-----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, ISwoCyndDnG2xAt+/0WUNSdiKXbHTT3fvxco2575GE1r5VdFPkcQfG3Zgy3cwCEE /zdsrX/JNs1i+p3z4ZMZGw== 0000950116-98-000831.txt : 19980409 0000950116-98-000831.hdr.sgml : 19980409 ACCESSION NUMBER: 0000950116-98-000831 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19980222 FILED AS OF DATE: 19980408 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: 98590045 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 February 22, 1998 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 - 12,533,535 as of March 30, 1998. INTERMAGNETICS GENERAL CORPORATION CONTENTS PART I - FINANCIAL INFORMATION Item 1: Financial Statements: Consolidated Balance Sheets - February 22, 1998 and May 25, 1997................................3 Consolidated Statements of Income - Three Months and Nine Months Ended February 22, 1998 and February 23, 1997.........................................................................5 Consolidated Statements of Cash Flows - Nine Months Ended February 22, 1998 and February 23, 1997........................................................................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 Feb 22, 1998 May 25, 1997 ------------ ------------ (Unaudited) CURRENT ASSETS Cash and short-term investments $ 11,989 $ 12,667 Trade accounts receivable, less allowance (February 22 - $287; May 25 - $302) 18,673 16,899 Costs and estimated earnings in excess of billings on uncompleted contracts 4,691 3,543 Inventories: Finished products 975 811 Work in process 17,192 14,196 Materials and supplies 12,246 11,410 -------- -------- 30,413 26,417 Prepaid expenses and other 4,006 3,272 -------- -------- TOTAL CURRENT ASSETS 69,772 62,798 PROPERTY, PLANT AND EQUIPMENT Land and improvements 1,479 1,479 Buildings and improvements 16,605 16,425 Machinery and equipment 38,241 36,181 Leasehold improvements 648 35 -------- -------- 56,973 54,120 Less allowances for depreciation and amortization 31,392 28,616 -------- -------- 25,581 25,504 Equipment in process of construction 2,521 3,048 -------- -------- 28,102 28,552 INTANGIBLE AND OTHER ASSETS Available for sale securities 4,557 3,112 Other investments 8,604 8,932 Excess of cost over net assets acquired, less accumulated amortization (February 22 - $831; May 25 - $169) 19,298 9,538 Other assets 4,382 3,057 -------- -------- TOTAL ASSETS $134,715 $115,989 ======== ========
3 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED BALANCE SHEETS, Continued (Dollars in Thousands)
LIABILITIES AND SHAREHOLDERS' EQUITY Feb 22, 1998 May 25, 1997 ----------------- ----------------- (Unaudited) CURRENT LIABILITIES Current portion of long-term debt $ 269 $ 259 Note payable 6,821 Accounts payable 5,398 6,441 Salaries, wages and related items 3,225 2,660 Customer advances and deposits 1,195 811 Product warranty reserve 1,143 911 Accrued income taxes 1,285 1,453 Other liabilities and accrued expenses 1,974 917 ---------------- ---------------- TOTAL CURRENT LIABILITIES 21,310 13,452 LONG-TERM DEBT, less current portion 28,882 29,105 DEFERRED INCOME TAXES, on unrealized gain on available for sale securities 864 345 SHAREHOLDERS' EQUITY Preferred Stock, par value $.10 per share: Authorized - 2,000,000 shares Issued and outstanding - 69,992 shares 6,999 Common Stock, par value $.10 per share: Authorized - 40,000,000 shares Issued and outstanding (including shares in treasury): February 22, 1998 - 13,046,761 shares May 25, 1997 - 12,642,508 shares 1,305 1,264 Additional paid-in capital 78,440 74,378 Retained earnings (deficit) 225 (1,643) Unrealized gain on available for sale securities, net 1,537 613 Foreign currency translation adjustments (12) (16) ---------------- ---------------- 88,494 74,596 Less cost of Common Stock in treasury (February 22, 1998 - 553,698 shares; May 25, 1997 - 163,700 shares) (4,835) (1,509) ---------------- ---------------- 83,659 73,087 ---------------- ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $134,715 $115,989 ================ ================
4 INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (Dollars in Thousands, Except Per Share Amounts)
Three Months Ended Nine Months Ended -------------------------------- -------------------------------- Feb 22, 1998 Feb 23, 1997 Feb 22, 1998 Feb 23, 1997 --------------- --------------- --------------- --------------- Net sales $25,235 $17,325 $68,470 $61,955 Other revenue 507 838 1,472 2,411 ------- ------- ------- ------- Total revenue 25,742 18,163 69,942 64,366 Costs and expenses: Cost of products sold 16,511 12,730 44,254 43,839 Product research and development 1,665 1,304 5,731 4,500 Marketing, general and administrative 5,357 3,465 14,894 11,433 Interest and other expense 555 515 1,600 1,585 Equity in net loss of unconsolidated affiliate 317 111 400 34 ------- ------- ------- ------- 24,405 18,125 66,879 61,391 ------- ------- ------- ------- Income before income taxes 1,337 38 3,063 2,975 Provision for income taxes 522 14 1,195 1,071 ------- ------- ------- ------- NET INCOME $ 815 $ 24 $ 1,868 $ 1,904 ======= ======= ======= ======= Earnings per Common Share: Basic $ 0.07 $ 0.00 $ 0.15 $ 0.16 ======= ======= ======= ======= Diluted $ 0.06 $ 0.00 $ 0.14 $ 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)
Nine Months Ended --------------------------------------- Feb 22, 1998 Feb 23, 1997 ----------------- ---------------- OPERATING ACTIVITIES Net income $ 1,868 $ 1,904 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,857 2,645 Cost of warrants issued 450 Imputed interest on unsecured notes 137 Equity in net loss of unconsolidated affiliate 400 34 Gain on sale of assets (91) Change in operating assets and liabilities: (Increase) decrease in accounts receivable and costs and estimated earnings in excess of billings on uncompleted contracts (408) 2395 Increase in inventories and prepaid expenses and other (3,123) (1,533) Decrease in accounts payable and accrued expenses (449) (2,284) Other (62) (29) -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 2,442 3,269 INVESTING ACTIVITIES Cash acquired in acquisition 3,706 Investment in unconsolidated affiliate (1,427) Purchases of property, plant and equipment (2,059) (3,559) Proceeds from sale of assets 93 Increase in other assets (26) -------- -------- NET CASH PROVIDED BY (USED IN) INVESTING 313 (3,585) ACTIVITIES FINANCING ACTIVITIES Proceeds from sales of Common Stock 621 697 Proceeds from sale of warrants 120 Purchase of Treasury Stock (3,962) (2,034) Principal payments on long-term debt (212) (2,371) -------- -------- NET CASH USED BY FINANCING ACTIVITIES (3,433) (3,708) -------- -------- DECREASE IN CASH AND SHORT-TERM INVESTMENTS (678) (4,024) CASH AND SHORT-TERM INVESTMENTS AT BEGINNING OF PERIOD 12,667 18,696 -------- -------- CASH AND SHORT-TERM INVESTMENTS AT END OF PERIOD $ 11,989 $ 14,672 ======== ========
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 February 22, 1998 and the results of operations and cash flows for the nine-month periods ended February 22, 1998 and February 23, 1997. The results for the three months and nine months ended February 22, 1998 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 - During the quarter, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 128 "Earnings Per Share". The SFAS replaces the concept of "primary" and "fully diluted" earnings per share with "basic" and "diluted" earnings per share. The impact of SFAS No. 128 was to increase basic earnings per share (as compared with primary) by $0.01 per share for the nine months ended February 23, 1997 and to decrease diluted earnings per share (as compared with fully diluted) for all periods except the nine months ended February 23, 1997. All other periods were unaffected. "Basic" earnings per common share amounts are based on the weighted average number of common shares outstanding during the periods. "Diluted" earnings per share are based on the weighted average shares outstanding during the period increased by dilutive potential common shares as shown below:
(Dollars in Thousands, Except Share and Per Share Amounts) Three Months Ended Nine Months Ended ----------------------------------------- ------------------------------------------ Feb 22, 1998 Feb 23, 1997 Feb 22, 1998 Feb 23, 1997 -------------------- ------------------- -------------------- -------------------- Income available to common stockholders $ 815 $ 24 $ 1,868 $ 1,904 Weighted average shares 12,503,724 11,940,206 12,500,206 11,958,694 Plus incremental shares from assumed conversions: Convertible preferred stock 666,268 0 222,116 0 Stock options 243,647 444,914 309,954 578,533 ------- ------- ------- ------- Dilutive potential common shares 909,915 444,914 532,070 578,553 ----------- ----------- ----------- ----------- Adjusted weighted average shares 13,413,639 12,385,119 13,032,276 12,537,247 =========== =========== =========== =========== Earnings per Common Share: Basic $ 0.07 $ 0.00 $ 0.15 $ 0.16 =========== =========== =========== =========== Diluted $ 0.06 $ 0.00 $ 0.14 $ 0.15 =========== =========== =========== ===========
7 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 consideration consisted of a promissory note for $6.82 million, approximately 276,050 shares of common stock, and approximately 70,000 shares of Series A Preferred Stock, par value $.10 per share. The Note bears interest at the compound rate of 5.75% per annum, and is payable, subject to certain obligations of the stockholders of Polycold as set forth in greater detail in the Agreement, ninety (90) days after issuance. The total value of the consideration received by the Stockholders of Polycold was approximately $16.5 million. The acquisition has been accounted for using the purchase method of accounting, and the results of operations of Polycold have been included in the consolidated financial statements since November 24, 1997, the date of acquisition. The excess of cost over net assets acquired of approximately $10,200,000 is being amortized on a straight-line basis over 15 years. The following unaudited pro forma information presents a summary of consolidated results of operations of the Company and Polycold as if the acquisition had occurred at the beginning of the fiscal year, with pro forma adjustments to give effect to amortization of the excess of cost over net assets acquired and interest income on short-term investments, together with related income tax effects. (Dollars in Thousands, Except Per Share Amounts) Nine Months Ended -------------------------------- Feb 22, 1998 Feb 23, 1997 --------------- --------------- Net revenue $78,591 $75,277 Net income 2,814 2,022 Earnings per common share 0.16 0.17 Diluted earnings per common share 0.15 0.16 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 results of operations for the nine month and three month periods ended February 22, 1998 include the results of Medical Advances, Inc. ("MAI"), which was acquired in March 1997, and Polycold Systems International, Inc. ("Polycold"), which was acquired in December, 1997, as described below. During the third quarter and nine months of fiscal 1998 net sales were approximately 46% and 11% higher, respectively, than the same periods in fiscal 1997. Other revenue declined approximately 40% in both periods due to lower royalty and interest income. Also in the first quarter of fiscal 1997, the Company sold a low volume, defense-related product line, which resulted in an after-tax gain of $186,000. In both the third quarter and nine month periods gross margins, as a percentage of net sales, increased for Magnetic Products and decreased slightly for Refrigeration Products. During the third quarter and first nine months of fiscal 1998, sales of Magnetic Products were higher than in the same periods of fiscal 1997 due to the inclusion of MAI and increased demand for magnets. Sales of superconducting materials were lower in the nine month period but increased in the third quarter with increased demand from a major customer. Sales of Refrigeration Products were lower in the nine month period due to reduced demand for refrigerants and refrigeration equipment, but increased in the third quarter due to the inclusion of Polycold. Gross margins, as a percentage of net sales, increased for Magnetic Products in both periods, reflecting the ongoing cost reduction efforts in magnets and superconducting materials and the MAI acquisition. Gross margins for Refrigeration Products declined slightly due to an unfavorable sales mix in the fiscal 1998 periods. Internal research and development expenses were 27.4% higher in the nine month period of fiscal 1998 compared to the same period in fiscal 1997, due principally to the inclusion of MAI and Polycold, and externally-funded programs declined by approximately 21%. Marketing, general and administrative expenses increased 30.3% in the first nine months of fiscal 1998 compared to the same period in fiscal 1997, principally due to the addition of MAI and Polycold. The Company's tax rate increased to 39% from 37% in the prior year, largely due to the effects of non-deductible amortization of the excess of the purchase price over the fair market value of net assets acquired in the MAI and Polycold acquisitions. During the third quarter, the Company acquired Polycold Systems International, Inc. of San Rafael, CA, a manufacturer of low-temperature refrigeration systems including water vapor cryopumps, cryocoolers, cold trap 9 chillers and gas chillers, for an aggregate consideration of approximately $16,500,000 consisting of a 90-day promissory note for $6,821,000, 276,050 shares of the Company's Common Stock and approximately 70,000 shares of Series A Preferred Stock, which is redeemable in cash or Common Stock at the option of the Company. The $10,175,000 excess of purchase price over the fair market value of net assets acquired is being amortized over 15 years. The Preferred Stock is redeemable in cash by the Company at any time at $100 per share. Also, the Company may convert some or all of the Preferred Stock into Common Stock at any time after December 11, 1998, but before December 1, 1999. If any of the Preferred Stock is not so converted by the Company, it shall automatically convert into Common Stock as of December 1, 1999. The conversion price per share is $100, subject to adjustment for stock dividends, and the price of the Stock will be calculated using the average closing price of the Common Stock for a defined ten-day trading period just prior to conversion. During the first nine months of fiscal 1998, the Company used net cash of $678,000. The $2,442,000 provided by operating activities and the $3,706,000 cash acquired in the Polycold acquisition, together with available cash, was used for financing activities, principally for repurchases of the Company's Common Stock under the previously-announced stock buy-back program, which is continuing, and other investing activities including $2,059,000 for machinery and equipment and an additional investment of $1,427,000 in Surrey Medical Imaging Systems Limited. The Company's capital resource commitments as of March 29, 1998 consist principally of capital equipment commitments of approximately $1,036,000. The Company has an unsecured line of credit of $25,000,000 which expires in November, 2000, none of which was in use on March 29, 1998. 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 6. Exhibits and Reports on Form 8-K (a) Exhibits None (b) Reports on Form 8-K On December 9, 1997 the Company filed a Form 8-K regarding the acquisition of Polycold Systems International, Inc. which was amended on February 9, 1998 on Form 8-K/A to provide Financial Statements of Business Acquired and Pro Forma Financial Information. 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: April 7, 1998 By: /s/Carl H. Rosner ----------------- Carl H. Rosner Chairman and Chief Executive Officer Dated: April 7, 1998 By: /s/Michael C. Zeigler --------------------- Michael C. Zeigler Senior Vice President, Finance 12 EX-27.1 2 ART.5 FDS FOR FY 1998 10-Q 3RD QUARTER
5 1,000 9-MOS MAY-31-1998 FEB-22-1998 11,989 0 18,960 287 30,413 69,772 59,494 31,392 134,715 21,310 28,882 0 6,999 1,305 75,355 134,715 68,470 69,942 44,254 44,254 21,025 0 1,600 3,063 1,195 1,868 0 0 0 1,868 .15 .14
EX-27.2 3 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS MAY-25-1997 FEB-23-1997 14,672 0 18,631 193 26,060 62,929 55,352 27,805 105,542 9,867 29,152 0 0 1,219 64,931 105,542 61,955 64,366 43,839 43,839 15,967 0 1,585 2,975 1,071 1,904 0 0 0 1,904 .16 .15
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