IMGC Intermagnetics General

- MRI, Medical Devices Sales Remain Strong LATHAM, N.Y., April 3 /PRNewswire-FirstCall/ -- Intermagnetics General Corporation (NASDAQ:IMGC) today reported that third-quarter normalized net income from operations increased 14 percent to $8.2 million, or $0.19 per diluted share, from $7.3 million, or $0.17 per diluted share, a year earlier. Reported income from continuing operations increased to $5.5 million, or $0.13 per diluted share, from $4.8 million or $0.11 per diluted share. Revenues for the quarter ended February 26, 2006, climbed 12 percent to nearly $77 million from $69 million. Per-share amounts have been adjusted to reflect the 3-2 stock split effective February 21, 2006. For the first nine months of fiscal 2006, normalized net income rose to $22.8 million, or $0.53 per diluted share, from $18.4 million, or $0.44 per diluted share, a year earlier. Reported nine-month income from continuing operations was $17.5 million, or $0.41 per diluted share, compared with $10.6 million, or $0.25 per diluted share. Revenue increased to $226 million from $186.7 million. "Our overall performance during the third quarter was very much in line with our expectations," said Glenn H. Epstein, chairman and chief executive officer. "Revenue was solid, and we remain on target with our full-year objective of delivering sales growth greater than 15 percent over the prior year, now expected to reach about $308 million." Epstein noted that the company expects to achieve its growth target while at the same time selectively discontinuing some lower-margin products in its non-MR-based patient monitoring lines. "We believe that this limited rationalization to our product portfolio will contribute to continued margin improvements throughout FY2007 and enable our technology and product commercialization teams to focus on higher-growth opportunities," Epstein said. "With these actions taken during the current fiscal year, we believe we are well positioned to meet our ongoing objective of achieving greater than 15 percent growth in both revenues and normalized operating income in fiscal 2007, with a continued outlook for attractive growth in following years. This forecast excludes the effect of any liquidity event pertaining to the various alternatives being explored with our SuperPower subsidiary during FY2007." Epstein said the company expects to incur some nonrecurring charges during the fourth quarter in order to rapidly implement certain product rationalizations. "We expect those charges to total $0.04 to $0.05 per share," Epstein said. "Excluding these specific items and remaining consistent with our representation of stock-based compensation, we now forecast our normalized operating income to be in the range of $0.22 to $0.24 for Q4 and $0.75 to $0.77 for FY2006." Operating EPS Reconciliation Information Operating EPS excludes non-cash performance-based stock compensation and other charges or benefits. The net benefit of a gain on litigation and favorable adjustment to gain on prior period sale of division totaled nearly $0.02 for the six months, recognized about evenly in the first and second quarters. The total of cash and non-cash charges related to certain product line discontinuations within the Medical Devices segment are expected to total $0.04 to $0.05 for FY2006 and anticipated to be recognized during Q4. The estimated non-cash charge during Q4 for Intermagnetics' performance-based restricted stock plan is expected to be about $0.7 million or $0.02 per fully diluted share based on the closing stock price on April 3, 2006 ($6.1 million or $0.14 per fully diluted share for all of FY2006). Conference Call Tomorrow The company will discuss its third-quarter results, as well as other developments during a conference call Tuesday, April 4, 2006, beginning at 11 a.m. EDT. The call will be broadcast live and archived over the Internet through the company's website http://www.intermagnetics.com/ under the Investor Relations section. The domestic dial-in number for the live call is 877-407-8037. The international dial-in number is 201-689-8037. No conference code is required for the live call. The company will also make available a digital replay beginning 2 p.m. EDT April 4, 2006, through 11:59 p.m. April 14, 2006, by dialing 201-612-7415 -- account number 249. Callers should select conference number 190632. Intermagnetics (http://www.intermagnetics.com/) draws on the financial strength, operational excellence and technical leadership in the market of Magnetic Resonance Imaging (MRI), as well as its expanding businesses within Medical Devices that encompass Invivo Diagnostic Imaging (focusing on MRI components & imaging sub-systems) and Invivo Patient Care (focusing on monitoring & other patient care devices). Intermagnetics is also a prominent participant in superconducting applications for Energy Technology. The company has a 35-year history as a successful developer, manufacturer and marketer of superconducting materials, high-field magnets, medical systems & components and other specialized high-value added devices. Safe Harbor Statement: The statements contained in this press release that are not historical fact are "forward-looking statements" which involve various important assumptions, risks, uncertainties and other factors. These forward-looking statements are based on currently available competitive, financial and economic data and management's views and assumptions regarding future events. Such forward-looking statements are inherently uncertain and are subject to risks, including but not limited to: the company's ability to meet the performance, quality and price requirements of our customers, develop new products and maintain gross margin levels through continued production cost reductions and manufacturing efficiencies; the ability of the company's largest customer to maintain and grow its share of the market for MRI systems; the company's ability to invest sufficient resources in and obtain third-party funding for its HTS development efforts and avoid the potential adverse impact of competitive emerging patents; as well as other risks and uncertainties set forth herein and in the company's Annual Report on Forms 10-K and 10-Q. The company has provided supplemental non-GAAP financial tables to provide shareholders and prospective shareholders additional information to understand the company's normalized quarterly operations. These tables contain certain estimated pro-forma calculations that we believe provide helpful information regarding our operations. Except for the company's continuing obligation to disclose material information under federal securities law, the company is not obligated to update its forward-looking statements even though situations may change in the future. The company qualifies all of its forward-looking statements by these cautionary statements. INTERMAGNETICS GENERAL CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended Nine Months Ended Feb. 26, Feb. 27, Feb. 26, Feb. 27, 2006 2005 2006 2005 Revenues $76,914 $68,974 $226,042 $186,673 Cost of revenues 41,638 36,535 124,460 99,889 Gross margin 35,276 32,439 101,582 86,784 Product research and development 8,276 6,399 23,247 17,546 Selling, general and administrative: Stock based compensation 4,110 1,064 9,339 5,632 Other selling, general and administrative 12,587 15,952 38,727 41,439 Amortization of intangible assets 1,266 1,661 3,930 4,718 Impairment of intangible assets 913 26,239 25,076 75,243 70,248 Operating income 9,037 7,363 26,339 16,536 Interest and other income 237 74 1,424 486 Interest and other expense (842) (1,109) (2,433) (3,238) Gain on litigation settlement 600 Adjustment to gain on prior period sale of division 648 1,094 Income from continuing operations before income taxes 8,432 6,328 26,578 14,878 Provision for income taxes 2,892 1,481 9,116 4,237 INCOME FROM CONTINUING OPERATIONS 5,540 4,847 17,462 10,641 Discontinued operations: Income from operations of discontinued subsidiary 35,133 40,727 Provision for income taxes 15,245 17,187 INCOME FROM DISCONTINUED OPERATIONS -- 19,888 -- 23,540 NET INCOME $5,540 $24,735 $17,462 $34,181 Basic Net Income per Common Share: Continuing operations $0.13 $0.12 $0.41 $0.26 Discontinued operations 0.47 $0.57 Basic Net Income per Common Share $0.13 $0.59 $0.41 $0.83 Diluted Net Income per Common Share: Continuing operations $0.13 $0.11 $0.41 $0.25 Discontinued operations 0.47 $0.56 Diluted Net Income per Common Share $0.13 $0.58 $0.41 $0.81 Shares: Basic 42,300,813 42,030,141 42,256,107 41,344,768 Diluted 43,138,329 42,790,389 42,994,099 42,043,305 INTERMAGNETICS GENERAL CORPORATION RECONCILING STATEMENTS OF OPERATIONS (Dollars in Thousands, Except Per Share Amounts) (Unaudited) Normalized Operations without Acquisition, Three Months Ended Nine Months Ended Integration, Sale Feb. 26, Feb. 27, Feb. 26, Feb. 27, and Non-cash items: 2006 2005 2006 2005 Revenues $76,914 $68,974 $226,042 $186,673 Cost of revenues 41,638 34,709 124,460 97,852 Gross margin 35,276 34,265 101,582 88,821 Product research and development 8,276 6,399 23,247 17,528 Selling, general and administrative 12,587 14,687 38,727 38,205 Amortization of intangible assets 1,266 1,661 3,930 4,718 22,129 22,747 65,904 60,451 Operating income 13,147 11,518 35,678 28,370 Interest and other income 237 74 1,424 486 Interest and other expense (842) (616) (2,433) (1,779) Income from continuing operations before income taxes 12,542 10,976 34,669 27,077 Provision for income taxes 4,302 3,725 11,891 8,667 INCOME FROM CONTINUING OPERATIONS $8,240 $7,251 $22,778 $18,410 Earnings per Common Share: Basic $0.19 $0.17 $0.54 $0.45 Diluted $0.19 $0.17 $0.53 $0.44 Shares: Basic 42,300,813 42,030,141 42,256,107 41,344,768 Diluted 43,138,329 42,790,389 42,994,099 42,043,305 Reconciliation of Financial Three Months Ended Nine Months Ended Statements to GAAP Feb. 26, Feb. 27, Feb. 26, Feb. 27, Equivalent: 2006 2005 2006 2005 Pro-forma net income $8,240 $7,251 $22,778 $18,410 Stock based compensation (4,110) (1,064) (9,339) (5,632) Gain on litigation settlement 600 Acquisition and integration related charges (3,091) (5,289) Impairment of intangible assets (913) Interest burden (493) (1,459) Adjustment to gain on prior period sale of division 648 1,094 Provision for taxes relating to pro-forma adjustments 1,410 2,244 2,775 4,430 Income from discontinued operations 19,888 23,540 As Reported Net Income $5,540 $24,735 $17,462 $34,181 This table is included to provide stockholders' and prospective stockholders' additional information to understand the Company's normalized quarterly and annual performance. INTERMAGNETICS GENERAL CORPORATION Condensed Consolidated Balance Sheets (Dollars in Thousands) (Unaudited) February 26, May 29, 2006 2005 ASSETS CURRENT ASSETS Cash and short-term investments $19,281 $6,970 Trade accounts receivable 67,778 60,682 Costs and estimated earnings in excess of billings on uncompleted contracts 299 718 Inventories 54,837 40,265 Prepaid expenses and other 10,279 8,665 TOTAL CURRENT ASSETS 152,474 117,300 PROPERTY, PLANT AND EQUIPMENT, net 45,377 42,974 GOODWILL, INTANGIBLE AND OTHER ASSETS 227,603 229,374 $425,454 $389,648 LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt $268 $12,404 Accounts payable 11,356 22,136 Salaries, wages and related items 10,862 11,691 Customer advances and deposits 1,238 1,951 Product warranty reserve 2,839 4,073 Income tax payable 841 3,305 Other liabilities and accrued expenses 8,285 10,189 TOTAL CURRENT LIABILITIES 35,689 65,749 LONG-TERM DEBT, less current portion 58,436 19,885 NOTE PAYABLE 5,000 5,000 DEFERRED INCOME TAXES 20,282 19,618 DERIVATIVE LIABILITY 52 DEFERRED COMPENSATION OBLIGATION 4,445 4,338 STOCKHOLDERS' EQUITY 301,602 275,006 $425,454 $389,648 INTERMAGNETICS GENERAL CORPORATION SUMMARY OF PERFORMANCE AGAINST GOALS Nine Months Ended Feb. 26, 2006 Feb. 27, 2005 Goal Gross Margin (1) 45% 48% 45% Operating Income: Percent of Sales (1) 16% 15% 15% Percent of Net Operating Assets (1)(2) 40% 49% 50% Return on Equity (1)(2) 11% 10% 15% Working Capital Efficiency (Working capital, less cash divided by net sales) (1)(2) 23% 14% 15% (1) Based on normalized data; (2) Based on annualized data SEGMENT DATA Three Months Ended February 26, 2006 (Dollars in Magnetic Thousands) Resonance Medical Energy Imaging Devices Technology Total Net revenues to external customers: Magnet systems $32,077 $32,077 Patient Monitors & RF Coils $42,706 42,706 Other $2,131 2,131 Total 32,077 42,706 2,131 76,914 Segment operating income (loss) 8,505 6,555 (1,913) 13,147 Total assets $145,153 $269,131 $11,170 $425,454 February 27, 2005 (Dollars in Magnetic Thousands) Resonance Medical Energy Imaging Devices Technology Total Net revenues to external customers: Magnet systems $30,128 $30,128 Patient Monitors & RF Coils $35,290 35,290 Other $3,556 3,556 Total 30,128 35,290 3,556 68,974 Segment operating income (loss) 7,937 4,908 (1,327) 11,518 Total assets $120,708 $249,895 $11,490 $382,093 Nine Months Ended February 26, 2006 Magnetic Resonance Medical Energy Imaging Devices Technology Total Net revenues to external customers: Magnet systems $94,741 $94,741 Patient Monitors & RF Coils $123,299 123,299 Other $8,002 8,002 Total 94,741 123,299 8,002 226,042 Segment operating income (loss) 24,462 16,349 (5,133) 35,678 Total assets $145,153 $269,131 $11,170 $425,454 February 27, 2005 Magnetic Resonance Medical Energy Imaging Devices Technology Total Net revenues to external customers: Magnet systems $83,736 $83,736 Patient Monitors & RF Coils $94,806 94,806 Other $8,131 8,131 Total 83,736 94,806 8,131 186,673 Segment operating income (loss) 18,910 14,634 (5,174) 28,370 Total assets $120,708 $249,895 $11,490 $382,093 Three Months Ended Feb. 26 Feb. 27 2006 2005 Reconciliation of income before income taxes: Operating income from reportable segments $13,147 $11,518 Non-cash stock based compensation (4,110) (1,064) Acquisition and integration related items (3,091) Net Operating Profit 9,037 7,363 Interest and other income 237 74 Interest and other expense (842) (1,109) Adjustment to gain on prior period sale of division Income before income taxes $8,432 $6,328 Nine Months Ended Feb. 26 Feb. 27 2006 2005 Reconciliation of income before income taxes: Operating income from reportable segments $35,678 $28,370 Non-cash stock based compensation (9,339) (5,632) Acquisition and integration related items (5,289) Impairment of intangible assets (913) Net Operating Profit 26,339 16,536 Interest and other income 1,424 486 Interest and other expense (2,433) (3,238) Gain on litigation settlement 600 Adjustment to gain on prior period sale of division 648 1,094 Income before income taxes $26,578 $14,878 Reconciliation of Metrics to GAAP Equivalent: Nine Months Ended February 26, 2006 Operating Income as a Gross Percent of Return on Margin Sales Equity As Reported GAAP Equivalent 45% 12% 8% Effect of non-cash related charges and non-recurring gains 4% 2% Effect of averaging 1% Pro-forma metrics 45% 16% 11% Nine Months Ended February 27, 2005 Operating Income as a Gross Percent of Return on Margin Sales Equity As Reported GAAP Equivalent 46% 9% 17% Impact of excluding Polycold (11%) Effect of acquisition, integration, non-cash related charges and other non-recurring charges and credits 2% 6% 3% Effect of averaging 1% Pro-forma metrics 48% 15% 10% DATASOURCE: Intermagnetics General Corporation CONTACT: Michael Burke, Exec. VP & CFO, or Cathy Yudzevich, IR Manager, both of Intermagnetics, +1-518-782-1122 Web site: http://www.intermagnetics.com/

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