money market funds, treasury bills and investment grade securities rated by Moody's or Standard & Poor's. The Company's investment portfolio is primarily invested in short-term securities and preferred stocks with at least an investment grade rating to minimize credit risk. These investments are exposed to a variety of market risks, including changes in interest rates. The fair value of the Company's investments in debt and equity securities at December 31, 2003 was $6,135,000, and the fair value at September 30, 2004 was $7,612,000. Year-to-date unrealized losses in the fair value of some of those investments are primarily due to recent increases in interest rates. The Company's investment policy is to manage its investment portfolio to preserve principal and liquidity while maximizing the return on the investment portfolio by investing in multiple types of investment grade securities. Although changes in interest rates may affect the fair value of the investment portfolio and cause unrealized gains or losses, such gains or losses would not be realized unless the investments were sold. Approximately $18,000 was realized as a loss on the sales of such investments during the second quarter. Since 1995, the Company has repurchased an aggregate of 1,755,978 shares of treasury stock at an average purchase price of $4.13 per share, pursuant to the Company's stock repurchase program. No repurchases have been made in 2004, but the Company may purchase up to an additional 19,022 shares under the current stock repurchase program. The Company may seek an expansion of this program in the future if it believes repurchases continue to be in the best interests of the Company. Expansion of this program would also be funded from cash from operations. We have no immediate plans to declare a dividend in the foreseeable future. The Company conducts some operations in leased facilities under an operating lease expiring on November 30, 2006. Future minimum rental payments under this lease for the remainder of 2004 are $48,000, $189,000 for 2005, and $171,000 for 2006. Other than the items discussed above, we are not aware of other commitments or contingent liabilities that would have a materially adverse effect on the Company's financial condition, results of operations, or cash flows. SEGMENT INFORMATION The Company manages its businesses primarily on a product and services basis. The Company aggregates its segments as one reportable segment based on the similar characteristics of their operations. CRITICAL ACCOUNTING POLICIES The preparation of financial statements, in accordance with generally accepted accounting principles, requires management to implement critical accounting policies and to make estimates that could significantly influence the results Page 15 of operations and financial position. The accounting policies and estimates, which significantly influence the results of the Company's operations and its financial position, include revenue recognition policies, the valuation of inventories and accounts receivable, evaluation of the impairment of and estimated useful lives of intangible assets, estimates for future losses on product warranties, stock-based compensation, and the necessity for a deferred income tax asset valuation reserve. Revenue Recognition. The Company derives revenues from three sources: system sales, part 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. Revenue related to part sales is recognized when the parts have been shipped and title and risk of loss have passed to the customer. Deferred revenue, net of related deferred cost of sales, is presented as unearned revenues in the accompanying condensed consolidated balance sheets. 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 contracts. Unearned maintenance and extended warranty revenue is included in unearned revenues in the accompanying consolidated balance sheets. Accounts Receivable. The Company maintains allowances for doubtful accounts for estimated losses resulting from the failure of its customers to make required payments and for estimated sales returns. Customers may not make payments due to a variety of reasons including deterioration of their financial condition or dissatisfaction with the Company's products. Management makes regular assessments of doubtful accounts and uses the best information available including correspondence with customers and credit reports. If the Company determines that there is impairment in the ability to collect payments from customers, additional allowances may be required. However, the Company does not believe that there is significant likelihood of this risk from a single customer, since the Company does not have a significant credit concentration risk with any one single customer. Historically, the Company has not experienced significant bad debt losses, but the Company could experience increased losses if general economic conditions were to deteriorate, resulting in the impairment of a number of its customers' ability to meet their obligations, or if management made different judgments or utilized different estimates for sales returns and allowances for doubtful accounts. Inventories. Inventories consist of electronic equipment, sensors, pumps, valves, and various components. The Company operates in an industry where technological advances or new product introductions are a frequent occurrence. Either of these occurrences can make obsolete or significantly impair customer demand for a portion of the Company's inventory on hand. The Company regularly evaluates its inventory and maintains a reserve for inventory Page 16 obsolescence and excess inventory. As a policy, the Company provides a reserve for products with no movement in six months or more and which management determines, based on available market information, are no longer saleable. The Company also applies subjective judgment in the evaluation of the recoverability of the rest of its inventory based upon known and expected market conditions and company plans. If the Company's competitors were to introduce a new technology or product that renders a product sold by the Company obsolete or unnecessary, it could have a significant adverse effect on the Company's future operating results and financial position. Product Warranties. Products are sold with warranties ranging from 90 days to one year, and extended warranties may be purchased for some products. Estimated expenses associated with these warranties are provided for in the accompanying condensed, consolidated financial statements at the time of revenue recognition. 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. Should actual product failure rates, material usage or service delivery costs differ from estimates, revisions to the estimated warranty liability would be required. Stock-based Compensation. The Company elected to account for fixed award stock options and non-employee directors' options under the provisions of APB Opinion No. 25 "Accounting for Stock Issued to Employees." As such, no compensation cost has been recorded in the financial statements relative to these options. The Company utilizes the Black-Scholes option-pricing model to estimate the fair value of these options for disclosure purposes. RECENT PRONOUNCEMENTS-SEE NOTE 9 OF ITEM 1 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The Company is exposed to a variety of market risks, including changes in interest rates and the market value of its investments. In the normal course of business, the Company employs established policies and procedures to manage its exposure to changes in the market value of its investments. The fair value of the Company's investments in debt and equity securities at December 31, 2003 and September 30, 2004 was $7,612,000 and $6,175,000, respectively. Year-to-date unrealized losses in the fair value of some of those investments are primarily due to recent increases in interest rates. The Company's investment policy is to manage its investment portfolio to preserve principal and liquidity while maximizing the return on the investment portfolio by investing in multiple types of investment grade securities. The Company's investment portfolio is primarily invested in short-term securities, with at least an investment grade rating to minimize credit risk, and preferred stocks. Although changes in interest rates may affect the fair value of the investment portfolio and cause unrealized gains or losses, such gains or losses would not be realized unless the investments were sold. Approximately $18,000 was realized as a loss on the sales of such investments during the second quarter. ITEM 4. CONTROLS AND PROCEDURES The Company maintains a set of disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms. As of September 30, 2004, an evaluation was carried out under the supervision and with the participation of the Company's management, including the chief executive officer and chief financial officer, of the effectiveness of the Company's Page 17 disclosure controls and procedures. Based on that evaluation, the chief executive and financial officers have concluded that the Company's disclosure controls and procedures are effective. There have been no changes in the Company's internal control over financial reporting that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect the Company's internal control over financial reporting. The Company's management, including the CEO and CFO, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. PART II- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits 31.1 Principal Executive Officer certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Principal Financial Officer certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Principal Executive Officer certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Principal Financial Officer certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K Form 8-K dated October 26, 2004, regarding material impairment of Intelligent Ion, Inc. Series A Preferred Stock and press release regarding its signing a non-binding Letter of Intent to acquire substantially all the assets of Intelligent Ion, Inc. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. O.I. CORPORATION ---------------------------------------- (Registrant) Date: November, 2004 BY: /s/ William W. Botts ----------------------------- William W. Botts President and Chief Executive Officer Authorized Officer Date: November, 2004 BY: /s/ Juan M. Diaz -------------------------- Juan M. Diaz Vice President-Corporate Controller Principal Accounting Officer Page 18 Exhibit Index
Exhibit Number Exhibit Title - ------- ------------- 31.1 Principal Executive Officer certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.2 Principal Financial Officer certification pursuant to 18. U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 32.1 Principal Executive Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Principal Financial Officer certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-31.1 2 h19951exv31w1.txt PRINCIPAL EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 302 Exhibit 31.1 CERTIFICATIONS I, William W. Botts, certify that: 1. I have reviewed this quarterly report on Form 10-Q of O.I. Corporation; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November, 2004 /s/ William W. Botts ------------------------------------ William W. Botts, Chairman of the Board of Directors, President, and Chief Executive Officer (Principal Executive Officer) EX-31.2 3 h19951exv31w2.txt PRINCIPAL FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 302 Exhibit 31.2 CERTIFICATIONS I, Juan M. Diaz, certify that: 1. I have reviewed this quarterly report on Form 10-Q of O.I. Corporation; 2. Based on my knowledge, this 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 report; 3. Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared; b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrants' internal control over financial reporting; and 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November, 2004 /s/ Juan M. Diaz ----------------------------------- Juan M. Diaz Vice President-Corporate Controller (Principal Financial Officer) EX-32.1 4 h19951exv32w1.txt PRINCIPAL EXECUTIVE OFFICER CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.1 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 Quarterly Report of O.I. Corporation (the "Company") on Form 10-Q for the period ended September 30, 2003, 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 solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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 - -------------------------------------------- Name: William W. Botts Title: President and Chief Executive Officer Date: November , 2004 EX-32.2 5 h19951exv32w2.txt PRINCIPAL FINANCIAL OFFICER CERTIFICATION PURSUANT TO SECTION 906 EXHIBIT 32.2 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 Quarterly Report of O.I. Corporation (the "Company") on Form 10-Q for the period ended September 30, 2003, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Juan M. Diaz, Vice President-Corporate Controller 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 solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 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/ Juan M. Diaz - ---------------------------------------- Name: Juan M. Diaz Title: Vice President-Corporate Controller Date: November , 2004 -----END PRIVACY-ENHANCED MESSAGE-----