EX-99 3 ex99-1.txt EXHIBIT 99.1 FOR IMMEDIATE RELEASE Contact: Michael Burke NASDAQ: IMGC Exec. VP & CFO Contact: Cathy Yudzevich IR Specialist (518) 782-1122 INTERMAGNETICS REPORTS THIRD-QUARTER EPS BEFORE ACQUISITION-RELATED CHARGES UP 20% o Operating Income Before Charges Up 25%, Reaches Quarterly Record $7.9 Million o Four Weeks Of Invivo Revenues Help Boost Q3 Sales 14% To $43.1 Million o FY 2004 Year-End Performance Reaffirmed o Invivo Integration Proceeding As Planned, Company Sees Strong Growth In FY05 LATHAM, NY, March 18, 2004--Intermagnetics General Corporation (NASDAQ: IMGC), demonstrating early benefits from its acquisition of medical device manufacturer Invivo Corporation and continued improvements in cost controls and overall efficiencies, today reported net income before acquisition-related charges increased 20 percent to $5.1 million or $0.30 per diluted share, from $4.2 million or $0.25 per diluted share a year earlier. Including charges related to the Invivo acquisition, net income was $4.3 million, or $0.25 per diluted share. Net revenues for the quarter ended February 22, 2004, increased 14 percent to $43.1 million from $37.8 million. Invivo--with four weeks of contributions to results during the quarter--accounted for $4.7 million in revenue. For the first nine months of fiscal 2004 and 2003, before nonrecurring items in both years, net income was $9.8 million, or $0.58 cents per diluted share, in 2004 compared with $11.6 million, or $0.68 per diluted share, in 2003. Inclusive of acquisition-related charges in 2004 and a loss on sale of securities in 2003, nine-month net income was $9 million, or $0.53 per diluted share, compared with $10.5 million, or $0.62 per diluted share. Net sales decreased to $105.3 million from $109.7 million due to a strategic realignment of supply-chain responsibilities that included a planned decrease in MRI magnet shipments in the first quarter of the current fiscal year. This resulted from a long-term extension and enhancement of Intermagnetics' exclusive supply agreement with its largest customer, Philips Medical Systems. Combined consolidated sales for the second and third quarters increased 11 percent to $83 million in FY04, from $74.5 million in FY03. The third-quarter performance also produced another quarterly record for operating income, excluding acquisition related charges, of $7.9 million, up 25 percent from $6.3 million a year earlier. Including charges, reported operating income was $6.7 million. -More- "Beyond the record financial results of the recently completed quarter, our performance demonstrates our ability to diversify Intermagnetics' revenue base by more effectively balancing our traditional focus on serving the needs of major original equipment manufacturers, or OEM's, with product lines and distribution capabilities that deal directly with end-users," said Glenn H. Epstein, chairman and chief executive officer. "We believe this course of action will provide enhanced growth opportunities for Intermagnetics." Solid Sector Performance "All of our businesses reported solid performance during the third quarter," Epstein said. "Our newly constituted Medical Technology sector, formerly MRI, improved to $36 million in revenue, from $32.1 million the prior year. Invivo, now part of that sector, contributed $4.7 million in revenue with only about four weeks of results in the quarter and remains on track to meet forecast revenue in our fourth quarter. Radio frequency coil revenues increased nicely, but actual magnet revenues, as we had projected in January, were down slightly because of product mix, although unit shipments continued to increase. "Year-over-year sales for our Instrumentation sector increased to $5.6 million from $5.2 million with even more substantial improvements to profitability," Epstein said. "Instrumentation's sales were down sequentially following a particularly strong second- quarter performance but, also as forecast previously, order trends have been strong in the past few months and we expect a return to 20 percent-plus annualized revenue growth rates during the fourth quarter and beyond." Energy Technology Revenue Triples Epstein also noted the Energy Technology sector continued its steady increase in revenues as it benefits from significant progress on existing contracts from government and other third-party sources. Energy Technology revenue for the quarter about tripled to $1.5 million from $511,000 a year earlier. Year-to-date sector revenue has more than tripled to $4.5 million from $1.3 million. Intermagnetics' investment in Energy Technology through the SuperPower subsidiary increased modestly for the third quarter to $1.7 million, from $1.5 million, but has decreased year-to-date to $4.1 million, from $5.1 million, as strategic partners and other funding sources take on a more proportionate share of project costs. The company previously reported it expects to increase its fourth-quarter investment in SuperPower due to delays in funding of new government contracts, but the full-year amount is expected to be comparable with overall investment levels during fiscal 2003. Technical Advancements At SuperPower "Our advancement toward a commercially viable manufacturing process for second-generation superconductors has been remarkable, with SuperPower recently announcing world-record results in consistent performance over long lengths of wire," Epstein said. "We remain confident that SuperPower will have developed production-level process capabilities during 2005. -More- "That, in turn, will set the stage for development of several associated devices--including cables, fault current controllers and transformers--designed to substantially enhance the capacity, reliability and quality of transmission and distribution of electrical power," Epstein said. "We intend to be a leader in developing and marketing those devices, as well as develop others that could be advantageous in national defense and other applications." Strong Showing On Performance Targets Epstein also noted Intermagnetics had a very strong quarter in terms of meeting performance targets, with gross margin of 43 percent against a target of 42 percent, operating income, exclusive of acquisition-related charges, at 18 percent of sales, versus a target of 15 percent and return on equity, at a record of 14 percent, compared with a recently upgraded target of 15 percent. "Our success in controlling costs as well as continually improving efficiencies once again enabled us to report gains in operating results that exceeded the rate of revenue growth," Epstein said. "Although some of our performance metrics were especially strong this quarter, we believe that our current targets remain appropriate objectives for the company." Continued Strength In Balance Sheet "While our historically strong cash position has been utilized to finance our acquisition of Invivo, we remain focused on balance sheet fundamentals," Epstein said. He added that cash flow from operations totaled $11 million during the quarter. The company also retired $10 million of the $67 million borrowed for the acquisition under its revolving credit facility. "A key characteristic of Intermagnetics has been the underpinning of strong earnings before interest, taxes, depreciation and amortization (EBITDA)--and we continue to forecast levels in the range of $40 to $45 million for fiscal 2005," Epstein said. "This provides flexibility for continued investments in growing our core businesses as well as accelerated repayment of debt." Company On Track With Growth Outlook "Overall we remain on plan and as projected as fiscal 2004 draws to a close," Epstein said. "The integration of Invivo is progressing well, and we look forward to a full year of contributions in fiscal 2005. To date, the new business has met our expectations. On a consolidated basis, we remain comfortable with our earlier projection of revenue for FY04, ending in May, in the range of $160 million with operating EPS in the range of $0.90 to $0.92, excluding acquisition-related charges totaling $0.07 to $0.10. "Fiscal 2005 results should be very strong, with a more than 50 percent increase in net sales to about $250 million and a more than 50 percent increase in operating earnings per share to $1.35 to $1.45, excluding a non-cash charge of about $0.15 expected in connection with our previously disclosed performance-based restricted stock plan, " Epstein said. "We foresee continued strength in all business areas." -More- The company will discuss its third-quarter results, as well as other developments, during a conference call today beginning at 11 a.m. EST. The call will be broadcast live and archived over the Internet through the company's web site intermagnetics.com under the Investor Relations section. The domestic dial-in number for the live call is (877) 407-8037. The international dial-in number is (201) 689-8037. No conference code is required for the live call. The company will also make available a digital replay beginning today at 2 p.m. EST through midnight March 23, 2004, by dialing (201) 612-7415 - account number 2926 and requesting conference 96904. Intermagnetics (www.intermagnetics.com) draws on the financial strength, operational excellence and technical leadership in its expanding business of Medical Technology that encompasses Magnetic Resonance Imaging Systems and Components and Patient Monitoring. Intermagnetics is also a key supplier to the markets within Instrumentation and has become a prominent participant in superconducting applications for Energy Technology. The company has a more than 30-year history as a successful developer, manufacturer and marketer of superconducting materials, high-field magnets, medical systems and components and other specialized high value-added devices. Safe Harbor Statement: The statements contained in this press release that are not historical fact are "forward-looking statements" which involve various important assumptions, risks, uncertainties and other factors. These include, without limitation, the assumptions, risks, and uncertainties set forth here as well as in the company's Annual Report on Form 10-K including but not limited to: (1) the company's ability to meet the performance, quality and price requirements of our customers and maintain gross margin levels through continued production cost reductions and manufacturing efficiencies; (2) the ability of the company's largest customer to maintain and grow its share of the market for MRI systems; (3) continued improvement in order trends from the Instrumentation sector; (4) the company's ability to successfully integrate Invivo Corporation; and (5) the company's ability to invest sufficient resources in and obtain third-party funding for its HTS development efforts and avoid the potential adverse impact of competitive emerging patents. Except for the company's continuing obligation to disclose material information under federal securities law, the company is not obligated to update its forward-looking statements even though situations may change in the future. The company qualifies all of its forward-looking statements by these cautionary statements. - Tables Follow -
INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended Nine Months Ended ------------------------------ ------------------------------ February 22, February 23, February 22, February 23, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Net sales $ 43,133 $ 37,837 $ 105,296 $ 109,681 Cost of products sold 24,691 23,206 62,791 67,307 ---------- ---------- ---------- ---------- Gross margin 18,442 14,631 42,505 42,374 Product research and development 3,148 2,860 8,815 9,558 Selling, general and administrative 7,633 4,837 18,002 13,840 Stock based compensation 201 168 442 470 Amortization of intangible assets 786 460 1,707 1,380 ---------- ---------- ---------- ---------- 11,768 8,325 28,966 25,248 ---------- ---------- ---------- ---------- Operating income 6,674 6,306 13,539 17,126 Interest and other income 176 299 695 974 Interest and other expense (295) (144) (524) (385) Loss on Available-for-sale securities (2,108) Gain on litigation settlement 537 ---------- ---------- ---------- ---------- Income before income taxes 6,555 6,461 13,710 16,144 Provision for income taxes 2,274 2,242 4,757 5,602 ---------- ---------- ---------- ---------- NET INCOME $ 4,281 $ 4,219 $ 8,953 $ 10,542 ========== ========== ========== ========== Earnings per Common Share: Basic $ 0.26 $ 0.26 $ 0.54 $ 0.64 ========== ========== ========== ========== Diluted $ 0.25 $ 0.25 $ 0.53 $ 0.62 ========== ========== ========== ========== Shares: Basic 16,746,949 16,480,959 16,647,798 16,538,320 ========== ========== ========== ========== Diluted 17,084,646 17,013,983 16,951,831 17,047,590 ========== ========== ========== ==========
INTERMAGNETICS GENERAL CORPORATION RECONCILING STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Amounts) (Unaudited) Operations without Acquisition Related Charges Three Months Ended Nine Months Ended ------------------------------ ----------------------------- February 22, February 23, February 22, February 23, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Net sales $ 43,133 $ 37,837 $ 105,296 $ 109,681 Cost of products sold 24,691 23,206 62,791 67,307 ---------- ---------- ---------- ----------- Gross margin 18,442 14,631 42,505 42,374 Product research and development 3,148 2,860 8,815 9,558 Selling, general and administrative 6,386 4,837 16,755 13,840 Stock based compensation 201 168 442 470 Amortization of intangible assets 786 460 1,707 1,380 ---------- ---------- ---------- ----------- 10,521 8,325 27,719 25,248 ---------- ---------- ---------- ----------- Operating income 7,921 6,306 14,786 17,126 Interest and other income 176 299 695 974 Interest and other expense (295) (144) (524) (385) ---------- ---------- ---------- ----------- Income before income taxes 7,802 6,461 14,957 17,715 Provision for income taxes 2,707 2,242 5,190 6,147 ---------- ---------- ---------- ----------- PRO-FORMA NET INCOME $ 5,095 $ 4,219 $ 9,767 $ 11,568 ========== ========== ========== =========== EPS Without acquisition related charges Basic $ 0.30 $ 0.26 $ 0.59 $ 0.70 ========== ========== ========== =========== Diluted $ 0.30 $ 0.25 $ 0.58 $ 0.68 ========== ========== ========== =========== Shares: Basic 16,746,949 16,480,959 16,647,798 16,538,320 =========== Diluted 17,084,646 17,013,983 16,951,831 17,047,590 ========== ========== ========== =========== Reconciliation of Financial Statements to GAAP Equivalent Three Months Ended Nine Months Ended ------------------------------ ----------------------------- February 22, February 23, February 22, February 23, 2004 2003 2004 2003 ----------- ----------- ----------- ----------- Pro-forma net income $ 5,095 $ 4,219 $ 9,767 $ 11,568 Acquisition Related Charges (1,247) (1,247) Loss on available-for-sale securities (2,108) Gain on litigation settlement 537 Provision for taxes relating to pro-forma adjustments 433 433 545 ---------- ---------- ---------- ----------- As Reported Net Income $ 4,281 $ 4,219 $ 8,953 $ 10,542 ========== ========== ========== ===========
INTERMAGNETICS GENERAL CORPORATION Condensed Consolidated Balance Sheets (Dollars in Thousands) February 22, May 25, 2004 2003 -------- -------- ASSETS CURRENT ASSETS Cash and short-term investments $ 9,470 $ 88,514 Trade accounts receivable 38,547 23,864 Costs and estimated earnings in excess of billings on uncompleted contracts 1,224 188 Inventories 27,581 14,210 Note receivable 64 3,959 Prepaid expenses and other 6,754 3,375 -------- -------- TOTAL CURRENT ASSETS 83,640 134,110 PROPERTY, PLANT AND EQUIPMENT, net 35,393 28,386 INVESTMENTS AND INTANGIBLE AND OTHER ASSETS 154,245 22,559 -------- -------- $273,278 $185,055 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $ 4,165 $ 284 Accounts payable 8,880 9,276 Salaries, wages and related items 11,632 7,698 Customer advances and deposits 785 544 Product warranty reserve 2,936 1,466 Accrued income taxes 2,206 821 Other liabilities and accrued expenses 15,860 4,156 -------- -------- TOTAL CURRENT LIABILITIES 46,464 24,245 LONG-TERM DEBT, less current portion 58,682 4,384 DEFERRED INCOME TAXES 2,167 1,453 DEFERRED LIABILITY 491 469 SHAREHOLDERS' EQUITY 165,474 154,504 -------- -------- $273,278 $185,055 ======== ========
INTERMAGNETICS GENERAL CORPORATION SUMMARY OF PERFORMANCE AGAINST GOALS Three Months Ended ---------------------------------------- February 22, 2004 February 23, 2003 Goal ----------------- ----------------- ---- Gross Margin 43% 39% 42% Operating Income: Percent of Sales (2) 18% 17% 15% Percent of Net Operating Assets (1) (2) 50% 48% 50% Return on Equity (1) (2) 14% 11% 15% Working Capital Efficiency (Working capital, less cash divided by net sales) (1) (2) 17% 16% 15% (1) Based on annualized data (2) Based on normalized data SEGMENT DATA Three Months Ended -------------------------------------------------------------------------- February 22, 2004 -------------------------------------------------------------------------- (Dollars in Thousands) Medical Energy Technology Instrumentation Technology Total ---------- --------------- ---------- ----- Net sales to external customers: Magnet systems & components $31,326 $31,326 Medical devices 4,715 4,715 Refrigeration equipment $5,573 5,573 Other $1,519 1,519 -------- ------ ------ -------- Total 36,041 5,573 1,519 43,133 Segment operating profit (loss) 8,865 760 (1,704) 7,921 Acquisition related Charges (1,247) (1,247) Total assets $254,379 $9,575 $9,324 $273,278 February 23, 2003 -------------------------------------------------------------------------- Medical Energy Technology Instrumentation Technology Total ---------- --------------- ---------- ----- Net sales to external customers: Magnet systems & components $32,113 $32,113 Medical devices - Refrigeration equipment $5,213 5,213 Other $511 511 -------- ------ ------ -------- Total 32,113 5,213 511 37,837 Segment operating profit (loss) 7,715 113 (1,522) 6,306 Total assets $159,866 $10,281 $8,058 $178,205 Nine Months Ended -------------------------------------------------------------------------- February 22, 2004 -------------------------------------------------------------------------- (Dollars in Thousands) Medical Energy Technology Instrumentation Technology Total ---------- --------------- ---------- ----- Net sales to external customers: Magnet systems & components $78,088 $78,088 Medical devices 4,715 4,715 Refrigeration equipment $17,965 17,965 Other $4,528 4,528 -------- ------ ------ -------- Total 82,803 17,965 4,528 105,296 Segment operating profit (loss) 16,589 2,316 (4,141) 14,764 Acquisition related Charges (1,247) (1,247) Total assets $254,379 $9,575 $9,324 $273,278 February 23, 2003 -------------------------------------------------------------------------- Medical Energy Technology Instrumentation Technology Total ---------- --------------- ---------- ----- Net sales to external customers: Magnet systems & components $93,634 $93,634 Medical devices - Refrigeration equipment $14,769 14,769 Other $1,278 1,278 -------- ------ ------ -------- Total 93,634 14,769 1,278 109,681 Segment operating profit (loss) 22,259 11 (5,171) 17,099 Total assets $159,866 $10,281 $8,058 $178,205
Three Months Ended --------------------------------------- February 22, 2004 February 23, 2003 ----------------- ----------------- Reconciliation of income before income taxes: Total profit from reportable segments $ 6,674 $ 6,306 Intercompany profit in ending inventory -------- -------- Net operating profit 6,674 6,306 Interest and other income 176 299 Interest and other expense (295) (144) Loss on Available-for-sale securities Gain on litigation settlement -------- -------- Income before income taxes $ 6,555 $ 6,461 ======== ======== Nine Months Ended --------------------------------------- February 22, 2004 February 23, 2003 ----------------- ----------------- Reconciliation of income before income taxes: Total profit from reportable segments $ 13,517 $ 17,099 Intercompany profit in ending inventory 22 27 -------- -------- Net operating profit 13,539 17,126 Interest and other income 695 974 Interest and other expense (524) (385) Loss on Available-for-sale securities (2,108) Gain on litigation settlement 537 -------- -------- Income before income taxes $ 13,710 $ 16,144 ======== ========