IMG RECORD SALES AND EARNINGS
Thursday September 21, 6:01 am Eastern Time
Press Release
SOURCE: Intermagnetics General Corporation
Intermagnetics' Income Doubles to Record $2.4 Million
- Sales Increase 18% To New Quarterly Record - Strong Performance And Order Trends Prompt Increase In Revenue and Earnings Targets - Continued Positive Cash Flow Further Strengthens Balance Sheet - Company Accelerates Investment In Energy Technology Initiative
LATHAM, N.Y., Sept. 21 /PRNewswire/ -- Intermagnetics General Corporation (Amex: IMG - news), citing the highest quarterly revenues in its 29-year history, today reported that first-quarter net income doubled to a record $2.4 million, or $0.16 per diluted share, from $1.2 million, or $0.09 per diluted share. Net sales for the quarter ended August 27, 2000, climbed 18 percent to $31.7 million from $26.8 million.
``The solid first-quarter performance, continued achievement of our gross-margin targets, expense control and strong order trends in our two largest segments, Electromagnetics and Refrigeration, indicate that our operating results will continue to improve,'' said Glenn H. Epstein, president and chief executive officer. ``We are therefore raising our goals for the current fiscal year to 15 percent for top-line, and 20 percent for bottom-line growth, up from the 10 and 15 percent we set as interim targets at last year's annual meeting.
``I believe these new goals are attainable even when taking into account our commitment to increase investment in the Energy Technology segment,'' Epstein said.
Solid Segment Results
Epstein noted that the three base business segments, Electromagnetics, Refrigeration and Superconducting Materials, were all profitable during the quarter. ``I am especially pleased to note that the Refrigeration segment -- which had struggled in prior quarters but achieved profitability as targeted by the end of last fiscal year -- continued on an upward trend,'' Epstein said.
The newly formed Energy Technology segment, which consists of the IGC-SuperPower subsidiary, was not expected to have significant revenues. IGC-SuperPower, building on Intermagnetics' years of research and development experience and working with technology from U.S. Department of Energy national laboratories and key patents licensed from Lucent Technologies, is developing a commercial-level manufacturing process for a second-generation of high-temperature superconducting (HTS) material. Ultimately, IGC-SuperPower expects to concentrate on designing, developing and manufacturing HTS devices that will make electric power transmission and distribution more efficient, reliable and environmentally responsible.
Heightened Financial Flexibility Through Strengthened Balance Sheet
Intermagnetics generated more than $7 million in cash from operations and increased its cash position by more than $5 million during the quarter. Additionally, during the quarter $10.1 million of convertible debentures were converted to common stock, significantly increasing shareholders' equity. Interest expense for the quarter includes a premium of approximately $400,000 in connection with this conversion. Shortly after the close of the quarter, virtually all of the remaining debentures were converted, increasing equity by an additional $8.8 million, for a total increase approaching $20 million. Total shares outstanding after these conversions are 15.2 million, compared with 12.4 million a year earlier.
``The two rounds of conversions have contributed to a reduction of our long-term debt to about $7.5 million, yielding a very low debt-to-equity ratio of 7 percent compared with 34 percent at year end,'' Epstein said. ``Coupled with a current cash position of nearly $18 million, we have the financial flexibility to vigorously pursue continued growth in our base businesses as well as the expected increased investment in the Energy Technology segment.''
Increased HTS Commitment
Epstein noted that Intermagnetics is ramping up its Energy Technology initiative, investing in increased capital equipment as well as hiring key technical personnel that will nearly double the staffing level at IGC-SuperPower over the next few months.
``We are firmly committed to developing a process to manufacture second-generation HTS material, using a technology that has been demonstrated within the national laboratory system of the Department of Energy and that we believe is scalable to provide a cost-performance ratio that will make it attractive for commercial use,'' Epstein said. ``IGC-SuperPower also will work to develop HTS devices designed for the electric utility industry in the emerging energy technology market that we and many experts believe could develop into a multibillion-dollar opportunity for superconducting devices.
``Among the companies in our industry, we consider ourselves uniquely positioned to leverage the future potential of HTS technology because of our depth of expertise in the enabling technologies that make HTS devices viable, our long track record of market-leading technological innovation, our robust manufacturing infrastructure and our history of significant revenues and profits,'' Epstein said. ``We expect to build on that strength with an overall fiscal 2001 that should again set new standards for revenue and earnings.''
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's current revenues are derived 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.
SAFE HARBOR STATEMENT:
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 Electromagnetics, Refrigeration and Materials segments, (3) successfully commercialize and gain market acceptance of HTS products, and (4) invest sufficient resources to bring HTS products to market; as well as 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.
INTERMAGNETICS GENERAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
August 27, August 29,
2000 1999
Net sales $31,711 $26,838
Cost of products sold 18,906 17,028
Inventory written off in
restructuring (38)
18,868 17,028
Gross margin 12,843 9,810
Product research and development 1,562 1,587
Marketing, general and
administrative 6,053 5,381
Amortization of intangible assets 761 341
8,376 7,309
Operating income 4,467 2,501
Interest and other income 261 284
Interest and other expense (776) (606)
Equity in net loss of unconsolidated
affiliates (38)
Income before income taxes 3,952 2,141
Provision for income taxes 1,525 942
NET INCOME $2,427 $1,199
Earnings per Common Share:
Basic $0.17 $0.09
Diluted $0.16 $0.09
Shares:
Basic 14,170,704 12,748,457
Diluted 15,293,285 14,090,467
INTERMAGNETICS GENERAL CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
August 27, May 28,
2000 2000
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and short-term investments $17,701 $12,527
Trade accounts receivable 21,067 21,319
Costs and estimated earnings in
excess of billings on uncompleted
contracts 1,340 1,525
Inventories 20,362 21,210
Prepaid expenses and other 7,803 7,629
TOTAL CURRENT ASSETS 68,273 64,210
PROPERTY, PLANT AND EQUIPMENT, net 26,694 26,266
INVESTMENTS AND INTANGIBLE AND OTHER ASSETS 43,058 37,501
$138,025 $127,977
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $1,432 $1,428
Accounts payable 6,315 2,988
Salaries, wages and related items 3,381 2,767
Customer advances and deposits 2,054 2,059
Product warranty reserve 2,095 1,220
Accrued income taxes 2,644 1,811
Other liabilities and accrued expenses 4,028 7,121
TOTAL CURRENT LIABILITIES 21,949 19,394
LONG-TERM DEBT, less current portion 16,279 26,524
DEFERRED INCOME TAXES 4,822 3,596
SHAREHOLDERS' EQUITY 94,975 78,463
$138,025 $127,977
INTERMAGNETICS GENERAL CORPORATION
SUMMARY OF PERFORMANCE AGAINST INTERIM GOALS
Quarter Ended
August 27, 2000 August 29, 1999 Interim Goal
Gross Margin 40.5% 36.6% >40.0%
Operating Income:
Percent of Sales 14.1% 9.3% >12.5%
Percent of Net Operating
Assets (1) 32.3% 16.4% >35.0%
Return on Equity (1) 11.2% 6.6% >10.0%
Working Capital Efficiency
(Working capital, less
cash divided by net
sales) (1) 22.8% 30.5% <20.0%
(1) Based on annualized data.
SEGMENT DATA Three Months Ended
August 27, 2000
(Dollars in Thousands)
LTS
Electro- Superconducting Energy
Magnetics Materials Refrigeration Technology Total
Net sales
to external
customers:
Magnet
Systems $16,747 $16,747
RF Coils 3,114 3,114
Superconductive
wire $2,868 2,868
Refrigeration
equipment $7,802 $7,802
Refrigerants 922 922
Other $258 258
Total $19,861 2,868 8,724 258 31,711
Intersegment
net sales 2,823 704 3,527
Segment
operating
profit
(loss) 3,666 765 662 (626) 4,467
Total assets 100,167 14,387 18,633 4,838 138,025
Three Months Ended
August 27, 1999
LTS
Electro- Superconducting Energy
Magnetics Materials Refrigeration Technology Total
Net sales
to external
customers:
Magnet
Systems $12,176 $12,176
RF Coils 2,873 2,873
Superconductive
wire $2,508 2,508
Refrigeration
equipment $6,983 $6,983
Refrigerants 1,874 1,874
Other $424 424
Total $15,049 2,508 8,857 424 26,838
Intersegment
net sales 2,893 526 3,419
Segment
operating
profit
(loss) 1,886 1,145 (187) (343) 2,501
Total assets 76,621 13,435 32,152 1,516 123,724
SOURCE: Intermagnetics General Corporation |
