EX-99.1 2 intricon074325_ex99-1.htm PRESS RELEASE DATED OCTOBER 24, 2007 INTRICON CORPORATION EXHIBIT 99.1 TO FORM 8-K DATED OCTOBER 24, 2007

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

INTRICON 2007 THIRD-QUARTER SALES UP 48 PERCENT OVER PRIOR YEAR

Focus on Body-Worn Devices Helps Drive Gains

 

ST. PAUL, Minn. — Oct. 24, 2007 — IntriCon Corporation (AMEX: IIN), a designer, developer, manufacturer and distributor of body-worn medical and electronics devices, today announced financial results for its 2007 third quarter ended September 30, 2007.

For the third quarter, the company reported quarterly net sales of $18.4 million, a 48 percent increase from net sales of $12.5 million for the 2006 third quarter. IntriCon delivered third-quarter net income of $650,000, or $0.12 per diluted share, up 48 percent from net income of $438,000, or $0.08 per diluted share, for the 2006 third quarter. The 2007 net sales and net income include results from the late-May 2007 acquisition of Tibbetts Industries, Inc.

“Our core businesses of medical, hearing health and professional audio—being driven by the demand for miniature body-worn devices—posted significant year-over-year gains,” said Mark S. Gorder, president and chief executive officer of IntriCon. “Medical was particularly strong, growing 137 percent year over year. In the medical arena, we’re seeing increased demand from OEMs.”

For the nine-month period, IntriCon reported net sales of $50.0 million and net income of $1.2 million, or $0.22 per diluted share. This compares to 2006 nine-month sales of $37.5 million and net income of $719,000, or $0.14 per diluted share, from continuing operations.

Included in the 2007 third-quarter results are net sales of $2.0 million and net income of $89,000, or $0.02 per diluted share, from the acquisition of Tibbetts Industries. The nine-month period includes net sales of $2.9 million and net income of $37,000, or $0.01 per diluted share, from Tibbetts Industries.

 

Business Update

For the third quarter, IntriCon’s core businesses increased 60 percent year over year. The company’s non-core electronics business decreased 3 percent from the third quarter of 2006. IntriCon’s gross margins rose to 28 percent from 23 percent a year earlier. Operating income more than doubled.

 

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IntriCon Corporation 2007 Third-Quarter Results

October 24, 2007

Page 2

 

Said Gorder, “By focusing on our expanding core businesses, we’re delivering significant incremental gains across the board. The Tibbetts acquisition enhances our medical and professional audio capabilities and product portfolio, and gives IntriCon a presence in the security market. Additionally, we recently entered into a strategic alliance with Minneapolis-based Advanced Medical Electronics Corp. (AME) to develop and manufacture new miniature, wireless, ultra low-power bio-telemetry instruments.

“Through the agreement, IntriCon will manufacture AME’s bio-telemetry devices and supply them to third-party distributors. We also gain exclusive access to key AME technology and will be able to use this technology to develop additional bio-telemetry applications. Increasingly, the medical industry is looking for wireless, low-power capabilities in their devices, and we believe that AME’s technology will allow us to develop new devices that better connect patients and care givers, providing critical information and feedback.”

Also in the third quarter, IntriCon’s Singapore facility achieved International Organization for Standardization (ISO) 13485 compliance. ISO 13485 compliance means that the company’s Singapore plant meets the comprehensive management system requirements for the design and manufacture of medical devices.

Said Gorder, “Achieving ISO 13485 compliance is a significant milestone for the company. It gives our key OEM customers a cost-effective way to manufacture their body-worn devices and other medical products. Being competitive in today’s marketplace demands the ability to have manufacturing capabilities in lower-cost geographies. Going forward, we plan to expand into other cost-efficient locations.”

In addition to possible overseas expansion, according to Gorder, IntriCon’s growth strategies may also include further acquisitions that are consistent with the company’s mission. The company continues to work to accelerate new product development, further commit to research and development initiatives, and incorporate proprietary technology in all devices.

Concluded Gorder, “As a company we’re delivering both sequential and year-over-year growth in our core businesses. While seasonality is a normal part of our industry, we believe that our long-term prospects in the miniature body-worn device arena are promising.”

 

 

 

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IntriCon Corporation 2007 Third-Quarter Results

October 24, 2007

Page 3

 

About IntriCon Corporation

Headquartered in Arden Hills, Minn., IntriCon Corporation designs, develops and manufactures miniature and micro-miniature body-worn medical and electronics products. The company is focused on four key markets: medical, hearing health, professional audio and communications, and electronics. IntriCon has facilities in the United States, Asia and Europe. The company’s common stock trades under the symbol “IIN” on the American Stock Exchange. For more information about IntriCon, visit www.intricon.com.

 

Forward-Looking Statements

Statements made in this release and in IntriCon’s other public filings and releases that are not historical facts or that include forward-looking terminology such as “may”, “will”, “believe”, “expect”, “should”, “optimistic” or “continue” or the negative thereof or other variations thereon are “forward-looking statements” within the meaning of the Securities Exchange Act of 1934 as amended. These forward-looking statements include, without limitation, statements concerning the benefits AME’s technology, prospects in the miniature body-worn device arena, future growth and expansion, future financial condition and performance, prospects, and the positioning of IntriCon to compete in chosen markets. These forward-looking statements are affected by known and unknown risks, uncertainties and other factors that are beyond IntriCon’s control, and may cause IntriCon’s actual results, performance or achievements to differ materially from the results, performance and achievements expressed or implied in the forward-looking statements. These risks, uncertainties and factors include, without limitation, risks related to the Tibbetts acquisition, including unanticipated liabilities and expenses, the risk that IntriCon may not be able to achieve its long-term strategy, weakening demand for products of the company due to general economic conditions, possible non-performance of developing technological products, the volume and timing of orders received by the company, changes in the mix of products sold, competitive pricing pressures, availability of electronic components for the company’s products, ability to create and market products in a timely manner, competition by competitors with more resources than the company, foreign currency risks arising from the company’s foreign operations and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2006. The company disclaims any intent or obligation to publicly update or revise any forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.

 

Contacts

At IntriCon:

At Padilla Speer Beardsley:

Scott Longval, CFO

Matt Sullivan/Marian Briggs

651-604-9526

612-455-1700

slongval@intricon.com

msullivan@psbpr.com / mbriggs@psbpr.com

 





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IntriCon Corporation 2007 Third-Quarter Results

October 24, 2007

Page 4

 

IntriCon Corporation

Consolidated Condensed Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

 

 

September 30,
2007

 

September 30,
2006

 

Sales, net

 

$

18,441,894

 

$

12,487,832

 

 

 

 

 

 

 

 

 

Costs of sales

 

 

13,316,223

 

 

9,614,058

 

 

 

 

 

 

 

 

 

Gross profit

 

 

5,125,671

 

 

2,873,774

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling expense

 

 

1,094,340

 

 

848,499

 

General and administrative expense (a)

 

 

2,167,118

 

 

1,177,860

 

Research and development expense

 

 

734,778

 

 

256,678

 

Total operating expenses

 

 

3,996,236

 

 

2,283,037

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,129,435

 

 

590,737

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(278,251

)

 

(91,394

)

Interest income

 

 

13,265

 

 

16,842

 

Equity in earnings of partnerships

 

 

(75,000

)

 

 

Other expense, net

 

 

(53,444

)

 

(10,401

)

 

 

 

 

 

 

 

 

Income before income taxes

 

 

736,005

 

 

505,784

 

Income tax expense

 

 

85,545

 

 

52,856

 

Income from continuing operations

 

 

650,460

 

 

452,928

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income tax expense

 

 

 

 

(14,655

)

 

 

 

 

 

 

 

 

Net income

 

$

650,460

 

$

438,273

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

Continuing operations

 

$

.13

 

$

.09

 

Discontinued operations

 

 

 

 

(.01

)

 

 

$

.13

 

$

.08

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

Continuing operations

 

$

.12

 

$

.08

 

Discontinued operations

 

 

 

 

(.00

)

 

 

$

.12

 

$

.08

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

5,201,966

 

 

5,157,925

 

Diluted

 

 

5,562,345

 

 

5,413,277

 

 

(a)

General and administrative expense includes $66,488 and $56,166 of non-cash stock option expense related to the adoption of FAS 123(R) for 2007 and 2006, respectively.

 

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IntriCon Corporation 2007 Third-Quarter Results

October 24, 2007

Page 5

 

IntriCon Corporation

Consolidated Condensed Statements of Operations

(Unaudited)

 

 

 

Nine Months Ended

 

 

 

September 30,
2007

 

September 30,
2006

 

 

 

 

 

 

 

 

 

Sales, net

 

$

49,958,858

 

$

37,532,457

 

 

 

 

 

 

 

 

 

Costs of sales

 

 

37,415,415

 

 

28,372,969

 

 

 

 

 

 

 

 

 

Gross profit

 

 

12,543,443

 

 

9,159,488

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling expense

 

 

2,899,978

 

 

2,620,031

 

General and administrative expense (a)

 

 

5,200,599

 

 

3,804,666

 

Research and development expense

 

 

2,118,236

 

 

1,437,499

 

Total operating expenses

 

 

10,218,813

 

 

7,862,196

 

 

 

 

 

 

 

 

 

Operating income

 

 

2,324,630

 

 

1,297,292

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(771,656

)

 

(392,570

)

Interest income

 

 

71,048

 

 

56,482

 

Equity in earnings of partnerships

 

 

(155,000

)

 

 

Other expense, net

 

 

(43,394

)

 

(71,345

)

 

 

 

 

 

 

 

 

Income before income taxes

 

 

1,425,628

 

 

889,859

 

Income tax expense

 

 

220,816

 

 

127,874

 

Income from continuing operations

 

 

1,204,812

 

 

761,985

 

 

 

 

 

 

 

 

 

Loss from discontinued operations, net of income tax expense

 

 

 

 

(42,630

)

 

 

 

 

 

 

 

 

Net income

 

$

1,204,812

 

$

719,355

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) per share:

 

 

 

 

 

 

 

Basic

 

 

 

 

 

 

 

Continuing operations

 

$

.23

 

$

.15

 

Discontinued operations

 

 

 

 

(.01

)

 

 

$

.23

 

$

.14

 

 

 

 

 

 

 

 

 

Diluted

 

 

 

 

 

 

 

Continuing operations

 

$

.22

 

$

.14

 

Discontinued operations

 

 

 

 

(.01

)

 

 

$

.22

 

$

.13

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

5,197,071

 

 

5,154,633

 

Diluted

 

 

5,466,128

 

 

5,490,606

 

 

(a)

General and administrative expense includes $208,187 and $149,512 of non-cash stock option expense related to the adoption of FAS 123(R) for 2007 and 2006, respectively.

 

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IntriCon Corporation 2007 Third-Quarter Results

October 24, 2007

Page 6

 

IntriCon Corporation

Consolidated Condensed Balance Sheets

(Unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

September 30,
2007

 

December 31,
2006

 

 

 

(unaudited)

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

1,022,869

 

$

599,459

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

69,336

 

 

60,158

 

 

 

 

 

 

 

 

 

Accounts receivable, less allowance for doubtful accounts of $218,000 at 2007 and $246,000 at 2006

 

 

9,200,046

 

 

8,456,450

 

 

 

 

 

 

 

 

 

Inventories

 

 

10,273,165

 

 

9,030,615

 

 

 

 

 

 

 

 

 

Refundable income taxes

 

 

30,951

 

 

103,587

 

 

 

 

 

 

 

 

 

Note receivable from sale of discontinued operations, less allowance of $225,000 at 2007 and 2006

 

 

234,000

 

 

300,000

 

 

 

 

 

 

 

 

 

Other current assets

 

 

687,750

 

 

235,418

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

21,518,117

 

 

18,785,687

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

 

 

 

Machinery and equipment

 

 

36,376,488

 

 

28,767,904

 

Less: accumulated depreciation

 

 

28,118,423

 

 

21,994,344

 

 

 

 

 

 

 

 

 

Net property, plant and equipment

 

 

8,258,065

 

 

6,773,560

 

 

 

 

 

 

 

 

 

Long-term note receivable from sale of discontinued operations

 

 

 

 

75,000

 

 

 

 

 

 

 

 

 

Goodwill

 

 

8,147,623

 

 

5,927,181

 

 

 

 

 

 

 

 

 

Investment in partnerships

 

 

1,558,925

 

 

1,800,000

 

 

 

 

 

 

 

 

 

Other assets, net

 

 

1,454,638

 

 

920,051

 

 

 

 

 

 

 

 

 

 

 

$

40,937,368

 

$

34,281,479

 

 

 

 

 

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IntriCon Corporation 2007 Third-Quarter Results

October 24, 2007

Page 7

 

IntriCon Corporation

Consolidated Condensed Balance Sheets

(Unaudited)

 

Liabilities and Shareholders’ Equity

 

September 30,
2007

 

December 31,
2006

 

 

 

(unaudited)

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checks written in excess of cash

 

$

1,381,845

 

$

661,756

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

 

1,195,373

 

 

952,730

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

3,704,750

 

 

5,161,450

 

 

 

 

 

 

 

 

 

Income taxes payable

 

 

150,230

 

 

173,810

 

 

 

 

 

 

 

 

 

Deferred gain on building sale

 

 

110,084

 

 

110,084

 

 

 

 

 

 

 

 

 

Short-term partnership payable

 

 

260,000

 

 

260,000

 

 

 

 

 

 

 

 

 

Other accrued liabilities

 

 

4,060,566

 

 

3,021,201

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

10,862,848

 

 

10,341,031

 

 

 

 

 

 

 

 

 

Long-term debt, less current maturities

 

 

8,772,155

 

 

3,830,461

 

 

 

 

 

 

 

 

 

Other post-retirement benefit obligations

 

 

951,175

 

 

1,063,744

 

 

 

 

 

 

 

 

 

Long-term partnership payable

 

 

1,280,000

 

 

1,280,000

 

 

 

 

 

 

 

 

 

Note payable, net of current portion (Amecon)

 

 

515,720

 

 

515,720

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

79,273

 

 

79,273

 

 

 

 

 

 

 

 

 

Accrued pension liability

 

 

584,808

 

 

628,569

 

 

 

 

 

 

 

 

 

Deferred gain on building sale, net of current portion

 

 

853,152

 

 

935,715

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

13,036,283

 

 

8,333,482

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

23,899,131

 

 

18,674,513

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common shares, $1 par; 10,000,000 shares authorized;

 

 

 

 

 

 

 

5,722,975 and 5,706,235 shares issued; 5,207,221 and 5,190,481 outstanding

 

 

5,722,975

 

 

5,706,235

 

Additional paid-in capital

 

 

12,570,899

 

 

12,339,988

 

 

 

 

 

 

 

 

 

Accumulated earnings (deficit)

 

 

215,307

 

 

(989,505

)

 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

(205,866

)

 

(184,674

)

 

 

 

 

 

 

 

 

Less: 515,754 common shares held in treasury, at cost

 

 

(1,265,078

)

 

(1,265,078

)

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

 

17,038,237

 

 

15,606,966

 

 

 

 

 

 

 

 

 

 

 

$

40,937,368

 

$

34,281,479

 

 

 

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