Intermagnetics General Reports First-Quarter EPS 7c VS. 4c; Record Q1 Sales Lead to 118% Increase in Net Income
Company Benefits from Strategic Expansion Moves
September 24, 1998 08:30 AM
LATHAM, N.Y., Sept. 24 /PRNewswire/ -- Intermagnetics General Corporation , citing strong performances from acquired businesses and its
core magnetic products segment, today reported first-quarter net income climbed 118 percent to $1.0 million, or 7 cents per diluted share, from
$461,000, or 4 cents per diluted share, a year earlier. Net sales increased 26 percent to $26.5 million from $21.0 million. Net sales were
first-quarter records.
"We are continuing the year-over-year improvements that began during the second half of fiscal 1998," said Carl H. Rosner, chairman and CEO
of Intermagnetics. "This first-quarter performance improvement indicates the positive impact of the acquisitions, as well as benefits from the
strategic decisions we have made over the past two years."
Margins Remain Strong, Operating Income Up
Gross margin for the quarter ended August 30, 1998, rose to $9.8 million, or 36.9 percent of sales in the current quarter, compared with $8.1
million, or 38.4 percent of sales, the prior year. The slight reduction in gross margin percentage was due primarily to the product mix and was
more than offset by the effect of much higher volume.
Operating expenses increased by about $537,000, with nearly half of that the result of higher amortization of intangible assets in connection
with the recent acquisition of Polycold Systems. Operating income increased 137 percent to $2.0 million from $860,000 in fiscal 1998.
Pre-tax income more than doubled to $1.7 million this year, compared with $756,000 the prior year. The effective tax rate rose to 42 percent
from 39 percent for the fiscal 1998 first quarter.
Stock Repurchase Accelerated
The Company purchased another 380,000 shares for about $3.2 million during the quarter as part of its previously announced acceleration of
the stock repurchase plan. Since the buyback program started, the Company has purchased nearly 1.3 million shares for a total outlay of
about $12.7 million.
"We continue to view the share repurchase as a prudent investment in our future as we consider our stock to be undervalued, both in terms of
current performance and future prospects," Rosner said.
Other Developments
"We made a number of strategic moves and announced some exciting developments recently that we believe solidify our outlook for the near
and longer term," Rosner said.
"In the magnetic products segment," Rosner said, "our proprietary magnetic-resonance-based system for inspecting quality of food and
non-ferrous materials has proven highly effective in an intense, commercial environment and we believe this product has strong market
potential. At the same time, our core business of producing superconducting magnets for medical MR imaging equipment has been increasing,
and last year's acquisition, Medical Advances, has been performing very solidly in the market for RF coils associated with MR equipment."
Rosner also noted that Intermagnetics has been awarded several contracts for superconducting wire, including $16.4 million over the next four
years for a highly advanced particle collider in Europe as well as $1 million to supply wire for a superconducting energy storage system.
Additionally the Company has significantly increased its sales of superconducting wire to a major manufacturer of MRI equipment.
"In refrigeration products, the acquisition of Polycold has proven to be highly accretive to earnings, with increasingly strong results since its
acquisition late last year," Rosner said. "We also have taken steps to bolster sales of our Freon* replacement refrigerant, FRIGC(R), through
penetration of the commercial stationary market in refrigeration and air conditioning. We continue to develop an increasingly effective domestic
distributor network.
"Overall, we believe this should be another very good year, both in sales and in profitability," Rosner said. "At the same time, it is important to
note that many of our products are 'big-ticket' items, so timing could play a role in the results on a quarterly basis."
Intermagnetics is the largest integrated U.S. developer and manufacturer of superconducting LTS and HTS magnets, wire and cable as well as
associated low-temperature refrigeration equipment, and radio-frequency (RF) coils, the combination of which is essential to successful
application of superconductivity such as Magnetic Resonance Imaging (MRI). The Company is dedicated to the development and
commercialization of applied superconductivity and refrigeration systems to the electric energy industry. The Company also supplies
permanent magnet systems, materials separation equipment and FRIGC(R) refrigerants as replacements for ozone-depleting refrigerants.
* Freon is a registered trademark of E.I. duPont deNemours & Co.
SAFE HARBOR STATEMENT:
The statements contained in this press release which are not historical fact are "forward-looking statements" that involve various important
assumptions, risks, uncertainties and other factors. These include, without limitation, the assumptions, risks, and uncertainties set forth in the
Company's Annual Report on Form 10-K, including the Company's ability to win greater market acceptance for FRIGC and expanded product
sales from IGC-APD as well as continued strength and expansion in its core wire and MRI magnet markets.
INTERMAGNETICS GENERAL CORPORATION
Consolidated Statements of Income
(Dollars in Thousands, Except Per Share Amounts)
(Unaudited)
Three Months Ended
August 30, 1998
Net sales $26,494 $21,020
Cost of products sold 16,713 12,952
Gross Margin 9,781 8,068
Product research and
development 1,838 2,095
Marketing, general and
administrative 5,471 4,912
Amortization of intangible assets 436 201
7,745 7,208
Operating income 2,036 860
Interest and other income 372 486
Interest and other expense (528) (503)
Equity in net loss of unconsolidated affiliate (148) (87)
Income before income taxes 1,732 756
Provision for income taxes 727 295
NET INCOME $1,005 $461
Earnings per Common Share
Per Share:
Basic $0.08 $0.04
Diluted $0.07 $0.04
Shares:
Basic 12,520,702 12,706,403
Diluted 13,536,645 13,046,844
NOTE: Primary shares and earnings per share have been adjusted to reflect
a 2% stock dividend declared on July 22, 1998.
INTERMAGNETICS GENERAL CORPORATION
Condensed Consolidated Balance Sheets
(Dollars in Thousands)
August 30, 1998 May 31, 1998
(Unaudited)
ASSETS
CURRENT ASSETS
Cash and short-term investments $2,828 $2,993
Trade accounts receivable 20,959 14,802
Costs and estimated earnings in excess
of billings on uncompleted contracts 2,953 4,660
Inventories 31,016 32,849
Prepaid expenses and other 5,016 5,006
TOTAL CURRENT ASSETS 62,772 60,310
PROPERTY, PLANT AND EQUIPMENT, net 27,899 27,939
INVESTMENTS AND INTANGIBLE AND OTHER ASSETS 37,689 39,527
$128,360 $127,776
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term debt $276 $272
Note payable 5,000 --
Accounts payable 5,283 6,076
Salaries, wages and related items 3,650 3,647
Customer advances and deposits 321 298
Product warranty reserve 1,027 996
Accrued income taxes 1,424 2,411
Other liabilities and accrued expenses 1,299 1,117
TOTAL CURRENT LIABILITIES 18,280 14,817
LONG-TERM DEBT, less current portion 28,780 28,833
DEFERRED INCOME TAXES -- 325
SHAREHOLDERS' EQUITY 81,300 83,801
$128,360 $127,776
SOURCE Intermagnetics General Corporation
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