-----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, Q8yz9y+y6BtY6Fjcvn0Ket+d2xbVggXa7JzVRGxqgJGPIMz/2P8SrNahME+ShQBZ YKNrSGYd08L/8Twiwq0C0g== 0000906602-97-000172.txt : 19971024 0000906602-97-000172.hdr.sgml : 19971024 ACCESSION NUMBER: 0000906602-97-000172 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19970311 ITEM INFORMATION: FILED AS OF DATE: 19971023 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTERMAGNETICS GENERAL CORP CENTRAL INDEX KEY: 0000351012 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS FABRICATED METAL PRODUCTS [3490] IRS NUMBER: 141537454 STATE OF INCORPORATION: NY FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-11344 FILM NUMBER: 97699900 BUSINESS ADDRESS: STREET 1: 450 OLD NISKAYUNA ROAD STREET 2: PO BOX 461 CITY: LATHAM STATE: NY ZIP: 12110-0461 BUSINESS PHONE: 5184565456 MAIL ADDRESS: STREET 1: 450 OLD NISKAYUNA ROAD STREET 2: PO BOX 461 CITY: LATHAM STATE: NY ZIP: 12110-0461 8-K/A 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A Amendment No. 2 Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported): March 11, 1997 INTERMAGNETICS GENERAL CORPORATION (Exact name of registrant as specified in its charter) Commission File Number 1-11344 New York 14-1537454 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 450 Old Niskayuna Road Latham, New York 12110 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (518) 782-1122 Item 7(a) - Financial Statements of Business Acquired (Medical Advances, Inc.) Audited financial statements as of December 31, 1996 together with auditor's report. MEDICAL ADVANCES, INC. REPORT ON AUDIT OF FINANCIAL STATEMENTS YEAR ENDED DECEMBER 31, 1996 BONFIELD & COMPANY, S.C. BONFIELD & COMPANY, S.C. CERTIFIED PUBLIC ACCOUNTS 740 N. Plankinton Milwaukee, Wisconsin 53203 REPORT OF INDEPENDENT AUDITORS Board of Directors Medical Advances, Inc. Milwaukee, Wisconsin We have audited the accompanying balance sheet of Medical Advances, Inc. (an S Corporation) as of December 31, 1996 and 1995, and the related statements of earnings and retained earnings and cash flows for the years 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 audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Medical Advances, Inc. as of December 31, 1996 and 1995, and the results of its operations and its cash flows for the years then ended in conformity with generally accepted accounting principles. /s/ Bonfield & Company, S.C. Certified Public Accountants January 30, 1997 Milwaukee, Wisconsin MEDICAL ADVANCES, INC. BALANCE SHEET December 31, 1996 and 1995
ASSETS 1996 1995 ------ ---- ---- CURRENT ASSETS: Cash and cash equivalents $ 1,253,811 $ 599,571 Short-term investment - Note B 100,000 Accounts receivable, less allowance for losses in collection of $40,000 in 1,243,239 1,048,061 both years Inventories: Finished goods 386,366 294,777 Work in progress 128,996 93,427 Purchased parts 219,515 273,852 ---------- ----------- 734,877 662,056 Prepaid expenses and other current assets 83,867 69,269 ---------- ----------- TOTAL CURRENT ASSETS 3,415,794 2,378,957 EQUIPMENT: Shop equipment 156,410 162,777 Research and development equipment 455,881 470,729 Office furniture and equipment 488,294 462,224 Transportation equipment 19,619 16,585 ---------- ----------- 1,120,204 1,112,315 Less accumulated depreciation 816,951 800,052 ---------- ----------- 303,253 312,263 OTHER ASSETS: Patent and license agreements, less accumulated amortization of $43,393 in 1996 and $35,534 in 1995 17,974 21,866 Split dollar insurance premiums due from 22,784 officer ---------- ----------- 17,974 44,650 ---------- ----------- $ 3,737,021 $ 2,735,870 ========== ===========
SEE NOTES TO FINANCIAL STATEMENTS.
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995 ------------------------------------ ---- ---- CURRENT LIABILITIES: Accounts payable $ 221,655 $ 151,677 Accrued expenses 482,645 448,753 Dividend payable - Note H 389,683 Upgrade and warranty accrual 60,000 30,000 Payments due within one year on long-term debt - Note C 118,889 ----------- ---------- TOTAL CURRENT LIABILITIES 1,153,983 749,319 STOCKHOLDERS' EQUITY: Common stock, $.01 par value, 2,000,000 shares authorized, 100,004 shares issued 1,000 1,000 Additional paid-in capital 336,316 336,316 Retained earnings 2,451,500 1,855,013 Treasury stock - 7,662 shares at cost (205,778) (205,778) ----------- ---------- 2,583,038 1,986,551 COMMITMENTS - Note E ----------- ---------- $ 3,737,021 $ 2,735,870 =========== ==========
MEDICAL ADVANCES, INC. STATEMENT OF EARNINGS AND RETAINED EARNINGS Years ended December 31, 1996 and 1995
1996 1995 ---- ---- REVENUES: Net sales $ 7,604,071 $ 5,829,014 Other Income 29,077 31,895 ----------- ----------- 7,633,148 5,860,909 COSTS AND EXPENSES: Cost of sales 2,392,965 1,886,108 Research, engineering and development 1,204,702 1,431,416 expenses Selling, general and administrative 2,198,864 1,612,216 expenses Interest expenses 912 26,730 ----------- ----------- 5,797,443 4,956,470 ----------- ----------- NET EARNINGS 1,835,705 904,439 RETAINED EARNINGS: Beginning of year 1,855,013 996,745 Less dividends paid and payable (1,239,218) (46,171) ----------- ----------- End of year $ 2,451,500 $ 1,855,013 =========== ===========
SEE NOTES TO FINANCIAL STATEMENTS. MEDICAL ADVANCES, INC. STATEMENT OF CASH FLOWS Years ended December 31, 1996 and 1995
1996 1995 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 1,835,705 $ 904,439 Adjustments to reconcile net earnings to net cash rovided by operating activities: Depreciation and amortization 166,386 177,637 Loss (gain) on sale of assets 7,730 (6,468) Change in allowance for losses in (10,000) collection Change in accounts receivable (195,178) (135,712) Change in inventories (72,821) 40,373 Change in other current assets (14,598) (21,552) Change in accounts payable 69,978 (7,348) Change in other accrued expenses 33,892 78,010 Change in upgrade and warranty accrual 30,000 (30,000) ---------- ---------- NET CASH PROVIDED BY OPERATING ACTIVITIES 1,861,094 989,379 CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of short-term investment (100,000) Purchases of equipment (159,947) (126,339) Payments to acquire patents (3,967) (1,614) Proceeds from sale of assets 2,700 11,334 Other 22,784 ---------- ---------- NET CASH USED BY INVESTING ACTIVITIES (238,430) (116,619) CASH FLOWS FROM FINANCING ACTIVITIES: Payments on notes payable to bank (118,889) (196,350) Payment on note issued to purchase treasury (90,000) stock Payments on notes payable to officers (20,000) Dividends paid (849,535) (46,171) ---------- ---------- NET CASH USED BY FINANCING ACTIVITIES (968,424) (352,521) ---------- ---------- NET INCREASE IN CASH 654,240 520,239 CASH AND CASH EQUIVALENTS: Beginning of year 599,571 79,332 ---------- ---------- End of year $ 1,253,811 $ 599,571 ========== ==========
See notes to financial statements. MEDICAL ADVANCES, INC. NOTES TO FINANCIAL STATEMENTS Years ended December 31, 1996 and 1995 Note A - Description of Company and summary of significant accounting policies: Description of Company: The Company manufactures and sells products that enhance the images produced by magnetic resonance equipment. Its sales are to medical care providers located throughout North and South America, Asia and Western Europe. Use of estimates: The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and notes to financial statements. Actual results could differ from those estimates. Cash and cash equivalents: The Company treats all investments in highly liquid debt instruments purchased with a maturity of three months or less as cash equivalents on the Company's balance sheet. The Company maintains its cash in bank deposit accounts. The balances fluctuate greatly during the year and can exceed the federally insured limit of $100,000. Cash balances at December 31, 1996 exceeded the federally insured limit by approximately $1,060,000. Inventories: Inventories are stated at the lower of cost (first-in, first- out method) or market. Cost includes material, labor and manufacturing overhead. Depreciation: Equipment is stated at cost and depreciated over its estimated useful life using accelerated methods of depreciation. Amortization: Patent and license agreements are amortized over their estimated useful lives (five years) under the straight-line method. Taxes on income: The Company elected S corporation status effective January 1, 1993. Retained earnings at the date of the S election was $938,124. Taxable income of an S corporation is allocated to its shareholders who are personally liable for their share of income taxes. Note B - Short term investment: In December, 1996, the Company purchased a $100,000 corporate bond that is classified as a security available for sale. The bond is carried at cost, which approximates fair market value plus accrued interest. Note C - Long term debt: Long term debt at December 31, 1995 consisted of a $118,889 note payable to bank that was repaid in 1996. The Company also has an unused $400,000 bank line of credit available at December 31, 1996. Substantially all of the Company's assets are pledged to support the line of credit. Note D - Profit-sharing plan: The Company maintains a 401(k) profit-sharing plan that covers substantially all employees. Company matching or voluntary contributions are at the discretion of the Board of Directors. Costs and expenses include matching contributions of $39,880 in 1996 and $34,570 in 1995 and a voluntary contribution of $36,049 in 1996 and $35,826 in 1995. Note E - Lease commitments, stock agreement: The Company rents its facilities under a lease that expires August 31, 1997. Costs and expenses include rent of $105,007 in 1996 and $101,695 in 1995. Future minimum rent payments due under the lease are approximately $68,000 through August, 1997. The Company has a right of refusal to purchase shares of stock offered for sale by its stockholders. The Company may also be required to purchase the stock of its stockholders upon their death at fair value payable over three years. Note F - Supplemental cash flow information: Cash paid for interest expense was $912 in 1996 and $28,730 in 1995. Note G - Major customer: One customer accounted for 18% of 1996 sales and 24% of 1995 sales. Accounts receivable from this customer totaled $276,882 at December 31, 1996 and $301,984 at December 31, 1995. Two other customers accounted for 12% and 10% of 1996 sales. Accounts receivable from these customers totaled $315,299 and $120,745 at December 31, 1996. Note H - Dividends payable: The Company's Board of Directors approved a dividend payment in December, 1996 of $389,883 which was paid in January, 1997. Item 7(b). Pro Forma Financial Information. Pro Forma Combined Condensed Balance Sheet of Intermagnetics General Corporation ("IGC") and Medical Advances, Inc. ("MAI") as of November 24, 1996 and Pro Forma Combined Condensed Summary of Operations for IGC and MAI for the six months ended November 24, 1996 and the twelve months ended May 26, 1996. INTRODUCTION On March 11, 1997, Intermagnetics General Corporation ("Intermagnetics") acquired Medical Advances, Inc. ("MAI"), a Wisconsin corporation, pursuant to an Agreement and Plan of Reorganization and Merger, dated March 11, 1997 (the "Agreement"), among Intermagnetics, Intermagnetics Merger Sub, Inc., a wholly-owned subsidiary of Intermagnetics ("Merger Sub"), MAI, and the 19 stockholders of MAI named therein (the "Stockholders"). Pursuant to the Agreement, MAI was acquired by merger (the "Merger") of MAI into Merger Sub. In the Merger, all of the 92,342 shares of the outstanding common stock of MAI were exchanged for the Merger consideration, described below. The Merger consideration was arrived at by arm's length negotiation and consisted on an aggregate basis of approximately $4.5 million in cash, 652,168 shares of the common stock, par value $0.10 per share, of Intermagnetics (the "Intermagnetics Common Stock") and certain additional contingent rights ("Rights"), described below. The total value of the Merger consideration received by the Stockholders, exclusive of the Rights, was approximately $11.735 million. Each Stockholder received for each MAI share held by it approximately $48.73 in cash and approximately seven shares of Intermagnetics Common Stock. Pursuant to the rights, the Stockholders are entitled to receive up to a maximum aggregate 97,826.09 additional shares (the "Adjustment Shares") of Intermagnetics Common Stock if the average closing price of the Intermagnetics Common Stock (the "Adjusted Closing Price"), as reported on the American Stock Exchange for the period beginning on the first trading day after the Company issues a release on its revenues and earnings for its 1997 fiscal year and ending ninety calendar days later, is less than $11.50. The Adjustment Shares shall be calculated as that number of shares equal to (a) $7,500,000 divided by the greater of (i) $10.00 per share or (ii) the Adjusted Closing Price, minus (b) $7,500,000 divided by $11.50 per share. Prior to the Merger, MAI was engaged in the business of manufacturing and distributing accessories used in Magnetic Resonance Imaging devices. All plant and equipment assets acquired in the Merger will continue to be used primarily as they were prior to the Merger . Intermagnetics General Corporation and Medical Advances, Inc. Pro Forma Combined Condensed Balance Sheet November 24, 1996 (Dollars in Thousands except per share amounts) (UNAUDITED) The following unaudited Pro Forma Combined Condensed Balance Sheet, as of November 24,1996, gives effect to the acquisition by Intermagnetics General Corporation (IGC) of Medical Advances, Inc. (MAI), which was consummated on March 11, 1997. The Pro Forma Condensed Balance Sheet should be read in conjunction with the related Pro Forma Condensed Summary of Operations and the notes to the Pro Forma Combined Condensed Financial Statements appearing elsewhere herein.
Pro Forma IGC - MAI Historical Adjustments Pro Forma IGC MAI Note 1 Combined --- --- ------ -------- ASSETS IGC MAI --- --- Current Assets Cash and short-term investments $ 15,084 $ 1,126 $(4,568) $ 0 $ 11,642 Trade accounts receivable 20,084 1,213 0 0 21,297 Unbilled revenue 3,345 0 0 0 3,345 Inventories 25,157 758 0 0 25,915 Prepaid expenses & other current 1,804 78 0 0 1,882 assets --------- -------- -------- ------- --------- 65,474 3,175 (4,568) 0 64,081 Buildings 15,403 0 0 15,403 Machinery & equipment 33,607 1,113 0 0 34,720 Other property, plants & equipment 5,305 0 0 0 5,305 --------- -------- -------- ------- --------- 54,315 1,113 0 0 55,428 Less allowance for depreciation (26,946) (820) 0 0 (27,756) --------- -------- -------- ------- --------- Property, plant & equipment (net) 27,369 303 0 0 27,672 Investments 7,796 0 2,435 (2,435) 7,796 Other Assets 7,825 30 9,633 0 17,488 --------- -------- -------- ------- --------- $ 108,464 $ 3,508 $ 7,500 (2,435) $ 117,037 ========= ======== ======== ======= ========= LIABILITIES & SHAREHOLDERS' EQUITY Current Liabilities Current portion of long-term debt $ 2,400 $ 0 $ 0 $ 0 $ 2,400 Accounts payable 4,074 163 0 0 4,237 Salaries, wages and related 2,610 639 0 0 3,249 expenses Customer advances 471 0 0 0 471 Other liabilities and accrued 2,788 271 0 0 3,059 expenses --------- -------- -------- ------- --------- 12,343 1,073 0 0 13,416 Long-Term Debt 29,275 0 0 0 29,275 Deferred Income Taxes 564 0 0 0 564 Shareholders' Equity Other equity (3,187) 2,099 5,322 (2,099) 2,135 Additional paid-in capital 69,469 336 2,178 (336) 71,647 --------- -------- -------- ------- --------- 66,282 2,435 7,500 (2,435) 73,782 --------- -------- -------- ------- --------- $ 108,464 $ 3,508 $ 7,500 $ (2,435) $ 117,037 ========= ======== ======== ======= =========
Intermagnetics General Corporation and Medical Advances, Inc. Pro Forma Combined Condensed Summary of Operations Six Months Ended November 24, 1996 (Dollars in Thousands except per share amounts) (UNAUDITED) The following unaudited Pro Forma Combined Condensed Summary of Operations as of November 24,1996, gives effect to the acquisition by Intermagnetics General Corporation (IGC) of Medical Advances, Inc., (MAI), using the purchase method of accounting as if the acquisition had taken place at the beginning of IGC's current fiscal year. The Pro Forma Combined Condensed Summary of Operations should be read in conjunction with the related Pro Forma Combined Condensed Balance Sheet and the notes to the Pro Forma Combined Condensed Financial Statements appearing elsewhere herein.
Pro Forma IGC - MAI Historical Adjustments Pro Forma IGC MAI (Note 2) Combined --- --- ------ -------- Net Sales $ 44,630 $ 4,035 $ 0 $ 48,665 Other Revenue 1,573 10 (125) 1,458 ----------- --------- ---------- ----------- 46,203 4,045 (125) 50,123 Costs and expenses: Costs of products sold 31,109 1,203 336 32,648 Product research and 3,196 538 3,734 development Marketing, general and 7,968 1,177 9,145 administrative Interest and other expense 1,070 2 1,072 Equity in net income of unconsolidated affiliate (77) 0 0 (77) ----------- --------- ---------- ----------- 43,266 2,920 336 46,522 Income before income taxes 2,937 1,125 (461) 3,601 Provision for income taxes 1,057 0 (360) 1,417 ----------- --------- ---------- ----------- NET INCOME $ 1,880 $ 1,125 $ (821) $ 2,184 ----------- --------- ---------- ----------- NET INCOME PER SHARE $ 0.15 $ 0.17 =========== =========== (Primary and Fully diluted) Weighted average shares outstanding during period (Primary and Fully Diluted) 12,331,267 12,331,267 Shares issued in acquisition 0 652,168 652,168 ----------- ---------- ----------- Pro Forma Weighted average shares outstanding during period 12,331,267 652,168 12,983,435 (Primary and Fully Diluted) =========== ========== ===========
Intermagnetics General Corporation and Medical Advances, Inc. Pro Forma Combined Condensed Summary of Operations Twelve Months Ended May 26, 1996 (Dollars in Thousands except per share amounts) (UNAUDITED) The following unaudited Pro Forma Combined Condensed Summary of Operations as of May 26, 1996 gives effect to the acquisition by Intermagnetics General Corporation (IGC) of Medical Advances, Inc. (MAI), using the purchase method of accounting as if the acquisition had taken place at the beginning of IGC's 1996 fiscal year. The Pro Forma Combined Condensed Summary of Operations should be read in conjunction with the related Pro Forma Combined Condensed Balance Sheet and the notes to the Pro Forma Combined Condensed Financial Statements appearing elsewhere herein.
Pro Forma IGC - MAI Pro Historical Adjustments Forma IGC MAI (Note 3) Combined --- --- ------ -------- Net Sales $ 88,467 $ 5,998 $ 0 $ 94,465 Other Revenue 4,138 17 (250) 3,905 Realized gain on the sale of available for sale securities 1,414 0 0 1,414 ----------- ---------- ----------- ----------- 94,019 6,015 (250) 99,784 Costs and expenses: Costs of products sold 66,188 1,953 672 68,813 Product research and development 5,075 1,392 6,467 Marketing, general and administrative 12,502 1,769 14,271 Interest and other expense 2,624 (14) 2,610 Equity in net loss of unconsolidated 748 0 0 748 affiliate ----------- ---------- ----------- ----------- 87,137 5,100 672 92,909 Income before income taxes 6,882 915 (922) 6,875 Provision for income taxes 2,455 0 237 2,692 ----------- ---------- ----------- ----------- NET INCOME $ 4,427 $ 915 $ (1,159) $ 4,183 =========== ========== =========== =========== NET INCOME PER SHARE $ 0.36 $ 0.32 (Primary and Fully diluted) Weighted average shares outstanding during period (Primary and Fully Diluted) 12,322,047 0 12,322,047 Shares issued in acquisition 0 652,168 652,168 Pro Forma Weighted average shares outstanding during period (Primary and Fully Diluted) 12,322,047 652,168 12,974,215 =========== =========== ===========
NOTES TO PRO FORMA FINANCIAL STATEMENTS NOTE 1 The Pro Forma Combined Condensed Balance Sheet includes adjustments as of the closing date to reflect the acquisition of MAI using the purchase method of accounting. The Pro Forma adjustments reflected in the Balance Sheet are as follows:
CONSIDERATION FOR MAI Cash $ 4,500 Common Stock 16 Paid in Capital 2,178 Treasury Stock 5,306 Related Expense 65 -------- Total Consideration $ 12,068 MAI Equity 2,435 -------- Purchased Technology $ 9,633 ========
NOTE 2 In connection with the Pro Forma Combined Condensed Summary of Operations for period ended November 24, 1996, the following pro forma adjustments relating to the acquisition of MAI were made using the purchase consideration described elsewhere:
Decrease in Interest Income resulting from cash used in the transaction. $ 125 Amortization of excess purchase price over net assets acquired 336 Decrease in income tax relating $ (45) to reduced Interest Income. Increase in income tax as MAI 405 360 was a S Corporation. -------- ----------- Decrease in net income $ 821 ===========
NOTE 3 In connection with the Pro Forma Combined Condensed Summary of Operations for period ended May 26, 1996, the following pro forma adjustments relating to the acquisition of MAI were made based on the purchase consideration described elsewhere:
Decrease in interest income resulting $ 250 from cash used in the transaction. Amortization of excess purchase price over net assets acquired 672 Decrease in income tax relating to reduced interest income. $ (90) Increase in income tax as MAI was a S 327 237 Corporation. -------- ----------- Decrease in net income $ 1,159 ===========
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 hereunto duly authorized. INTERMAGNETICS GENERAL CORPORATION Date: October 23, 1997 By: /S/ MICHAEL C. ZIEGLER Senior Vice President and Chief Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----