Exhibit 99.1
FOR IMMEDIATE RELEASE
INTRICON 2007 THIRD-QUARTER SALES UP 48 PERCENT OVER PRIOR YEAR
Focus on Body-Worn Devices Helps Drive Gains
ST. PAUL, Minn. — Oct. 24, 2007 — IntriCon Corporation (AMEX: IIN), a designer, developer, manufacturer and distributor of body-worn medical and electronics devices, today announced financial results for its 2007 third quarter ended September 30, 2007.
For the third quarter, the company reported quarterly net sales of $18.4 million, a 48 percent increase from net sales of $12.5 million for the 2006 third quarter. IntriCon delivered third-quarter net income of $650,000, or $0.12 per diluted share, up 48 percent from net income of $438,000, or $0.08 per diluted share, for the 2006 third quarter. The 2007 net sales and net income include results from the late-May 2007 acquisition of Tibbetts Industries, Inc.
“Our core businesses of medical, hearing health and professional audio—being driven by the demand for miniature body-worn devices—posted significant year-over-year gains,” said Mark S. Gorder, president and chief executive officer of IntriCon. “Medical was particularly strong, growing 137 percent year over year. In the medical arena, we’re seeing increased demand from OEMs.”
For the nine-month period, IntriCon reported net sales of $50.0 million and net income of $1.2 million, or $0.22 per diluted share. This compares to 2006 nine-month sales of $37.5 million and net income of $719,000, or $0.14 per diluted share, from continuing operations.
Included in the 2007 third-quarter results are net sales of $2.0 million and net income of $89,000, or $0.02 per diluted share, from the acquisition of Tibbetts Industries. The nine-month period includes net sales of $2.9 million and net income of $37,000, or $0.01 per diluted share, from Tibbetts Industries.
Business Update
For the third quarter, IntriCon’s core businesses increased 60 percent year over year. The company’s non-core electronics business decreased 3 percent from the third quarter of 2006. IntriCon’s gross margins rose to 28 percent from 23 percent a year earlier. Operating income more than doubled.
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IntriCon Corporation 2007 Third-Quarter Results
October 24, 2007
Page 2
Said Gorder, “By focusing on our expanding core businesses, we’re delivering significant incremental gains across the board. The Tibbetts acquisition enhances our medical and professional audio capabilities and product portfolio, and gives IntriCon a presence in the security market. Additionally, we recently entered into a strategic alliance with Minneapolis-based Advanced Medical Electronics Corp. (AME) to develop and manufacture new miniature, wireless, ultra low-power bio-telemetry instruments.
“Through the agreement, IntriCon will manufacture AME’s bio-telemetry devices and supply them to third-party distributors. We also gain exclusive access to key AME technology and will be able to use this technology to develop additional bio-telemetry applications. Increasingly, the medical industry is looking for wireless, low-power capabilities in their devices, and we believe that AME’s technology will allow us to develop new devices that better connect patients and care givers, providing critical information and feedback.”
Also in the third quarter, IntriCon’s Singapore facility achieved International Organization for Standardization (ISO) 13485 compliance. ISO 13485 compliance means that the company’s Singapore plant meets the comprehensive management system requirements for the design and manufacture of medical devices.
Said Gorder, “Achieving ISO 13485 compliance is a significant milestone for the company. It gives our key OEM customers a cost-effective way to manufacture their body-worn devices and other medical products. Being competitive in today’s marketplace demands the ability to have manufacturing capabilities in lower-cost geographies. Going forward, we plan to expand into other cost-efficient locations.”
In addition to possible overseas expansion, according to Gorder, IntriCon’s growth strategies may also include further acquisitions that are consistent with the company’s mission. The company continues to work to accelerate new product development, further commit to research and development initiatives, and incorporate proprietary technology in all devices.
Concluded Gorder, “As a company we’re delivering both sequential and year-over-year growth in our core businesses. While seasonality is a normal part of our industry, we believe that our long-term prospects in the miniature body-worn device arena are promising.”
(more)
IntriCon Corporation 2007 Third-Quarter Results
October 24, 2007
Page 3
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 four key markets: medical, hearing health, professional audio and communications, and electronics. IntriCon has facilities in the United States, Asia and Europe. The company’s common stock trades under the symbol “IIN” on the American Stock Exchange. 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 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 are 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.
Contacts
At IntriCon: | At Padilla Speer Beardsley: |
Scott Longval, CFO | Matt Sullivan/Marian Briggs |
651-604-9526 | 612-455-1700 |
slongval@intricon.com | msullivan@psbpr.com / mbriggs@psbpr.com |
(more)
IntriCon Corporation 2007 Third-Quarter Results
October 24, 2007
Page 4
IntriCon Corporation
Consolidated Condensed Statements of Operations
(Unaudited)
|
| Three Months Ended |
| ||||
|
| September 30, |
| September 30, |
| ||
Sales, net |
| $ | 18,441,894 |
| $ | 12,487,832 |
|
|
|
|
|
|
|
|
|
Costs of sales |
|
| 13,316,223 |
|
| 9,614,058 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 5,125,671 |
|
| 2,873,774 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling expense |
|
| 1,094,340 |
|
| 848,499 |
|
General and administrative expense (a) |
|
| 2,167,118 |
|
| 1,177,860 |
|
Research and development expense |
|
| 734,778 |
|
| 256,678 |
|
Total operating expenses |
|
| 3,996,236 |
|
| 2,283,037 |
|
|
|
|
|
|
|
|
|
Operating income |
|
| 1,129,435 |
|
| 590,737 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (278,251 | ) |
| (91,394 | ) |
Interest income |
|
| 13,265 |
|
| 16,842 |
|
Equity in earnings of partnerships |
|
| (75,000 | ) |
| — |
|
Other expense, net |
|
| (53,444 | ) |
| (10,401 | ) |
|
|
|
|
|
|
|
|
Income before income taxes |
|
| 736,005 |
|
| 505,784 |
|
Income tax expense |
|
| 85,545 |
|
| 52,856 |
|
Income from continuing operations |
|
| 650,460 |
|
| 452,928 |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income tax expense |
|
| — |
|
| (14,655 | ) |
|
|
|
|
|
|
|
|
Net income |
| $ | 650,460 |
| $ | 438,273 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share: |
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
Continuing operations |
| $ | .13 |
| $ | .09 |
|
Discontinued operations |
|
| — |
|
| (.01 | ) |
|
| $ | .13 |
| $ | .08 |
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
Continuing operations |
| $ | .12 |
| $ | .08 |
|
Discontinued operations |
|
| — |
|
| (.00 | ) |
|
| $ | .12 |
| $ | .08 |
|
|
|
|
|
|
|
|
|
Average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
| 5,201,966 |
|
| 5,157,925 |
|
Diluted |
|
| 5,562,345 |
|
| 5,413,277 |
|
(a) | General and administrative expense includes $66,488 and $56,166 of non-cash stock option expense related to the adoption of FAS 123(R) for 2007 and 2006, respectively. |
(more)
IntriCon Corporation 2007 Third-Quarter Results
October 24, 2007
Page 5
IntriCon Corporation
Consolidated Condensed Statements of Operations
(Unaudited)
|
| Nine Months Ended |
| ||||
|
| September 30, |
| September 30, |
| ||
|
|
|
|
|
|
|
|
Sales, net |
| $ | 49,958,858 |
| $ | 37,532,457 |
|
|
|
|
|
|
|
|
|
Costs of sales |
|
| 37,415,415 |
|
| 28,372,969 |
|
|
|
|
|
|
|
|
|
Gross profit |
|
| 12,543,443 |
|
| 9,159,488 |
|
|
|
|
|
|
|
|
|
Operating expenses: |
|
|
|
|
|
|
|
Selling expense |
|
| 2,899,978 |
|
| 2,620,031 |
|
General and administrative expense (a) |
|
| 5,200,599 |
|
| 3,804,666 |
|
Research and development expense |
|
| 2,118,236 |
|
| 1,437,499 |
|
Total operating expenses |
|
| 10,218,813 |
|
| 7,862,196 |
|
|
|
|
|
|
|
|
|
Operating income |
|
| 2,324,630 |
|
| 1,297,292 |
|
|
|
|
|
|
|
|
|
Interest expense |
|
| (771,656 | ) |
| (392,570 | ) |
Interest income |
|
| 71,048 |
|
| 56,482 |
|
Equity in earnings of partnerships |
|
| (155,000 | ) |
| — |
|
Other expense, net |
|
| (43,394 | ) |
| (71,345 | ) |
|
|
|
|
|
|
|
|
Income before income taxes |
|
| 1,425,628 |
|
| 889,859 |
|
Income tax expense |
|
| 220,816 |
|
| 127,874 |
|
Income from continuing operations |
|
| 1,204,812 |
|
| 761,985 |
|
|
|
|
|
|
|
|
|
Loss from discontinued operations, net of income tax expense |
|
| — |
|
| (42,630 | ) |
|
|
|
|
|
|
|
|
Net income |
| $ | 1,204,812 |
| $ | 719,355 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) per share: |
|
|
|
|
|
|
|
Basic |
|
|
|
|
|
|
|
Continuing operations |
| $ | .23 |
| $ | .15 |
|
Discontinued operations |
|
| — |
|
| (.01 | ) |
|
| $ | .23 |
| $ | .14 |
|
|
|
|
|
|
|
|
|
Diluted |
|
|
|
|
|
|
|
Continuing operations |
| $ | .22 |
| $ | .14 |
|
Discontinued operations |
|
| — |
|
| (.01 | ) |
|
| $ | .22 |
| $ | .13 |
|
|
|
|
|
|
|
|
|
Average shares outstanding: |
|
|
|
|
|
|
|
Basic |
|
| 5,197,071 |
|
| 5,154,633 |
|
Diluted |
|
| 5,466,128 |
|
| 5,490,606 |
|
(a) | General and administrative expense includes $208,187 and $149,512 of non-cash stock option expense related to the adoption of FAS 123(R) for 2007 and 2006, respectively. |
(more)
IntriCon Corporation 2007 Third-Quarter Results
October 24, 2007
Page 6
IntriCon Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
Assets |
|
|
|
|
|
|
|
|
| September 30, |
| December 31, |
| ||
|
| (unaudited) |
|
|
|
| |
Current assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash |
| $ | 1,022,869 |
| $ | 599,459 |
|
|
|
|
|
|
|
|
|
Restricted cash |
|
| 69,336 |
|
| 60,158 |
|
|
|
|
|
|
|
|
|
Accounts receivable, less allowance for doubtful accounts of $218,000 at 2007 and $246,000 at 2006 |
|
| 9,200,046 |
|
| 8,456,450 |
|
|
|
|
|
|
|
|
|
Inventories |
|
| 10,273,165 |
|
| 9,030,615 |
|
|
|
|
|
|
|
|
|
Refundable income taxes |
|
| 30,951 |
|
| 103,587 |
|
|
|
|
|
|
|
|
|
Note receivable from sale of discontinued operations, less allowance of $225,000 at 2007 and 2006 |
|
| 234,000 |
|
| 300,000 |
|
|
|
|
|
|
|
|
|
Other current assets |
|
| 687,750 |
|
| 235,418 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets |
|
| 21,518,117 |
|
| 18,785,687 |
|
|
|
|
|
|
|
|
|
Property, plant and equipment |
|
|
|
|
|
|
|
Machinery and equipment |
|
| 36,376,488 |
|
| 28,767,904 |
|
Less: accumulated depreciation |
|
| 28,118,423 |
|
| 21,994,344 |
|
|
|
|
|
|
|
|
|
Net property, plant and equipment |
|
| 8,258,065 |
|
| 6,773,560 |
|
|
|
|
|
|
|
|
|
Long-term note receivable from sale of discontinued operations |
|
| — |
|
| 75,000 |
|
|
|
|
|
|
|
|
|
Goodwill |
|
| 8,147,623 |
|
| 5,927,181 |
|
|
|
|
|
|
|
|
|
Investment in partnerships |
|
| 1,558,925 |
|
| 1,800,000 |
|
|
|
|
|
|
|
|
|
Other assets, net |
|
| 1,454,638 |
|
| 920,051 |
|
|
|
|
|
|
|
|
|
|
| $ | 40,937,368 |
| $ | 34,281,479 |
|
(more)
IntriCon Corporation 2007 Third-Quarter Results
October 24, 2007
Page 7
IntriCon Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
Liabilities and Shareholders’ Equity |
| September 30, |
| December 31, |
| ||
|
| (unaudited) |
|
|
|
| |
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Checks written in excess of cash |
| $ | 1,381,845 |
| $ | 661,756 |
|
|
|
|
|
|
|
|
|
Current maturities of long-term debt |
|
| 1,195,373 |
|
| 952,730 |
|
|
|
|
|
|
|
|
|
Accounts payable |
|
| 3,704,750 |
|
| 5,161,450 |
|
|
|
|
|
|
|
|
|
Income taxes payable |
|
| 150,230 |
|
| 173,810 |
|
|
|
|
|
|
|
|
|
Deferred gain on building sale |
|
| 110,084 |
|
| 110,084 |
|
|
|
|
|
|
|
|
|
Short-term partnership payable |
|
| 260,000 |
|
| 260,000 |
|
|
|
|
|
|
|
|
|
Other accrued liabilities |
|
| 4,060,566 |
|
| 3,021,201 |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
| 10,862,848 |
|
| 10,341,031 |
|
|
|
|
|
|
|
|
|
Long-term debt, less current maturities |
|
| 8,772,155 |
|
| 3,830,461 |
|
|
|
|
|
|
|
|
|
Other post-retirement benefit obligations |
|
| 951,175 |
|
| 1,063,744 |
|
|
|
|
|
|
|
|
|
Long-term partnership payable |
|
| 1,280,000 |
|
| 1,280,000 |
|
|
|
|
|
|
|
|
|
Note payable, net of current portion (Amecon) |
|
| 515,720 |
|
| 515,720 |
|
|
|
|
|
|
|
|
|
Deferred income taxes |
|
| 79,273 |
|
| 79,273 |
|
|
|
|
|
|
|
|
|
Accrued pension liability |
|
| 584,808 |
|
| 628,569 |
|
|
|
|
|
|
|
|
|
Deferred gain on building sale, net of current portion |
|
| 853,152 |
|
| 935,715 |
|
|
|
|
|
|
|
|
|
Total non-current liabilities |
|
| 13,036,283 |
|
| 8,333,482 |
|
|
|
|
|
|
|
|
|
Total liabilities |
|
| 23,899,131 |
|
| 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 |
|
| 5,722,975 |
|
| 5,706,235 |
|
Additional paid-in capital |
|
| 12,570,899 |
|
| 12,339,988 |
|
|
|
|
|
|
|
|
|
Accumulated earnings (deficit) |
|
| 215,307 |
|
| (989,505 | ) |
|
|
|
|
|
|
|
|
Accumulated other comprehensive loss |
|
| (205,866 | ) |
| (184,674 | ) |
|
|
|
|
|
|
|
|
Less: 515,754 common shares held in treasury, at cost |
|
| (1,265,078 | ) |
| (1,265,078 | ) |
|
|
|
|
|
|
|
|
Total shareholders’ equity |
|
| 17,038,237 |
|
| 15,606,966 |
|
|
|
|
|
|
|
|
|
|
| $ | 40,937,368 |
| $ | 34,281,479 |
|
# # #