Contents: Letter to Shareholders Corporate Officer Statements of Operations Consolidated Balance Sheets
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Letter to Shareholders: Please Note: On July 11, 2001, Intermagnetics' stock began trading on the Nasdaq National Market under the ticker symbol IMGC. Prior to that it had traded on the American Stock Exchange. We believe moving to Nasdaq will enhance our recognition as an attractive growth company and our visibility as a leading player in the emerging field of Energy Technology. On July 26, 2001 Intermagnetics announced that its Board of Directors approved a 2 percent stock dividend, to be distributed August 31, 2001 to shareholders of record on August 14, 2001. We remain committed to releasing quarterly results approximately three weeks after the end of each quarter. We expect to report results for the fiscal 2002 first quarter (ending August 26, 2001) during the week of September 17th.
INTERMAGNETICS EXCEEDS TARGETS, EPS UP 48% FOR YEAR
Q4 EPS $0.16 vs. $0.14 Full-Year Sales Climb Nearly 23% To $138.2 Million Reportable Segments Realigned To Reflect Market Focus Continued Solid Outlook Prompts Further Staff Increases LATHAM, N.Y., July 19, 2001-Intermagnetics General Corporation (Nasdaq: IMGC) today reported that record sales, fueled by ongoing strong product demand, drove a 26 percent increase in fourth-quarter net income to $2.6 million, or $0.16 per diluted share, from $2.1 million, or $0.14 per diluted share a year earlier. Net sales for the quarter rose to $39.7 million from $29.4 million the previous year.
For the year ended May 27, 2001, net income climbed 72 percent to a record $11.1 million, or $0.68 per diluted share, from $6.5 million, or $0.46 per diluted share in fiscal 2000. Weighted average shares outstanding on a diluted basis for fiscal 2001 were 16.2 million, or about 15 percent higher than a year earlier. Net sales for fiscal 2001 were a record $138.2 million, 23 percent greater than the prior year's $112.8 million.
Performance Exceeds Targets for Sales, Earnings; Targets Increased "Continued strong demand in both the MRI and Instrumentation segments resulted in sales increases well in excess of the targeted level of 15 percent for the year," said Glenn H. Epstein, president and chief executive officer. "This provided the impetus for a 48 percent gain in earnings per share for the year, exceeding the 40 percent target announced in January and reaffirmed in May.
"Our existing backlog and continued order rate give us confidence that our growth will continue in fiscal 2002," Epstein said. "In fact, we are raising our growth targets for sales from 15 percent to a range of 17 to 18 percent. Our previously announced target for earnings per share growth was 15 to 20 percent. We now expect to end fiscal 2002 with growth at the high end of that range."
The company continues to show strong gross margins, 41 percent for both the fourth quarter and the full year, compared with 38 and 37 percent, respectively, the previous year, all before restructuring charges and credits.
"We have chosen to devote an increased proportion of product margins to boost our research and product development expenses," Epstein said. "This incremental investment is intended to diversify and broaden our revenue base in the near-term and further into the future. We are also in the process of broadening our management team and have made other investments in administrative areas to enable us to more effectively manage our continued growth."
Reportable Segments Realigned To Reflect Market Focus The company's continued focus on commercial market applications of core technology has led to a realignment of reporting segments. The new segments reflect the primary markets served: Magnetic Resonance Imaging (MRI), which primarily provides products such as magnets, superconducting wire and radio frequency coils to the diagnostic imaging market; Instrumentation, providing cryogenic refrigeration equipment used primarily in ultra-high vacuum applications, industrial coatings, analytical instrumentation and semiconductor processing and testing; and Energy Technology, which is developing second-generation high-temperature superconducting materials that we expect to use in devices designed to enhance capacity, reliability and quality of transmission and distribution of electrical power.
"Strong gains in sales and profitability of the MRI and Instrumentation segments allowed us to triple our investment in the Energy Technology segment for the quarter and still surpass our targeted growth in profitability," Epstein said. "We believe that the ability to fund these new developments while maintaining strong earnings differentiate us from others competing in this emerging market."
Cash Generation Continues, Line of Credit to Increase Although inventories continued to increase due, among other things, to ramping up production levels to keep pace with increased orders and the increase in consignment inventory supporting a major customer, the company's cash position continued to increase, to nearly $28 million at year-end from $12.5 million a year ago. That, coupled with the earlier conversion of all of the outstanding convertible debentures, leaves the company in a strong position to take advantage of opportunities as they arise.
The company is further strengthening its financial capability through a recently received commitment from three banks to increase the size of its unsecured line of credit to $50 million.
Solid Outlook Prompts Further Staff Increases, Facilities Expansion "As a result of the growth in all areas of our business, Intermagnetics finished the year with about 800 employees, more than 30 percent higher than a year ago and about 50 people more than our previously announced expectation," Epstein said. "Because of the solid outlook for fiscal 2002 and our ongoing commitment to Energy Technology, we expect to increase staffing by about another 100 people during the current fiscal year."
"Over the past 18 months, we have completed a significant reconfiguration of our magnet plant to allow us to absorb the production of our former French joint venture and respond to higher levels of orders," Epstein said. "We also recently completed a 32,000-square foot build-out of the second floor of the IGC-SuperPower facility in Schenectady, N.Y., which has about doubled the manufacturing space available for HTS and related device engineering and manufacturing efforts."
Epstein noted that in the coming months the company will begin moving its Polycold Systems operations to expanded facilities in order to manufacture its products more efficiently.
The company will discuss its quarterly results and other developments during a conference call today beginning at 10 a.m. EDT. The call will be broadcast live and archived over the Internet through the company's web site at igc.com under the Investor Relations section.
Intermagnetics is a leading developer and manufacturer of superconducting materials, radio-frequency coils, magnets and devices utilizing low- and high-temperature superconducting wire, cable and tape, and related refrigeration equipment. The company currently derives revenues primarily from applications within magnetic resonance imaging for medical diagnostics and cryogenic applications for vacuum and related processes. Through its own research and development programs and in conjunction with industry partners, Intermagnetics is committed to further commercialization of applied superconductivity and refrigeration systems including high-temperature superconductor applications for the electric utility industry.
The statements contained in this press release that are not historical fact are "forward-looking statements" which involve various important assumptions, risks, uncertainties and other factors. These include, without limitation, the assumptions, risks, and uncertainties set forth here as well as in the company's Annual Report on Form 10-K, including but not limited to, the company's ability to: (1) attract and retain sufficient personnel to meet increased demand for its products, (2) ramp up production to meet customer needs in its Magnetic Resonance Imaging and Instrumentation segments, (3) locate and integrate adequate manufacturing facilities for its operating segments, (4) successfully commercialize and gain market acceptance of HTS products, (5) attract and maintain strategic partners for its HTS initiatives (6) invest sufficient resources to bring HTS products to market and (7) avoid the potential adverse impact on the company of emerging patents in the highly competitive energy technology field. Except for the company's continuing obligation to disclose material information under federal securities law, the company is not obligated to update its forward-looking statements even though situations may change in the future. The company qualifies all of its forward-looking statements by these cautionary statements.
Glenn Epstein Chief Executive Officer Cathy Yudzevich I/R Specialist
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