EX-99.1 3 intricon083075_ex99-1.htm PRESS RELEASE DATED JULY 24, 2008 INTRICON CORPORATION PRESS RELEASE DATED JULY 24, 2008

Exhibit 99.1

FOR IMMEDIATE RELEASE

 

INTRICON REPORTS 2008 SECOND-QUARTER RESULTS

Professional Audio and Medical Businesses Drive Year-Over-Year Sales Growth

 

ST. PAUL, Minn. — July 24, 2008 — IntriCon Corporation (NASDAQ: IIN), a designer, developer, manufacturer and distributor of body-worn medical and electronics devices, today announced financial results for its 2008 second quarter ended June 30, 2008.

For the second quarter, the company reported net sales of $17.5 million, a 3 percent increase from net sales of $16.9 million for the 2007 second quarter. IntriCon’s 2008 second-quarter net income was $410,000, or $0.07 per diluted share, compared with net income of $527,000, or $0.10 per diluted share, for the year-ago period. For the quarter, net income from the company’s core business (hearing health, professional audio and medical) was $447,000, or $0.08 per share, partially offset by a non-core business net loss of $37,000, or $0.01 per share. For the 2007 second quarter, net income from IntriCon’s core business was $425,000, or $0.08 per share; non-core business net income was $102,000, or $0.02 per share.

“Second-quarter sales were driven by strong performance in medical, and in particular, professional audio,” said Mark S. Gorder, president and chief executive officer of IntriCon. “Net income for the quarter declined due in large part to a 33 percent increase in new research and development expense. New medical projects contributed to the rise. One of IntriCon’s strategic goals for 2008 is a continued emphasis on investing in R&D—not only to develop new products and technology, but to further enhance our current product portfolio.

“By leveraging our proprietary technology, we’re designing smaller, more advanced body-worn devices. We believe that our commitment to enhancing the mobility and effectiveness of these devices, combined with IntriCon’s strategic expansion initiatives, will fuel long-term growth.”

For the six-month period, IntriCon reported net sales of $34.1 million and net income of $560,000, or $0.10 per diluted share. This compares to 2007 net sales of $31.5 million and net income of $554,000, or $0.10 per diluted share for the six months ended June 30, 2007. For the six-month period, net income from the company’s core business was $654,000, or $0.12 per share, partially offset by a net loss in its non-core business of $94,000, or $0.02 per share. For the six months ended June 30, 2007, core business net income was $506,000, or $0.09 per share; non-core business net income was $48,000, or $0.01 per share.

 

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IntriCon Corporation 2008 Second-Quarter Results

July 24, 2008

Page 2

 

 

Business Update

For the second quarter, net sales for IntriCon’s core businesses increased 8 percent over the prior year. Net sales for the company’s non-core electronics business decreased 21 percent from the year-earlier period. Company wide, year-to-date gross margins rose slightly to 23.7 percent from 23.5 percent a year ago.

Said Gorder, “Recently, IntriCon has achieved a number of key milestones that we believe bode well for our performance going forward. On the hearing health front, we introduced EthosTM, our new high-performance adaptive digital signal processing (DSP) hearing aid amplifier. Ethos’ advanced capabilities are ideally suited for the hearing health market. We believe the introduction of Ethos, equipped with advanced technologies that will greatly improve hearing performance for customers, solidifies our position as a leader of high-performance adaptive DSP hearing aid amplifiers.”

In professional audio, IntriCon continues to work to enhance the mobility and effectiveness of body-worn devices. IntriCon recently demonstrated the effectiveness of its nanoLinkTM wireless application to key customers.

Double-digit second-quarter sales gains in medical were driven by continuing projects with large OEM customers. IntriCon’s development efforts in the medical arena continue to focus on bio-telemetry, through its strategic partnership with Advanced Medical Electronics.

Said Gorder, “During the quarter, we were recognized for our strong performance over the past year. In June, IntriCon was named to FORTUNE Small Business magazine’s 2008 list of the 100 fastest-growing small companies in America—ranking number 22. We also were added to the Russell Microcap® Index—which is widely used by investment managers and institutional investors for index funds and a benchmark for both passive and active investment strategies. We believe that both honors acknowledge our accomplishments as a company and enhance our visibility among both current and prospective investors.”

According to Gorder, the company continues to make progress with its 2008 strategic priorities of leveraging its proprietary technology to:

 

gain additional traction and market share in hearing health;

 

further advance its professional audio product offering; and

 

develop new bio-telemetry medical applications.

“Across our core markets, the shift to smaller body-worn devices is clear. IntriCon has the capabilities to design, manufacture and bring these devices to market. Given today’s unpredictable economic conditions, we might experience quarter-to-quarter fluctuations. However, we believe that our long-term growth prospects are encouraging—and we remain committed to continuing to deliver sales growth and improving gross margins,” concluded Gorder.

 

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IntriCon Corporation 2008 Second-Quarter Results

July 24, 2008

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 three key markets: medical, hearing health, and professional audio and communications. IntriCon has facilities in the United States, Asia and Europe. The company’s common stock trades under the symbol “IIN” on the NASDAQ Stock Market. 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 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 and the Company’s planned investments in research and development. These forward-looking statements may be 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, the cost and availability of electronic components and commodities 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, the costs and risks associated with research and development investments 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, 2007. 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 2008 Second-Quarter Results

July 24, 2008

Page 4

 

 

IntriCon Corporation

Consolidated Condensed Statements of Operations

(Unaudited)

 

 

 

Three Months Ended

 

 

 

 

 

 

 

June 30,
2008

 

June 30,
2007

 

Sales, net

 

$

17,525,127

 

$

16,937,697

 

 

 

 

 

 

 

 

 

Costs of sales

 

 

13,270,711

 

 

12,731,182

 

 

 

 

 

 

 

 

 

Gross profit

 

 

4,254,416

 

 

4,206,515

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling expense

 

 

985,035

 

 

962,872

 

General and administrative expense (a)

 

 

1,734,956

 

 

1,613,217

 

Research and development expense

 

 

867,459

 

 

650,777

 

Total operating expenses

 

 

3,587,450

 

 

3,226,866

 

 

 

 

 

 

 

 

 

Operating income

 

 

666,966

 

 

979,649

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(186,081

)

 

(333,129

)

Interest income

 

 

1,287

 

 

12,047

 

Equity in earnings of partnerships

 

 

(590

)

 

(60,000

)

Other (expense) income, net

 

 

(42,839

)

 

35,788

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

438,743

 

 

634,355

 

Income tax expense

 

 

28,785

 

 

107,511

 

 

 

 

 

 

 

 

 

Net income

 

$

409,958

 

$

526,844

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

.08

 

$

.10

 

Diluted

 

$

.07

 

$

.10

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

5,309,904

 

 

5,200,137

 

Diluted

 

 

5,574,222

 

 

5,455,743

 

 

(a)

General and administrative expense includes $139,770 and $68,626 of non-cash stock option expense related to FAS 123(R) for the three-month period ended June 30, 2008 and 2007, respectively.

 

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IntriCon Corporation 2008 Second-Quarter Results

July 24, 2008

Page 5

 

 

IntriCon Corporation

Consolidated Condensed Statements of Operations

(Unaudited)

 

 

 

Six Months Ended

 

 

 

 

 

 

 

June 30,
2008

 

June 30,
2007

 

Sales, net

 

$

34,116,507

 

$

31,516,964

 

 

 

 

 

 

 

 

 

Costs of sales

 

 

26,017,400

 

 

24,099,192

 

 

 

 

 

 

 

 

 

Gross profit

 

 

8,099,107

 

 

7,417,772

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Selling expense

 

 

1,981,261

 

 

1,805,638

 

General and administrative expense (a)

 

 

3,387,335

 

 

3,033,481

 

Research and development expense

 

 

1,655,232

 

 

1,383,458

 

Total operating expenses

 

 

7,023,828

 

 

6,222,577

 

 

 

 

 

 

 

 

 

Operating income

 

 

1,075,279

 

 

1,195,195

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(381,706

)

 

(486,406

)

Interest income

 

 

8,547

 

 

50,783

 

Equity in earnings of partnerships

 

 

21,566

 

 

(80,000

)

Other (expense) income, net

 

 

(48,297

)

 

10,051

 

 

 

 

 

 

 

 

 

Income before income taxes

 

 

675,389

 

 

689,623

 

Income tax expense

 

 

115,615

 

 

135,271

 

 

 

 

 

 

 

 

 

Net income

 

$

559,774

 

$

554,352

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

.11

 

$

.11

 

Diluted

 

$

.10

 

$

.10

 

 

 

 

 

 

 

 

 

Average shares outstanding:

 

 

 

 

 

 

 

Basic

 

 

5,315,382

 

 

5,198,542

 

Diluted

 

 

5,592,558

 

 

5,410,192

 

 

(a)

General and administrative expense includes $268,121 and $141,699 of non-cash stock option expense related to FAS 123(R) for the six-month period ended June 30, 2008 and 2007, respectively.

 

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IntriCon Corporation 2008 Second-Quarter Results

July 24, 2008

Page 6

 

 

IntriCon Corporation

Consolidated Condensed Balance Sheets

(Unaudited)

 

Assets

 

 

 

 

 

 

 

 

 

June 30, 2008

 

December 31, 2007

 

 

 

(unaudited)

 

 

 

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

1,576,826

 

$

1,651,145

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

76,838

 

 

72,231

 

 

 

 

 

 

 

 

 

Accounts receivable, less allowance for doubtful accounts of $266,000 at 2008 and $259,000 at 2007

 

 

9,223,730

 

 

8,408,149

 

 

 

 

 

 

 

 

 

Inventories

 

 

9,099,536

 

 

9,835,060

 

 

 

 

 

 

 

 

 

Refundable income taxes

 

 

45,894

 

 

28,297

 

 

 

 

 

 

 

 

 

Note receivable from sale of discontinued operations, less allowance of $225,000 at 2008 and 2007

 

 

 

 

75,000

 

 

 

 

 

 

 

 

 

Other current assets

 

 

962,070

 

 

775,206

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total current assets

 

 

20,984,894

 

 

20,845,088

 

 

 

 

 

 

 

 

 

Property, plant and equipment

 

 

 

 

 

 

 

Machinery and equipment

 

 

37,187,054

 

 

36,959,184

 

 

 

 

 

 

 

 

 

Less: accumulated depreciation

 

 

29,155,612

 

 

28,500,318

 

 

 

 

 

 

 

 

 

Net property, plant and equipment

 

 

8,031,442

 

 

8,458,866

 

 

 

 

 

 

 

 

 

Goodwill

 

 

8,266,438

 

 

8,238,020

 

 

 

 

 

 

 

 

 

Investment in partnerships

 

 

1,611,992

 

 

1,590,426

 

 

 

 

 

 

 

 

 

Other assets, net

 

 

1,529,719

 

 

1,543,127

 

 

 

 

 

 

 

 

 

Total assets

 

$

40,424,485

 

$

40,675,527

 

 

 

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IntriCon Corporation 2008 Second-Quarter Results

July 24, 2008

Page 8

 

 

IntriCon Corporation

Consolidated Condensed Balance Sheets

(Unaudited)

 

Liabilities and Shareholders’ Equity

 

June 30, 2008

 

December 31, 2007

 

 

 

(unaudited)

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Checks written in excess of cash

 

$

706,476

 

$

1,209,642

 

 

 

 

 

 

 

 

 

Current maturities of long-term debt

 

 

1,628,865

 

 

1,476,665

 

 

 

 

 

 

 

 

 

Accounts payable

 

 

3,287,636

 

 

3,965,914

 

 

 

 

 

 

 

 

 

Income taxes payable

 

 

31,076

 

 

74,549

 

 

 

 

 

 

 

 

 

Deferred gain on building sale

 

 

110,084

 

 

110,084

 

 

 

 

 

 

 

 

 

Short term partnership payable

 

 

260,000

 

 

260,000

 

 

 

 

 

 

 

 

 

Other accrued liabilities

 

 

4,189,164

 

 

4,382,755

 

 

 

 

 

 

 

 

 

Total current liabilities

 

 

10,213,301

 

 

11,479,609

 

 

 

 

 

 

 

 

 

Long term debt, less current maturities

 

 

7,058,420

 

 

6,963,410

 

 

 

 

 

 

 

 

 

Other post-retirement benefit obligations

 

 

729,913

 

 

816,532

 

 

 

 

 

 

 

 

 

Long term partnership payable

 

 

1,020,000

 

 

1,020,000

 

 

 

 

 

 

 

 

 

Note payable, net of current portion (Amecon)

 

 

259,360

 

 

259,360

 

 

 

 

 

 

 

 

 

Deferred income taxes

 

 

92,273

 

 

89,273

 

 

 

 

 

 

 

 

 

Accrued pension liability

 

 

643,346

 

 

624,517

 

 

 

 

 

 

 

 

 

Deferred gain on building sale

 

 

770,589

 

 

825,631

 

 

 

 

 

 

 

 

 

Other accrued liabilities

 

 

49,894

 

 

 

 

 

 

 

 

 

 

 

Total non-current liabilities

 

 

10,623,795

 

 

10,598,723

 

 

 

 

 

 

 

 

 

Total liabilities

 

 

20,837,096

 

 

22,078,332

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

 

 

Common shares, $1 par; 10,000,000 shares authorized;
5,830,131 and 5,813,491 shares issued; 5,314,377 and 5,297,737 outstanding

 

 

5,830,131

 

 

5,813,491

 

 

 

 

 

 

 

 

 

Additional paid-in capital

 

 

13,785,113

 

 

13,391,449

 

 

 

 

 

 

 

 

 

Retained earnings

 

 

1,437,507

 

 

877,733

 

 

 

 

 

 

 

 

 

Accumulated other comprehensive loss

 

 

(200,284

)

 

(220,400

)

 

 

 

 

 

 

 

 

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

 

 

(1,265,078

)

 

(1,265,078

)

 

 

 

 

 

 

 

 

Total shareholders’ equity

 

 

19,587,389

 

 

18,597,195

 

 

 

 

 

 

 

 

 

Total liabilities and shareholders’ equity

 

$

40,424,485

 

$

40,675,527

 

 

 

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