<PAGE>
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 23, 1997
-----------------
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
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(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
--------------
(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 - 12,390,576 as of March 27, 1997
<PAGE>
INTERMAGNETICS GENERAL CORPORATION
CONTENTS
PART I - FINANCIAL INFORMATION
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<CAPTION>
<S> <C> <C>
Item 1: Financial Statements:
Consolidated Balance Sheets - February 23, 1997 and May 26, 1996................................3
Consolidated Statements of Income - Three Months and Nine Months Ended February 23, 1997
and February 25, 1996.........................................................................5
Consolidated Statements of Cash Flows - Nine Months Ended February 23, 1997
and February 25, 1996.........................................................................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 23, 1997 May 26, 1996
-------------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash and short-term investments $ 14,672 $ 18,696
Trade accounts receivable, less allowance
(February 23 - $193; May 26 - $169) 18,438 20,587
Costs and estimated earnings in excess of
billings on uncompleted contracts 1,848 2,094
Inventories:
Finished products 563 477
Work in process 14,485 13,933
Materials and supplies 11,012 10,447
-------------------- -----------------
26,060 24,857
Prepaid expenses and other 1,911 1,581
-------------------- -----------------
TOTAL CURRENT ASSETS 62,929 67,815
PROPERTY, PLANT AND EQUIPMENT
Land and improvements 1,479 1,479
Buildings and improvements 16,632 16,610
Machinery and equipment 34,067 31,321
Leasehold improvements - 233
-------------------- -----------------
52,178 49,643
Less allowances for depreciation and amortization 27,805 25,648
-------------------- -----------------
24,373 23,995
Equipment in process of construction 3,174 2,381
-------------------- -----------------
27,547 26,376
INTANGIBLE AND OTHER ASSETS
Available for sale securities 4,625 7,500
Other investments 7,664 7,760
Purchased technology, less accumulated amortization
(February 23 - $1,234; May 26 - $1,180) 357 411
Other assets 2,420 2,535
-------------------- -----------------
TOTAL ASSETS $105,542 $112,397
==================== =================
</TABLE>
3
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INTERMAGNETICS GENERAL CORPORATION
CONSOLIDATED BALANCE SHEETS, Continued
(Dollars in Thousands)
<TABLE>
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY Feb 23, 1997 May 26, 1996
----------------- -----------------
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Current portion of long-term debt $ 255 $ 2,277
Accounts payable 4,196 5,806
Salaries, wages and related items 2,365 2,373
Customer advances and deposits 403 539
Product warranty reserve 1,002 1,100
Accrued income taxes 430 1,203
Other liabilities and accrued expenses 1,216 875
---------------- ----------------
TOTAL CURRENT LIABILITIES 9,867 14,173
LONG-TERM DEBT, less current portion 29,152 29,364
DEFERRED INCOME TAXES, on unrealized gain on
available for sale securities 373 1,564
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 23, 1997 - 12,194,957 shares
May 26, 1996 - 12,076,499 shares 1,219 1,208
Additional paid-in capital 69,730 69,040
Retained earnings (deficit) 173 (1,727)
Unrealized gain on available for sale securities, net 662 2,346
Foreign currency translation adjustments (125) (96)
---------------- ----------------
71,659 70,771
Less cost of Common Stock in treasury
(February 23, 1997 - 465,584 shares;
May 26, 1996 - 322,540 shares) (5,509) (3,475)
---------------- ----------------
66,150 67,296
---------------- ----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $105,542 $112,397
================ ================
</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 23, 1997 Feb 25, 1996 Feb 23, 1997 Feb 25, 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Net sales $17,325 $20,022 $61,955 $62,492
Realized gain on sale of available for sale
securities 1,321
Other revenue 838 1,183 2,411 2,443
--------------- --------------- --------------- ---------------
Total revenue 18,163 21,205 64,366 66,256
Costs and expenses:
Cost of products sold 12,730 15,012 43,839 46,441
Product research and development 1,304 1,150 4,500 3,635
Marketing, general and administrative 3,465 3,048 11,433 9,285
Interest and other expense 515 569 1,585 1,968
Equity in net loss
of unconsolidated affiliate 111 220 34 637
--------------- --------------- --------------- ---------------
18,125 19,999 61,391 61,966
--------------- --------------- --------------- ---------------
Income before income taxes 38 1,206 2,975 4,290
Provision for income taxes 14 481 1,071 1,715
--------------- --------------- --------------- ---------------
NET INCOME $ 24 $ 725 $ 1,904 $ 2,575
=============== =============== =============== ===============
NET INCOME PER SHARE (Primary and
Fully diluted) $0.00 $0.06 $0.15 $0.21
=============== =============== =============== ===============
</TABLE>
5
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INTERMAGNETICS GENERAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
---------------------------------------
Feb 23, 1997 Feb 25, 1996
----------------- ----------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 1,904 $2,575
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 2,645 2,339
Imputed interest on unsecured notes 137 157
Equity in net loss of unconsolidated affiliate 34 637
Gain on sale of available for sale securities (1,321)
Change in operating assets and liabilities:
Decrease in accounts receivable and
costs and estimated earnings in excess of billings
on uncompleted contracts 2,395 2,747
(Increase) in inventories and prepaid expenses and (1,533) (543)
other
Increase (decrease) in accounts payable and accrued expenses (2,284) 1,632
Other (29) (172)
----------------- ----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,269 8,051
INVESTING ACTIVITIES
Proceeds from sale of available for sale securities 1779
Investment in unconsolidated affiliate (2,047)
Purchases of property, plant and equipment (3,559) (2,721)
Increase in other assets (26)
----------------- ----------------
NET CASH USED IN INVESTING ACTIVITIES (3,585) (2,989)
FINANCING ACTIVITIES
Proceeds from sales of Common Stock 697 880
Purchase of Treasury Stock (2,034) (523)
Principal payments on note payable and long-term debt (2,371) (199)
----------------- ----------------
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (3,708) 158
----------------- ----------------
INCREASE (DECREASE) IN CASH AND SHORT-TERM
INVESTMENTS (4,024) 5,220
CASH AND SHORT-TERM INVESTMENTS AT
BEGINNING OF PERIOD 18,696 13,009
----------------- ----------------
CASH AND SHORT-TERM INVESTMENTS AT END
OF PERIOD $14,672 $18,229
================= ================
</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 23, 1997
and the results of operations and cash flows for the nine-month periods ended
February 23, 1997 and February 25, 1996. The results for the three months and
nine months ended February 23, 1997 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 26, 1996, filed on Form 10-K on August 23, 1996.
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 23, 1997 Feb 25, 1996 Feb 23, 1997 Feb 25, 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Primary
Weighted average shares outstanding 11,706,084 11,723,787 11,724,210 11,437,469
Common stock equivalents 436,190 867,478 567,209 816,158
---------- ---------- ---------- ----------
Total 12,142,274 12,591,265 12,291,419 12,253,627
==========- ========== ========== ==========
Fully Diluted
Weighted average shares outstanding 11,706,084 11,723,787 11,724,210 11,437,469
Common stock equivalents 436,190 867,478 567,209 839,480
---------- ---------- ---------- ----------
Total 12,142,274 12,591,265 12,291,419 12,276,949
========== ========== ========== ==========
</TABLE>
7
<PAGE>
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 a 2% stock dividend declared on May 21,
1996, distributed August 22, 1996 to shareholders of record on August 1, 1996.
NOTE C -
In the third quarter of fiscal 1997 the Company committed to increase
its investment in Surrey Medical Imaging Systems Limited ("SMIS") by purchasing
$1,000,000 of convertible debt.
Also, during the third quarter, the Company signed a Letter of Intent
to acquire Medical Advances, Inc. ("MAI") of Milwaukee, WI., a manufacturer of
Radio Frequency ("RF") coils generally used for clinical diagnostic MRI systems.
The preliminary agreement provides for a negotiated price of $12,000,000,
consisting of cash of $4,500,000 and the balance in the Company's Common Stock.
This transaction will be accounted for as a purchase in the fourth quarter of
fiscal 1997.
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 of fiscal 1997, revenues decreased
approximately 3%, compared to fiscal 1996 due principally to the fact that
fiscal 1996 revenues included a realized gain of $1,321,000 on the sale of
marketable securities. No such sales occurred in fiscal 1997. Revenues declined
approximately 14% in the third quarter of fiscal 1997 compared to the third
quarter of fiscal 1996, due to a substantial reduction in sales of
superconducting materials for MRI. Also in the current quarter, sales were below
expectations due to lower than expected sales of FRIGC(R) refrigerants. The
Company experienced slightly higher gross margin rates in the fiscal 1997
periods compared to the periods in fiscal 1996 due to a better sales mix and
production cost improvements in the Refrigeration Products segment.
During the first nine months and the third quarter of fiscal 1997,
sales of Magnetic Products were lower than in the same periods of fiscal 1996
due principally to a substantial decline in demand for superconducting materials
for MRI. A substantial improvement in the mix of magnet sales was offset by
lower selling prices. Sales of Refrigeration Products were higher in the first
nine months and the third quarter of fiscal 1997 compared to the corresponding
fiscal 1996 periods due to increased demand for FRIGC refrigerants, laboratory
systems and shield coolers for MRI magnets. As a percentage of net sales, gross
margins for Magnetic Products were lower in the fiscal 1997 periods due
principally to substantially lower sales and higher costs of superconducting
wire. Gross margins for Refrigeration Products improved due to higher sales of
FRIGC refrigerants than last year and reduced production costs for cryogenic
equipment.
Total expenditures (internally and externally funded) for research and
development increased approximately 11% in the third quarter of fiscal 1997 and
29% in the first nine months as additional internal engineering efforts were
devoted to planned new products and to externally-funded programs. Marketing,
general and administrative expenses increased in fiscal 1997 due to the creation
of separate organizations to develop and market FRIGC refrigerants and IMiG
MRI(TM) diagnostic imaging systems. Interest expense declined in fiscal 1997 due
to the conversion of $8,375,000 of the Company's convertible subordinated
debentures in September 1995.
In the third quarter of fiscal 1997 the Company committed to increase
its investment in Surrey Medical Imaging Systems Limited ("SMIS") by purchasing
$1,000,000 of convertible debt. Also, during the third quarter the Company
signed a Letter of Intent to acquire Medical Advances, Inc. ("MAI") of
Milwaukee, WI., a manufacturer of Radio Frequency ("RF") coils generally used
for clinical diagnostic MRI systems. RF coils are used to collect organ specific
MRI signals. The preliminary agreement provides for a negotiated price of
$12,000,000 consisting of cash of $4,500,000 and the balance in the Company's
Common Stock. It is contemplated that MAI will continue to operate in Milwaukee
as a wholly-owned subsidiary and that MAI will add several million dollars of
profitable sales to the Company from new product lines related to its core
business. These transactions were completed in the fourth quarter.
9
<PAGE>
During the first nine months of fiscal 1997 the Company used net cash
of $4,024,000. Cash generated from operations of $3,269,000 was offset by
$3,585,000 used in investing activities for machinery and equipment and
$3,708,000 used in financing activities, principally for repurchases of the
Company's Common Stock under the Company's stock buy-back program, which is
continuing, and for the repayment of $2,167,000 of maturing installment notes.
The Company's capital expenditure commitments at February 23, 1997 were
approximately $1,750,000. The Company has an unsecured line of credit of
$10,000,000 which expires in November 1997, none of which was in use on February
23, 1997. 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 or other business
opportunities may require the Company to seek additional financing.
10
<PAGE>
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 23, 1997.
11
<PAGE>
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 3, 1997 By: /s/ Carl H. Rosner
-------------------------------------
Carl H. Rosner, Chairman
President and Chief Executive Officer
Dated: April 3, 1997 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-25-1997
<PERIOD-END> FEB-23-1997
<CASH> 14,672
<SECURITIES> 0
<RECEIVABLES> 18,631
<ALLOWANCES> 193
<INVENTORY> 26,060
<CURRENT-ASSETS> 62,929
<PP&E> 55,352
<DEPRECIATION> 27,805
<TOTAL-ASSETS> 105,542
<CURRENT-LIABILITIES> 9,867
<BONDS> 29,152
0
0
<COMMON> 1,219
<OTHER-SE> 64,931
<TOTAL-LIABILITY-AND-EQUITY> 105,542
<SALES> 61,955
<TOTAL-REVENUES> 64,366
<CGS> 43,839
<TOTAL-COSTS> 43,839
<OTHER-EXPENSES> 15,967
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,585
<INCOME-PRETAX> 2,975
<INCOME-TAX> 1,071
<INCOME-CONTINUING> 1,904
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,904
<EPS-PRIMARY> .15
<EPS-DILUTED> .15
</TABLE>
