Demand for Body-Worn Devices Drives IntriCon's Strong Fourth-Quarter and Full-Year Results
Sales Rise 34 Percent for Fourth Quarter and 33 Percent for Year
ST. PAUL, Minn.--(Business Wire)--
IntriCon Corporation (NASDAQ: IIN), a designer, developer,
manufacturer and distributor of body-worn medical and electronics
devices, today announced financial results for its 2007 fourth quarter
and year ended December 31, 2007.
For the fourth quarter, the company reported quarterly net sales
of $19.0 million, a 34 percent increase from net sales of $14.2
million for the 2006 fourth quarter. IntriCon delivered fourth-quarter
net income of $662,000, or $0.12 per diluted share, up 49 percent from
net income of $443,000, or $0.08 per diluted share, for the 2006
fourth quarter. The 2007 net sales and net income include results from
the late-May 2007 acquisition of Tibbetts Industries, Inc.
"Across the board, we saw strong gains in our core medical,
hearing health and professional audio businesses for the fourth
quarter and full year," said Mark S. Gorder, president and chief
executive officer of IntriCon. "Medical saw the most rapid growth in
2007, rising 122 percent from the prior year. Our success is a direct
result of building our business through existing OEM customers.
"Fueling demand throughout our organization is the industry-wide
trend toward further miniaturization. As device sizes continue to
shrink and move to body-worn platforms--many incorporating low-power
wireless capabilities to transmit critical data--we believe that we're
one of the few companies with the capabilities to design, manufacture
and bring these products to market."
For the year, IntriCon reported net sales of $69.0 million and net
income of $1.9 million, or $0.34 per diluted share. This compares to
2006 net sales of $51.7 million and net income of $1.2 million, or
$0.22 per diluted share.
Included in the 2007 fourth-quarter results are net sales of $1.6
million from the acquisition of Tibbetts Industries. The 12-month
period includes net sales of $4.5 million from Tibbetts Industries.
Business Update
For the fourth quarter and full year, IntriCon's core businesses
increased 45 percent and 44 percent, respectively. The company's
non-core electronics business decreased 17 percent from the fourth
quarter of 2006 and 9 percent for the year. IntriCon's gross margins
rose to 25 percent for the fourth quarter from 23 percent a year
earlier. Gross margins for 2007 were 25 percent, versus 24 percent for
2006. Operating income was up 40 percent for the three-month period
and 66 percent for 2007, year over year.
Said Gorder, "Our targeted market focus drove solid performance
for the third straight year. To further enhance our capabilities and
add to our growing portfolio of proprietary technology, we made the
strategic acquisition of Tibbetts Industries, and entered into a key
partnership with Advanced Medical Electronics Corp. (AME). Both
transactions augment our expertise; and we're particularly excited
about the opportunity to develop and manufacture new miniature,
wireless, ultra low-power bio-telemetry instruments using AME's
technology."
"IntriCon is committed to enhancing the mobility and effectiveness
of body-worn devices that connect people to people and to the devices
around them. We believe this commitment, combined with our strategic
initiatives, will help us continue to grow."
In the fourth quarter, the company's board of directors approved
the decision to switch the listing of IntriCon's common stock from the
American Stock Exchange to The NASDAQ Stock Market LLC(R). The change,
effective Jan. 2, 2008, was made to provide added visibility and
liquidity, while at the same time offering investors the best prices,
fastest execution and lowest cost per trade.
According to Gorder, IntriCon moves into 2008 with a continued
emphasis on investing in R&D--not only to develop new products and
technology, but to further enhance its current product portfolio. In
addition, the company plans to leverage its proprietary IntriCon
technology to:
-- gain additional traction and market share in hearing health;
-- further advance its professional audio product offering; and
-- develop new bio-telemetry medical applications.
Concluded Gorder, "We continue to explore possible overseas
expansion and our growth strategies may also include further
acquisitions that are consistent with IntriCon's mission. As a
company, though we might experience quarter-to-quarter fluctuations,
we're committed to continuing to deliver low double-digit sales growth
and improving gross margins. Given our advanced capabilities, proven
track record and growing customer base, we're confident in our ability
to achieve those goals."
About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation designs,
develops and manufactures miniature and micro-miniature body-worn
medical and electronics products. The company is focused on three key
markets: medical, hearing health, and professional audio and
communications. IntriCon has facilities in the United States, Asia and
Europe. The company's common stock trades under the symbol "IIN" on
the NASDAQ Stock Market. For more information about IntriCon, visit
www.intricon.com.
Forward-Looking Statements
Statements made in this release and in IntriCon's other public
filings and releases that are not historical facts or that include
forward-looking terminology such as "may", "will", "believe",
"expect", "should", "optimistic" or "continue" or the negative thereof
or other variations thereon are "forward-looking statements" within
the meaning of the Securities Exchange Act of 1934 as amended. These
forward-looking statements include, without limitation, statements
concerning the benefits of AME's technology, prospects in the
miniature body-worn device arena, future growth and expansion, future
financial condition and performance, prospects and the positioning of
IntriCon to compete in chosen markets. These forward-looking
statements may be affected by known and unknown risks, uncertainties
and other factors that are beyond IntriCon's control, and may cause
IntriCon's actual results, performance or achievements to differ
materially from the results, performance and achievements expressed or
implied in the forward-looking statements. These risks, uncertainties
and factors include, without limitation, risks related to the Tibbetts
acquisition, including unanticipated liabilities and expenses, the
risk that IntriCon may not be able to achieve its long-term strategy,
weakening demand for products of the company due to general economic
conditions, possible non-performance of developing technological
products, the volume and timing of orders received by the company,
changes in the mix of products sold, competitive pricing pressures,
availability of electronic components for the company's products,
ability to create and market products in a timely manner, competition
by competitors with more resources than the company, foreign currency
risks arising from the company's foreign operations and other risks
detailed from time to time in the company's filings with the
Securities and Exchange Commission, including the Annual Report on
Form 10-K for the year ended December 31, 2006. The company disclaims
any intent or obligation to publicly update or revise any
forward-looking statements, regardless of whether new information
becomes available, future developments occur or otherwise.
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IntriCon Corporation
Consolidated Condensed Statements of Operations
(Unaudited)
Three Months Ended
December 31, December 31,
2007 2006
------------- -------------
Sales, net................................ $ 19,024,522 $ 14,193,495
Costs of sales............................ 14,323,158 10,931,034
------------- -------------
Gross profit.............................. 4,701,364 3,262,461
Operating expenses:
Selling expense........................... 1,134,157 790,195
General and administrative expense (a).... 1,683,158 1,117,152
Research and development expense.......... 945,359 685,095
------------- -------------
Total operating expenses................ 3,762,674 2,592,442
Operating income.......................... 938,690 670,019
Interest expense.......................... (206,488) (133,745)
Interest income........................... 13,476 19,316
Equity in earnings of partnerships........ (2,500) --
Other expense, net........................ (120,896) (30,487)
------------- -------------
Income before income taxes................ 622,282 525,103
Income tax (benefit) expense.............. (40,143) 46,586
------------- -------------
Income from continuing operations......... 662,425 478,517
Loss from discontinued operations, net of
income tax expense....................... -- (35,360)
------------- -------------
Net income................................ $ 662,425 $ 443,157
============= =============
Income (loss) per share:
Basic
Continuing operations................. $ .13 $ .09
Discontinued operations............... -- --
------------- -------------
$ .13 $ .09
============= =============
Diluted
Continuing operations................. $ .12 $ .09
Discontinued operations............... -- (.01)
------------- -------------
$ .12 $ .08
============= =============
Average shares outstanding:
Basic 5,246,681 5,172,712
Diluted 5,664,500 5,307,979
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(a) General and administrative expense includes $72,189 and $64,019 of
non-cash stock option expense related to the adoption of FAS
123(R) for the three-month period ended December 31, 2007 and
2006, respectively.
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IntriCon Corporation
Consolidated Condensed Statements of Operations
(Unaudited)
Twelve Months Ended
December 31, December 31,
2007 2006
------------ ------------
Sales, net.................................. $68,983,380 $51,725,952
Costs of sales.............................. 51,738,573 39,304,003
------------ ------------
Gross profit................................ 17,244,807 12,421,949
Operating expenses:
Selling expense............................. 4,034,135 3,410,226
General and administrative expense (a)...... 6,858,582 4,921,818
Research and development expense............ 3,088,770 2,122,594
------------ ------------
Total operating expenses.................. 13,981,487 10,454,638
Operating income............................ 3,263,320 1,967,311
Interest expense............................ (978,145) (498,521)
Interest income............................. 84,524 48,003
Equity in earnings of partnerships.......... (157,500) --
Other expense, net.......................... (164,288) (101,831)
------------ ------------
Income before income taxes.................. 2,047,911 1,414,962
Income tax expense.......................... 180,673 174,460
------------ ------------
Income from continuing operations........... 1,867,238 1,240,502
Loss from discontinued operations, net of
income tax expense......................... -- (77,990)
------------ ------------
Net income.................................. $ 1,867,238 $ 1,162,512
============ ============
Income (loss) per share:
Basic
Continuing operations................... $ .36 $ .24
Discontinued operations................. -- (.01)
------------ ------------
$ .36 $ .23
============ ============
Diluted
Continuing operations................... $ .34 $ .23
Discontinued operations................. -- (.01)
------------ ------------
$ .34 $ .22
============ ============
Average shares outstanding:
Basic 5,209,567 5,159,216
Diluted 5,519,780 5,319,802
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(a) General and administrative expense includes $280,376 and $213,531
of non-cash stock option expense related to the adoption of FAS
123(R) for the twelve-months ended December 31, 2007 and 2006,
respectively.
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IntriCon Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
Assets
December 31, 2007 December 31, 2006
----------------- -----------------
(unaudited)
Current assets
Cash............................ $ 1,651,145 $ 599,459
Restricted cash................. 72,231 60,158
Accounts receivable, less
allowance for doubtful accounts
of $259,000 at 2007 and
$246,000 at 2006 $418,000 in
2002 (all cash equivalents are
restricted).................... 8,408,149 8,456,450
Inventories..................... 9,835,060 9,030,615
Refundable income taxes......... 28,297 103,587
Note receivable from sale of
discontinued operations, less
allowance of $225,000 at 2007
and 2006....................... 75,000 300,000
Other current assets............ 775,206 235,418
----------------- -----------------
Total current assets.......... 20,845,088 18,785,687
Property, plant and equipment.....
Machinery and equipment......... 36,959,184 28,767,904
Less: accumulated depreciation.. 28,500,318 21,994,344
----------------- -----------------
Net property, plant and
equipment.................... 8,458,866 6,773,560
Long-term note receivable from
sale of discontinued operations.. -- 75,000
Goodwill.......................... 8,238,020 5,927,181
Investment in partnerships........ 1,590,426 1,800,000
Other assets, net................. 1,543,127 920,051
----------------- -----------------
$ 40,675,527 $ 34,281,479
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IntriCon Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
Liabilities and Shareholders'
Equity December 31, 2007 December 31, 2006
----------------- -----------------
(unaudited)
Current liabilities
Checks written in excess of cash $ 1,209,642 $ 661,756
Current maturities of long-term
debt........................... 1,476,665 952,730
Accounts payable................ 3,965,914 5,161,450
Income taxes payable............ 74,549 173,810
Deferred gain on building sale.. 110,084 110,084
Short term partnership payable.. 260,000 260,000
Other accrued liabilities....... 4,382,755 3,021,201
----------------- -----------------
Total current liabilities..... 11,479,609 10,341,031
Long term debt, less current
maturities....................... 6,963,410 3,830,461
Other post-retirement benefit
obligations...................... 816,532 1,063,744
Long term partnership payable..... 1,020,000 1,280,000
Note payable, net of current
portion (Amecon)................. 259,360 515,720
Deferred income taxes............. 89,273 79,273
Accrued pension liability......... 624,517 628,569
Deferred gain on building sale.... 825,631 935,715
----------------- -----------------
Total non-current liabilities..... 10,598,723 8,333,482
Total liabilities............. 22,078,332 18,674,513
Commitments and contingencies
Shareholders' equity
Common shares, $1 par; 10,000,000
shares authorized;
5,722,975 and 5,706,235 shares
issued; 5,207,221 and 5,190,481
outstanding.................... 5,813,491 5,706,235
Additional paid-in capital...... 13,391,449 12,339,988
Accumulated earnings (deficit).. 877,733 (989,505)
Accumulated other comprehensive
loss........................... (220,400) (184,674)
Less: 515,754 common shares held
in treasury, at cost........... (1,265,078) (1,265,078)
----------------- -----------------
Total shareholders' equity.. 18,597,195 15,606,966
----------------- -----------------
$40,675,527 $34,281,479
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IntriCon
Scott Longval, 651-604-9526
CFO
slongval@intricon.com
or
Padilla Speer Beardsley
Matt Sullivan, 612-455-1700
msullivan@psbpr.com
or
Marian Briggs, 612-455-1700
mbriggs@psbpr.com
Copyright Business Wire 2008
