<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended February 26, 1995
------------------
or
[ ] Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ________ to ________
Commission file number 1-11344
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INTERMAGNETICS GENERAL CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
New York 14-1537454
- ------------------------------- --------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 Old Niskayuna Road, PO Box 461, Latham, NY 12110-0461
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(Address of principal executive offices)
(Zip Code)
(518) 782-1122
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(Registrant's telephone number, including area code)
- -------------------------------------------------------------------------------
(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.
Yes x No .
------ ----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.
Common Stock, $.10 par value - 10,741,739 shares were outstanding as of March
31, 1995.
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INTERMAGNETICS GENERAL CORPORATION
CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
<S> <C>
Item 1: Financial Statements:
Consolidated Balance Sheets - February 26, 1995 and May 29, 1994................................3
Consolidated Statements of Income - Three Months and Nine Months Ended February 26, 1995
and February 27, 1994.........................................................................5
Consolidated Statements of Cash Flows - Nine Months Ended February 26, 1995
and February 27, 1994.........................................................................6
Notes to Consolidated Financial Statements......................................................7
Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................................................9
PART II - OTHER INFORMATION.............................................................................11
SIGNATURES..............................................................................................12
</TABLE>
2
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INTERMAGNETICS GENERAL CORPORATION
ITEM 1: FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands)
<TABLE>
<CAPTION>
ASSETS Feb 26, 1995 May 29, 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 11,263 $13,196
Trade accounts receivable, less allowance
(February 26 - $121; May 29 - $100) 16,037 12,957
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,870 2,704
Inventories:
Finished products 851 733
Work in process 18,326 16,067
Materials and supplies 10,950 9,313
-------- --------
30,127 26,113
Prepaid expenses and other 1,878 1,362
-------- --------
TOTAL CURRENT ASSETS 61,175 56,332
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 1,502 1,502
Buildings and improvements 16,214 15,540
Machinery and equipment 25,733 24,171
Leasehold improvements 233 233
-------- --------
43,682 41,446
Less allowances for depreciation and amortization 22,042 19,832
-------- --------
21,640 21,614
Equipment in process of construction 3,311 2,564
-------- --------
24,951 24,178
INTANGIBLE AND OTHER ASSETS
Available for sale securities 3,319
Other investments 8,899 10,052
Purchased technology, less accumulated amortization
of $1,090 at February 26 and $1,011 at May 29 501 580
Other assets 2,377 2,645
-------- --------
$101,222 $93,787
======== ========
</TABLE>
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INTERMAGNETICS GENERAL CORPORATION
CONSOLIDATED BALANCE SHEETS, Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY Feb 26, 1995 May 29, 1994
------------ ------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Note payable $ 94
Current portion of long-term debt $ 238 279
Accounts payable 3,975 2,552
Salaries, wages and related items 2,139 1,919
Customer advances and deposits 459 764
Product warranty reserve 723 562
Accrued interest expense 754 367
Accrued taxes 850
Other liabilities and accrued expenses 812 456
-------- --------
TOTAL CURRENT LIABILITIES 9,950 6,993
LONG-TERM DEBT, less current portion 39,785 39,859
DEFERRED INCOME TAXES 691
SHAREHOLDERS' EQUITY
Preferred Stock, par value $.10 per share:
Authorized - 2,000,000 shares
Issued and outstanding - none
Common Stock, par value $.10 per share:
Authorized - 20,000,000 shares
Issued and outstanding (including shares in treasury):
February 26, 1995 - 10,698,417 shares
May 29, 1994 - 10,552,707 shares 1,070 1,055
Additional paid-in capital 49,956 49,133
Retained earnings (deficit) (423) (2,595)
Unrealized gain on investment securities 1,037
Foreign currency translation adjustments 150 194
-------- --------
51,790 47,787
Less cost of Common Stock in treasury
(February 26, 1995 - 137,426 shares;
May 29, 1994 - 126,812 shares) (994) (852)
-------- --------
50,796 46,935
-------- --------
$101,222 $93,787
======== ========
</TABLE>
4
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INTERMAGNETICS GENERAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
-------------------- ---------------------
Feb 26, Feb 27, Feb 26, Feb 27,
1995 1994 1995 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net sales $21,653 $12,278 $56,341 $35,293
Other revenue 545 362 1,000 808
------- ------- ------- -------
Total revenue 22,198 12,640 57,341 36,101
Costs and expenses:
Cost of products sold 15,465 8,387 39,810 23,809
Product research and development 1,245 537 3,511 1,780
Marketing, general and administrative 2,938 2,642 8,340 7,971
Interest and other expense 722 524 2,060 1,349
------- ------- ------- -------
20,370 12,090 53,721 34,909
------- ------- ------- -------
Income before income taxes 1,828 550 3,620 1,192
Provision for income taxes 731 220 1,448 477
------- ------- ------- -------
Income before cumulative effect of
accounting change 1,097 330 2,172 715
Cumulative effect as of May 30, 1993
of change in method of accounting for
income taxes 888
------- ------- ------- -------
NET INCOME $ 1,097 $ 330 $ 2,172 $ 1,603
======= ======= ======= =======
PER SHARE (Primary and Fully Diluted):
Before cumulative effect of
accounting change $ .10 $ .03 $ .19 $ .06
Cumulative effect of accounting change .08
------- ------- ------- -------
Net income $ .10 $ .03 $ .19 $ .14
======= ======= ======= =======
</TABLE>
5
<PAGE>
INTERMAGNETICS GENERAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
----------------------------
Feb 26, 1995 Feb 27, 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $2,172 $1,603
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,499 2,435
Imputed interest on royalties receivable (22) (38)
Imputed interest on unsecured notes 127 126
Change in operating assets and liabilities:
(Increase) in accounts receivable and costs and
estimated earnings in excess of billings on
uncompleted contracts (2,246) (1,689)
(Increase) in inventories and prepaid expenses (4,530) (8,577)
Increase in accounts payable and accrued expenses 3,092 3,313
Other (44) (206)
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NET CASH PROVIDED BY (USED IN) OPERATING
ACTIVITIES 1,048 (3,033)
INVESTING ACTIVITIES
Purchases of equity securities (438)
Purchases of property, plant and equipment (2,983) (7,680)
Payments received on royalties receivable 80 97
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NET CASH USED IN INVESTING ACTIVITIES (3,341) (7,583)
FINANCING ACTIVITIES
Proceeds from long-term borrowing 30,000
Debt issue costs (1,180)
Proceeds from sales of Common Stock 696 1,922
Principal payments on long-term debt (336) (7,274)
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NET CASH PROVIDED BY FINANCING ACTIVITIES 360 23,468
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INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS (1,933) 12,852
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 13,196 1,653
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CASH AND CASH EQUIVALENTS AT END OF PERIOD $11,263 $14,505
======= =======
</TABLE>
6
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INTERMAGNETICS GENERAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A -
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments which are of a normal recurring
nature, necessary to present fairly the financial position at February 26, 1995
and the results of operations and cash flows for the nine month periods ended
February 26, 1995 and February 27, 1994. The results for the three month and
nine months ended February 26, 1995 are not necessarily indicative of the
results to be expected for the entire year. The Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations should be read in conjunction with the Company's financial statements
for the year ended May 29, 1994, filed on Form 10-K on August 26, 1994.
NOTE B -
Net income per share amounts are based on the weighted average number
of common shares outstanding during the periods plus common stock equivalents as
shown below:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
Feb. 26, 1995 Feb. 27, 1994 Feb. 26, 1995 Feb. 27, 1994
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Primary
- -------
Weighted average shares outstanding 10,855,952 10,615,293 10,814,005 10,473,375
Common stock equivalents 637,228 703,074 717,646 714,358
---------- ---------- ---------- ----------
Total 11,493,180 11,318,367 11,531,651 11,187,733
========== ========== ========== ==========
Fully Diluted
- -------------
Weighted average shares outstanding 10,855,952 10,615,293 10,814,005 10,473,375
Common stock equivalents 637,228 727,867 717,646 771,206
---------- ---------- ---------- ----------
Total 11,493,180 11,343,160 11,531,651 11,244,581
========== ========== ========== ==========
</TABLE>
Both primary and fully diluted shares include the dilutive effect
(common stock equivalents) of outstanding stock options based on the treasury
stock method using average market price for primary and closing market price
(unless the average market price is higher) for fully diluted. Shares for the
periods presented have been adjusted to reflect the five-for-four stock split
and the 3% stock dividend described in Note D. During the three months and nine
months ended February 26, 1995, primary and fully diluted are the same because
the average market price during those periods was higher than the close.
7
<PAGE> 6
NOTE C -
During the first quarter of fiscal 1995 the Company adopted Statement
of Financial Accounting Standards No. 115 "Accounting for Certain Investments in
Debt and Equity Securities". As a result of the adoption of Statement No. 115,
the Company carries a portion of its investment in Ultralife Batteries, Inc. at
market value. The effect of adoption was to increase the carrying value of
investments at the start of the fiscal year by $1,854,000 with corresponding
increases in deferred taxes payable of $742,000 and shareholders' equity of
$1,112,000. As of February 26, 1995, these amounts were $1,728,000, $691,000 and
$1,037,000, respectively. Also, as of February 26, 1995, the cost and market
value of "Available for Sale" securities were $1,591,000 and $3,319,000,
respectively.
NOTE D -
In June 1994 the Company declared a five-for-four stock split which was
effected on September 8,1994 for all shareholders of record on August 25, 1994.
On March 22, 1995, the Company declared a 3% stock dividend, payable on June 15,
1995 to shareholders of record on May 31, 1995. The distributions will be made
from the Company's authorized but unissued shares. The financial statements have
been adjusted retroactively to reflect the stock split and stock dividend in all
numbers of shares, prices per share and earnings per share.
8
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INTERMAGNETICS GENERAL CORPORATION
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
During the first nine months and third quarter of fiscal 1995, revenues
increased approximately 59% and 76%, respectively, compared to the same periods
in fiscal 1994 due principally to increased demand for products related to the
MRI market. Even though revenues were higher, the Company did experience
slightly lower gross margin rates in the fiscal 1995 periods compared to the
periods in fiscal 1994, reflecting higher costs associated with the introduction
of new products.
During the first nine months and third quarter of fiscal 1995, sales of
Magnetic Products were significantly higher than in the same periods of fiscal
1994 due to increased shipments of the new line of MRI magnets and continued
strong demand for superconducting materials for MRI. Sales of Cryogenic Products
were higher in the first nine months and the third quarter of fiscal 1995
compared to the corresponding fiscal 1994 periods due to increased demand for
the new line of cryopumps and shield coolers for MRI magnets. As a percentage of
net sales, gross margins were lower in the fiscal 1995 periods due principally
to the higher manufacturing costs associated with the ramp up of production of
the new line of MRI magnets and cryopumps.
Total expenditures for research and development, both internally and
externally funded, increased approximately 9% in the first nine months of fiscal
1995 with internal funding increasing by more than 97% and external funding
declining by almost 23%. It is expected that this trend will continue due to
further reductions in external funding sources and increased refrigerant and
other highly proprietary internal development activities. The increases in
marketing, general and administrative expenses in fiscal 1995 have been nominal
due to controlled spending with most of the increase occurring in the marketing
area. Interest expense increased significantly in the current periods due to the
issuance, in September 1993, of convertible subordinated debentures and, in
April 1994, the mortgage on the new Latham, NY facility.
During the first quarter of fiscal 1994, the Company adopted the
provisions of Statement of Financial Accounting Standards (SFAS) No. 109
"Accounting for Income Taxes". The effect of such adoption, which in accordance
with the terms of the SFAS has been treated as the cumulative effect of a change
in accounting method, was to record net deferred income tax assets of $888,000
and a corresponding increase in net income in that quarter.
During the first nine months of fiscal 1995 the Company used net cash
of $3,341,000 in investing activities, principally for machinery and equipment,
which was funded from operating cash and by financing activities. During the
first quarter of fiscal 1995, the Company adopted SFAS No. 115 which had the
9
<PAGE> 8
effect of increasing the carrying value of certain investments to market value.
The amount of this increase at February 26, 1995 was $1,728,000 with
corresponding increases in deferred taxes payable of $691,000 and shareholders'
equity of $1,037,000. These investments, which are shown on the balance sheet at
February 26, 1995 as "Available for sale securities", have a cost basis of
$1,591,000 and market value of $3,319,000. In March 1995, the Company announced
a stock buy-back program under which the Company may, from time-to-time through
December 31, 1995, repurchase up to 1,000,000 shares of its Common Stock
depending on market conditions. The repurchases are expected to be financed from
working capital and would be used, among other things, to meet future
obligations under stock option plans and outstanding convertible securities.
The Company's capital expenditure commitments at February 26, 1995 were
approximately $550,000. The Company has an unsecured line of credit of
$10,000,000 which expires in November 1997, none of which was in use on March
31, 1995. The Company believes that it will have sufficient working capital to
meet its needs for the foreseeable future. However, pursuit of large scale
applications in superconductivity and new refrigerants may require the Company
to seek additional financing.
10
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INTERMAGNETICS GENERAL CORPORATION
PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None filed during the quarter ended February 26, 1995.
11
<PAGE> 10
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.
INTERMAGNETICS GENERAL CORPORATION
Dated: April 4, 1995 By: /s/ Carl H. Rosner
-------------------------------------
Carl H. Rosner, Chairman
President and Chief Executive Officer
Dated: April 4, 1995 By: /s/ Michael C. Zeigler
-------------------------------------
Michael C. Zeigler
Senior Vice President, Finance
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAY-28-1995
<PERIOD-END> FEB-26-1995
<CASH> 11,263
<SECURITIES> 0
<RECEIVABLES> 16,158
<ALLOWANCES> 121
<INVENTORY> 30,127
<CURRENT-ASSETS> 61,175
<PP&E> 46,993
<DEPRECIATION> 22,042
<TOTAL-ASSETS> 101,222
<CURRENT-LIABILITIES> 9,950
<BONDS> 39,785
<COMMON> 1,070
0
0
<OTHER-SE> 49,726
<TOTAL-LIABILITY-AND-EQUITY> 101,222
<SALES> 56,341
<TOTAL-REVENUES> 57,341
<CGS> 39,810
<TOTAL-COSTS> 39,810
<OTHER-EXPENSES> 3,511
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,060
<INCOME-PRETAX> 3,620
<INCOME-TAX> 1,448
<INCOME-CONTINUING> 2,172
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,172
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
</TABLE>
