-----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, OFEasLajHLA5svb1VaqBd5Dd98scnDN6vu4eF2br0khTIDmqAbfClVJ//GscItJs tuts/OSmVuwjnezx3tYi6g== 0000950116-98-000017.txt : 19980108 0000950116-98-000017.hdr.sgml : 19980108 ACCESSION NUMBER: 0000950116-98-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971123 FILED AS OF DATE: 19980107 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: 98502200 BUSINESS ADDRESS: STREET 1: 450 OLD NISKAYUNA RD STREET 2: PO BOX 461 CITY: LATHAM STATE: NY ZIP: 12110-0461 BUSINESS PHONE: 5187821122 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 November 23, 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 - 12,480,222 as of January 5, 1998. INTERMAGNETICS GENERAL CORPORATION CONTENTS PART I - FINANCIAL INFORMATION Item 1: Financial Statements: Consolidated Balance Sheets - November 23, 1997 and May 25, 1997................................3 Consolidated Statements of Income - Three Months and Six Months Ended November 23, 1997 and November 24, 1996.........................................................................5 Consolidated Statements of Cash Flows - Six Months Ended November 23, 1997 and November 24, 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 Nov 23, 1997 May 25, 1997 ------------ ------------ (Unaudited) CURRENT ASSETS Cash and short-term investments $ 9,347 $ 12,667 Trade accounts receivable, less allowance (November 23 - $287; May 25 - $302) 17,189 16,899 Costs and estimated earnings in excess of billings on uncompleted contracts 4,781 3,543 Inventories: Finished products 837 811 Work in process 16,108 14,196 Materials and supplies 11,608 11,410 -------- -------- 28,553 26,417 Prepaid expenses and other 3,922 3,272 -------- -------- TOTAL CURRENT ASSETS 63,792 62,798 PROPERTY, PLANT AND EQUIPMENT Land and improvements 1,479 1,479 Buildings and improvements 16,425 16,425 Machinery and equipment 37,088 36,181 Leasehold improvements 35 35 -------- -------- 55,027 54,120 Less allowances for depreciation and amortization 30,485 28,616 -------- -------- 24,542 25,504 Equipment in process of construction 3,644 3,048 -------- -------- 28,186 28,552 INTANGIBLE AND OTHER ASSETS Available for sale securities 4,238 3,112 Other investments 8,807 8,932 Excess of cost over net assets acquired, less accumulated amortization (November 23 - $495; May 25 - $169) 9,209 9,538 Other assets 4,161 3,057 -------- -------- TOTAL ASSETS $118,393 $115,989 ======== ========
3 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED BALANCE SHEETS, Continued (Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY Nov 23, 1997 May 25, 1997 ------------ ----------- (Unaudited) CURRENT LIABILITIES Current portion of long-term debt $ 265 $ 259 Accounts payable 5,414 6,441 Salaries, wages and related items 2,886 2,660 Customer advances and deposits 1,029 811 Product warranty reserve 1,001 911 Accrued income taxes 1,662 1,453 Other liabilities and accrued expenses 1,132 917 -------- -------- TOTAL CURRENT LIABILITIES 13,389 13,452 LONG-TERM DEBT, less current portion 29,008 29,105 DEFERRED INCOME TAXES, on unrealized gain on available for sale securities 750 345 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 - 40,000,000 shares Issued and outstanding (including shares in treasury): November 23, 1997 - 12,719,977 shares May 25, 1997 - 12,642,508 shares 1,272 1,264 Additional paid-in capital 75,622 74,378 Retained earnings (deficit) (590) (1,643) Unrealized gain on available for sale securities, net 1,333 613 Foreign currency translation adjustments 17 (16) -------- -------- 77,654 74,596 Less cost of Common Stock in treasury (November 23, 1997 - 252,783 shares; May 25, 1997 - 163,700 shares) (2,408) (1,509) -------- -------- 75,246 73,087 -------- -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $118,393 $115,989 ======== ========
4 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Six Months Ended -------------------------------- ----------------------------- Nov 23, 1997 Nov 24, 1996 Nov 23, 1997 Nov 24, 1996 ------------ ------------ ------------ ------------ Net sales $ 22,215 $ 23,260 $ 43,235 $ 44,630 Other revenue 479 488 965 1,573 -------- -------- -------- -------- Total revenue 22,694 23,748 44,200 46,203 Costs and expenses: Cost of products sold 14,608 16,168 27,743 31,109 Product research and development 1,953 1,633 4,066 3,196 Marketing, general and administrative 4,625 4,269 9,537 7,968 Interest and other expense 542 526 1,045 1,070 Equity in net loss (income) of unconsolidated affiliate (4) (87) 83 (77) -------- -------- -------- -------- 21,724 22,509 42,474 43,266 -------- -------- -------- -------- Income before income taxes 970 1,239 1,726 2,937 Provision for income taxes 378 412 673 1,057 -------- -------- -------- -------- NET INCOME $ 592 $ 827 $ 1,053 $ 1,880 ======== ======== ======== ======== NET INCOME PER SHARE (Primary and Fully diluted) $ 0.05 $ 0.07 $ 0.08 $ 0.15 ======== ======== ======== ========
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)
Six Months Ended --------------------------------------- Nov 23, 1997 Nov 24, 1996 ----------------- ---------------- OPERATING ACTIVITIES Net income $ 1,053 $ 1,880 Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 2,479 1,813 Cost of warrants issued 300 Imputed interest on unsecured notes 117 Equity in net loss (income) of unconsolidated affiliate 83 (77) Gain on sale of assets (91) (306) Change in operating assets and liabilities: Increase in accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (1,528) (748) Increase in inventories and prepaid expenses and other (2,486) (928) Increase (decrease) in accounts payable and accrued expenses 158 (1,953) Other 44 6 -------- -------- NET CASH PROVIDED (USED) BY OPERATING 12 (196) ACTIVITIES INVESTING ACTIVITIES Investment in unconsolidated affiliate (1,219) Purchases of property, plant and equipment (1,631) (2,632) Proceeds from sale of assets 93 725 Increase in other assets (26) -------- -------- NET CASH USED IN INVESTING ACTIVITIES (2,757) (1,933) FINANCING ACTIVITIES Proceeds from sales of Common Stock 504 431 Proceeds from sale of warrants 120 Purchase of Treasury Stock (1,108) (1,831) Principal payments on long-term debt (91) (83) -------- -------- NET CASH USED BY FINANCING ACTIVITIES (575) (1,483) -------- -------- DECREASE IN CASH AND SHORT-TERM INVESTMENTS (3,320) (3,612) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 12,667 18,696 -------- -------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 9,347 $ 15,084 ======== ========
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 November 23, 1997 and the results of operations and cash flows for the six-month periods ended November 23, 1997 and November 24, 1996. The results for the three months and six months ended November 23, 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:
Three Months Ended Six Months Ended ------------------ ---------------- Nov 23, 1997 Nov 24, 1996 Nov 23, 1997 Nov 24, 1996 ------------ ------------ ------------ ------------ Primary Weighted average shares outstanding 12,503,573 11,929,648 12,498,447 11,967,938 Common stock equivalents 308,175 549,292 333,158 609,953 ---------- ---------- ---------- ---------- Total 12,811,748 12,478,940 12,831,605 12,577,891 ========== ========== ========== ========== Fully Diluted Weighted average shares outstanding 12,503,573 11,929,648 12,498,447 11,967,938 Common stock equivalents 308,175 549,292 333,158 609,953 ---------- ---------- ---------- ---------- Total 12,811,748 12,478,940 12,831,605 12,577,891 ========== ========== ========== ==========
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 - On November 24, 1997, the Company completed its acquisition of Polycold Systems International, Inc. of San Rafael, CA, a manufacturer of low-temperature refrigeration systems including water vapor cryopumps, cryocoolers, cold trap chillers and gas chillers. The agreement provides for a negotiated price of approximately $16,500,000, consisting of a promissory note of $6,820,000 and the balance in the Company's Preferred and Common Stock. This transaction will be accounted for as a purchase in the third quarter of 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 The Company achieved higher gross margin rates in the first half and second quarter of fiscal 1998 compared to the periods in fiscal 1997, even though total sales were slightly lower. Other revenue was higher in the first half of fiscal 1997 due to 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. Continued extension of product cost reduction programs and an improved sales mix together with the results of Medical Advances, Inc. ("MAI"), which was acquired in March 1997, enabled the Company to achieve improved gross margin rates despite continuing selling price decreases. During the first half and second quarter of fiscal 1998, sales of Magnetic Products were higher than in the same periods of fiscal 1997 principally due to a higher volume of magnet sales and sales by MAI, the total of which was somewhat offset by reduced demand for superconducting materials for MRI. Sales of Refrigeration Products were lower in the first half and second quarter of fiscal 1998 compared to the corresponding fiscal 1997 periods due to a somewhat lower demand for cryogenic products and substantially lower sales of refrigerants due to a relatively cool summer. As a percentage of net sales, gross margins were higher in the fiscal 1998 periods when compared to the previous year for Magnetic Products due to a better sales mix and effective cost reduction programs while gross margin rates for Refrigeration Products were about the same as fiscal 1997. Internal research and development expenses were 27.2% higher in the current half (which included MAI) compared to the first half of fiscal 1997, and externally-funded programs declined by approximately 20%. Marketing, general and administrative expenses increased approximately 20% in the first half of fiscal 1998 compared to the same period in fiscal 1997 principally due to the inclusion of MAI, an increased effort to develop and market FRIGC refrigerants, and higher marketing costs for APD Cryogenics. During the second quarter, the Company signed a Letter of Intent to acquire Polycold Systems International, Inc. ("Polycold") of San Rafael, CA, a manufacturer of low-temperature refrigeration systems including water vapor cryopumps, cryocoolers, cold trap chillers and gas chillers. The acquisition of Polycold was completed in the third quarter of fiscal 1998 for an aggregate consideration of approximately $16,500,000 consisting of a 90-day promissory note for $6,820,000, 276,050 shares of the Company's Common Stock and 9 approximately 70,000 shares of Series A Preferred Stock, which is redeemable in cash or Common Stock at the option of the Company. During the first half of fiscal 1998 the Company used net cash of $3,320,000, of which $2,757,000 was used in investing activities, $1,631,000 for machinery and equipment and an additional investment of $1,219,000 in Surrey Medical Imaging Systems Limited and $575,000 in financing activities, principally for repurchases of the Company's Common Stock under the previously-announced stock buy-back program which is continuing. The Company's capital resource commitments as of December 28, 1997 consist principally of capital equipment commitments of approximately $1,100,000 and a short-term promissory note of approximately $6,820,000 due in February, 1998. The Company has an unsecured line of credit of $25,000,000 which expires in November, 2000, none of which was in use on December 28, 1997. 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 or other business opportunities may require the Company to seek additional financing in future years. 10 INTERMAGNETICS GENERAL CORPORATION PART II: OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders (a) The November 1997 Annual Meeting of Shareholders of the Company was held on November 11, 1997. (c)(i) At the Annual Meeting, the Shareholders of the Company approved an amendment to the Company's Certificate of Incorporation to increase the number of shares of Common Stock authorized to be issued by the Company from 20 million to 40 million. The vote was 10,272,680 FOR; 944,435 AGAINST; 88,555 ABSTAIN; and -0- BROKER NON-VOTES. (c)(ii) At the Annual Meeting, the Shareholders of the Company elected to the Board of Directors all five nominees for director with the following vote: BROKER DIRECTOR FOR AGAINST ABSTAIN NON-VOTES Joseph C. Abeles 10,797,693 456,528 -- -- James S. Hyde. 11,089,616 421,850 -- -- Thomas L. Kempner 10,828,767 425,454 -- -- Stuart A. Shikiar 10,830,171 424,050 Sheldon Weinig 10,830,986 423,235 -- -- Item 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K On October 24, 1997 the Company filed a Form 8-K/A to provide additional financial information regarding the acquisition of Medical Advances, Inc. 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: January 6, 1998 By: /s/Carl H. Rosner ----------------- Carl H. Rosner, Chairman Chairman and Chief Executive Officer Dated: January 6, 1998 By: /s/Michael C. Zeigler --------------------- Michael C. Zeigler Senior Vice President, Finance 12 EX-27 2 ART.5 FDS FOR FY 1998 10-Q 2ND QUARTER
5 1,000 6-MOS May-31-1998 Nov-23-1997 9,347 0 17,476 287 28,553 63,792 58,671 30,485 118,393 13,389 29,008 0 0 1,272 73,974 118,393 43,235 44,200 27,743 27,743 13,686 0 1,045 1,726 673 1,053 0 0 0 1,053 .08 .08
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