10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

xQUARTERLY REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2015

or

oTRANSITION REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____ to _____

Commission File Number: 1-5005

INTRICON CORPORATION

(Exact name of registrant as specified in its charter)

Pennsylvania	23-1069060
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)
1260 Red Fox Road
Arden Hills, Minnesota	55112
(Address of principal executive offices)	(Zip Code)

	(651) 636-9770
(Registrant’s telephone number, including area code)

N/A

(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.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  x Yes  o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act).

o Yes x No

The number of outstanding shares of the registrant’s common stock, $1.00 par value, on April 30, 2015 was 5,855,023.

INTRICON CORPORATION

I N D E X

			Page Numbers
PART I: FINANCIAL INFORMATION
	Item 1.	Financial Statements
		Consolidated Condensed Balance Sheets as of March 31, 2015 (Unaudited) and December 31, 2014	3
		Consolidated Condensed Statements of Operations (Unaudited) for the Three Months Ended March 31, 2015 and 2014	4
		Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2015 and 2014	5
		Consolidated Condensed Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2015 and 2014	6
		Notes to Consolidated Condensed Financial Statements (Unaudited)	7-16
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16-24
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
	Item 4.	Controls and Procedures	24
PART II: OTHER INFORMATION
	Item 1.	Legal Proceedings	26
	Item 1A.	Risk Factors	26
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
	Item 3.	Defaults Upon Senior Securities	26
	Item 4.	Mine Safety Disclosures	26
	Item 5.	Other Information	26
	Item 6.	Exhibits	27
	Signatures		28
	Exhibit Index		29

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PART I: FINANCIAL INFORMATION

ITEM 1.  Financial Statements

INTRICON CORPORATION

Consolidated Condensed Balance Sheets

(In Thousands, Except Per Share Amounts)

	March 31, 2015			December 31, 2014
	(Unaudited)
Current assets:
Cash	$	693		$	328
Restricted cash		594			640
Accounts receivable, less allowance for doubtful accounts of $113 at March 31, 2015 and $120 at December 31, 2014		7,666			7,673
Inventories		9,948			9,983
Other current assets		745			1,013
Total current assets		19,646			19,637
Machinery and equipment		35,807			35,104
Less:  Accumulated depreciation		31,207			30,859
Net machinery and equipment		4,600			4,245
Goodwill		9,194			9,194
Investment in partnerships		338			387
Other assets, net		443			498
Total assets	$	34,221		$	33,961
Current liabilities:
Checks written in excess of cash	$	—		$	516
Current maturities of long-term debt		1,890			1,886
Accounts payable		5,628			5,438
Accrued salaries, wages and commissions		2,393			2,519
Deferred gain		110			110
Other accrued liabilities		1,293			1,364
Total current liabilities		11,314			11,833
Long-term debt, less current maturities		5,118			4,627
Other postretirement benefit obligations		483			485
Accrued pension liabilities		685			741
Deferred gain		28			55
Other long-term liabilities		102			113
Total liabilities		17,730			17,854
Commitments and contingencies (note 12)
Shareholders’ equity:
Common stock, $1.00 par value per share; 20,000 shares authorized; 5,855 and 5,844  shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		5,855			5,844
Additional paid-in capital		17,138			16,939
Accumulated deficit		(5,990	)		(6,274	)
Accumulated other comprehensive loss		(512	)		(402	)
Total shareholders’ equity		16,491			16,107
Total liabilities and shareholders’ equity	$	34,221		$	33,961

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION

Consolidated Condensed Statements of Operations

(In Thousands, Except Per Share Amounts)

	Three Months Ended
	March 31, 2015			March 31, 2014
	(Unaudited)			(Unaudited)
Sales, net	$	16,602		$	17,310
Cost of sales		12,274			12,537
Gross profit		4,328			4,773
Operating expenses:
Sales and marketing		987			1,007
General and administrative		1,709			1,624
Research and development		1,226			1,168
Restructuring charges (note 3)		—			83
Total operating expenses		3,922			3,882
Operating income		406			891
Interest expense		(103	)		(138	)
Other income		136			60
Income from continuing operations before  income taxes and discontinued operations		439			813
Income tax expense		155			26
Income before  discontinued operations		284			787
Loss on sale of discontinued operations		—			(120	)
Loss from discontinued operations, net of income taxes (note 4)		—			(150	)
Net income	$	284		$	517
Basic income (loss) per share:
Continuing operations	$	0.05		$	0.14
Discontinued operations		—			(0.05	)
Net income per share:	$	0.05		$	0.09
Diluted income (loss) per share:
Continuing operations	$	0.05		$	0.14
Discontinued operations		—			(0.05	)
Net income per share:	$	0.05		$	0.09
Average shares outstanding:
Basic		5,849			5,729
Diluted		6,227			5,859

(See accompanying notes to the consolidated condensed financial statements)

4

INTRICON CORPORATION

Consolidated Condensed Statements of Comprehensive Income (Loss)

(In Thousands)

	Three Months Ended
	March 31, 2015			March 31, 2014
	(Unaudited)			(Unaudited)
Net income	$	284		$	517
Change in fair value of interest rate swap		(2	)		10
Gain (loss) on foreign currency translation adjustment		(108	)		10
Comprehensive income	$	174		$	537

(See accompanying notes to the consolidated condensed financial statements)

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INTRICON CORPORATION

Consolidated Condensed Statements of Cash Flows

(In Thousands)

	Three Months Ended
	March 31, 2015			March 31, 2014
	(Unaudited)			(Unaudited)
Cash flows from operating activities:
Net income	$	284		$	517
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		423			559
Stock-based compensation		169			142
Change in deferred gain		(28	)		(28	)
Change in allowance for doubtful accounts		7			1
Equity in loss of partnerships		49			35
Loss on sale of discontinued operation		—			120
Changes in operating assets and liabilities:
Accounts receivable		92			(1,133	)
Inventories		41			(381	)
Other assets		297			343
Accounts payable		181			544
Accrued expenses		(382	)		306
Other liabilities		38			(50	)
Net cash provided by operating activities		1,171			975
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment		—			21
Proceeds from sale of discontinued operation		—			500
Purchases of property, plant and equipment		(711	)		(241	)
Net cash (used in) provided by investing activities		(711	)		280
Cash flows from financing activities:
Proceeds from long-term borrowings		2,926			2,999
Repayments of long-term  borrowings		(2,430	)		(3,980	)
Proceeds from employee stock purchases and exercise of stock options		42			23
Change in restricted cash		79			(128	)
Change in checks written in excess of cash		(516	)		178
Net cash provided by (used by) financing activities		101			(908	)
Effect of exchange rate changes on cash		(196	)		12
Net increase in cash		365			359
Cash, beginning of period		328			217
Cash, end of period	$	693		$	576

(See accompanying notes to the consolidated condensed financial statements)

6

INTRICON CORPORATION

Notes to Consolidated Condensed Financial Statements (Unaudited) (In Thousands, Except Per Share Data)

1.General

In the opinion of management, the accompanying consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly IntriCon Corporation’s (“IntriCon” or the “Company”) consolidated financial position as of March 31, 2015 and December 31, 2014, and the consolidated results of its operations and cash flows for the three months ended March 31, 2015 and 2014.  Results of operations for the interim periods are not necessarily indicative of the results of operations expected for the full year or any other interim period.

On June 13, 2013, the Company announced a global restructuring plan to accelerate future growth and reduce costs by approximately $3.0 million annually. As part of the restructuring, the Company sold its security and certain microphone and receiver operations on January 27, 2014 to Sierra Peaks Corporation. For all periods presented, the Company classified these businesses as discontinued operations (Note 4).

The Company has evaluated subsequent events occurring after the date of the consolidated financial statements for events requiring recording or disclosure in the financial statements.

2.           New Accounting Pronouncements

In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, or ASU 2015-02. ASU 2015-02 amends current consolidation guidance by modifying the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminating the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with variable interest entities. ASU No. 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. All legal entities are subject to reevaluation under the revised consolidation model. The adoption of ASU 2015-02 is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

In May 2014, the Financial Accounting Standards Board issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact on the Company’s consolidated financial statements.

3.           Restructuring Charges

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth by focusing resources on the highest potential growth areas and reduce costs. The plan was approved by the Company’s Board of Directors on June 12, 2013. As part of this plan, the Company: reduced investment in certain non-core professional audio communications product lines; transferred specific product lines from Singapore to the Company’s lower-cost manufacturing facility in Batam, Indonesia; reduced global administrative and support workforce; transferred the medical coil operations from the Company’s Maine facility to Minnesota to better leverage existing manufacturing capacity; sold its remaining security, microphone and receiver operations; added experienced professionals in value hearing health; and focused more resources in medical biotelemetry. During the first quarter of 2014, the Company incurred charges of $83, primarily related to employee termination benefits, from the restructuring of its continuing operations. In the future, the Company does not expect to incur any additional cash charges related to this restructuring.

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4.           Discontinued Operations

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth and reduce costs. See Note 3 for additional information. As part of the global strategic restructuring plan, the Company decided to exit the security and certain microphone and receiver businesses.  On January 27, 2014, the Company completed the sale of the security business and certain microphone and receiver businesses of IntriCon Tibbetts Corporation, IntriCon’s wholly owned subsidiary based in Camden, Maine, to Sierra Peaks Corporation, pursuant to an Asset Purchase Agreement entered into on January 27, 2014 between Sierra Peaks Corporation, as the buyer, and IntriCon Tibbetts Corporation as the seller. Sierra Peaks Corporation paid $500 cash at closing for the assets and assumed certain operating liabilities of the businesses.

The Company recorded a loss on the sale of $120. The net loss was computed as follows:

Accounts receivable, net	$	384
Inventory, net		128
Property, plant and equipment, net		127
Other assets		1
Accounts payable		(69	)
Total	$	571
Cash proceeds received from Sierra Peaks		500
Net assets sold		(571	)
Transaction costs		(49	)
Loss on sale of discontinued operations	$	(120	)

The following table shows the results of operations of the Company’s discontinued operations:

	Three Months Ended
	March 31, 2015		March 31, 2014
	(Unaudited)		(Unaudited)
Sales, net	$	—	$	207
Operating costs and expenses		—		(357	)
Operating loss		—		(150	)
Other income, net		—		—
Net loss from discontinued operations	$	—	$	(150	)

5.           Product Warranty

In general, the Company warrants its products to be free from defects in material and workmanship and will fully conform to and perform to specifications for a period of one year. The following table presents changes in the Company’s warranty liability for the three months ended March 31, 2015 and the year ended December 31, 2014:

	March 31, 2015			December 31, 2014
Beginning balance	$	100		$	72
Warranty expense		20			122
Closed warranty claims		(12	)		(94	)
Ending balance	$	108		$	100

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6.           Geographic Information

The geographical distribution of long-lived assets to geographical areas consisted of the following at:

	March 31, 2015		December 31, 2014
United States	$	3,738	$	3,307
Other – primarily Asia		862		938
Consolidated	$	4,600	$	4,245

Long-lived assets consist of property and equipment and certain other assets that are difficult to move and relatively illiquid. Excluded from long-lived assets are investments in partnerships, patents, license agreements and goodwill. The Company capitalizes long-lived assets pertaining to the production of specialized parts. These assets are periodically reviewed to assure the net realizable value from the estimated future production based on forecasted cash flows exceeds the carrying value of the assets.

The geographical distribution of net sales to geographical areas for the three months ended March 31, 2015 and 2014 were as follows:

	Three Months Ended
Net Sales to Geographical Areas	March 31, 2015		March 31, 2014
United States	$	12,582	$	12,822
Switzerland		629		332
Germany		528		591
Vietnam		437		364
China		434		699
Japan		371		322
United Kingdom		282		523
Turkey		264		193
France		241		534
Hong Kong		195		178
Singapore		85		111
All other countries		554		641
Consolidated	$	16,602	$	17,310

Geographic net sales are allocated based on the location of the customer. All other countries include net sales primarily to various countries in Europe and in the Asian Pacific. Customer concentrations greater than 10% of consolidated net sales and account receivable are disclosed below.

For the three months ended March 31, 2015, one customer accounted for 39% of the Company’s consolidated net sales.  For the three months ended March 31, 2014, two customers accounted for 49% of the Company’s consolidated net sales.

9

At March 31, 2015, two customers combined accounted for 33% of the Company’s consolidated accounts receivable. At December 31, 2014, two customers accounted for a combined 29% of the Company’s consolidated accounts receivable.

7.           Inventories

Inventories consisted of the following at:

	Raw materials		Work-in process		Finished products and components		Total
March 31, 2015
Domestic	$	3,783	$	1,520	$	1,923	$	7,226
Foreign		1,774		746		202		2,722
Total	$	5,557	$	2,266	$	2,125	$	9,948
December 31, 2014
Domestic	$	3,993	$	1,300	$	1,838	$	7,131
Foreign		1,894		720		238		2,852
Total	$	5,887	$	2,020	$	2,076	$	9,983

8.           Short and Long-Term Debt

Short and long-term debt is summarized as follows:

	March 31, 2015			December 31, 2014
Domestic Asset-Based Revolving Credit Facility	$	1,093		$	3,843
Foreign Overdraft and Letter of Credit Facility		915			920
Domestic Term-Loan		5,000			1,750
Total Debt		7,008			6,513
Less: Current maturities		(1,890	)		(1,886	)
Total Long-Term Debt	$	5,118		$	4,627

Domestic Credit Facilities

The Company and its domestic subsidiaries are parties to a credit facility with The PrivateBank and Trust Company. The credit facility, as amended, provides for:

§ an $8,000 revolving credit facility, with a $200 sub facility for letters of credit.  Under the revolving credit facility, the availability of funds depends on a borrowing base composed of stated percentages of the Company’s eligible trade receivables and eligible inventory, and eligible equipment less a reserve; and

§ a term loan in the original amount of $5,000.

10

In March 2015, the Company and its domestic subsidiaries entered into a Seventh Amendment to the Loan and Security Agreement with The PrivateBank and Trust Company. The amendment, among other things:

§ increased the Company’s term loan to $5,000 from its then current balance of $1,750, as a result of which the Company borrowed an additional $3,250 under the term loan facility;

§ extended the term loan and revolving loan maturity date to February 28, 2019, keeping the existing term loan amortization schedule in place;

§ increased the annual capital expenditure limit to $4,500;

§ implemented investment provisions that allow for up to $4,000 in investment spending prior to requiring bank approval;

§ lowered interest rates on the term loan and revolving loan;

Due to the Seventh Amendment as described above, the term loan and the revolving loan maturity date has been extended to February 28, 2019. All of the borrowings under this agreement have been characterized as either a current or long-term liability on our balance sheet in accordance with the repayment terms described more fully below.

Loans under the credit facility are secured by a security interest in substantially all of the assets of the Company and its domestic subsidiaries including a pledge of the stock of its domestic subsidiaries. Loans under the credit facility bear interest at varying rates based on the Company’s leverage ratio of funded debt / EBITDA, at the option of the Company, at:

§ the London InterBank Offered Rate (“LIBOR”) plus 2.50% to 4.00%, or

§ the base rate, which is the higher of (a) the rate publicly announced from time to time by the lender as its “prime rate” and (b) the Federal Funds Rate plus 0.5%, plus (0.25)% to 1.25%; in each case, depending on the Company’s leverage ratio.

Interest is payable monthly in arrears, except that interest on LIBOR based loans is payable at the end of the one, two or three month interest periods applicable to LIBOR based loans. IntriCon is also required to pay a non-use fee equal to 0.25% per year of the unused portion of the revolving line of credit facility, payable quarterly in arrears.

Weighted average interest on the revolving credit facility was 4.39% for the three months ended March 31, 2015 and 4.51% for the year ended December 31, 2014.  The outstanding balance of the revolving credit facility was $1,093 and $3,843 at March 31, 2015 and December 31, 2014, respectively.  The total availability on the revolving credit facility was approximately $6,341 and $3,456 at March 31, 2015 and December 31, 2014, respectively.

The outstanding principal balance of the term loan, as amended, is payable in quarterly installments of $250. Any remaining principal and accrued interest is payable on February 28, 2019. IntriCon is also required to use 100% of the net cash proceeds of certain asset sales (excluding inventory and certain other dispositions), sale of capital securities or issuance of debt to pay down the term loan.

The Company was in compliance with the financial covenants under the facility as of March 31, 2015.

Foreign Credit Facility

In addition to its domestic credit facilities, the Company’s wholly-owned subsidiary, IntriCon, PTE LTD., entered into an international senior secured credit agreement with Oversea-Chinese Banking Corporation Ltd. that provides for an asset based line of credit.  Borrowings bear interest at a rate of .75% to 2.5% over the lender’s prevailing prime lending rate.  Weighted average interest on the international credit facilities was 3.38% and 4.50% for the three months ended March 31, 2015 and the year ended December 31, 2014, respectively. The outstanding balance was $915 and $920 at March 31, 2015 and December 31, 2014, respectively.  The total remaining availability on the international senior secured credit agreement was approximately $878 and $956 at March 31, 2015 and December 31, 2014, respectively.

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9.           Income Taxes

Income tax expense for the three months ended March 31, 2015 was $155 compared to $26 for the same period in 2014. The expense for the three months ended March 31, 2015 and 2014, was primarily due to foreign operations. The Company has net operating loss carryforwards for U.S. federal income tax purposes and, consequently, minimal federal benefit or expense from the domestic operations was recognized as the deferred tax asset has a full valuation allowance.

The following was the income (loss) before income taxes for each jurisdiction in which the Company has operations for the three months ended March 31, 2015 and 2014.

	Three Months Ended
	March 31, 2015			March 31, 2014
United States	$	(310	)	$	316
Singapore		541			382
Indonesia		20			19
Germany		188			96
Income before income taxes and discontinued operations	$	439		$	813

10.         Shareholders’ Equity and Stock-based Compensation

The Company has a 2001 stock option plan, a non-employee directors’ stock option plan and a 2006 Equity Incentive Plan. New grants may not be made under the 2001 and the non-employee directors’ stock option plans; however certain option grants under these plans remain exercisable as of March 31, 2015. The aggregate number of shares of common stock for which awards could be granted under the 2006 Equity Incentive Plan as of the date of adoption was 699 shares. The Plan was amended in 2010 and 2012 to authorize an additional 250 and 300 shares, respectively, for issuance under the Plan. Additionally, as outstanding options under the 2001 stock option plan and non-employee directors’ stock option plan expire, the shares of the Company’s common stock subject to the expired options will become available for issuance under the 2006 Equity Incentive Plan.

Under the various plans, executives, employees and outside directors receive awards of options to purchase common stock. Under the 2006 Equity Incentive Plan, the Company may also grant stock awards, stock appreciation rights, restricted stock units and other equity-based awards, although no such awards, other than awards under the director program and management purchase program described below, had been granted as of March 31, 2015.  Under all awards, the terms are fixed on the grant date. Generally, the exercise price of stock options equals the market price of the Company’s stock on the date of the grant. Options under the plans generally vest over three years, and have a maximum term of 10 years.

Additionally, the board has established the non-employee directors’ stock fee election program, referred to as the director program, as an award under the 2006 Equity Incentive Plan. The director program gives each non-employee director the right under the 2006 Equity Incentive Plan to elect to have some or all of his quarterly director fees paid in common shares rather than cash.  No shares were issued in lieu of cash for director fees under the director program for the three months ended March 31, 2015 and 2014, respectively.

On July 23, 2008, the Compensation Committee of the Board of Directors approved the non-employee director and executive officer stock purchase program, referred to as the management purchase program, as an award under the 2006 Plan. The purpose of the management purchase program is to permit the Company’s non-employee directors and executive officers to purchase shares of the Company’s Common Stock directly from the Company. Pursuant to the management purchase program, as amended, participants may elect to purchase shares of Common Stock from the Company not exceeding an aggregate of $100 during any fiscal year. Participants may make such election one time during each twenty business day period following the public release of the Company’s earnings announcement, referred to as a window period, and only if such participant is not in possession of material, non-public information concerning the Company and subject to the discretion of the Board to prohibit any transactions in Common Stock by directors and executive officers during a window period. There were no shares purchased under the management purchase program during the three months ended March 31, 2015 and 2014, respectively.

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On April 24, 2015, the shareholders of the Company approved the 2015 Equity Incentive Plan.  The new plan replaces the 2006 Plan.

Stock option activity as of and during the three months ended March 31, 2015 was as follows:

	Number of Shares			Weighted-average Exercise Price		Aggregate Intrinsic Value
Outstanding at December 31, 2014		1,313		$	5.86
Options forfeited or cancelled		—			—
Options granted		128			6.87
Options exercised		(11	)		3.52
Outstanding at March 31, 2015		1,430		$	5.97	$	3,836
Exercisable at March 31, 2015		1,082		$	6.06	$	3,031
Available for future grant at December 31, 2014		175
Available for future grant at March 31, 2015		50

The number of shares available for future grants at March 31, 2015 does not include a total of up to 147 shares subject to options outstanding under the 2001 stock option plans and non-employee directors’ stock option plans as of March 31, 2015, which will become available for grant under the 2006 Equity Incentive Plan in the event of the expiration of such options.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of subjective assumptions, including the expected stock price volatility. Because the Company’s options have characteristics different from those of traded options, in the opinion of management, the existing models do not necessarily provide a reliable single measure of the fair value of its options. The weighted average fair value of options granted was $4.37 for options granted during the three months ended March 31, 2015. The weighted average fair value of options granted was $3.85for options granted during the three months ended March 31, 2014.

The Company calculates expected volatility for stock options and awards using the Company’s historical volatility.

The Company currently estimates a zero percent forfeiture rate for stock options, but will continue to review this estimate in future periods.

The risk-free rates for the expected terms of the stock options and awards are based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted average remaining contractual life of options exercisable at March 31, 2015 was 4.10 years.

The Company recorded $169 of non-cash stock option expense for the three months ended March 31, 2015. The Company recorded $142 of non-cash stock option expense for the three months ended March 31, 2014.  As of March 31, 2015, there was $904 of total unrecognized compensation costs related to non-vested awards that are expected to be recognized over a weighted-average period of 2.29 years.

The Company also has an Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan initially provided that a maximum of 100 shares may be sold under the Purchase Plan as of the date of adoption. On April 27, 2011, the Company’s shareholders approved an amendment to the Purchase Plan to increase the number of shares which may be purchased under the plan by an additional 100 shares. There were 3 shares purchased under the plan for the three months ended March 31, 2015 and a total of 5 shares purchased for the three months ended March 31, 2014.

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11.         Income Per Share

The following table presents a reconciliation between basic and diluted earnings per share:

	Three Months Ended
	March 31, 2015		March 31, 2014
Numerator:
Income before  discontinued operations	$	284	$	787
Loss from discontinued operations, net of income taxes (note 4)		—		(270	)
Net income	$	284	$	517
Denominator:
Basic – weighted shares outstanding		5,849		5,729
Weighted shares assumed upon exercise of stock options		378		130
Diluted – weighted shares outstanding		6,227		5,859
Basic income (loss) per share:
Continuing operations	$	0.05	$	0.14
Discontinued operations		—		(0.05	)
Net income per share:	$	0.05	$	0.09
Diluted income (loss) per share:
Continuing operations	$	0.05	$	0.14
Discontinued operations		—		(0.05	)
Net income per share:	$	0.05	$	0.09

The dilutive impact summarized above relates to the periods when the average market price of Company stock exceeded the exercise price of the potentially dilutive option securities granted. Earnings per common share was based on the weighted average number of common shares outstanding during the periods when computing the basic earnings per share. When dilutive, stock options are included as equivalents using the treasury stock method when computing the diluted earnings per share. Individual components of basic and diluted income (loss) per share may not sum to the total income (loss) per share due to rounding.

12.         Legal Proceedings

The Company is a defendant along with a number of other parties in lawsuits alleging that plaintiffs have or may have contracted asbestos-related diseases as a result of exposure to asbestos products or equipment containing asbestos sold by one or more named defendants. These lawsuits relate to the discontinued heat technologies segment which was sold in March 2005. Due to the non-informative nature of the complaints, the Company does not know whether any of the complaints state valid claims against the Company. Certain insurance carriers have informed the Company that the primary policies for the period August 1, 1970-1978 have been exhausted and that the carriers will no longer provide defense and insurance coverage under those policies. However, the Company has other primary and excess insurance policies that the Company believes afford coverage for later years.  Some of these other primary insurers have accepted defense and insurance coverage for these suits, and some of them have either ignored the Company’s tender of defense of these cases, or have denied coverage, or have accepted the tenders but asserted a reservation of rights and/or advised the Company that they need to investigate further.  Because settlement payments are applied to all years a litigant was deemed to have been exposed to asbestos, the Company believes that it will have funds available for defense and insurance coverage under the non-exhausted primary and excess insurance policies.  However, unlike the older policies, the more recent policies have deductible amounts for defense and settlements costs that the Company will be required to pay; accordingly, the Company expects that its litigation costs will increase in the future. Further, many of the policies covering later years (approximately 1984 and thereafter) have exclusions for any asbestos products or operations, and thus do not provide insurance coverage for asbestos-related lawsuits. The Company does not believe that the asserted exhaustion of some of the primary insurance coverage for the 1970-1978 period will have a material adverse effect on its financial condition, liquidity, or results of operations. Management believes that the number of insurance carriers involved in the defense of the suits, and the significant number of policy years and policy limits under which these insurance carriers are insuring the Company, make the ultimate disposition of these lawsuits not material to the Company’s consolidated financial position or results of operations.

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The Company’s former French subsidiary, Selas SAS, filed for insolvency in France. The Company may be subject to additional litigation or liabilities as a result of the French insolvency proceeding.

The Company is also involved in other lawsuits arising in the normal course of business. While it is not possible to predict with certainty the outcome of these matters, management is of the opinion that the disposition of these lawsuits and claims will not materially affect our consolidated financial position, liquidity or results of operations.

13.         Related-Party Transactions

One of the Company’s subsidiaries leases office and factory space from a partnership consisting of three present or former officers of the subsidiary, including Mark Gorder, a member of the Company’s Board of Directors and the President and Chief Executive Officer of the Company. The subsidiary is required to pay all real estate taxes and operating expenses. The total base rent expense, real estate taxes and other charges incurred under the lease were approximately $122 for the three months ended March 31, 2015 and approximately $122 for the three months ended March 31, 2014.

The Company uses the law firm of Blank Rome LLP for legal services. A partner of that firm is the son-in-law of the Chairman of the Company’s Board of Directors.   For the three months ended March 31, 2015, the Company paid that firm approximately $48 for legal services and costs.  For the three months ended March 31, 2014, the Company paid that firm approximately $39 for legal services and costs.  The Chairman of our Board of Directors is considered independent under applicable Nasdaq and Securities Exchange Commission rules because (i) no payments were made to the Chairman or the partner directly in exchange for the services provided by the law firm and (ii) the amounts paid to the law firm did not exceed the thresholds contained in the Nasdaq standards. Furthermore, the aforementioned partner does not provide any legal services to the Company and is not involved in billing matters.

14.         Statements of Cash Flows

The following table provides supplemental disclosures of cash flow information:

	Three Months Ended
	March 31, 2015			March 31, 2014
Interest received		$	12		$	—
Interest paid			89			134
Income taxes paid			110			—

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15.         Revenue by Market

The following tables set forth, for the periods indicated, net revenue by market:

	Three Months Ended
	March 31, 2015		March 31, 2014
Medical	$	8,957	$	9,483
Hearing Health		5,564		5,859
Professional Audio Communications		2,081		1,968
Total Revenue	$	16,602	$	17,310

ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Business Overview

Headquartered in Arden Hills, Minnesota, IntriCon Corporation (together with its subsidiaries referred to as the “Company”, “IntriCon,” “we”, “us” or “our”) is an international company engaged in designing, developing, engineering and manufacturing body-worn devices. In addition to its operations in Minnesota, the Company has facilities in California, Singapore, Indonesia and Germany.

Information contained in this section of this Quarterly Report on Form 10-Q and expressed in U.S. dollars is presented in thousands (000s), except for per share data and as otherwise noted.

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth by focusing resources on the highest potential growth areas and reduce costs by approximately $3.0 million annually. As part of this plan, the Company reduced investment in certain non-core professional audio communications product lines; transferred specific product lines from Singapore to the Company’s lower-cost manufacturing facility in Batam, Indonesia; reduced its global administrative and support workforce; transferred the medical coil operations from the Company’s Maine facility to Minnesota to better leverage existing manufacturing capacity, sold its remaining security and certain microphone and receiver businesses effective January 27, 2014; added experienced professionals in value hearing health; and focused more resources in medical biotelemetry. The sale of security, certain microphone and receivers businesses, which closed on January 27, 2014, marked the final milestone in the global strategic restructuring plan. For all periods presented, the Company classified its former security, certain microphone and receiver businesses as discontinued operations. Unless otherwise indicated, the following description of our business refers only to continuing operations.

Market Overview

IntriCon serves the body-worn device market by designing, developing, engineering and manufacturing micro-miniature products, microelectronics, micro-mechanical assemblies, complete assemblies and software solutions, primarily for medical bio-telemetry devices, value hearing health devices and professional audio communication devices.Revenue from the medical bio-telemetry and value hearing health markets is reported on the respective medical and hearing health lines in the discussion of our results of operation in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Note 15 “Revenue by Market” to the Company’s consolidated condensed financial statements included herein.

Value Hearing Health Market

The Company believes the value hearing health (VHH) market offers significant growth opportunities. In the United States alone, there are approximately 48 million adults that report some degree of hearing loss. In adults the most common cause of hearing loss is aging and noise. In fact, by the age of 65 year old, one out of three people have hearing loss. The hearing impaired population is expected to grow significantly over the next decade due to an aging population and more frequent exposure to loud sounds that can cause noise-induced hearing loss. It is estimated that hearing aids can help more than 90 percent of people with hearing loss, however the current market penetration into the U.S. hearing impaired population is approximately 20 percent, a percentage that has remained essentially unchanged for the last four decades. We believe the U.S. market penetration is low primarily due to the high costs to purchase a hearing aid, consolidation at the retail level and inconveniences in the distribution channel. These factors have created the opportunity for alternative care models, such as the value hearing aid (VHA) channel and personal sound amplifier (PSAP) channel. The VHA channel is outcome based focused and requires the best device and software technology, to provide the most efficient, lowest cost solution to the consumer.   IntriCon has positioned itself as a leader in these channels through significant, on-going investments in sales and marketing and its research and development. The Company is aggressively pursuing prospective partnerships and customers who can benefit from our value proposition and the VHA and PSAP channels.

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In the VHA channel, the Company entered into a manufacturing agreement with hi HealthInnovations, a UnitedHealth Group company, to become their supplier of hearing aids. At the beginning of 2012, hi HealthInnovations launched a suite of high-tech, lower-cost hearing devices for their Medicare and Part D participants and later in the year announced they were increasing this offering to the over 26 million people enrolled in their employer-sponsored and individual health benefit plans. Recently they have expanded their offering to include a hearing aid discount program for health plans. This program is available nationwide to all health insurers, including employer-sponsored, individual and Medicare plans. The insurance model has been successfully demonstrated internationally, where several countries providing a full insurance program are serving 40 to 70 percent of the hearing impaired population. Further, research in the U.S. has shown a fully insured model will encourage an individual to seek treatment at an earlier stage of hearing loss, greatly increasing the market size and penetration. The Company also has various international VHA initiatives. In 2014 the Company entered into an exclusive distribution agreement with PC Werth in the United Kingdom. PC Werth, through its partnership with IntriCon, has been appointed as one of the main suppliers to the National Health Service (NHS) Supply Chain’s National Framework. The NHS, which offers free hearing health care to UK citizens, is the largest purchaser of hearing aids in the world, supplying an estimated 1.2 million hearing aids annually.

We also believe there are niches in the conventional hearing health channel that will embrace our VHA proposition. High costs of conventional devices and retail consolidation have constrained the growth potential of the independent audiologist and dispenser. We believe our software and product offering can provide the independent audiologist and dispensers the ability to compete with larger retailers, such as Costco and manufacturer owned retail distributors.

In the past few years the PSAP channel, which includes ear worn devices that provide cost effective sound amplification, has begun to emerge.  These sound amplification devices are not regulated by the FDA, as they are hearing aids and make no claims of compensating for hearing loss. They can be purchased “off-the-shelf” and are not fit or prescribed to meet a specific individual’s needs rather, these devices amplify sound and tend to be used in noisy or challenging environments. They have a significantly lower retail price to the consumer than traditional hearing aids. Additionally, the Company believes there is great potential to market its situational listening devices (SLD’s). Similar to the PSAP devices, the Company’s SLD’s are intended to help people hear in noisy environments, like restaurants and automobiles, and listen to television, music, and direct broadcast by wireless connection. Such devices are intended to be supplements to conventional hearing aids, which do not handle those situations well. The product line consists of an earpiece, TV transmitter, companion microphone, iPod/iPhone transmitter, and USB transmitter.

We believe IntriCon is very well positioned to serve these VHH market channels. Over the past several years the Company has invested heavily in core technologies, product platforms and its global manufacturing capabilities geared to provide high-tech, lower-cost hearing devices and can help drive efficiencies in the delivery model. Our DSP devices provide better clarity and an improved ability to filter out background noise at attractive pricing points. We believe product platform introductions such as the Audion Amplifiers, APT™ and Lumen™ devices will drive market share gains into all channels of the emerging VHH market.

Medical Bio-Telemetry

In the medical bio-telemetry market, the Company is focused on sales of bio-telemetry devices for life-critical diagnostic monitoring. Using our nanoDSP and BodyNet™ technology platforms, the Company manufactures microelectronics, micro-mechanical assemblies, high-precision injection-molded plastic components and complete bio-telemetry devices for emerging and leading medical device manufacturers. The medical industry is faced with pressures to reduce the cost of healthcare. Driven by core technologies, such as the IntriCon Physiolink™ that wirelessly connects patients and care givers in non-traditional ways, IntriCon helps shift the point of care from expensive traditional settings, such as hospitals, to less expensive non-traditional settings like the home. IntriCon currently serves this market by offering medical manufacturers the capabilities to design, develop and manufacture medical devices that are easier to use, are more miniature, use less power, and are lighter. Increasingly, the medical industry is looking for wireless, low-power capabilities in their devices. We have a strategic relationship with Advanced Medical Electronics Corp. (AME) that allows us to develop new bio-telemetry devices that better connect patients and care givers, providing critical information and feedback. Through the further development of our ULP BodyNet family, we believe the bio-telemetry markets offer significant opportunity.

IntriCon currently has a strong presence in both the diabetes and cardiac diagnostic monitoring bio-telemetry markets. For diabetes, IntriCon has partnered with Medtronic to manufacture their wireless continuous glucose monitors, sensors, and related accessories that measure glucose levels and deliver real-time blood glucose trend information. During the 2013 third quarter, Medtronic received Food and Drug Administration (FDA) approval for their MiniMed 530G insulin pump system. To support their MiniMed 530G system launch in the United States, IntriCon built and sold significant inventory from the fourth quarter of 2013 through the first half of 2014.  In addition to the MiniMed 530G system, the products we manufacture also support Medtronic’s international insulin pump system offerings, such as the recently unveiled MiniMed 640G system.  Further, we believe there are opportunities to expand our diabetes product offering with Medtronic as well as move into new markets outside of the diabetes market.

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In the cardiac diagnostic monitoring market, we provide solutions for ambulatory cardiac monitoring. Our first two product platforms, Sirona and Centauri, received FDA 510(k) approval in late 2011. The Sirona platform, which incorporates the PhysioLink technology, is essentially two products in one design: it can be used as an event recorder, a holter monitor or both. This platform is very small, rechargeable, and water spray proof. IntriCon is receiving feedback from its customers about the treatment flexibility and economic benefits of remote patient monitoring. The Company has contracts in place with lead customers for the Sirona platform and anticipates expanding that customer base during 2015.

IntriCon has a suite of medical coils and micro coils that it offers to various original equipment manufacturing (OEM) customers. These products are currently used in pacemaker programming and interventional catheter positioning applications. As part of the global restructuring initiative, the Company is increasing its investment of resources and capital to help expand our customer base and market share.

IntriCon manufactures bubble sensors and flow restrictors that monitor and control the flow of fluid in an intravenous infusion system as well as a family of safety needle products for an OEM customer that utilizes IntriCon’s insert and straight molding capabilities. These products are assembled using full automation, including built-in quality checks within the production lines.

Lastly, IntriCon is targeting other emerging biotelemetry and home care markets, such as sleep apnea, that could benefit from its capabilities to develop devices that are more technologically advanced, smaller and lightweight. To do so, IntriCon is focusing more capital and resources in sales and marketing and research and development to expand its reach to other large medical device and health care companies.

Professional Audio Communications

IntriCon entered the high-quality audio communication device market in 2001, and now has a line of miniature, professional audio headset products used by customers focusing on emergency response needs. The line includes several communication devices that are extremely portable and perform well in noisy or hazardous environments. These products are well suited for applications in the fire, law enforcement, safety, aviation and military markets. In addition, the Company has a line of miniature ear- and head-worn devices used by performers and support staff in the music and stage performance markets. We believe performance in difficult listening environments and wireless operations will continue to improve as these products increasingly include our proprietary nanoDSP, wireless nanoLink and PhysioLink technologies.

Core Technologies Overview

Our core technologies expertise is focused on three main markets: medical bio-telemetry, value hearing health and professional audio communications. Over the past several years, the Company has increased investments in the continued development of four critical core technologies: Ultra-Low-Power (ULP) Digital Signal Processing (DSP), ULP Wireless, Microminiaturization, and Miniature Transducers. These four core technologies serve as the foundation of current and future product platform development, designed to meet the rising demand for smaller, portable more advanced devices and the need for greater efficiencies in the delivery models. The continued advancements in this area have allowed the Company to further enhance the mobility and effectiveness of miniature body-worn devices.

ULP DSP

DSP converts real-world analog signals into a digital format. Through our nanoDSP™ technology, IntriCon offers an extensive range of ULP DSP amplifiers for hearing, medical and professional audio applications. Our proprietary nanoDSP incorporates advanced ultra-miniature hardware with sophisticated signal processing algorithms to produce devices that are smaller and more effective.

The Company further expanded its DSP portfolio including improvements to its Reliant CLEAR™ feedback canceller, offering increased added stable gain and faster reaction time. Additionally, newly developed DSP technologies are utilized in our recently unveiled Audion8™, our new eight-channel hearing aid amplifier. The Audion8 is a feature-rich amplifier designed to fit a wide array of applications. In addition to multiple compression channels, the amplifier has a complete set of proven adaptive features which greatly improve the user experience.

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ULP Wireless

Wireless connectivity is fast becoming a required technology, and wireless capabilities are especially critical in new body-worn devices. IntriCon’s BodyNet™ ULP technology, including the nanoLink™ and PhysioLink™ wireless systems, offers solutions for transmitting the body’s activities to caregivers, and wireless audio links for professional communications and surveillance products. Potential BodyNet applications include electrocardiogram (ECG) diagnostics and monitoring, diabetes monitoring, sleep apnea studies and audio streaming for hearing devices.

IntriCon is in the final stages of commercializing its PhysioLink wireless technology, which will be incorporated into product platforms serving the medical, hearing health and professional audio communication markets. This system is based on 2.4GHz proprietary digital radio protocol in the industrial-scientific-medical (ISM) frequency band and enables audio and data streaming to ear-worn and body-worn applications over distances of up to five meters.

Microminiaturization

IntriCon excels at miniaturizing body-worn devices. We began honing our microminiaturization skills over 30 years ago, supplying components to the hearing health industry. Our core miniaturization technology allows us to make devices for our markets that are one cubic inch and smaller. We also are specialists in devices that run on very low power, as evidenced by our ULP wireless and DSP. Less power means a smaller battery, which enables us to reduce size even further, and develop devices that fit into the palm of one’s hand.

Miniature Transducers

IntriCon’s advanced transducer technology has been pushing the limits of size and performance for over a decade. Included in our transducer line are our miniature medical coils and micro coils used in pacemaker programming and interventional catheter positioning applications. We believe with the increase of greater interventional care that our coil technology harbors significant value.

Forward-Looking and Cautionary Statements

Certain statements included in this Quarterly Report on Form 10-Q or documents the Company files with the Securities and Exchange Commission, which are not historical facts, or that include forward-looking terminology such as “may”, “will”, “believe”, “anticipate”, “expect”, “should”, “optimistic” “continue”, “estimate”, “intend”, “plan”, “would”, “could”, “guidance”, “potential”, “opportunity”, “project”, “forecast”, “confident”, “projections”, “schedule”, “designed”, “future”, “discussion”, “if” or the negative thereof or other variations thereof, are forward-looking statements (as such term is defined in Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933, and the regulations thereunder), which are intended to be covered by the safe harbors created thereby. These statements may include, but are not limited to statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Notes to the Company’s Condensed Consolidated Financial Statements” such as net operating loss carryforwards, the ability to meet cash requirements for operating needs, the ability to meet liquidity needs, assumptions used to calculate future level of funding of employee benefit plans, the adequacy of insurance coverage and the impact of new accounting pronouncements and litigation.Forward-looking statements also include, without limitation, statements as to the Company’s expected future results of operations and growth, the Company’s ability to meet working capital requirements, the Company’s business strategy, the expected increases in operating efficiencies, anticipated trends in the Company’s markets, estimates of goodwill impairments and amortization expense of other intangible assets, the effects of changes in accounting pronouncements, the effects of litigation and the amount of insurance coverage, expected costs and savings from the restructuring, and statements as to trends or the Company’s or management’s beliefs, expectations and opinions.

Forward-looking statements are subject to risks and uncertainties and may be affected by various factors that may cause actual results to differ materially from those in the forward-looking statements. In addition to the factors discussed in this Quarterly Report on Form 10-Q, certain risks, uncertainties and other factors can cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements, including, without limitation, the following:

§ our ability to successfully implement our business and growth strategy;

§ risks arising in connection with the insolvency of our former subsidiary, Selas SAS, and potential liabilities and actions arising in connection with the insolvency;

§ the volume and timing of orders received by the Company, particularly from Medtronic and hi HealthInnovations;

§ changes in estimated future cash flows;

§ our ability to collect our accounts receivable;

§ foreign currency movements in markets that we serve;

§ changes in the global economy and financial markets;

§ weakening demand for our products due to general economic conditions;

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§ changes in the mix of products sold;

§ our ability to meet demand;

§ changes in customer requirements;

§ timing and extent of research and development expenses;

§ FDA approval, timely release and acceptance of our products;

§ competitive pricing pressures;

§ pending and potential future litigation;

§ cost and availability of electronic components and commodities for our products;

§ our ability to create and market products in a timely manner and develop products that are inexpensive to manufacture;

§ our ability to comply with covenants in our debt agreements or to obtain waivers if we do not comply;

§ our ability to repay debt when it comes due;

§ ability to obtain extensions of our current credit facility or a new credit facility;

§ the loss of one or more of our major customers;

§ our ability to identify, complete and integrate acquisitions;

§ effects of legislation;

§ effects of foreign operations;

§ our ability to develop new products;

§ our ability to recruit and retain engineering and technical personnel;

§ the costs and risks associated with research and development investments;

§ the recent recessions in Europe and the debt crisis in certain countries in the European Union;

§ our ability and the ability of our customers to protect intellectual property;

§ cybersecurity threats;

§ loss of members of our senior management team; and

§ other risk factors set forth in our most recent Annual Report on Form 10-K or any prior Quarterly Report on Form 10-Q, which are incorporated by reference into this Report.

For a description of these and other risks, see Part I, “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014, and other risks described elsewhere in this Quarterly Report on Form 10-Q, or in other filings the Company makes from time to time with the Securities and Exchange Commission. The Company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

Critical Accounting Policies

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make certain assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expense during the reporting period.

Certain accounting estimates and assumptions are particularly sensitive because their significance to the consolidated condensed financial statements and the possibility that future events affecting them may differ markedly. The accounting policies of the Company with significant estimates and assumptions include the Company’s revenue recognition, accounts receivable reserves, inventory valuation, goodwill, long-lived assets, deferred taxes policies and employee benefit obligations. These and other significant accounting policies are described in and incorporated by reference from “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and Note 1 to the financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Results of Operations

Sales, net

Our net sales are comprised of three main markets: medical, hearing health, and professional audio communications.  Below is a summary of our sales by main markets for the three months ended March 31, 2015 and 2014:

					Change
Three Months Ended March 31	2015		2014		Dollars			Percent
Medical	$	8,957	$	9,483	$	(526	)		-5.5	%
Hearing Health		5,564		5,859		(295	)		-5.0	%
Professional Audio Communications		2,081		1,968		113			5.7	%
Consolidated Net Sales	$	16,602	$	17,310	$	(708	)		-4.1	%

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For the three months ended March 31, 2015, we experienced a decrease of 5.5% in net sales in the medical market compared to the same period in 2014.To support Medtronic’s MiniMed 530G insulin pump launch in late 2013, IntriCon built and sold significant inventory from the fourth quarter of 2013 through the first half of 2014. While Medtronic volumes were down year-over-year, we experienced significant sequential Medtronic revenue of 29% from the 2014 fourth quarter.  We continue to anticipate sequential Medtronic revenue growth throughout 2015 driven by market share growth for legacy products and the introduction of new products. IntriCon currently serves this market by offering medical manufacturers the capabilities to design, develop and manufacture medical devices that are easier to use, are more miniature, use less power, and are lighter. IntriCon has a strong presence in both the diabetes market, with its Medtronic partnership, and cardiac diagnostic monitoring bio-telemetry market. The Company believes there are growth opportunities in these markets as well other emerging biotelemetry and home care markets, such as sleep apnea, that could benefit from its capabilities to develop devices that are more technologically advanced, smaller and lightweight.

Net sales in our hearing health business for the three months ended March 31, 2015 decreased 5.0% compared to the same period in 2014. The decrease for the three months ended March 31, 2015 was primarily due to decreases in the conventional hearing health channel, partially offset by gains in targeted value hearing health initiatives, including value hearing aids, personal sound amplifier products (PSAP) and assistive listening devices. The Company remains very optimistic about the progress that has been made and the long term prospects of the value hearing health market. Market dynamics, such as low penetration rates, an aging population, and the need for reduced cost and convenience, have resulted in the emergence of alternative care models, such the insurance channel and PSAP channel. IntriCon believes it is very well positioned to serve these value hearing health market channels. The Company will be aggressively pursuing larger customers who can benefit from our value proposition.  Over the past several years, the Company has invested heavily in core technologies, product platforms and its global manufacturing capabilities geared to provide high-tech, lower-cost hearing devices.

Net sales to the professional audio device sector increased 5.7% for the three months ended March 31, 2015 compared to the same period in 2014.  IntriCon will continue to leverage its core technology in professional audio to support existing customers, as well as pursue related hearing health and medical product opportunities.

Gross profit

Gross profit, both in dollars and as a percent of sales, for the three months ended March 31, 2015 and 2014, was as follows:

	2015				2014				Change
Three Months Ended March 31	Dollars		Percent of Sales		Dollars		Percent of Sales		Dollars			Percent
Gross Profit	$	4,328	26.1	%	$	4,773	27.6	%	$	(445	)	-9.3	%

The 2015 gross profit decrease over the comparable prior year period was primarily due to lower overall sales volumes partially offset by a more favorable sales mix.

Sales and Marketing, General and Administrative and Research and Development Expenses

Sales and marketing, general and administrative and research and development expenses for the three months ended March 31, 2015 and 2014 were as follows:

	2015				2014				Change
Three Months Ended March 31	Dollars		Percent of Sales		Dollars		Percent of Sales		Dollars			Percent
Sales and Marketing	$	987	5.9	%	$	1,007	5.8	%	$	(20	)	-2.0	%
General and Administrative		1,709	10.3	%		1,624	9.4	%		85		5.2	%
Research and Development		1,226	7.4	%		1,168	6.7	%		58		5.0	%

Sales and marketing remained steady with the prior year.General and administrative expenses were slightly greater than the prior year period primarily due to increased support costs.Research and development increased over the prior year three month period primarily due to increased outside service materials and support costs.

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Restructuring charges

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth by focusing resources on the highest potential growth areas and reduce costs. The plan was approved by the Company’s Board of Directors on June 12, 2013. As part of this plan, the Company: reduced investment in certain non-core professional audio communications product lines; transferred specific product lines from Singapore to the Company’s lower-cost manufacturing facility in Batam, Indonesia; reduced global administrative and support workforce; transferred the medical coil operations from the Company’s Maine facility to Minnesota to better leverage existing manufacturing capacity; sold its remaining security, microphone and receiver operations; added experienced professionals in value hearing health; and focused more resources in medical biotelemetry. During the first quarter of 2014, the Company incurred charges of $83, primarily related to employee termination benefits, from the restructuring of its continuing operations. In the future, the Company does not expect to incur any additional cash charges related to this restructuring.

Interest expense

Net interest expense for the three months ended March 31, 2015 was $103 compared to $138 for the comparable three month period in 2014.  The decrease in interest expense was primarily due to lower average debt balances and interest rates as compared to the prior year.

Other income

Other income for the three months ended March 31, 2015 was $136 compared to other income of $60 for the same period in 2014. The change in other income primarily related to a royalty earned in the 2015 first quarter.

Income tax expense

Income tax expense for the three months ended March 31, 2015 was $155 compared to $26 for the same period in 2014. The expense for the three months ended March 31, 2015 was primarily due to taxable income generated by foreign operations.

Loss from discontinued operations

Loss from discontinued operations, net of income taxes, of $270 for the three months ended March 31, 2014 was due to a discontinued operations loss of $150 and a loss on the sale of discontinued operations of $120.

Liquidity and Capital Resources

As of March 31, 2015, we had $693 of cash on hand.  Sources of our cash for the three months ended March 31, 2015have been from our operating and financing activities, as described below.  The Company’s cash flows from operating, investing and financing activities, as reflected in the statement of cash flows, are summarized as follows:

	Three Months Ended
	March 31, 2015			March 31, 2014
Cash provided by (used in):
Operating activities	$	1,171		$	975
Investing activities		(711	)		259
Financing activities		101			(908	)
Effect of exchange rate changes on cash		(196	)		12
Increase in cash	$	365		$	338

The most significant items that contributed to the $1,171 of cash provided by operating activities was the net income of $284, add backs for non-cash depreciation and stock compensation, partially offset by increases in accrued expenses.

Net cash used in investing activities of $(711) consisted of purchases of property, plant and equipment.

Net cash provided by financing activities of $101 was comprised primarily of proceeds from long-term borrowings partially offset by repayments of borrowings under our credit facilities.

The effect of exchange rate changes on cash fluctuated largely due to the dollar strengthening in comparison to the euro.

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The Company had the following bank arrangements:

	March 31, 2015		December 31, 2014
Total borrowing capacity under existing facilities	$	14,227	$	10,925
Facility Borrowings:
Domestic revolving credit facility		1,093		3,843
Domestic term loan		5,000		1,750
Foreign overdraft and letter of credit facility		915		920
Total borrowings and commitments		7,008		6,513
Remaining availability under existing facilities	$	7,219	$	4,412

Domestic Credit Facilities

The Company and its domestic subsidiaries are parties to a credit facility with The PrivateBank and Trust Company. The credit facility, as amended, provides for:

§ an $8,000 revolving credit facility, with a $200 sub facility for letters of credit.  Under the revolving credit facility, the availability of funds depends on a borrowing base composed of stated percentages of the Company’s eligible trade receivables and eligible inventory, and eligible equipment less a reserve; and

§ a term loan in the original amount of $5,000.

In March 2015, the Company and its domestic subsidiaries entered into a Seventh Amendment to the Loan and Security Agreement with The PrivateBank and Trust Company. The amendment, among other things:

§ increased the Company’s term loan to $5,000 from its then current balance of $1,750, as a result of which the Company borrowed an additional $3,250 under the term loan facility;

§ extended the term loan and revolving loan maturity date to February 28, 2019, keeping the existing term loan amortization schedule in place;

§ increased the annual capital expenditure limit to $4,500;

§ implemented investment provisions that allow for up to $4,000 in investment spending prior to requiring bank approval;

§ lowered interest rates on the term loan and revolving loan;

Due to the Seventh Amendment as described above, the term loan and the revolving loan maturity date has been extended to February 28, 2019. All of the borrowings under this agreement have been characterized as either a current or long-term liability on our balance sheet in accordance with the repayment terms described more fully below.

Loans under the credit facility are secured by a security interest in substantially all of the assets of the Company and its domestic subsidiaries including a pledge of the stock of its domestic subsidiaries. Loans under the credit facility bear interest at varying rates based on the Company’s leverage ratio of funded debt / EBITDA, at the option of the Company, at:

§ the London InterBank Offered Rate (“LIBOR”) plus 2.50% to 4.00%, or

§ the base rate, which is the higher of (a) the rate publicly announced from time to time by the lender as its “prime rate” and (b) the Federal Funds Rate plus 0.5%, plus (0.25)% to 1.25%; in each case, depending on the Company’s leverage ratio.

23

Interest is payable monthly in arrears, except that interest on LIBOR based loans is payable at the end of the one, two or three month interest periods applicable to LIBOR based loans. IntriCon is also required to pay a non-use fee equal to 0.25% per year of the unused portion of the revolving line of credit facility, payable quarterly in arrears.

Weighted average interest on the revolving credit facility was 4.39% for the three months ended March 31, 2015 and 4.51% for the year ended December 31, 2014.  The outstanding balance of the revolving credit facility was $1,093 and $3,843 at March 31, 2015 and December 31, 2014, respectively.  The total availability on the revolving credit facility was approximately $6,341 and $3,456 at March 31, 2015 and December 31, 2014, respectively.

The outstanding principal balance of the term loan, as amended, is payable in quarterly installments of $250. Any remaining principal and accrued interest is payable on February 28, 2019. IntriCon is also required to use 100% of the net cash proceeds of certain asset sales (excluding inventory and certain other dispositions), sale of capital securities or issuance of debt to pay down the term loan.

The Company was in compliance with the financial covenants under the facility as of March 31, 2015.

Foreign Credit Facility

In addition to its domestic credit facilities, the Company’s wholly-owned subsidiary, IntriCon, PTE LTD., entered into an international senior secured credit agreement with Oversea-Chinese Banking Corporation Ltd. that provides for an asset based line of credit. Borrowings bear interest at a rate of .75% to 2.5% over the lender’s prevailing prime lending rate.  Weighted average interest on the international credit facilities was 3.38% and 4.50% for the three months ended March 31, 2015 and the year ended December 31, 2014, respectively. The outstanding balance was $915 and $920 at March 31, 2015 and December 31, 2014, respectively.  The total remaining availability on the international senior secured credit agreement was approximately $878 and $956 at March 31, 2015 and December 31, 2014, respectively.

We believe that funds expected to be generated from operations, the available borrowing capacity through our revolving credit loan facilities and the control of capital spending will be sufficient to meet our anticipated cash requirements for operating needs and for repayment of maturing debt for at least the next 12 months. If, however, we do not generate sufficient cash from operations, or if we incur additional unanticipated liabilities, we may be required to seek additional financing or sell equity or debt on terms which may not be as favorable as we could have otherwise obtained. No assurance can be given that any refinancing, additional borrowing or sale of equity or debt will be possible when needed or that we will be able to negotiate acceptable terms. In addition, our access to capital is affected by prevailing conditions in the financial and equity capital markets, as well as our own financial condition. Furthermore, if we fail to meet our financial and other covenants under our loan agreements, absent waiver, we will be in default of the loan agreements and our lenders could take action that would adversely affect our business. There can be no assurance that our lenders will provide a waiver of any default in our loan covenants. While management believes that we will be able to meet our liquidity needs for at least the next 12 months, no assurance can be given that we will be able to do so.

ITEM 3.  Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

ITEM 4.  Controls and Procedures

The Company’s management, with the participation of its chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of the Company’s disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e), as of March 31, 2015 (the “Disclosure Controls Evaluation”). Based on the Disclosure Controls Evaluation, the Company’s chief executive officer and chief financial officer concluded that the Company’s disclosure controls and procedures were effective to provide a reasonable level of assurance that: (i) information required to be disclosed by the Company in the reports the Company files or submits under the Securities Exchange Act of 1934, as amended (“Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) information required to be disclosed in the reports the Company files or submits under Exchange Act is accumulated and communicated to management, including the principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure, all in accordance with Exchange Act Rule 13a-15(e).

24

There were no changes in the Company’s internal control over financial reporting, as defined in Exchange Act Rule 13a-15(f), during the quarter ended March 31, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings

The information contained in note 12 to the Consolidated Condensed Financial Statements in Part I of this quarterly report is incorporated by reference herein.

ITEM 1A. Risk Factors

In addition to the foregoing and the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect the Company’s business, financial condition or future results.  The risk factors in the Company’s Annual Report on Form 10-K have not materially changed.  The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

ITEM 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

ITEM 3.  Defaults upon Senior Securities

None.

ITEM 4.  Mine Safety Disclosures.

Not applicable.

ITEM 5.  Other Information

None.

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ITEM 6.  Exhibits

(a) Exhibits

+10.1 Amendment No. 2 to Equity Plans (incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).

10.2 * Seventh Amendment to Loan and Security Agreement among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation and The PrivateBank and Trust Company, dated as of March 31, 2015.

10.3 * Second Amended and Restated Term Notefrom the Company, IntriCon, Inc. and IntriCon Tibbetts Corporation to The PrivateBank and Trust Company

+10.4 2015 Equity Incentive Plan (incorporated by reference from Appendix A to the Company’s proxy statement filed with the SEC on March 6, 2015).

+10.5 * Form of Stock Option Agreement issued to employees pursuant to the 2015 Equity Incentive Plan.

+10.6 * Form of Stock Option Agreement issued to directors pursuant to the 2015 Equity Incentive Plan.

31.1 * Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2 * Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1 * Certification of principal executive officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 * Certification of principal financial officer to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101 * The following materials from IntriCon Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets as of March 31, 2015,  (Unaudited) and December 31, 2014; (ii) Consolidated Condensed Statements of Operations (Unaudited) for the Three Months Ended March 31, 2015, and 2014; (iii) Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2015, and 2014;  (iv) Consolidated Condensed Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2015, and 2014; and (v) Notes to Consolidated Condensed Financial Statements (Unaudited)

*  Filed herewith.

+  Denotes management contract, compensatory plan or arrangement.

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SIGNATURES

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.

	INTRICON CORPORATION (Registrant)
Date: May 13, 2015	By:	/s/ Mark S. Gorder
	Mark S. Gorder
	President and Chief Executive Officer
	(principal executive officer)

Date: May 13, 2015	By:	/s/ Scott Longval
	Scott Longval
	Chief Financial Officer and Treasurer
	(principal financial officer)

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EXHIBIT INDEX

+10.1 Amendment No. 2 to Equity Plans (incorporated by reference from the Company’s Annual Report on Form 10-K for the year ended December 31, 2014).

10.2* Seventh Amendment to Loan and Security Agreement among the Company, IntriCon, Inc., IntriCon Tibbetts Corporation and The PrivateBank and Trust Company, dated as of March 31, 2015 .

10.3* Second Amended and Restated Term Notefrom the Company, IntriCon, Inc. and IntriCon Tibbetts Corporation to The PrivateBank and Trust Company

+10.4 2015 Equity Incentive Plan (incorporated by reference from Appendix A to the Company’s proxy statement filed with the SEC on March 6, 2015).

+10.5* Form of Stock Option Agreement issued to employees pursuant to the 2015 Equity Incentive Plan.

+10.6* Form of Stock Option Agreement issued to directors pursuant to the 2015 Equity Incentive Plan

31.1* Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2* Certification of principal financial officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1* Certification of principal executive officer pursuant to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2* Certification of principal financial officer to U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101* The following materials from IntriCon Corporation’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Condensed Balance Sheets as of March 31, 2015, (Unaudited) and December 31, 2014; (ii) Consolidated Condensed Statements of Operations (Unaudited) for the Three Months Ended March 31, 2015, and 2014; (iii) Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) for the Three Months Ended March 31, 2015, and 2014;  (iv) Consolidated Condensed Statements of Cash Flows (Unaudited) for the Three Months Ended March 31, 2015, and 2014; and (v) Notes to Consolidated Condensed Financial Statements (Unaudited)

*  Filed herewith.

+  Denotes management contract, compensatory plan or arrangement.

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EX-10.2

EXHIBIT 10.2

Execution Copy

SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

THIS SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT (this “Amendment”) is made and entered into as of March 31, 2015, by and among INTRICON CORPORATION, a Pennsylvania corporation, INTRICON, INC. (formerly known as Resistance Technology, Inc.), a Minnesota corporation (successor-by-merger to Intricon Datrix Corporation (formerly known as Jon Barron, Inc.) (d/b/a Datrix), a California corporation), INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine corporation (each, a “Borrower”; collectively, the “Borrowers”), and THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation (the “Bank”).

RECITALS:

A.           The Borrowers and the Bank are parties to a certain Loan and Security Agreement dated as of August 13, 2009, as amended by a First Amendment dated as of March 12, 2010, as further amended by a Second Amendment dated as of August 12, 2011, as further amended by a Third Amendment dated as of March 1, 2012, as further amended by a Fourth Amendment dated as of August 6, 2012, as further amended by a Fifth Amendment dated December 21, 2012 and as further amended by a Sixth Amendment dated February 14, 2014 (as so amended, the “Loan Agreement”). All capitalized terms not otherwise defined herein shall have the meanings given to them in the Loan Agreement.

B.           The Borrowers have requested that the Bank amend certain provisions of the Loan Agreement, and the Bank has agreed to so amend the Loan Agreement upon the terms and subject to the conditions set forth in this Amendment.

AGREEMENTS:

NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, and for other good and valuable consideration, the nature, receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1.Delivery of Documents. At or prior to the execution of this Amendment, and as a condition precedent to the effectiveness of this Amendment, the Borrowers shall have satisfied the following conditions and delivered or caused to be delivered to the Bank the following documents each dated such date and in form and substance satisfactory to the Bank and duly executed by all appropriate parties:

(a)          This Amendment, duly executed by the Borrowers.

(b)          The Second Amended and Restated Term Note, substantially similar to the form attached hereto as Exhibit A.

(c)          With respect to each Borrower, a copy of the resolutions of the Board of Directors of such Borrower authorizing the execution, delivery and performance of this Amendment and the Second Amended and Restated Term Note certified as true and accurate by an officer of such Borrower, along with a certificate of such officer which (i) certifies that there has been no amendment to either the Articles of Incorporation or the Bylaws of such Borrower since true and accurate copies of the same were last delivered and certified to the Bank, and that said Articles of Incorporation and the Bylaws remain in full force and effect as of the date of this Amendment, (ii) identifies each officer of such Borrower authorized to execute this Amendment and any other instrument or agreement executed by such Borrower in connection with this Amendment, and (iii) sets forth specimen signatures of each officer of such Borrower referred to above and identifies the office or offices held by such officer.

(d)            The Bank shall have received (i) an amendment and extension fee in the amount of $10,000, which fee shall be non-refundable when paid and wholly earned when received; and (ii) reimbursement for its legal fees and other expenses as described in Section 8 hereof.

(e)            Copies of all material agreements related to the Borrowers’ intended Investments in the Potential Investments.

(f)            Such other documents or instruments as the Bank may reasonably require.

Section 2.Amendments.

(a)            Definitions. Section 1.1 of the Loan Agreement is amended by adding in appropriate alphabetical order, or amending and restating, as applicable, the following terms:

“Applicable Base Rate Margin,” “Applicable LIBOR Rate Margin,” “Applicable LOC Fee” and “Applicable Non-Use Fee” means, as of any date, the applicable per annum rate shown in the applicable column in the table set forth below based on the then applicable Tier associated with the then applicable Leverage Ratio:

		Revolving Loans		Term Loan
Tier	Leverage Ratio	Applicable LIBOR Rate Margin	Applicable Base Rate Margin	Applicable LIBOR Rate Margin	Applicable Base Rate Margin	Applicable LOC Fee	Applicable Non-Use Fee
I	≥ 3.00 to 1.00	3.50%	0.75%	4.00%	1.25%	3.50%	0.25%
II	≥ 2.00 to 1.00 and < 3.00 to 1.00	3.00%	0.25%	3.50%	0.75%	3.00%	0.25%
III	≥ 1.25 to 1.00 and < 2.00 to 1.00	2.75%	0.0%	3.00%	0.25%	2.75%	0.25%
IV	< 1.25 to 1.00	2.50%	(0.25%)	2.75%	0.0%	2.50%	0.25%

2

For purposes of determining the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-Use Fee, the Leverage Ratio (and applicable Tier) will be determined as of the end of each calendar quarter occurring during the term of this Agreement (the end of each calendar quarter being a “Determination Date”) beginning with the calendar quarter ending June 30, 2015.  On the Bank’s receipt of the financial statements required to be delivered to the Bank pursuant to Section 8.8, the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-Use Fee will be subject to adjustment in accordance with the table set forth above based on the then Leverage Ratio and Tier so long as no Event of Default is existing as of applicable Determination Date or as of the effective date of adjustment.  The foregoing adjustment, if applicable, to the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-Use Fee will become effective for LIBOR Rate Loans requested, the unpaid principal balance of Base Rate Loans outstanding, non-use fees accruing, and fees due with respect to Letters of Credit issued or renewed, on and after the first day of the first calendar month following delivery to the Bank of the financial statements required to be delivered to the Bank pursuant to Section 8.8 until the next succeeding effective date of adjustment pursuant to this Agreement.  Each of the financial statements required to be delivered to the Bank must be delivered to the Bank in compliance with Section 8.8.  If the Borrowers, however, have not timely delivered their financial statements in accordance with Section 8.8, then, without limiting any of the rights and remedies available to the Bank by reason of such noncompliance, at the Bank’s option, commencing on the date upon which such financial statements should have been delivered in accordance with Section 8.8 and continuing until such financial statements are actually delivered in accordance with Sections 8.8, it shall be assumed for purposes of determining the Applicable LIBOR Rate Margin, the Applicable Base Rate Margin, the Applicable LOC Fee, and the Applicable Non-Use Fee that Tier I and the pricing associated with Tier I will be applicable on the then applicable Determination Date.  From the date of the Seventh Amendment to this Agreement to and including the first Determination Date beginning with the calendar quarter ending June 30, 2015, the pricing associated with Tier III will be in effect.

“Capital Expenditures” shall mean all expenditures (including Capitalized Lease Obligations) which, in accordance with GAAP, would be required to be capitalized and shown on the consolidated balance sheet of the Borrowers, but excluding expenditures made in connection with the replacement, substitution or restoration of assets to the extent financed (i) from insurance proceeds (or other similar recoveries) paid on account of the loss of or damage to the assets being replaced or restored, (ii) with awards of compensation arising from the taking by eminent domain or condemnation of the assets being replaced or (iii) from the proceeds of an Asset Disposition; provided, however, that to the extent that the amounts described in clause (x) of the definition of “EBITDA” are capitalized in accordance with GAAP, the same shall be excluded from the calculation of Capital Expenditures.

“Debt” shall mean, as to any Person, without duplication, (a) all indebtedness of such Person; (b) all borrowed money of such Person (including principal, interest, fees and charges), whether or not evidenced by bonds, debentures, notes or similar instruments; (c) all obligations to pay the deferred purchase price of property or services; (d) all obligations, contingent or otherwise, with respect to the maximum face amount of all letters of credit (whether or not drawn), bankers’ acceptances and similar obligations issued for the account of such Person (including the Letters of Credit), and all unpaid drawings in respect of such letters of credit, bankers’ acceptances and similar obligations; (e) all indebtedness secured by any Lien on any property owned by such Person, whether or not such indebtedness has been assumed by such Person (provided, however, if such Person has not assumed or otherwise become liable in respect of such indebtedness, such indebtedness shall be deemed to be in an amount equal to the fair market value of the property subject to such Lien at the time of determination); (f) the aggregate amount of all Capitalized Lease Obligations of such Person; (g) all Contingent Liabilities of such Person, whether or not reflected on its balance sheet; (h) all Hedging Obligations of such Person; (i) all Debt of any partnership of which such Person is a general partner; (j) all monetary obligations of such Person under (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations that do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the indebtedness of such Person (without regard to accounting treatment); and (k) as to the Borrowers, all Foreign Overdraft Debt. Notwithstanding the foregoing, Debt shall not include (i) trade payables and accrued expenses incurred by such Person in accordance with customary practices and in the ordinary course of business of such Person, or (ii) obligations to fund Investments that are permitted under Section 9.3(g).

3

“EBITDA” shall mean, for any period, the sum for such period of: (i) Net Income, plus (ii) Interest Charges,  plus  (iii) federal and state income taxes,  plus  (iv) Depreciation,  plus  (v) non-cash management compensation expense,  plus  (vi) all other non-cash charges,  minus  (vii) all non-cash income or gains, in each case to the extent included in determining Net Income for such period,  minus  (viii) all cash payments made in such period on account of non-cash charges expensed in a prior period,  in each case determined on a consolidated basis, plus (ix) without duplication, cash received following the date of the Seventh Amendment to this Agreement from dividends, distributions or interest payments related to any of Borrowers’ joint venture or minority interest Investments permitted under Section 9.3(g), plus (x) to the extent deducted in arriving at Net Income for such period, an amount not to exceed $3,000,000 in the aggregate incurred in respect of a Potential Investment specifically designated by Borrowers in writing to Bank in connection with the Seventh Amendment to this Agreement.

“Potential Investments” means the potential Investments disclosed by Borrowers to Bank in writing in connection with the Seventh Amendment to this Agreement.

“Revolving Loan Maturity Date” means February 28, 2019, unless extended by the Bank pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the Revolving Note.

“Term Loan Maturity Date” means February 28, 2019, unless extended by the Bank pursuant to any modification, extension or renewal note executed by the Borrowers and accepted by the Bank in its sole and absolute discretion in substitution for the Term Note.

“Term Note” means a term note in the form prepared by and acceptable to the Bank, dated as of the date of the Seventh Amendment to this Agreement, in the original principal amount of $5,000,000 and maturing on the Term Loan Maturity Date, duly executed by the Borrowers and made jointly and severally payable to the order of the Bank, together with any and all renewal, extension, modification or replacement notes executed by the Borrowers and delivered to the Bank and given in substitution therefor.

(b)          Deleted Definitions. Section 1.1 of the Loan Agreement is amended to delete the definition of “Term Loan Commitment”.

4

(c)          Term Loan Provisions.

(i)          Section 2.2(a) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

(a)          Term Loan.

(i)           The Bank has made term loans to the Borrowers in accordance with the terms of this Agreement, in connection with the Second Amendment to this Agreement and in connection with the Fifth Amendment to this Agreement (the “Prior Term Loans”. Immediately before giving effect to the Seventh Amendment to this Agreement, the aggregate outstanding principal balance of the Prior Term Loans was $1,750,000 and the Borrowers’ obligation to pay the Prior Term Loans was evidenced by the Promissory Note of the Borrowers  payable to the order of the Bank in the original principal amount of $4,000,000 (the “Prior Term Note”).

(ii)          The Bank agrees to make a new term loan to the Borrowers in the amount of $3,250,000 (the “Seventh Amendment Term Loan”) on the date the conditions precedent to the Seventh Amendment to this Agreement are satisfied and from and after such date, the Prior Term Loan and the Seventh Amendment Term Loan will be deemed to be a single term loan in the original principal amount of $5,000,000 and will be referred to as the “Term Loan”. The obligation of the Borrowers to pay the principal of, and interest on, the Term Loan shall be evidenced by the Term Note. The Borrowers will use the proceeds of the Seventh Amendment Term Loan for the purposes of (i) making Investments subject to the provisions of Section 9.3(g), (ii) providing working capital for the value hearing health business segment and (iii) financing their working capital requirements and general corporate purposes. The Term Loan may be prepaid in whole or in part at any time subject to Section 2.2(e), but shall be due in full on the Term Loan Maturity Date, unless the credit extended under the Term Loan is otherwise accelerated, terminated or extended as provided in this Agreement.

(ii)         Section 2.2(c) of the Loan Agreement is hereby amended by replacing the date “December 31, 2012” with the date “June 30, 2015”.  For the sake of clarity, no quarterly installment is required to be made on March 31, 2015.

(d)          Investments.        Section 9.3(g) of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

(g)          Investments in the Potential Investments as contemplated by the agreements delivered to the Bank in connection with the Seventh Amendment to this Agreement and, after delivery to the Bank of such documents as the Bank may reasonably request, other Investments in businesses related to the core business activities of the Borrowers, provided that (i) immediately before and immediately after giving effect to any such Investment, no Unmatured Event of Default or Event of Default shall have occurred and be continuing and (ii) aggregate amount of such Investments (net of all repayments, returns of capital, interest payments, dividends and distributions received after the date of the Seventh Amendment to this Agreement) does not exceed $4,000,000 at any time.

5

(e)          Fixed Charge Coverage Ratio. Section 10.3 of the Loan Agreement is hereby amended by replacing clauses (a) and  (b)(ii) of that Section with the following:

(a) the total of consolidated EBITDA for such period,  minus  the sum of all income taxes paid in cash by the Borrowers on a consolidated basis,  minus all Capital Expenditures of the Borrowers made during such period which are not financed with Funded Debt, minus that portion of the aggregate cash payments made by the applicable Borrower(s) in respect of the Subject Agreements and Applicable Agreements during such period that was not deducted as an expense in arriving at Net Income for such period,  minus, to the extent not deducted as an expense or loss in arriving at EBITDA for such period, cash paid following the date of the Seventh Amendment to this Agreement in respect of capital calls related to any of Borrowers’ joint venture or minority interest Investments permitted under Section 9.3(g);

(ii) (A) regularly scheduled payments made (and, without duplication, payments required to be made) in respect of principal of Funded Debt (including the Term Loan, but excluding the Revolving Loans) and (B) a payment of $250,000 assumed to have been made with respect to the Term Loan on March 31, 2015 (notwithstanding that no such payment is required to be made on such date),

(f)           Capital Expenditures. Section 10.4 of the Loan Agreement is hereby amended and restated in its entirety to read as follows:

10.4     Capital Expenditures. The Borrowers shall not incur Capital Expenditures in an amount greater than $4,500,000 in the aggregate in the fiscal year ending December 31, 2015 or in any fiscal year thereafter.

Section 3.Representations; No Default. Each Borrower represents and warrants that: (a) the representation and warranties contained in Section 7 of the Loan Agreement are true and correct in all material respects, as though made on the date hereof, except to the extent such representation and warranty, by its express terms, relates solely to a prior date, and except that the representations and warranties contained in Section 7.26 of the Loan Agreement shall be true and correct in all material respects, as though made on the date of the financial statements most recently delivered to the Bank pursuant to Section 8.8(a) of the Loan Agreement; (b) such Borrower has the power and legal right and authority to enter into this Amendment and has duly authorized the execution and delivery of this Amendment and other agreements and documents executed and delivered by such Borrower in connection herewith; (c) neither this Amendment nor the agreements contained herein contravene or constitute an Unmatured Event of Default or Event of Default under the Loan Agreement or a default under any other agreement, instrument or indenture to which such Borrower is a party or a signatory, or any provision of such Borrower’s Articles of Incorporation or Bylaws or, to the best of such Borrower’s knowledge, any other agreement or requirement of law, or result in the imposition of any lien or other encumbrance on any of its property under any agreement binding on or applicable to such Borrower or any of its property except, if any, in favor of the Bank; (d) no consent, approval or authorization of or registration or declaration with any party, including but not limited to any governmental authority, is required in connection with the execution and delivery by the Borrower of this Amendment or other agreements and documents executed and delivered by such Borrower in connection herewith or the performance of obligations of such Borrower herein described, except for those which such Borrower has obtained or provided and as to which such Borrower has delivered certified copies of documents evidencing each such action to the Bank; (e) no events have taken place and no circumstances exist at the date hereof which would give such Borrower grounds to assert a defense, offset or counterclaim to the obligations of such Borrower under the Loan Agreement or any of the other Loan Documents; (f) there are no known claims, causes of action, suits, debts, liens, obligations, liabilities, demands, losses, costs and expenses (including attorneys’ fees) of any kind, character or nature whatsoever, fixed or contingent, which such Borrower may have or claim to have against the Bank, which might arise out of or be connected with any act of commission or omission of the Bank existing or occurring on or prior to the date of this Amendment, including, without limitation, any claims, liabilities or obligations arising with respect to the indebtedness evidenced by the Notes (as defined in the Loan Agreement); and (g) after giving effect to this Amendment, no Unmatured Event of Default or Event of Default has occurred and is continuing under the Loan Agreement.

6

Section 4.         Affirmation; Further References. The Bank and each Borrower  acknowledge and affirm that the Loan Agreement, as hereby amended, is hereby ratified and confirmed in all respects and all terms, conditions and provisions of the Loan Agreement (except as amended by this Amendment) and of each of the other Loan Documents shall remain unmodified and in full force and effect. All references in any document or instrument to the Loan Agreement are hereby amended and shall refer to the Loan Agreement as amended by this Amendment.

Section 5.         Merger and Integration; Superseding Effect. This Amendment, from and after the date hereof, embodies the entire agreement and understanding between the parties hereto and supersedes and has merged into it all prior oral and written agreements on the same subjects by and between the parties hereto with the effect that this Amendment, shall control with respect to the specific subjects hereof and thereof.

Section 6.         Severability. Whenever possible, each provision of this Amendment and any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be interpreted in such manner as to be effective, valid and enforceable under the applicable law of any jurisdiction, but, if any provision of this Amendment or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto shall be held to be prohibited, invalid or unenforceable under the applicable law, such provision shall be ineffective in such jurisdiction only to the extent of such prohibition, invalidity or unenforceability, without invalidating or rendering unenforceable the remainder of such provision or the remaining provisions of this Amendment or any other statement, instrument or transaction contemplated hereby or thereby or relating hereto or thereto in such jurisdiction, or affecting the effectiveness, validity or enforceability of such provision in any other jurisdiction.

Section 7.         Successors. This Amendment shall be binding upon the Borrowers, the Bank and their respective successors and assigns, and shall inure to the benefit of the Borrowers, the Bank and to the respective successors and assigns of the Bank.

Section 8.         Costs and Expenses. Each Borrower agrees to reimburse the Bank, upon execution of this Amendment, for all reasonable out-of-pocket expenses (including attorneys’ fees and legal expenses of counsel for the Bank) incurred in connection with the Loan Agreement, including in connection with the negotiation, preparation and execution of this Amendment and all other documents negotiated, prepared and executed in connection with this Amendment, and in enforcing the obligations of the Borrowers under this Amendment, and to pay and save the Bank harmless from all liability for, any stamp or other taxes which may be payable with respect to the execution or delivery of this Amendment.

7

Section 9.         Headings. The headings of various sections of this Amendment have been inserted for reference only and shall not be deemed to be a part of this Amendment.

Section 10.        Counterparts; Digital Copies. This Amendment may be executed in several counterparts as deemed necessary or convenient, each of which, when so executed, shall be deemed an original, provided that all such counterparts shall be regarded as one and the same document, and any party to this Amendment may execute any such agreement by executing a counterpart of such agreement. A facsimile or digital copy (.pdf) of this signed Amendment shall be deemed to be an original thereof.

Section 11.        Release of Rights and Claims. Each Borrower, for itself and its successors and assigns, hereby releases, acquits, and forever discharges Bank and its successors and assigns for any and all manner of actions, suits, claims, charges, judgments, levies and executions occurring or arising from the transactions entered into with Bank prior to entering into this Amendment whether known or unknown, liquidated or unliquidated, fixed or contingent, direct or indirect which such Borrower may have against Bank.

Section 12.        Governing Law. This Amendment shall be governed by the internal laws of the State of Minnesota, without giving effect to conflict of law principles thereof.

Section 13.        No Waiver. Nothing contained in this Amendment (or in any other agreement or understanding between the parties) shall constitute a waiver of, or shall otherwise diminish or impair, the Bank’s rights or remedies under the Loan Agreement or any of the other Loan Documents, or under applicable law.

[Remainder of page intentionally blank; signature page follows]

8

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the day and year first above written.

BORROWERS:	INTRICON CORPORATION, a Pennsylvania corporation
	By	/s/ Scott Longval
		Scott Longval, Chief Financial Officer
	INTRICON, INC. (formerly known as Resistance  Technology, Inc.), a Minnesota corporation
	By	/s/ Scott Longval
		Scott Longval, Chief Financial Officer
	INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine corporation
	By	/s/ Scott Longval
		Scott Longval, Chief Financial Officer

[Signature page to Seventh Amendment to Loan and Security Agreement]

 

BANK:	THE PRIVATEBANK AND TRUST COMPANY, an Illinois banking corporation
	By	/s/ John Falb
		John Falb, Managing Director

[Signature page to Seventh Amendment to Loan and Security Agreement]

EXHIBIT A

TO

SEVENTH AMENDMENT TO LOAN AND SECURITY AGREEMENT

SECOND AMENDED AND RESTATED TERM NOTE

$5,000,000 Minneapolis, Minnesota

FOR VALUE RECEIVED, the undersigned, INTRICON CORPORATION, a Pennsylvania corporation, INTRICON, INC. (formerly known as Resistance Technology, Inc.), a Minnesota corporation (successor-by-merger to Intricon Datrix Corporation (formerly known as Jon Barron, Inc.) (d/b/a Datrix), a California corporation), and INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine corporation (each, a “Borrower”; collectively, the “Borrowers”), hereby JOINTLY AND SEVERALLY promise to pay to the order of THE PRIVATEBANK AND TRUST COMPANY, an Illinois state banking corporation (the “Bank”), the principal sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000), payable in periodic installments on the dates and in the amounts set forth in Loan Agreement (as hereinafter defined), with one final balloon payment on the Term Loan Maturity Date. The actual amount due and owing from time to time hereunder shall be evidenced by Bank’s records of receipts and disbursements with respect to the Term Loan, which shall, absent manifest error, be conclusive evidence of such amount.

Each Borrower further promises to pay interest on the aggregate unpaid principal amount hereof at the rates provided in the Loan Agreement from the date hereof until payment in full hereof. Accrued interest shall be payable on the dates specified in the Loan Agreement.

All payments of principal and interest under this Second Amended and Restated Term Note (the “Note”) shall be made in lawful money of the United States of America in immediately available funds at the Bank’s office at 50 South 6th Street, Suite 1415, Minneapolis, MN 55402, or at such other place as may be designated by the Bank to the Borrowers in writing.

This Note is the Term Note referred to in, and evidences indebtedness incurred under, a Loan and Security Agreement dated as of August 13, 2009 (as previously amended, as further amended on or about the date hereof and as the same may be hereafter further amended, modified or supplemented from time to time, the “Loan Agreement”), among the Borrowers and the Bank, to which Loan Agreement reference is made for a statement of the terms and provisions thereof, including those under which the Borrowers are permitted and required to make prepayments and repayments of principal of such indebtedness and under which such indebtedness may be declared to be immediately due and payable.

All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment, demand, protest and notice of dishonor in connection with this Note.

This Note is made under and governed by the internal laws of the State of Minnesota.

This Note amends, restates and replaces, but does not evidence repayment of or constitute a novation with respect to, that certain Term Note, dated August 12, 2011 made payable jointly and severally by the Borrowers to the order of the Bank in the original principal amount of $4,000,000.00.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the undersigned have caused this Note to be executed as of the date first set forth above.

INTRICON CORPORATION, a Pennsylvania corporation
By	/s/ Scott Longval
	Scott Longval, Chief Financial Officer
INTRICON, INC. (formerly known as Resistance  Technology, Inc.), a Minnesota corporation
By	/s/ Scott Longval
	Scott Longval, Chief Financial Officer
INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine corporation
By	/s/ Scott Longval
	Scott Longval, Chief Financial Officer

[Signature page to Second Amended and Restated Term Note]

EX-10.3

EXHIBIT 10.3

SECOND AMENDED AND RESTATED TERM NOTE

$5,000,000  Minneapolis, Minnesota

FOR VALUE RECEIVED, the undersigned, INTRICON CORPORATION, a Pennsylvania corporation, INTRICON, INC. (formerly known as Resistance Technology, Inc.), a Minnesota corporation (successor-by-merger to Intricon Datrix Corporation (formerly known as Jon Barron, Inc.) (d/b/a Datrix), a California corporation), and INTRICON TIBBETTS CORPORATION (formerly known as TI Acquisition Corporation), a Maine corporation (each, a “Borrower”; collectively, the “Borrowers”), hereby JOINTLY AND SEVERALLY promise to pay to the order of THE PRIVATEBANK AND TRUST COMPANY, an Illinois state banking corporation (the “Bank”), the principal sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000), payable in periodic installments on the dates and in the amounts set forth in the Loan Agreement (as hereinafter defined), with one final balloon payment on the Term Loan Maturity Date. The actual amount due and owing from time to time hereunder shall be evidenced by Bank’s records of receipts and disbursements with respect to the Term Loan, which shall, absent manifest error, be conclusive evidence of such amount.

Each Borrower further promises to pay interest on the aggregate unpaid principal amount hereof at the rates provided in the Loan Agreement from the date hereof until payment in full hereof. Accrued interest shall be payable on the dates specified in the Loan Agreement.

All payments of principal and interest under this Second Amended and Restated Term Note (the “Note”) shall be made in lawful money of the United States of America in immediately available funds at the Bank’s office at 50 South 6th Street, Suite 1415, Minneapolis, MN 55402, or at such other place as may be designated by the Bank to the Borrowers in writing.

This Note is the Term Note referred to in, and evidences indebtedness incurred under, a Loan and Security Agreement dated as of August 13, 2009 (as previously amended, as further amended on or about the date hereof and as the same may be hereafter further amended, modified or supplemented from time to time, the “Loan Agreement”), among the Borrowers and the Bank, to which Loan Agreement reference is made for a statement of the terms and provisions thereof, including those under which the Borrowers are permitted and required to make prepayments and repayments of principal of such indebtedness and under which such indebtedness may be declared to be immediately due and payable.

All parties hereto, whether as makers, endorsers or otherwise, severally waive presentment, demand, protest and notice of dishonor in connection with this Note.

This Note is made under and governed by the internal laws of the State of Minnesota.

This Note amends, restates and replaces, but does not evidence repayment of or constitute a novation with respect to, that certain Term Note, dated August 12, 2011 made payable jointly and severally by the Borrowers to the order of the Bank in the original principal amount of $4,000,000.00.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

IN WITNESS WHEREOF, the undersigned have caused this Note to be executed as of the date first set forth above.

INTRICON CORPORATION, a Pennsylvania corporation
By	/s/ Scott Longval
	Scott Longval, Chief Financial Officer
INTRICON, INC. (formerly known as Resistance  Technology, Inc.), a Minnesota corporation
By	/s/ Scott Longval
	Scott Longval, Chief Financial Officer
INTRICON TIBBETTS CORPORATION
(formerly known as TI Acquisition Corporation), a Maine corporation
By	/s/ Scott Longval
	Scott Longval, Chief Financial Officer

[Signature page to Second Amended and Restated Term Note]

EX-10.5

EXHIBIT 10.5

«Date»

«Full_Name»

«Address1»

«Address2»

Dear «M_1st_Name»:

I am pleased to inform you that on «Grant_Date» the Compensation Committee of the Board of Directors of IntriCon Corporation granted you options to purchase «Shares» Common Shares of the Company under the Company’s 2015 Equity Incentive Plan (the “Plan”) at an exercise price of $«Price» per share.

The options granted to you are intended to be non-qualified stock options.

These options will become exercisable as follows:

Date First Exercisable	Number of Shares
«M_1st_Exercise»		«M__shares»
«M_2nd_Ex»		«M__shares1»
«M_3rd_Ex»		«M__shares2»

The exercise price for your options shall be payable in cash, by the “net exercise” method without the payment of cash or as otherwise permitted under the Plan.

Once options become exercisable, they will remain exercisable until they are exercised or until they terminate.  Unless earlier terminated pursuant to the terms of the Plan, all options granted hereby shall terminate on «Terminate» (the “Scheduled Expiration Date”).  While the specific terms of the Plan will govern, generally:

· If your directorship is terminated due to your death or Disability (as defined in the Plan), all of your options will become immediately exercisable in full and may be exercised at any time prior to  the Scheduled Expiration Date;

· If your directorship is terminated due to your Retirement (as defined in the Plan), all of your options will become immediately exercisable in full and may be exercised at any time prior to the Scheduled Expiration Date;

· If your directorship is terminated due to any other reason, any options that you had that were not exercisable as of the date of the termination of your directorship will expire.  You may exercise options that were exercisable as of the date of the termination of your directorship at any time prior to the earlier of (a) 90 days after the date of termination of your directorship and (b) the Scheduled Expiration Date.

1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com

«Full_Name»

Page 2

Subject to the Plan, this option shall become exercisable in full upon the occurrence of a Change in Control (as defined in the Plan).

This option is subject to cancellation in the event that your directorship is terminated for Cause (as defined in the Plan) and under other circumstances described in the Plan.

Further terms governing the options granted to you are set forth in the Plan, which is incorporated herein by reference.  A copy of the Plan is available from the Human Resources Department.

If you wish to accept the grant of the options as provided above and in the Plan, please so indicate by signing and returning the enclosed copy of this letter, whereupon you and the Company shall be legally bound hereby under Pennsylvania law.

	Very truly yours, INTRICON CORPORATION
	By:
		«From»
		«Title»
		«M_2nd_line»
Accepted and Agreed:
«Full_Name»

1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com

EX-10.6

EXHIBIT 10.6

«Date»

«Full_Name»

IntriCon Corporation

1260 Red Fox Road

Arden Hills, MN 55112

Dear «M_1st_Name»:

I am pleased to inform you that on «Grant_Date» the Compensation Committee of the Board of Directors of IntriCon Corporation granted you options to purchase «Shares» Common Shares of the Company under the Company’s 2015 Equity Incentive Plan (the “Plan”) at an exercise price of $«Price» per share.

Under the Plan, the Company may grant either incentive stock options or non-qualified stock options.  The options granted to you are intended to be incentive stock options.

These options will become exercisable as follows:

Date First Exercisable	Number of Shares
«M_1st_Exercise»		«M__shares»
«M_2nd_Ex»		«M__shares1»
«M_3rd_Ex»		«M__shares2»

The exercise price for your options shall be payable in cash, by the “net exercise” method without the payment of cash or as otherwise permitted under the Plan.

Once options become exercisable, they will remain exercisable until they are exercised or until they terminate.  Unless earlier terminated pursuant to the terms of the Plan, all options granted hereby shall terminate on «Terminate» (the “Scheduled Expiration Date”).  While the specific terms of the Plan will govern, generally:

· If your employment is terminated due to your death or Disability (as defined in the Plan), all of your options will become immediately exercisable in full and may be exercised at any time prior to the Scheduled Expiration Date;

· If your employment is terminated due to your Retirement (as defined in the Plan), all of your options will become immediately exercisable in full and may be exercised at any time prior to the Scheduled Expiration Date;

· If your employment is terminated due to any other reason, any options that you had that were not exercisable as of the date of the termination of your employment will expire.  You may exercise options that were exercisable as of the date of the termination of your employment at any time prior to the earlier of (a) 90 days after the date of termination of employment and (b) the Scheduled Expiration Date.

1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com

«Full_Name»

Page 2

Subject to the Plan, this option shall become exercisable in full upon the occurrence of a Change in Control (as defined in the Plan).

This option is subject to cancellation in the event that your employment is terminated for Cause (as defined in the Plan) and under other circumstances described in the Plan.

Further terms governing the options granted to you are set forth in the Plan, which is incorporated herein by reference.  A copy of the Plan is available from the Human Resources Department.

If you wish to accept the grant of the options as provided above and in the Plan, please so indicate by signing and returning the enclosed copy of this letter, whereupon you and the Company shall be legally bound hereby under Pennsylvania law.

	Very truly yours, INTRICON CORPORATION
	By:
		«From»
		«Title»
		«M_2nd_line»
Accepted and Agreed:
«Full_Name»

1260 Red Fox Road ● Arden Hills, MN 55112 ● Tel: 651-636-9770 ● Fax: 651-357-1097 ● www.IntriCon.com

EX-31.1

EXHIBIT 31.1

CERTIFICATION Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Mark S. Gorder, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IntriCon Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2015	/s/ Mark S. Gorder
	Mark S. Gorder
	Chief Executive Officer
	(principal executive officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATIONPursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

I, Scott Longval, certify that:

1. I have reviewed this quarterly report on Form 10-Q of IntriCon Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 13, 2015	/s/ Scott Longval
	Scott Longval
	Chief Financial Officer and Treasurer
	(principal financial officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark S. Gorder, Chief Executive Officer (principal executive officer) of IntriCon Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1) the quarterly report on Form 10-Q of the Company for the quarterly period ended March 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 13, 2015	/s/ Mark S. Gorder
	Mark S. Gorder
	President and Chief Executive Officer
	(principal executive officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Scott Longval, Chief Financial Officer (principal financial officer) of IntriCon Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:

1) the quarterly report on Form 10-Q of the Company for the quarterly period ended March 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: May 13, 2015	/s/ Scott Longval
	Scott Longval
	Chief Financial Officer and Treasurer
	(principal financial officer)

The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Section 1350 of Chapter 63 of Title 18 of the United States Code) and is not being filed as part of the Report or as a separate disclosure document.

XML

Geographic Information (Geographical Distribution Of Long-Lived Assets) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 4,600	$ 4,245
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	3,738	3,307
Other - Primarily Asia [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Long-lived assets	$ 862	$ 938

XML

Income Per Share (Reconciliation Of Basic And Diluted Income Per Share) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Per Share [Abstract]
Income before discontinued operations	$ 284	$ 787
Loss from discontinued operations, net of income taxes (note 4)		(270)
Net income	$ 284	$ 517
Basic - weighted shares outstanding	5,849	5,729
Weighted shares assumed upon exercise of stock options	378	130
Diluted - weighted shares outstanding	6,227	5,859
Continuing operations	$ 0.05	$ 0.14
Discontinued operations		$ (0.05)
Net income per share:	$ 0.05	$ 0.09
Continuing operations	$ 0.05	$ 0.14
Discontinued operations		$ (0.05)
Net income per share:	$ 0.05	$ 0.09

XML

Shareholders' Equity And Stock-Based Compensation (Narrative) (Details) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2012	Dec. 31, 2010	Dec. 31, 2014
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Aggregate number of shares of common stock which awards could be granted	50,000				175,000
Maximum amount of common stock participants may elect to purchase	$ 100
Window period	20 days
Weighted average fair value of options granted	$ 4.37	$ 3.85
Expected forfeiture rate of stock options	0.00%
Weighted average remaining contractual life of options exercisable, years	4 years 1 month 6 days
Stock option expense	169	142
Unrecognized compensation costs on non-vested awards	$ 904
Unrecognized compensation costs, period of recognition, years	2 years 3 months 15 days
2006 Equity Incentive Plan [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Aggregate number of shares of common stock which awards could be granted			699,000
Increase in maximum number of shares approved			300,000	250,000
Vesting period of options under equity incentive plan	3 years
Shares issued in lieu of cash for director fees under director program	0	0
2001 Stock Option Plan And Non-Employee Directors' Stock Option Plan [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Aggregate number of shares of common stock which awards could be granted	147,000
Management Purchase Program [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Shares purchased for award	0	0
Employee Stock Purchase Plan [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Increase in maximum number of shares approved	100,000
Maximum number of shares approved under purchase plan	100,000
Shares purchased for award	3,000	5,000
Maximum [Member] | 2006 Equity Incentive Plan [Member]
Deferred Compensation Arrangement with Individual, Share-based Payments [Line Items]
Term of options	10 years

XML

Restructuring Charges (Details) (Employee Termination And Moving Costs [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2014
Employee Termination And Moving Costs [Member]
Restructuring Cost and Reserve [Line Items]
Incurred restructuring charges	$ 83

XML

Inventories (Tables)

3 Months Ended

Mar. 31, 2015

Inventories [Abstract]

Schedule Of Inventories

		Raw materials		Work-in process		Finished products and components		Total
March 31, 2015
Domestic	$	3,783	$	1,520	$	1,923	$	7,226
Foreign		1,774		746		202		2,722
Total	$	5,557	$	2,266	$	2,125	$	9,948
December 31, 2014
Domestic	$	3,993	$	1,300	$	1,838	$	7,131
Foreign		1,894		720		238		2,852
Total	$	5,887	$	2,020	$	2,076	$	9,983

XML

Statements Of Cash Flows (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Statements Of Cash Flows [Abstract]
Interest received	$ 12
Interest paid	89	134
Income taxes paid	$ 110

XML

Short And Long-Term Debt (Narrative) (Details) (USD $)	3 Months Ended	1 Months Ended	0 Months Ended
	Mar. 31, 2015	Mar. 31, 2015	Aug. 31, 2011	Feb. 28, 2015	Aug. 13, 2009	Dec. 31, 2014
Short And Long-Term Debt [Line Items]
Line of credit facility, Non-use fee percentage	0.25%
Quarterly installment amounts	$ 250,000
Percentage of proceeds from certain asset sales required to pay down term loan	100.00%
Federal Funds Rate [Member]
Short And Long-Term Debt [Line Items]
Basis spread on variable rate of debt instruments	0.50%
Domestic Term-Loan [Member]
Short And Long-Term Debt [Line Items]
Loan amount				1,750,000	5,000,000
Seventh Amendment to the Loan and Security Agreement [Member]
Short And Long-Term Debt [Line Items]
Increase in the annual capital expenditure limit		4,500,000
Seventh Amendment to the Loan and Security Agreement [Member] | Domestic Term-Loan [Member]
Short And Long-Term Debt [Line Items]
Loan amount	5,000,000	5,000,000
Additional term loan facility borrowed		3,250,000
Debt instrument maturity date	Feb. 28, 2019
Domestic Asset-Based Revolving Credit Facility [Member]
Short And Long-Term Debt [Line Items]
Weighted average interest rate of debt instruments	4.39%	4.39%				4.51%
International Credit Facility [Member]
Short And Long-Term Debt [Line Items]
Amount outstanding	915,000	915,000				920,000
Remaining borrowing capacity under credit facility	878,000	878,000				956,000
Weighted average interest rate of debt instruments	3.38%	3.38%				4.50%
Minimum interest rate of debt instruments			0.75%
Maximum interest rate of debt instruments			2.50%
Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Short And Long-Term Debt [Line Items]
Basis spread on variable rate of debt instruments	2.50%
Minimum [Member] | Federal Funds Rate [Member]
Short And Long-Term Debt [Line Items]
Basis spread on variable rate of debt instruments	(0.25%)
Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member]
Short And Long-Term Debt [Line Items]
Basis spread on variable rate of debt instruments	4.00%
Maximum [Member] | Federal Funds Rate [Member]
Short And Long-Term Debt [Line Items]
Basis spread on variable rate of debt instruments	1.25%
Maximum [Member] | Seventh Amendment to the Loan and Security Agreement [Member]
Short And Long-Term Debt [Line Items]
Investment spending prior to requiring bank approval		4,000,000
Revolving Credit Facility [Member]
Short And Long-Term Debt [Line Items]
Credit facility, borrowing capacity					8,000,000
Amount outstanding	1,093,000	1,093,000				3,843,000
Remaining borrowing capacity under credit facility	6,341,000	6,341,000				3,456,000
Letters Of Credit [Member]
Short And Long-Term Debt [Line Items]
Credit facility, borrowing capacity					$ 200,000

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Product Warranty (Changes In Warranty Liability) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended	12 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Product Warranty [Abstract]
Product warranty period	1 year
Beginning balance	$ 100	$ 72
Warranty expense	20	122
Closed warranty claims	(12)	(94)
Ending balance	$ 108	$ 100

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Shareholders' Equity And Stock-Based Compensation (Summary Of Stock Option Activity) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Shareholders' Equity and Stock-Based Compensation [Abstract]
Number of Shares, Outstanding	1,313
Number of Shares, Options granted	128
Number of Shares, Options exercised	(11)
Number of Shares, Outstanding	1,430
Number of Shares, Exercisable	1,082
Number of Shares, Available for future grant at December 31, 2014	175
Number of Shares, Available for future grant at March 31, 2015	50
Weighted-average Exercise Price, Outstanding	$ 5.86
Weighted-average Exercise Price, Options granted	$ 6.87
Weighted-average Exercise Price, Options exercised	$ 3.52
Weighted-average Exercise Price, Outstanding	$ 5.97
Weighted-average Exercise Price, Exercisable	$ 6.06
Aggregate Intrinsic Value, Outstanding at March 31, 2015	$ 3,836
Aggregate Intrinsic Value, Exercisable	$ 3,031

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Restructuring Charges

3 Months Ended

Mar. 31, 2015

Restructuring Charges [Abstract]

Restructuring Charges

3.   Restructuring Charges

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth by focusing resources on the highest potential growth areas and reduce costs. The plan was approved by the Company’s Board of Directors on June 12, 2013. As part of this plan, the Company: reduced investment in certain non-core professional audio communications product lines; transferred specific product lines from Singapore to the Company’s lower-cost manufacturing facility in Batam, Indonesia; reduced global administrative and support workforce; transferred the medical coil operations from the Company’s Maine facility to Minnesota to better leverage existing manufacturing capacity; sold its remaining security, microphone and receiver operations; added experienced professionals in value hearing health; and focused more resources in medical biotelemetry. During the first quarter of 2014, the Company incurred charges of $83, primarily related to employee termination benefits, from the restructuring of its continuing operations. In the future, the Company does not expect to incur any additional cash charges related to this restructuring.

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Short And Long-Term Debt (Summary Of Short And Long-Term Debt) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Debt Instrument [Line Items]
Total Debt	$ 7,008	$ 6,513
Less: Current maturities	(1,890)	(1,886)
Total Long-Term Debt	5,118	4,627
Domestic Asset-Based Revolving Credit Facility [Member]
Debt Instrument [Line Items]
Total Debt	1,093	3,843
Foreign Overdraft And Letter Of Credit Facility [Member]
Debt Instrument [Line Items]
Total Debt	915	920
Domestic Term-Loan [Member]
Debt Instrument [Line Items]
Total Debt	$ 5,000	$ 1,750

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Income Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Income Per Share [Abstract]

Reconciliation Of Basic And Diluted Income Per Share

	Three Months Ended
		March 31, 2015		March 31, 2014
Numerator:
Income before  discontinued operations	$	284	$	787
Loss from discontinued operations, net of income taxes (note 4)		-		(270)
Net income	$	284	$	517
Denominator:
Basic – weighted shares outstanding		5,849		5,729
Weighted shares assumed upon exercise of stock options		378		130
Diluted – weighted shares outstanding		6,227		5,859
Basic income (loss) per share:
Continuing operations	$	0.05	$	0.14
Discontinued operations		-		(0.05)
Net income per share:	$	0.05	$	0.09
Diluted income (loss) per share:
Continuing operations	$	0.05	$	0.14
Discontinued operations		-		(0.05)
Net income per share:	$	0.05	$	0.09

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Shareholders' Equity And Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2015

Shareholders' Equity and Stock-Based Compensation [Abstract]

Summary Of Stock Option Activity

			Weighted-average		Aggregate
	Number of Shares		Exercise Price		Intrinsic Value
Outstanding at December 31, 2014	1,313	$	5.86
Options forfeited or cancelled	-		-
Options granted	128		6.87
Options exercised	(11)		3.52
Outstanding at March 31, 2015	1,430	$	5.97	$	3,836
Exercisable at March 31, 2015	1,082	$	6.06	$	3,031
Available for future grant at December 31, 2014	175
Available for future grant at March 31, 2015	50

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Income Taxes (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Income Taxes [Abstract]
Income tax expense (benefit)	$ 155	$ 26

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Statements Of Cash Flows (Tables)

3 Months Ended

Mar. 31, 2015

Statements Of Cash Flows [Abstract]

Supplemental Disclosures Of Cash Flow Information

	Three Months Ended
	March 31,		March 31,
	2015		2014
Interest received	$	12	$	-
Interest paid		89		134
Income taxes paid		110		-

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Revenue By Market (Tables)

3 Months Ended

Mar. 31, 2015

Revenue By Market [Abstract]

Schedule Of Net Revenue By Market

		Three Months Ended
	March 31,		March 31,
	2015		2014
Medical	$	8,957	$	9,483
Hearing Health		5,564		5,859
Professional Audio Communications		2,081		1,968
Total Revenue	$	16,602	$	17,310

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New Accounting Pronouncements

3 Months Ended

Mar. 31, 2015

New Accounting Pronouncements [Abstract]

New Accounting Pronouncements

2.New Accounting Pronouncements

In February 2015, the FASB issued Accounting Standards Update No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, or ASU 2015-02. ASU 2015-02 amends current consolidation guidance by modifying the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, eliminating the presumption that a general partner should consolidate a limited partnership, and affects the consolidation analysis of reporting entities that are involved with variable interest entities. ASU No. 2015-02 is effective for interim and annual reporting periods beginning after December 15, 2015, with early adoption permitted. All legal entities are subject to reevaluation under the revised consolidation model. The adoption of ASU 2015-02 is not expected to have a material impact on our consolidated financial position, results of operations or cash flows.

In May 2014, the Financial Accounting Standards Board issued new accounting guidance related to revenue recognition. This new standard will replace all current U.S. GAAP guidance on this topic and eliminate all industry-specific guidance. The new revenue recognition standard provides a unified model to determine when and how revenue is recognized. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration for which the entity expects to be entitled in exchange for those goods or services. This guidance will be effective for the Company beginning January 1, 2017 and can be applied either retrospectively to each period presented or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact on the Company’s consolidated financial statements.

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General (Details) (USD $) In Millions, unless otherwise specified	0 Months Ended
	Jun. 13, 2013
General [Abstract]
Expected annual cost reduction amount	$ 3.0

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Geographic Information (Geographical Distribution Of Net Sales) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 16,602	$ 17,310
United States [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	12,582	12,822
Switzerland [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	629	332
Germany [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	528	591
Vietnam [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	437	364
China [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	434	699
Japan [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	371	322
UK [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	282	523
Turkey [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	264	193
France [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	241	534
Hong Kong [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	195	178
Singapore [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	85	111
All Other Countries [Member]
Revenues from External Customers and Long-Lived Assets [Line Items]
Net sales	$ 554	$ 641

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Consolidated Condensed Balance Sheets (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash	$ 693	$ 328
Restricted cash	594	640
Accounts receivable, less allowance for doubtful accounts of $113 at March 31, 2015 and $120 at December 31, 2014	7,666	7,673
Inventories	9,948	9,983
Other current assets	745	1,013
Total current assets	19,646	19,637
Machinery and equipment	35,807	35,104
Less: Accumulated depreciation	31,207	30,859
Net machinery and equipment	4,600	4,245
Goodwill	9,194	9,194
Investment in partnerships	338	387
Other assets, net	443	498
Total assets	34,221	33,961
Current liabilities:
Checks written in excess of cash		516
Current maturities of long-term debt	1,890	1,886
Accounts payable	5,628	5,438
Accrued salaries, wages and commissions	2,393	2,519
Deferred gain	110	110
Other accrued liabilities	1,293	1,364
Total current liabilities	11,314	11,833
Long-term debt, less current maturities	5,118	4,627
Other postretirement benefit obligations	483	485
Accrued pension liabilities	685	741
Deferred gain	28	55
Other long-term liabilities	102	113
Total liabilities	17,730	17,854
Commitments and contingencies (Note 12)
Shareholders' equity:
Common stock, $1.00 par value per share; 20,000 shares authorized; 5,855 and 5,844 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	5,855	5,844
Additional paid-in capital	17,138	16,939
Accumulated deficit	(5,990)	(6,274)
Accumulated other comprehensive loss	(512)	(402)
Total shareholders' equity	16,491	16,107
Total liabilities and shareholders' equity	$ 34,221	$ 33,961

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Income Taxes (Income (Loss) Before Income Tax By Jurisdiction) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Operating Loss Carryforwards [Line Items]
Income from continuing operations before income taxes and discontinued operations	$ 439	$ 813
Federal [Member]
Operating Loss Carryforwards [Line Items]
Income (loss) before income taxes, United States	(310)	316
Singapore [Member]
Operating Loss Carryforwards [Line Items]
Income (loss) before income taxes, Foreign	541	382
Indonesia [Member]
Operating Loss Carryforwards [Line Items]
Income (loss) before income taxes, Foreign	20	19
Germany [Member]
Operating Loss Carryforwards [Line Items]
Income (loss) before income taxes, Foreign	$ 188	$ 96

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Consolidated Condensed Statements Of Cash Flows (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income	$ 284	$ 517
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	423	559
Stock-based compensation	169	142
Change in deferred gain	(28)	(28)
Change in allowance for doubtful accounts	7	1
Equity in loss of partnerships	49	35
Loss on sale of discontinued operation		120
Changes in operating assets and liabilities:
Accounts receivable	92	(1,133)
Inventories	41	(381)
Other assets	297	343
Accounts payable	181	544
Accrued expenses	(382)	306
Other liabilities	38	(50)
Net cash provided by operating activities	1,171	975
Cash flows from investing activities:
Proceeds from sale of property, plant and equipment		21
Proceeds from sale of discontinued operation		500
Purchases of property, plant and equipment	(711)	(241)
Net cash (used in) provided by investing activities	(711)	280
Cash flows from financing activities:
Proceeds from long-term borrowings	2,926	2,999
Repayments of long-term borrowings	(2,430)	(3,980)
Proceeds from employee stock purchases and exercise of stock options	42	23
Change in restricted cash	79	(128)
Change in checks written in excess of cash	(516)	178
Net cash provided by (used in) financing activities	101	(908)
Effect of exchange rate changes on cash	(196)	12
Net increase in cash	365	359
Cash, beginning of period	328	217
Cash, end of period	$ 693	$ 576

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Discontinued Operations (Schedule Of Loss On Sale Of Discontinued Operations) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended
	Jan. 27, 2014	Mar. 31, 2014
Discontinued Operations [Abstract]
Accounts receivable, net	$ 384
Inventory, net	128
Property, plant and equipment, net	127
Other assets	1
Accounts payable	(69)
Total	571
Cash proceeds received from Sierra Peaks	500	500
Net assets sold	(571)
Transaction costs	(49)
Loss on sale of discontinued operations	$ (120)	$ (120)

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Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2015

Discontinued Operations [Abstract]

Schedule Of Loss On Sale Of Discontinued Operations

Accounts receivable, net	$	384
Inventory, net		128
Property, plant and equipment, net		127
Other assets		1
Accounts payable		(69)
Total	$	571
Cash proceeds received from Sierra Peaks		500
Net assets sold		(571)
Transaction costs		(49)
Loss on sale of discontinued operations	$	(120)

Summary Of Results Of Operations

		Three Months Ended
		March 31,		March 31,
		2015		2014
		(Unaudited)		(Unaudited)
Sales, net	$	-	$	207
Operating costs and expenses		-		(357)
Operating loss		-		(150)
Other income, net		-		-
Net loss from discontinued operations	$	-	$	(150)

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Discontinued Operations (Summary Of Results Of Operations) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Discontinued Operations [Abstract]
Sales, net		$ 207
Operating costs and expenses		(357)
Operating loss		(150)
Other income, net
Net loss from discontinued operations		$ (150)

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Geographic Information (Tables)

3 Months Ended

Mar. 31, 2015

Geographic Information [Abstract]

Geographical Distribution Of Long-Lived Assets

		March 31,		December 31,
		2015		2014
United States	$	3,738	$	3,307
Other – primarily Asia		862		938
Consolidated	$	4,600	$	4,245

Geographical Distribution Of Net Sales

		Three Months Ended
Net Sales to Geographical Areas		March 31, 2015		March 31, 2014
United States	$	12,582	$	12,822
Switzerland		629		332
Germany		528		591
Vietnam		437		364
China		434		699
Japan		371		322
United Kingdom		282		523
Turkey		264		193
France		241		534
Hong Kong		195		178
Singapore		85		111
All other countries		554		641
Consolidated	$	16,602	$	17,310

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General

3 Months Ended

Mar. 31, 2015

General [Abstract]

General

1.General

In the opinion of management, the accompanying consolidated condensed financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to present fairly IntriCon Corporation's (“IntriCon” or the “Company”) consolidated financial position as of March 31, 2015 and December 31, 2014, and the consolidated results of its operations and cash flows for the three months ended March 31, 2015 and 2014.  Results of operations for the interim periods are not necessarily indicative of the results of operations expected for the full year or any other interim period.

On June 13, 2013, the Company announced a global restructuring plan to accelerate future growth and reduce costs by approximately $3.0 million annually. As part of the restructuring, the Company sold its security and certain microphone and receiver operations on January 27, 2014 to Sierra Peaks Corporation. For all periods presented, the Company classified these businesses as discontinued operations (Note 4).

The Company has evaluated subsequent events occurring after the date of the consolidated financial statements for events requiring recording or disclosure in the financial statements. 

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Consolidated Condensed Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Consolidated Condensed Balance Sheets [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 113	$ 120
Common shares, par value	$ 1.00	$ 1.00
Common shares, shares authorized	20,000,000	20,000,000
Common shares, shares issued	5,855,000	5,844,000
Common shares, shares outstanding	5,855,000	5,844,000

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Income Per Share

3 Months Ended

Mar. 31, 2015

Income Per Share [Abstract]

Income Per Share

11. Income Per Share

The following table presents a reconciliation between basic and diluted earnings per share:

	Three Months Ended
		March 31, 2015		March 31, 2014
Numerator:
Income before  discontinued operations	$	284	$	787
Loss from discontinued operations, net of income taxes (note 4)		-		(270)
Net income	$	284	$	517
Denominator:
Basic – weighted shares outstanding		5,849		5,729
Weighted shares assumed upon exercise of stock options		378		130
Diluted – weighted shares outstanding		6,227		5,859
Basic income (loss) per share:
Continuing operations	$	0.05	$	0.14
Discontinued operations		-		(0.05)
Net income per share:	$	0.05	$	0.09
Diluted income (loss) per share:
Continuing operations	$	0.05	$	0.14
Discontinued operations		-		(0.05)
Net income per share:	$	0.05	$	0.09

The dilutive impact summarized above relates to the periods when the average market price of Company stock exceeded the exercise price of the potentially dilutive option securities granted. Earnings per common share was based on the weighted average number of common shares outstanding during the periods when computing the basic earnings per share. When dilutive, stock options are included as equivalents using the treasury stock method when computing the diluted earnings per share. Individual components of basic and diluted income (loss) per share may not sum to the total income (loss) per share due to rounding.

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Document And Entity Information	3 Months Ended
	Mar. 31, 2015	Apr. 30, 2015
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Entity Registrant Name	INTRICON CORP
Entity Central Index Key	0000088790
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		5,855,023

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Legal Proceedings

3 Months Ended

Mar. 31, 2015

Legal Proceedings [Abstract]

Legal Proceedings

12. Legal Proceedings

The Company is a defendant along with a number of other parties in lawsuits alleging that plaintiffs have or may have contracted asbestos-related diseases as a result of exposure to asbestos products or equipment containing asbestos sold by one or more named defendants. These lawsuits relate to the discontinued heat technologies segment which was sold in March 2005. Due to the non-informative nature of the complaints, the Company does not know whether any of the complaints state valid claims against the Company. Certain insurance carriers have informed the Company that the primary policies for the period August 1, 1970-1978 have been exhausted and that the carriers will no longer provide defense and insurance coverage under those policies. However, the Company has other primary and excess insurance policies that the Company believes afford coverage for later years.  Some of these other primary insurers have accepted defense and insurance coverage for these suits, and some of them have either ignored the Company’s tender of defense of these cases, or have denied coverage, or have accepted the tenders but asserted a reservation of rights and/or advised the Company that they need to investigate further.  Because settlement payments are applied to all years a litigant was deemed to have been exposed to asbestos, the Company believes that it will have funds available for defense and insurance coverage under the non-exhausted primary and excess insurance policies.  However, unlike the older policies, the more recent policies have deductible amounts for defense and settlements costs that the Company will be required to pay; accordingly, the Company expects that its litigation costs will increase in the future. Further, many of the policies covering later years (approximately 1984 and thereafter) have exclusions for any asbestos products or operations, and thus do not provide insurance coverage for asbestos-related lawsuits. The Company does not believe that the asserted exhaustion of some of the primary insurance coverage for the 1970-1978 period will have a material adverse effect on its financial condition, liquidity, or results of operations. Management believes that the number of insurance carriers involved in the defense of the suits, and the significant number of policy years and policy limits under which these insurance carriers are insuring the Company, make the ultimate disposition of these lawsuits not material to the Company's consolidated financial position or results of operations.

The Company’s former French subsidiary, Selas SAS, filed for insolvency in France. The Company may be subject to additional litigation or liabilities as a result of the French insolvency proceeding.

The Company is also involved in other lawsuits arising in the normal course of business. While it is not possible to predict with certainty the outcome of these matters, management is of the opinion that the disposition of these lawsuits and claims will not materially affect our consolidated financial position, liquidity or results of operations.

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Consolidated Condensed Statements Of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Consolidated Condensed Statements Of Operations [Abstract]
Sales, net	$ 16,602	$ 17,310
Cost of sales	12,274	12,537
Gross profit	4,328	4,773
Operating expenses:
Sales and marketing	987	1,007
General and administrative	1,709	1,624
Research and development	1,226	1,168
Restructuring charges (Note 3)		83
Total operating expenses	3,922	3,882
Operating income	406	891
Interest expense	(103)	(138)
Other income	136	60
Income from continuing operations before income taxes and discontinued operations	439	813
Income tax expense	155	26
Income before discontinued operations	284	787
Loss on sale of discontinued operations		(120)
Loss from discontinued operations, net of income taxes (Note 4)		(150)
Net income	$ 284	$ 517
Basic income (loss) per share:
Continuing operations	$ 0.05	$ 0.14
Discontinued operations		$ (0.05)
Net income per share:	$ 0.05	$ 0.09
Diluted income (loss) per share:
Continuing operations	$ 0.05	$ 0.14
Discontinued operations		$ (0.05)
Net income per share:	$ 0.05	$ 0.09
Average shares outstanding:
Basic	5,849	5,729
Diluted	6,227	5,859

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Geographic Information

3 Months Ended

Mar. 31, 2015

Geographic Information [Abstract]

Geographic Information

6.    Geographic Information

The geographical distribution of long-lived assets to geographical areas consisted of the following at:

		March 31,		December 31,
		2015		2014
United States	$	3,738	$	3,307
Other – primarily Asia		862		938
Consolidated	$	4,600	$	4,245

Long-lived assets consist of property and equipment and certain other assets that are difficult to move and relatively illiquid. Excluded from long-lived assets are investments in partnerships, patents, license agreements and goodwill. The Company capitalizes long-lived assets pertaining to the production of specialized parts. These assets are periodically reviewed to assure the net realizable value from the estimated future production based on forecasted cash flows exceeds the carrying value of the assets.

The geographical distribution of net sales to geographical areas for the three months ended March 31, 2015 and 2014 were as follows:

		Three Months Ended
Net Sales to Geographical Areas		March 31, 2015		March 31, 2014
United States	$	12,582	$	12,822
Switzerland		629		332
Germany		528		591
Vietnam		437		364
China		434		699
Japan		371		322
United Kingdom		282		523
Turkey		264		193
France		241		534
Hong Kong		195		178
Singapore		85		111
All other countries		554		641
Consolidated	$	16,602	$	17,310

Geographic net sales are allocated based on the location of the customer. All other countries include net sales primarily to various countries in Europe and in the Asian Pacific. Customer concentrations greater than 10% of consolidated net sales and account receivable are disclosed below.

For the three months ended March 31, 2015,  one customer accounted for 39% of the Company’s consolidated net sales.  For the three months ended March 31, 2014, two customers accounted for 49% of the Company’s consolidated net sales.

At March 31, 2015, two customers combined accounted for 33% of the Company’s consolidated accounts receivable. At December 31, 2014, two customers accounted for a combined 29% of the Company’s consolidated accounts receivable.

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Product Warranty

3 Months Ended

Mar. 31, 2015

Product Warranty [Abstract]

Product Warranty

5.    Product Warranty

In general, the Company warrants its products to be free from defects in material and workmanship and will fully conform to and perform to specifications for a period of one year. The following table presents changes in the Company’s warranty liability for the three months ended March 31, 2015 and the year ended December 31, 2014:

		March 31,		December 31,
		2015		2014
Beginning balance	$	100	$	72
Warranty expense		20		122
Closed warranty claims		(12)		(94)
Ending balance	$	108	$	100

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Product Warranty (Tables)

3 Months Ended

Mar. 31, 2015

Product Warranty [Abstract]

Changes In Warranty Liability

		March 31,		December 31,
		2015		2014
Beginning balance	$	100	$	72
Warranty expense		20		122
Closed warranty claims		(12)		(94)
Ending balance	$	108	$	100

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Related-Party Transactions

3 Months Ended

Mar. 31, 2015

Related-Party Transactions [Abstract]

Related-Party Transactions

13. Related-Party Transactions

One of the Company’s subsidiaries leases office and factory space from a partnership consisting of three present or former officers of the subsidiary, including Mark Gorder, a member of the Company’s Board of Directors and the President and Chief Executive Officer of the Company. The subsidiary is required to pay all real estate taxes and operating expenses. The total base rent expense, real estate taxes and other charges incurred under the lease were approximately $122 for the three months ended March 31, 2015 and approximately $122 for the three months ended March 31, 2014.

The Company uses the law firm of Blank Rome LLP for legal services. A partner of that firm is the son-in-law of the Chairman of the Company’s Board of Directors.   For the three months ended March 31, 2015, the Company paid that firm approximately $48 for legal services and costs. For the three months ended March 31, 2014, the Company paid that firm approximately $39 for legal services and costs. The Chairman of our Board of Directors is considered independent under applicable Nasdaq and Securities Exchange Commission rules because (i) no payments were made to the Chairman or the partner directly in exchange for the services provided by the law firm and (ii) the amounts paid to the law firm did not exceed the thresholds contained in the Nasdaq standards. Furthermore, the aforementioned partner does not provide any legal services to the Company and is not involved in billing matters.

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Income Taxes

3 Months Ended

Mar. 31, 2015

Income Taxes [Abstract]

Income Taxes

9.  Income Taxes

Income tax expense for the three months ended March 31, 2015 was $155 compared to $26 for the same period in 2014. The expense for the three months ended March 31, 2015 and 2014, was primarily due to foreign operations. The Company has net operating loss carryforwards for U.S. federal income tax purposes and, consequently, minimal federal benefit or expense from the domestic operations was recognized as the deferred tax asset has a full valuation allowance.

The following was the income (loss) before income taxes for each jurisdiction in which the Company has operations for the three months ended March 31, 2015 and 2014.

	Three Months Ended
		March 31, 2015		March 31, 2014
United States	$	(310)	$	316
Singapore		541		382
Indonesia		20		19
Germany		188		96
Income before income taxes and discontinued operations	$	439	$	813

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Inventories

3 Months Ended

Mar. 31, 2015

Inventories [Abstract]

Inventories

7.   Inventories

Inventories consisted of the following at:

		Raw materials		Work-in process		Finished products and components		Total
March 31, 2015
Domestic	$	3,783	$	1,520	$	1,923	$	7,226
Foreign		1,774		746		202		2,722
Total	$	5,557	$	2,266	$	2,125	$	9,948
December 31, 2014
Domestic	$	3,993	$	1,300	$	1,838	$	7,131
Foreign		1,894		720		238		2,852
Total	$	5,887	$	2,020	$	2,076	$	9,983

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Short And Long-Term Debt

3 Months Ended

Mar. 31, 2015

Short And Long-Term Debt [Abstract]

Short And Long-Term Debt

8.    Short and Long-Term Debt

Short and long-term debt is summarized as follows:

	March 31,		December 31,
	2015		2014
Domestic Asset-Based Revolving Credit Facility	$	1,093	$	3,843
Foreign Overdraft and Letter of Credit Facility		915		920
Domestic Term-Loan		5,000		1,750
Total Debt		7,008		6,513
Less: Current maturities		(1,890)		(1,886)
Total Long-Term Debt	$	5,118	$	4,627

Domestic Credit Facilities

The Company and its domestic subsidiaries are parties to a credit facility with The PrivateBank and Trust Company. The credit facility, as amended, provides for:

§ an $8,000 revolving credit facility, with a $200 sub facility for letters of credit.  Under the revolving credit facility, the availability of funds depends on a borrowing base composed of stated percentages of the Company’s eligible trade receivables and eligible inventory, and eligible equipment less a reserve; and

§ a term loan in the original amount of $5,000.  

In March 2015, the Company and its domestic subsidiaries entered into a Seventh Amendment to the Loan and Security Agreement with The PrivateBank and Trust Company. The amendment, among other things:

§ increased the Company’s term loan to $5,000 from its then current balance of $1,750, as a result of which the Company borrowed an additional $3,250 under the term loan facility;

§ extended the term loan and revolving loan maturity date to February 28, 2019, keeping the existing term loan amortization schedule in place;

§ increased the annual capital expenditure limit to $4,500;

§ implemented investment provisions that allow for up to $4,000 in investment spending prior to requiring bank approval;

§ lowered interest rates on the term loan and revolving loan;

Due to the Seventh Amendment as described above, the term loan and the revolving loan maturity date has been extended to February 28, 2019. All of the borrowings under this agreement have been characterized as either a current or long-term liability on our balance sheet in accordance with the repayment terms described more fully below.

Loans under the credit facility are secured by a security interest in substantially all of the assets of the Company and its domestic subsidiaries including a pledge of the stock of its domestic subsidiaries. Loans under the credit facility bear interest at varying rates based on the Company’s leverage ratio of funded debt / EBITDA, at the option of the Company, at:

§ the London InterBank Offered Rate (“LIBOR”) plus 2.50% to 4.00%, or

§ the base rate, which is the higher of (a) the rate publicly announced from time to time by the lender as its “prime rate” and (b) the Federal Funds Rate plus 0.5%, plus (0.25)% to 1.25%; in each case, depending on the Company’s leverage ratio.

Interest is payable monthly in arrears, except that interest on LIBOR based loans is payable at the end of the one, two or three month interest periods applicable to LIBOR based loans. IntriCon is also required to pay a non-use fee equal to 0.25% per year of the unused portion of the revolving line of credit facility, payable quarterly in arrears.

Weighted average interest on the revolving credit facility was 4.39% for the three months ended March 31, 2015 and 4.51% for the year ended December 31, 2014.  The outstanding balance of the revolving credit facility was $1,093 and $3,843 at March 31, 2015 and December 31, 2014, respectively.  The total availability on the revolving credit facility was approximately $6,341 and $3,456at March 31, 2015 and December 31, 2014, respectively.

The outstanding principal balance of the term loan, as amended, is payable in quarterly installments of $250. Any remaining principal and accrued interest is payable on February 28, 2019. IntriCon is also required to use 100% of the net cash proceeds of certain asset sales (excluding inventory and certain other dispositions), sale of capital securities or issuance of debt to pay down the term loan.

The Company was in compliance with the financial covenants under the facility as of March 31, 2015.

Foreign Credit Facility

In addition to its domestic credit facilities, the Company’s wholly-owned subsidiary, IntriCon, PTE LTD., entered into an international senior secured credit agreement with Oversea-Chinese Banking Corporation Ltd. that provides for an asset based line of credit.  Borrowings bear interest at a rate of .75% to 2.5% over the lender’s prevailing prime lending rate.  Weighted average interest on the international credit facilities was 3.38% and 4.50% for the three months ended March 31, 2015 and the year ended December 31, 2014, respectively. The outstanding balance was $915 and $920 at March 31, 2015 and December 31, 2014, respectively.  The total remaining availability on the international senior secured credit agreement was approximately $878 and $956 at March 31, 2015 and December 31, 2014, respectively.

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Shareholders' Equity And Stock-Based Compensation

3 Months Ended

Mar. 31, 2015

Shareholders' Equity and Stock-Based Compensation [Abstract]

Shareholders' Equity And Stock-Based Compensation

10.  Shareholders’ Equity and Stock-based Compensation

The Company has a 2001 stock option plan, a non-employee directors’ stock option plan and a 2006 Equity Incentive Plan. New grants may not be made under the 2001 and the non-employee directors’ stock option plans; however certain option grants under these plans remain exercisable as of March 31, 2015. The aggregate number of shares of common stock for which awards could be granted under the 2006 Equity Incentive Plan as of the date of adoption was 699 shares. The Plan was amended in 2010 and 2012 to authorize an additional 250 and 300 shares, respectively, for issuance under the Plan. Additionally, as outstanding options under the 2001 stock option plan and non-employee directors’ stock option plan expire, the shares of the Company’s common stock subject to the expired options will become available for issuance under the 2006 Equity Incentive Plan.

Under the various plans, executives, employees and outside directors receive awards of options to purchase common stock. Under the 2006 Equity Incentive Plan, the Company may also grant stock awards, stock appreciation rights, restricted stock units and other equity-based awards, although no such awards, other than awards under the director program and management purchase program described below, had been granted as of March 31, 2015.  Under all awards, the terms are fixed on the grant date. Generally, the exercise price of stock options equals the market price of the Company’s stock on the date of the grant. Options under the plans generally vest over three years, and have a maximum term of 10 years.  

Additionally, the board has established the non-employee directors’ stock fee election program, referred to as the director program, as an award under the 2006 Equity Incentive Plan. The director program gives each non-employee director the right under the 2006 Equity Incentive Plan to elect to have some or all of his quarterly director fees paid in common shares rather than cash.  No shares were issued in lieu of cash for director fees under the director program for the three months ended March 31, 2015 and 2014, respectively.

On July 23, 2008, the Compensation Committee of the Board of Directors approved the non-employee director and executive officer stock purchase program, referred to as the management purchase program, as an award under the 2006 Plan. The purpose of the management purchase program is to permit the Company’s non-employee directors and executive officers to purchase shares of the Company’s Common Stock directly from the Company. Pursuant to the management purchase program, as amended, participants may elect to purchase shares of Common Stock from the Company not exceeding an aggregate of $100 during any fiscal year. Participants may make such election one time during each twenty business day period following the public release of the Company’s earnings announcement, referred to as a window period, and only if such participant is not in possession of material, non-public information concerning the Company and subject to the discretion of the Board to prohibit any transactions in Common Stock by directors and executive officers during a window period. There were no shares purchased under the management purchase program during the three months ended March 31, 2015 and 2014, respectively.

On April 24, 2015, the shareholders of the Company approved the 2015 Equity Incentive Plan.  The new plan replaces the 2006 Plan. 

Stock option activity as of and during the three months ended March 31, 2015 was as follows:

			Weighted-average		Aggregate
	Number of Shares		Exercise Price		Intrinsic Value
Outstanding at December 31, 2014	1,313	$	5.86
Options forfeited or cancelled	-		-
Options granted	128		6.87
Options exercised	(11)		3.52
Outstanding at March 31, 2015	1,430	$	5.97	$	3,836
Exercisable at March 31, 2015	1,082	$	6.06	$	3,031
Available for future grant at December 31, 2014	175
Available for future grant at March 31, 2015	50

The number of shares available for future grants at March 31, 2015 does not include a total of up to 147 shares subject to options outstanding under the 2001 stock option plans and non-employee directors’ stock option plans as of March 31, 2015, which will become available for grant under the 2006 Equity Incentive Plan in the event of the expiration of such options.

The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model was developed for use in estimating the fair value of traded options that have no vesting restrictions and are fully transferable. In addition, option-pricing models require the input of subjective assumptions, including the expected stock price volatility. Because the Company’s options have characteristics different from those of traded options, in the opinion of management, the existing models do not necessarily provide a reliable single measure of the fair value of its options. The weighted average fair value of options granted was $4.37 for options granted during the three months ended March 31, 2015. The weighted average fair value of options granted was $3.85for options granted during the three months ended March 31, 2014.

The Company calculates expected volatility for stock options and awards using the Company’s historical volatility.

The Company currently estimates a zero percent forfeiture rate for stock options, but will continue to review this estimate in future periods.

The risk-free rates for the expected terms of the stock options and awards are based on the U.S. Treasury yield curve in effect at the time of grant.

The weighted average remaining contractual life of options exercisable at March 31, 2015 was 4.10 years.

The Company recorded $169 of non-cash stock option expense for the three months ended March 31, 2015. The Company recorded $142 of non-cash stock option expense for the three months ended March 31, 2014.  As of March 31, 2015, there was $904 of total unrecognized compensation costs related to non-vested awards that are expected to be recognized over a weighted-average period of 2.29 years.

The Company also has an Employee Stock Purchase Plan (the “Purchase Plan”). The Purchase Plan initially provided that a maximum of 100 shares may be sold under the Purchase Plan as of the date of adoption. On April 27, 2011, the Company’s shareholders approved an amendment to the Purchase Plan to increase the number of shares which may be purchased under the plan by an additional 100 shares. There were 3 shares purchased under the plan for the three months ended March 31, 2015 and a total of 5 shares purchased for the three months ended March 31, 2014.

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Discontinued Operations (Narrative) (Details) (USD $) In Thousands, unless otherwise specified	0 Months Ended	3 Months Ended
	Jan. 27, 2014	Mar. 31, 2014
Discontinued Operations [Line Items]
Proceeds from sale of business	$ 500	$ 500
Loss on sale of discontinued operations	(120)	(120)
Microphone And Receiver Businesses [Member]
Discontinued Operations [Line Items]
Proceeds from sale of business	$ 500

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Revenue By Market (Schedule Of Net Revenue By Market) (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Segment Reporting Information [Line Items]
Total Revenue	$ 16,602	$ 17,310
Medical [Member]
Segment Reporting Information [Line Items]
Total Revenue	8,957	9,483
Hearing Health [Member]
Segment Reporting Information [Line Items]
Total Revenue	5,564	5,859
Professional Audio Communications [Member]
Segment Reporting Information [Line Items]
Total Revenue	$ 2,081	$ 1,968

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Revenue By Market

3 Months Ended

Mar. 31, 2015

Revenue By Market [Abstract]

Revenue By Market

15.Revenue by Market

The following tables set forth, for the periods indicated, net revenue by market:

		Three Months Ended
	March 31,		March 31,
	2015		2014
Medical	$	8,957	$	9,483
Hearing Health		5,564		5,859
Professional Audio Communications		2,081		1,968
Total Revenue	$	16,602	$	17,310

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Short And Long-Term Debt (Tables)

3 Months Ended

Mar. 31, 2015

Short And Long-Term Debt [Abstract]

Summary Of Short And Long-Term Debt

	March 31,		December 31,
	2015		2014
Domestic Asset-Based Revolving Credit Facility	$	1,093	$	3,843
Foreign Overdraft and Letter of Credit Facility		915		920
Domestic Term-Loan		5,000		1,750
Total Debt		7,008		6,513
Less: Current maturities		(1,890)		(1,886)
Total Long-Term Debt	$	5,118	$	4,627

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Related-Party Transactions (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Related-Party Transactions [Abstract]
Annual base rent expense, real estate taxes and other charges	$ 122	$ 122
Legal service costs	$ 48	$ 39

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Inventories (Schedule Of Inventories) (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Inventory [Line Items]
Raw materials	$ 5,557	$ 5,887
Work-in process	2,266	2,020
Finished products and components	2,125	2,076
Total	9,948	9,983
Domestic Inventories [Member]
Inventory [Line Items]
Raw materials	3,783	3,993
Work-in process	1,520	1,300
Finished products and components	1,923	1,838
Total	7,226	7,131
Foreign Inventories [Member]
Inventory [Line Items]
Raw materials	1,774	1,894
Work-in process	746	720
Finished products and components	202	238
Total	$ 2,722	$ 2,852

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Consolidated Condensed Statements Of Comprehensive Income (Loss) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Consolidated Condensed Statements Of Comprehensive Income (Loss) [Abstract]
Net income	$ 284	$ 517
Change in fair value of interest rate swap	(2)	10
Gain (loss) on foreign currency translation adjustment	(108)	10
Comprehensive income	$ 174	$ 537

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Discontinued Operations

3 Months Ended

Mar. 31, 2015

Discontinued Operations [Abstract]

Discontinued Operations

4.   Discontinued Operations

On June 13, 2013, the Company announced a global strategic restructuring plan designed to accelerate the Company’s future growth and reduce costs. See Note 3 for additional information. As part of the global strategic restructuring plan, the Company decided to exit the security and certain microphone and receiver businesses.  On January 27, 2014, the Company completed the sale of the security business and certain microphone and receiver businesses of IntriCon Tibbetts Corporation, IntriCon’s wholly owned subsidiary based in Camden, Maine, to Sierra Peaks Corporation, pursuant to an Asset Purchase Agreement entered into on January 27, 2014 between Sierra Peaks Corporation, as the buyer, and IntriCon Tibbetts Corporation as the seller. Sierra Peaks Corporation paid $500 cash at closing for the assets and assumed certain operating liabilities of the businesses.

The Company recorded a loss on the sale of $120. The net loss was computed as follows:

Accounts receivable, net	$	384
Inventory, net		128
Property, plant and equipment, net		127
Other assets		1
Accounts payable		(69)
Total	$	571
Cash proceeds received from Sierra Peaks		500
Net assets sold		(571)
Transaction costs		(49)
Loss on sale of discontinued operations	$	(120)

The following table shows the results of operations of the Company’s discontinued operations:

		Three Months Ended
		March 31,		March 31,
		2015		2014
		(Unaudited)		(Unaudited)
Sales, net	$	-	$	207
Operating costs and expenses		-		(357)
Operating loss		-		(150)
Other income, net		-		-
Net loss from discontinued operations	$	-	$	(150)

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Income Taxes (Tables)

3 Months Ended

Mar. 31, 2015

Income Taxes [Abstract]

Income (Loss) Before Income Tax By Jurisdiction

	Three Months Ended
		March 31, 2015		March 31, 2014
United States	$	(310)	$	316
Singapore		541		382
Indonesia		20		19
Germany		188		96
Income before income taxes and discontinued operations	$	439	$	813

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Geographic Information (Narrative) (Details)	3 Months Ended		12 Months Ended
	Mar. 31, 2015 customer	Mar. 31, 2014 customer	Dec. 31, 2014 customer
Net Sales [Member] | One Customer [Member]
Revenue, Major Customer [Line Items]
Number of customers	1
Percentage of sales and/or receivables	39.00%
Net Sales [Member] | Two Customers [Member]
Revenue, Major Customer [Line Items]
Number of customers		2
Percentage of sales and/or receivables		49.00%
Accounts Receivable [Member] | Two Customers [Member]
Revenue, Major Customer [Line Items]
Number of customers	2		2
Percentage of sales and/or receivables	33.00%		29.00%

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Statements Of Cash Flows

3 Months Ended

Mar. 31, 2015

Statements Of Cash Flows [Abstract]

Statements Of Cash Flows

14.Statements of Cash Flows

The following table provides supplemental disclosures of cash flow information:

	Three Months Ended
	March 31,		March 31,
	2015		2014
Interest received	$	12	$	-
Interest paid		89		134
Income taxes paid		110		-