-----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, Rqwlmd8F1xShsDfNkpvLkCbMRlYIBLoEsSylRdfcwQVEOiTrxF64LbkuDSJbe2Ru VGjOFmLiYuppL+XWHsXYAQ== 0000950116-97-001841.txt : 19971009 0000950116-97-001841.hdr.sgml : 19971009 ACCESSION NUMBER: 0000950116-97-001841 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970824 FILED AS OF DATE: 19971008 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: 10-Q SEC ACT: SEC FILE NUMBER: 001-11344 FILM NUMBER: 97692161 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 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended August 24, 1997 or [ ] 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 1-11344 -------- INTERMAGNETICS GENERAL CORPORATION ---------------------------------- (Exact name of registrant as specified in its charter) New York 14-1537454 ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 450 Old Niskayuna Road, PO Box 461, Latham, NY 12110-0461 --------------------------------------------------------- (Address of principal executive offices) (Zip Code) (518) 782-1122 -------------- (Registrant's telephone number, including area code) - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) 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 the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Common Stock, $.10 par value - 12,715,073 as of October 6, 1997. INTERMAGNETICS GENERAL CORPORATION CONTENTS PART I - FINANCIAL INFORMATION
Item 1: Financial Statements: Consolidated Balance Sheets - August 24, 1997 and May 25, 1997..................................3 Consolidated Statements of Income - Three Months Ended August 24, 1997 and August 25, 1996...........................................................................5 Consolidated Statements of Cash Flows - Three Months Ended August 24, 1997 and August 25, 1996.............................................................................6 Notes to Consolidated Financial Statements......................................................7 Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................................................9 PART II - OTHER INFORMATION.............................................................................11 SIGNATURES..............................................................................................12
2 INTERMAGNETICS GENERAL CORPORATION ITEM 1: FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEETS (Dollars in Thousands)
ASSETS August 24, 1997 May 25, 1997 -------------------- ----------------- (Unaudited) CURRENT ASSETS Cash and short-term investments $ 9,311 $ 12,667 Trade accounts receivable, less allowance (August 24 - $309; May 25 - $302) 17,294 16,899 Costs and estimated earnings in excess of billings on uncompleted contracts 4,854 3,543 Inventories: Finished products 962 811 Work in process 15,313 14,196 Materials and supplies 11,779 11,410 ---------- --------- 28,054 26,417 Prepaid expenses and other 3,989 3,272 ---------- --------- TOTAL CURRENT ASSETS 63,502 62,798 PROPERTY, PLANT AND EQUIPMENT Land and improvements 1,479 1,479 Buildings and improvements 16,425 16,425 Machinery and equipment 36,932 36,181 Leasehold improvements 35 35 ---------- --------- 54,871 54,120 Less allowances for depreciation and amortization 29,594 28,616 ---------- --------- 25,277 25,504 Equipment in process of construction 3,056 3,048 ---------- --------- 28,333 28,552 INTANGIBLE AND OTHER ASSETS Available for sale securities 4,458 3,112 Other investments 8,823 8,932 Excess of cost over net assets acquired, less accumulated amortization (August 24 - $332; May 25 - $169) 9,372 9,538 Other assets 3,611 3,057 ---------- --------- TOTAL ASSETS $118,099 $ 115,989 ========== =========
3 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED BALANCE SHEETS, Continued (Dollars in Thousands) LIABILITIES AND SHAREHOLDERS' EQUITY
August 24, 1997 May 25, 1997 --------------------- ---------------- (Unaudited) CURRENT LIABILITIES Current portion of long-term debt $ 262 $ 259 Accounts payable 5,224 6,441 Salaries, wages and related items 2,705 2,660 Customer advances and deposits 1,073 811 Product warranty reserve 957 911 Accrued income taxes 1,482 1,453 Other liabilities and accrued expenses 1,293 917 ---------- --------- TOTAL CURRENT LIABILITIES 12,996 13,452 LONG-TERM DEBT, less current portion 29,058 29,105 DEFERRED INCOME TAXES, on unrealized gain on available for sale securities 829 345 SHAREHOLDERS' EQUITY Preferred Stock, par value $.10 per share: Authorized - 2,000,000 shares Issued and outstanding - None Common Stock, par value $.10 per share: Authorized - 20,000,000 shares Issued and outstanding (including shares in treasury): August 24, 1997 - 12,702,051 shares May 25, 1997 - 12,642,508 shares 1,270 1,264 Additional paid-in capital 75,489 74,378 Retained earnings (deficit) (1,182) (1,643) Unrealized gain on available for sale securities 1,474 613 Foreign currency translation adjustments 133 (16) ---------- --------- 77,184 74,596 Less cost of Common Stock in treasury (August 24, 1997 - 206,140 shares; May 25, 1997 - 163,700 shares) (1,968) (1,509) ---------- --------- 75,216 73,087 ---------- --------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $118,099 $115,989 ========== ========
4 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands, Except Per Share Amounts)
Three Months Ended ----------------------------------------- Aug 24, 1997 Aug 25, 1996 ------------------ ------------------ Net sales $21,020 $21,370 Other revenue 486 1,085 ------- ------- Total revenue 21,506 22,455 Costs and expenses: Cost of products sold 13,135 14,941 Product research and development 2,113 1,563 Marketing, general and administrative 4,912 3,699 Interest and other expense 503 544 Equity in net loss of unconsolidated affiliate 87 10 ------- ------- 20,750 20,757 ------- ------- Income before income taxes 756 1,698 Provision for income taxes 295 645 ------- ------- NET INCOME $ 461 $ 1,053 ========= ======== NET INCOME PER SHARE (Primary and Fully Diluted) $0.04 $0.08 ========= ========
NOTE: Shares and earnings per share have been adjusted to reflect a 2% stock dividend distributed September 16, 1997. 5 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (Dollars in Thousands)
Three Months Ended --------------------------------------- Aug 24, 1997 Aug 25, 1996 ---------------- ---------------- OPERATING ACTIVITIES Net income $ 461 $ 1,053 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,219 908 Cost of warrants issued 150 Imputed interest on unsecured notes 59 Equity in net loss of unconsolidated affiliate 87 10 Gain on sale of assets (306) Change in operating assets and liabilities: Increase in accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (1,706) (3,060) Increase in inventories and prepaid expenses and other (1,904) (2,633) Decrease in accounts payable and accrued expenses (459) (1,452) Other 150 (46) ---------- -------- NET CASH USED IN OPERATING ACTIVITIES (2,002) (5,467) INVESTING ACTIVITIES Investment in unconsolidated affiliate (609) Purchases of property, plant and equipment (759) (1,199) Proceeds from sale of assets 725 ---------- -------- NET CASH USED IN INVESTING ACTIVITIES (1,368) (474) FINANCING ACTIVITIES Proceeds from sales of Common Stock 397 274 Proceeds from sale of warrants 120 Purchase of Treasury Stock (459) (1,126) Principal payments on long-term debt (44) (41) ---------- -------- NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 14 (893) ---------- -------- DECREASE IN CASH AND SHORT-TERM INVESTMENTS (3,356) (6,834) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 12,667 18,696 ---------- -------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 9,311 $11,862 ========== ========
6 INTERMAGNETICS GENERAL CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE A - In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments, which are of a normal recurring nature, necessary to present fairly the financial position at August 24, 1997 and the results of operations and cash flows for the three-month periods ended August 24, 1997 and August 25, 1996. The results for the three months ended August 24, 1997 are not necessarily indicative of the results to be expected for the entire year. The Financial Statements and Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company's financial statements for the year ended May 25, 1997, filed on Form 10-K on August 25, 1997. NOTE B - Net income per share amounts are based on the weighted average number of common shares outstanding during the periods plus common stock equivalents as shown below: Quarter Ended ------------------------------ Aug 24, 1997 Aug 25, 1996 ------------ ------------ Primary Weighted average shares outstanding 12,493,322 12,006,227 Common stock equivalents 405,015 673,507 ---------- ---------- Total 12,898,337 12,679,734 ========== ========== Fully Diluted Weighted average shares outstanding 12,493,322 12,006,227 Common stock equivalents 405,015 673,507 ---------- ---------- Total 12,898,337 12,679,734 ========== ========== 7 Both primary and fully diluted shares include the dilutive effect (common stock equivalents) of outstanding stock options based on the treasury stock method using average market price for primary and closing market price (unless the average market price is higher) for fully diluted. Shares for the periods presented have been adjusted to reflect a 2% stock dividend distributed September 16, 1997 as described in Note D. NOTE C - In June, 1997, the Company, as part of a long-term strategic alliance, entered into a Warrant Agreement with a distributor under which the distributor could purchase up to 1,200,000 shares of Common Stock. The distributor paid $120,000 for the rights to the warrants and an initial warrant (which expires on November 16, 1998) to purchase 500,000 shares at $12.50 per share was issued. Future warrants are conditioned on the distributor meeting specified performance levels and would be issued at market prices at that time. In connection with the initial warrant, the Company incurred a non-cash marketing charge of $600,000 which is being recognized in quarterly installments of $150,000 during fiscal 1998. NOTE D - On July 22, 1997, the Company declared a 2% stock dividend which was distributed on all outstanding shares, except Treasury Stock, on September 16, 1997 for all shareholders of record on August 26, 1997. The financial statements have been adjusted retroactively to reflect this stock dividend in all numbers of shares, prices per share and earnings per share. 8 INTERMAGNETICS GENERAL CORPORATION ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS During the first quarter of fiscal 1998, revenues were 4.2% lower than the first quarter of fiscal 1997. Increased sales of Magnetic Products, including Medical Advances, Inc. ("MAI"), were more than offset by declines in sales of Refrigeration Products. Gross margin rates improved in spite of further reductions in selling prices due to the success of continuing cost reduction programs and a more favorable product mix, including MAI. Other revenue in fiscal 1997 included higher royalty income and a $299,000 sale of a low volume, defense-related product line which resulted in an after-tax gain of $186,000. In the first quarter of fiscal 1998 sales were higher in the Magnetic Products segment due to increased demand for MRI magnets and inclusion of MAI, despite much lower sales of superconducting materials for MRI. Sales were lower in the Refrigeration Products segment with declines in almost all cryogenic product lines due to reduced demand and lower than expected sales of FRIGC(R) refrigerants due to unseasonably cool temperatures and an apparently adequate, although diminishing, supply of R-12. Gross margins improved for Magnetic Products due to a better sales mix and continued cost reduction efforts. Gross margins for Refrigeration Products increased due to continuing cost reduction programs. Internal research and development expenses were 35.2% higher in the current quarter compared to the first quarter of fiscal 1997 as externally-funded programs declined by approximately 34%. Marketing, general and administrative expenses increased approximately 33% in the first quarter of fiscal 1998 compared to the same period in fiscal 1997 principally due to the inclusion of MAI and the creation of separate organizations to develop and market FRIGC refrigerants and IMiG-MRI systems. During the first quarter of fiscal 1998 the Company used net cash of $3,356,000, of which $2,002,000 was used to fund operating activities, principally increases in receivables and inventories, and $1,368,000 was used in investing activities for machinery and equipment and an additional investment of $609,000 in Surrey Medical Imaging Systems Limited. 9 In June, 1997, the Company announced that, as part of a long-term strategic alliance, it entered into a Warrant Agreement with Sumitomo Corporation of America, the recently appointed distributor of FRIGC FR-12 in the Asia-Pacific market, under which Sumitomo could purchase up to 1,200,000 shares of Common Stock. Sumitomo paid $120,000 for the rights to the warrants. The Company issued an initial warrant (which expires on November 16, 1998) to purchase 500,000 shares at $12.50 per share. The issuance of future warrants depends on Sumitomo meeting specified performance levels. Additional warrants would be issued at market prices at the time the warrants were issued. In connection with the initial Warrant, the Company will incur non-cash, quarterly charges of $150,000 throughout fiscal 1998 to be recorded as marketing expenses. The Company's capital resource commitments as of September 28, 1997 consist principally of capital equipment commitments of approximately $1,130,000. The Company has an unsecured line of credit of $10,000,000 which expires in November, 1997, none of which was in use on September 28, 1997. The Company is negotiating a new line of credit. The Company believes that it will have sufficient working capital to meet its needs for the foreseeable future. However, pursuit of large scale applications in superconductivity and new refrigerants may require the Company to seek additional financing in future years. 10 PART II: OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K None filed during the quarter ended August 24, 1997. 11 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. INTERMAGNETICS GENERAL CORPORATION Dated: October 6, 1997 By: /s/Carl H. Rosner ----------------- Carl H. Rosner Chairman and Chief Executive Officer Dated: October 6, 1997 By: /s/Michael C. Zeigler --------------------- Michael C. Zeigler Senior Vice President, Finance 12 EX-27 2 FINANCIAL DATA SCHEDULE
5 1,000 3-MOS MAY-31-1998 AUG-24-1997 9,311 0 22,457 309 28,054 63,502 57,927 29,594 118,099 12,996 29,058 0 0 1,270 73,946 118,099 21,020 21,506 13,135 13,135 7,112 0 503 756 295 461 0 0 0 461 .04 .04
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