UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 2
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 11, 1997
INTERMAGNETICS GENERAL CORPORATION
(Exact name of registrant as specified in its charter)
Commission File Number 1-11344
New York 14-1537454
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
450 Old Niskayuna Road
Latham, New York 12110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (518) 782-1122
<PAGE>
Item 7(a) - Financial Statements of Business Acquired (Medical Advances, Inc.)
Audited financial statements as of December 31, 1996 together with
auditor's report.
<PAGE>
MEDICAL ADVANCES, INC.
REPORT ON AUDIT OF FINANCIAL STATEMENTS
YEAR ENDED DECEMBER 31, 1996
BONFIELD & COMPANY, S.C.
<PAGE>
BONFIELD & COMPANY,
S.C.
CERTIFIED PUBLIC ACCOUNTS
740 N. Plankinton
Milwaukee, Wisconsin 53203
REPORT OF INDEPENDENT AUDITORS
Board of Directors
Medical Advances, Inc.
Milwaukee, Wisconsin
We have audited the accompanying balance sheet of Medical Advances,
Inc. (an S Corporation) as of December 31, 1996 and 1995, and the related
statements of earnings and retained earnings and cash flows for the years
then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Medical
Advances, Inc. as of December 31, 1996 and 1995, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.
/s/ Bonfield & Company, S.C.
Certified Public Accountants
January 30, 1997
Milwaukee, Wisconsin
<PAGE>
MEDICAL ADVANCES, INC.
BALANCE SHEET
December 31, 1996 and 1995
<TABLE>
<CAPTION>
ASSETS 1996 1995
------ ---- ----
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 1,253,811 $ 599,571
Short-term investment - Note B 100,000
Accounts receivable, less allowance for
losses in collection of $40,000 in 1,243,239 1,048,061
both years
Inventories:
Finished goods 386,366 294,777
Work in progress 128,996 93,427
Purchased parts 219,515 273,852
---------- -----------
734,877 662,056
Prepaid expenses and other current assets 83,867 69,269
---------- -----------
TOTAL CURRENT ASSETS 3,415,794 2,378,957
EQUIPMENT:
Shop equipment 156,410 162,777
Research and development equipment 455,881 470,729
Office furniture and equipment 488,294 462,224
Transportation equipment 19,619 16,585
---------- -----------
1,120,204 1,112,315
Less accumulated depreciation 816,951 800,052
---------- -----------
303,253 312,263
OTHER ASSETS:
Patent and license agreements, less
accumulated amortization of $43,393
in 1996 and $35,534 in 1995 17,974 21,866
Split dollar insurance premiums due from 22,784
officer ---------- -----------
17,974 44,650
---------- -----------
$ 3,737,021 $ 2,735,870
========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY 1996 1995
------------------------------------ ---- ----
<S> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 221,655 $ 151,677
Accrued expenses 482,645 448,753
Dividend payable - Note H 389,683
Upgrade and warranty accrual 60,000 30,000
Payments due within one year on long-term
debt - Note C 118,889
----------- ----------
TOTAL CURRENT LIABILITIES 1,153,983 749,319
STOCKHOLDERS' EQUITY:
Common stock, $.01 par value, 2,000,000
shares authorized, 100,004 shares issued 1,000 1,000
Additional paid-in capital 336,316 336,316
Retained earnings 2,451,500 1,855,013
Treasury stock - 7,662 shares at cost (205,778) (205,778)
----------- ----------
2,583,038 1,986,551
COMMITMENTS - Note E
----------- ----------
$ 3,737,021 $ 2,735,870
=========== ==========
</TABLE>
<PAGE>
MEDICAL ADVANCES, INC.
STATEMENT OF EARNINGS AND RETAINED EARNINGS
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
REVENUES:
Net sales $ 7,604,071 $ 5,829,014
Other Income 29,077 31,895
----------- -----------
7,633,148 5,860,909
COSTS AND EXPENSES:
Cost of sales 2,392,965 1,886,108
Research, engineering and development 1,204,702 1,431,416
expenses
Selling, general and administrative 2,198,864 1,612,216
expenses
Interest expenses 912 26,730
----------- -----------
5,797,443 4,956,470
----------- -----------
NET EARNINGS 1,835,705 904,439
RETAINED EARNINGS:
Beginning of year 1,855,013 996,745
Less dividends paid and payable (1,239,218) (46,171)
----------- -----------
End of year $ 2,451,500 $ 1,855,013
=========== ===========
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS.
<PAGE>
MEDICAL ADVANCES, INC.
STATEMENT OF CASH FLOWS
Years ended December 31, 1996 and 1995
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,835,705 $ 904,439
Adjustments to reconcile net earnings to net
cash rovided by operating activities:
Depreciation and amortization 166,386 177,637
Loss (gain) on sale of assets 7,730 (6,468)
Change in allowance for losses in (10,000)
collection
Change in accounts receivable (195,178) (135,712)
Change in inventories (72,821) 40,373
Change in other current assets (14,598) (21,552)
Change in accounts payable 69,978 (7,348)
Change in other accrued expenses 33,892 78,010
Change in upgrade and warranty accrual 30,000 (30,000)
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 1,861,094 989,379
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of short-term investment (100,000)
Purchases of equipment (159,947) (126,339)
Payments to acquire patents (3,967) (1,614)
Proceeds from sale of assets 2,700 11,334
Other 22,784
---------- ----------
NET CASH USED BY INVESTING ACTIVITIES (238,430) (116,619)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on notes payable to bank (118,889) (196,350)
Payment on note issued to purchase treasury (90,000)
stock
Payments on notes payable to officers (20,000)
Dividends paid (849,535) (46,171)
---------- ----------
NET CASH USED BY FINANCING ACTIVITIES (968,424) (352,521)
---------- ----------
NET INCREASE IN CASH 654,240 520,239
CASH AND CASH EQUIVALENTS:
Beginning of year 599,571 79,332
---------- ----------
End of year $ 1,253,811 $ 599,571
========== ==========
</TABLE>
See notes to financial statements.
<PAGE>
MEDICAL ADVANCES, INC.
NOTES TO FINANCIAL STATEMENTS
Years ended December 31, 1996 and 1995
Note A - Description of Company and summary of significant accounting
policies:
Description of Company:
The Company manufactures and sells products that enhance the images
produced by magnetic resonance equipment. Its sales are to
medical care providers located throughout North and South
America, Asia and Western Europe.
Use of estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts
reported in the financial statements and notes to financial
statements. Actual results could differ from those
estimates.
Cash and cash equivalents:
The Company treats all investments in highly liquid debt
instruments purchased with a maturity of three months or
less as cash equivalents on the Company's balance sheet.
The Company maintains its cash in bank deposit accounts.
The balances fluctuate greatly during the year and can
exceed the federally insured limit of $100,000. Cash
balances at December 31, 1996 exceeded the federally insured
limit by approximately $1,060,000.
Inventories:
Inventories are stated at the lower of cost (first-in, first-
out method) or market. Cost includes material, labor and
manufacturing overhead.
Depreciation:
Equipment is stated at cost and depreciated over its estimated
useful life using accelerated methods of depreciation.
Amortization:
Patent and license agreements are amortized over their estimated
useful lives (five years) under the straight-line method.
Taxes on income:
The Company elected S corporation status effective January 1,
1993. Retained earnings at the date of the S election was
$938,124. Taxable income of an S corporation is allocated
to its shareholders who are personally liable for their
share of income taxes.
Note B - Short term investment:
In December, 1996, the Company purchased a $100,000 corporate
bond that is classified as a security available for sale.
The bond is carried at cost, which approximates fair market
value plus accrued interest.
Note C - Long term debt:
Long term debt at December 31, 1995 consisted of a $118,889 note
payable to bank that was repaid in 1996. The Company also
has an unused $400,000 bank line of credit available at
December 31, 1996. Substantially all of the Company's
assets are pledged to support the line of credit.
Note D - Profit-sharing plan:
The Company maintains a 401(k) profit-sharing plan that covers
substantially all employees. Company matching or voluntary
contributions are at the discretion of the Board of
Directors. Costs and expenses include matching
contributions of $39,880 in 1996 and $34,570 in 1995 and a
voluntary contribution of $36,049 in 1996 and $35,826 in
1995.
Note E - Lease commitments, stock agreement:
The Company rents its facilities under a lease that expires
August 31, 1997. Costs and expenses include rent of $105,007 in
1996 and $101,695 in 1995. Future minimum rent payments due
under the lease are approximately $68,000 through August, 1997.
The Company has a right of refusal to purchase shares of stock
offered for sale by its stockholders. The Company may also
be required to purchase the stock of its stockholders upon
their death at fair value payable over three years.
Note F - Supplemental cash flow information:
Cash paid for interest expense was $912 in 1996 and $28,730 in 1995.
Note G - Major customer:
One customer accounted for 18% of 1996 sales and 24% of 1995
sales. Accounts receivable from this customer totaled
$276,882 at December 31, 1996 and $301,984 at December 31,
1995. Two other customers accounted for 12% and 10% of 1996
sales. Accounts receivable from these customers totaled
$315,299 and $120,745 at December 31, 1996.
Note H - Dividends payable:
The Company's Board of Directors approved a dividend payment in
December, 1996 of $389,883 which was paid in January, 1997.
<PAGE>
Item 7(b). Pro Forma Financial Information.
Pro Forma Combined Condensed Balance Sheet of Intermagnetics General
Corporation ("IGC") and Medical Advances, Inc. ("MAI") as of November 24,
1996 and Pro Forma Combined Condensed Summary of Operations for IGC and MAI
for the six months ended November 24, 1996 and the twelve months ended May
26, 1996.
INTRODUCTION
On March 11, 1997, Intermagnetics General Corporation
("Intermagnetics") acquired Medical Advances, Inc. ("MAI"), a Wisconsin
corporation, pursuant to an Agreement and Plan of Reorganization and
Merger, dated March 11, 1997 (the "Agreement"), among Intermagnetics,
Intermagnetics Merger Sub, Inc., a wholly-owned subsidiary of
Intermagnetics ("Merger Sub"), MAI, and the 19 stockholders of MAI named
therein (the "Stockholders"). Pursuant to the Agreement, MAI was acquired
by merger (the "Merger") of MAI into Merger Sub. In the Merger, all of the
92,342 shares of the outstanding common stock of MAI were exchanged for the
Merger consideration, described below.
The Merger consideration was arrived at by arm's length negotiation
and consisted on an aggregate basis of approximately $4.5 million in cash,
652,168 shares of the common stock, par value $0.10 per share, of
Intermagnetics (the "Intermagnetics Common Stock") and certain additional
contingent rights ("Rights"), described below. The total value of the
Merger consideration received by the Stockholders, exclusive of the Rights,
was approximately $11.735 million. Each Stockholder received for each MAI
share held by it approximately $48.73 in cash and approximately seven
shares of Intermagnetics Common Stock.
Pursuant to the rights, the Stockholders are entitled to receive up to
a maximum aggregate 97,826.09 additional shares (the "Adjustment Shares")
of Intermagnetics Common Stock if the average closing price of the
Intermagnetics Common Stock (the "Adjusted Closing Price"), as reported on
the American Stock Exchange for the period beginning on the first trading
day after the Company issues a release on its revenues and earnings for its
1997 fiscal year and ending ninety calendar days later, is less than
$11.50. The Adjustment Shares shall be calculated as that number of shares
equal to (a) $7,500,000 divided by the greater of (i) $10.00 per share or
(ii) the Adjusted Closing Price, minus (b) $7,500,000 divided by $11.50 per
share.
Prior to the Merger, MAI was engaged in the business of manufacturing
and distributing accessories used in Magnetic Resonance Imaging devices.
All plant and equipment assets acquired in the Merger will continue to be
used primarily as they were prior to the Merger .
<PAGE>
Intermagnetics General Corporation and Medical Advances, Inc.
Pro Forma Combined Condensed Balance Sheet
November 24, 1996
(Dollars in Thousands except per share amounts)
(UNAUDITED)
The following unaudited Pro Forma Combined Condensed Balance Sheet, as of
November 24,1996, gives effect to the acquisition by Intermagnetics General
Corporation (IGC) of Medical Advances, Inc. (MAI), which was consummated on
March 11, 1997. The Pro Forma Condensed Balance Sheet should be read in
conjunction with the related Pro Forma Condensed Summary of Operations and the
notes to the Pro Forma Combined Condensed Financial Statements appearing
elsewhere herein.
<TABLE>
<CAPTION>
Pro Forma IGC - MAI
Historical Adjustments Pro Forma
IGC MAI Note 1 Combined
--- --- ------ --------
ASSETS IGC MAI
--- ---
<S> <C> <C> <C> <C> <C>
Current Assets
Cash and short-term investments $ 15,084 $ 1,126 $(4,568) $ 0 $ 11,642
Trade accounts receivable 20,084 1,213 0 0 21,297
Unbilled revenue 3,345 0 0 0 3,345
Inventories 25,157 758 0 0 25,915
Prepaid expenses & other current 1,804 78 0 0 1,882
assets --------- -------- -------- ------- ---------
65,474 3,175 (4,568) 0 64,081
Buildings 15,403 0 0 15,403
Machinery & equipment 33,607 1,113 0 0 34,720
Other property, plants & equipment 5,305 0 0 0 5,305
--------- -------- -------- ------- ---------
54,315 1,113 0 0 55,428
Less allowance for depreciation (26,946) (820) 0 0 (27,756)
--------- -------- -------- ------- ---------
Property, plant & equipment (net) 27,369 303 0 0 27,672
Investments 7,796 0 2,435 (2,435) 7,796
Other Assets 7,825 30 9,633 0 17,488
--------- -------- -------- ------- ---------
$ 108,464 $ 3,508 $ 7,500 (2,435) $ 117,037
========= ======== ======== ======= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 2,400 $ 0 $ 0 $ 0 $ 2,400
Accounts payable 4,074 163 0 0 4,237
Salaries, wages and related 2,610 639 0 0 3,249
expenses
Customer advances 471 0 0 0 471
Other liabilities and accrued 2,788 271 0 0 3,059
expenses --------- -------- -------- ------- ---------
12,343 1,073 0 0 13,416
Long-Term Debt 29,275 0 0 0 29,275
Deferred Income Taxes 564 0 0 0 564
Shareholders' Equity
Other equity (3,187) 2,099 5,322 (2,099) 2,135
Additional paid-in capital 69,469 336 2,178 (336) 71,647
--------- -------- -------- ------- ---------
66,282 2,435 7,500 (2,435) 73,782
--------- -------- -------- ------- ---------
$ 108,464 $ 3,508 $ 7,500 $ (2,435) $ 117,037
========= ======== ======== ======= =========
</TABLE>
<PAGE>
Intermagnetics General Corporation and Medical Advances, Inc.
Pro Forma Combined Condensed Summary of Operations
Six Months Ended November 24, 1996
(Dollars in Thousands except per share amounts)
(UNAUDITED)
The following unaudited Pro Forma Combined Condensed Summary of Operations as of
November 24,1996, gives effect to the acquisition by Intermagnetics General
Corporation (IGC) of Medical Advances, Inc., (MAI), using the purchase method of
accounting as if the acquisition had taken place at the beginning of IGC's
current fiscal year. The Pro Forma Combined Condensed Summary of Operations
should be read in conjunction with the related Pro Forma Combined Condensed
Balance Sheet and the notes to the Pro Forma Combined Condensed Financial
Statements appearing elsewhere herein.
<TABLE>
<CAPTION>
Pro Forma IGC - MAI
Historical Adjustments Pro Forma
IGC MAI (Note 2) Combined
--- --- ------ --------
<S> <C> <C> <C> <C>
Net Sales $ 44,630 $ 4,035 $ 0 $ 48,665
Other Revenue 1,573 10 (125) 1,458
----------- --------- ---------- -----------
46,203 4,045 (125) 50,123
Costs and expenses:
Costs of products sold 31,109 1,203 336 32,648
Product research and 3,196 538 3,734
development
Marketing, general and 7,968 1,177 9,145
administrative
Interest and other expense 1,070 2 1,072
Equity in net income of
unconsolidated affiliate (77) 0 0 (77)
----------- --------- ---------- -----------
43,266 2,920 336 46,522
Income before income taxes 2,937 1,125 (461) 3,601
Provision for income taxes 1,057 0 (360) 1,417
----------- --------- ---------- -----------
NET INCOME $ 1,880 $ 1,125 $ (821) $ 2,184
----------- --------- ---------- -----------
NET INCOME PER SHARE $ 0.15 $ 0.17
=========== ===========
(Primary and Fully diluted)
Weighted average shares outstanding
during period
(Primary and Fully Diluted) 12,331,267 12,331,267
Shares issued in acquisition 0 652,168 652,168
----------- ---------- -----------
Pro Forma Weighted average shares
outstanding during period 12,331,267 652,168 12,983,435
(Primary and Fully Diluted)
=========== ========== ===========
</TABLE>
<PAGE>
Intermagnetics General Corporation and Medical Advances, Inc.
Pro Forma Combined Condensed Summary of Operations
Twelve Months Ended May 26, 1996
(Dollars in Thousands except per share amounts)
(UNAUDITED)
The following unaudited Pro Forma Combined Condensed Summary of Operations as of
May 26, 1996 gives effect to the acquisition by Intermagnetics General
Corporation (IGC) of Medical Advances, Inc. (MAI), using the purchase method of
accounting as if the acquisition had taken place at the beginning
of IGC's 1996 fiscal year. The Pro Forma Combined Condensed Summary of
Operations should be read in conjunction with the related Pro Forma Combined
Condensed Balance Sheet and the notes to the Pro Forma Combined Condensed
Financial Statements appearing elsewhere herein.
<TABLE>
<CAPTION>
Pro Forma IGC - MAI Pro
Historical Adjustments Forma
IGC MAI (Note 3) Combined
--- --- ------ --------
<S> <C> <C> <C> <C>
Net Sales $ 88,467 $ 5,998 $ 0 $ 94,465
Other Revenue 4,138 17 (250) 3,905
Realized gain on the sale of available
for sale
securities 1,414 0 0 1,414
----------- ---------- ----------- -----------
94,019 6,015 (250) 99,784
Costs and expenses:
Costs of products sold 66,188 1,953 672 68,813
Product research and development 5,075 1,392 6,467
Marketing, general and administrative 12,502 1,769 14,271
Interest and other expense 2,624 (14) 2,610
Equity in net loss of unconsolidated 748 0 0 748
affiliate ----------- ---------- ----------- -----------
87,137 5,100 672 92,909
Income before income taxes 6,882 915 (922) 6,875
Provision for income taxes 2,455 0 237 2,692
----------- ---------- ----------- -----------
NET INCOME $ 4,427 $ 915 $ (1,159) $ 4,183
=========== ========== =========== ===========
NET INCOME PER SHARE $ 0.36 $ 0.32
(Primary and Fully diluted)
Weighted average shares outstanding
during period
(Primary and Fully Diluted) 12,322,047 0 12,322,047
Shares issued in acquisition 0 652,168 652,168
Pro Forma Weighted average shares
outstanding during period
(Primary and Fully Diluted) 12,322,047 652,168 12,974,215
=========== =========== ===========
</TABLE>
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
NOTE 1
The Pro Forma Combined Condensed Balance Sheet includes adjustments as of the
closing date to reflect the acquisition of MAI using the purchase method of
accounting. The Pro Forma adjustments reflected in the Balance Sheet are as
follows:
<TABLE>
<CAPTION>
<S> <C>
CONSIDERATION FOR MAI
Cash $ 4,500
Common Stock 16
Paid in Capital 2,178
Treasury Stock 5,306
Related Expense 65
--------
Total Consideration $ 12,068
MAI Equity 2,435
--------
Purchased Technology $ 9,633
========
</TABLE>
NOTE 2
In connection with the Pro Forma Combined Condensed Summary of Operations for
period ended November 24, 1996, the following pro forma adjustments relating to
the acquisition of MAI were made using the purchase consideration described
elsewhere:
<TABLE>
<CAPTION>
<S> <C> <C>
Decrease in Interest Income resulting from cash used in the transaction. $ 125
Amortization of excess purchase price over net assets acquired 336
Decrease in income tax relating $ (45)
to reduced Interest Income.
Increase in income tax as MAI 405 360
was a S Corporation.
-------- -----------
Decrease in net income $ 821
===========
</TABLE>
NOTE 3
In connection with the Pro Forma Combined Condensed Summary of Operations for
period ended May 26, 1996, the following pro forma
adjustments relating to the acquisition of MAI were made based on the purchase
consideration described elsewhere:
<TABLE>
<CAPTION>
<S> <C> <C>
Decrease in interest income resulting $ 250
from cash used in the transaction.
Amortization of excess purchase price
over net assets acquired 672
Decrease in income tax relating to
reduced interest income. $ (90)
Increase in income tax as MAI was a S 327 237
Corporation.
-------- -----------
Decrease in net income $ 1,159
===========
</TABLE>
<PAGE>
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 hereunto duly authorized.
INTERMAGNETICS GENERAL CORPORATION
Date: October 23, 1997 By: /S/ MICHAEL C. ZIEGLER
Senior Vice President and Chief Financial Officer
