SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
Date of Report (Date of earliest event reported): November 24, 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
Item 2. Acquisition or Disposition of Assets.
On November 24, 1997, Intermagnetics General Corporation (the "Company")
completed its acquisition of Polycold Systems International, a California
corporation ("Polycold"), pursuant to an Agreement and Plan of Reorganization
and Merger, dated November 24, 1997 (the "Agreement"), by and among the
Company, Polycold Merger Sub, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Merger Sub"), Polycold, and the 13 stockholders of
Polycold named therein (the "Stockholders"). Pursuant to the Agreement,
Polycold was acquired by the merger (the "Merger") of Polycold with and into
Merger Sub. Merger Sub is the surviving corporation in the Merger, and has been
named Polycold Systems International, Inc. In the Merger, all of the 284,887
shares of the outstanding common stock, no par value, of Polycold (the
"Polycold Shares") 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 a promissory note (the "Note") for $6.82
million, approximately 276,050 shares of the common stock, par value $.10 per
share, of the Company (the "Company Common Stock"), and approximately 70,000
shares of the Series A Preferred Stock, par value $.10 per share, of the
Company (the "Company Series A Preferred Stock"). The Note bears interest at
the compound rate of 5.75% per annum, and is payable, subject to certain
obligations of the Stockholders of Polycold as set forth in greater detail in
the Agreement, ninety (90) days after issuance. The total value of the Merger
consideration received by the Stockholders of Polycold was approximately $16.5
million. Each Stockholder of Polycold received for each Polycold Share held by
it (i) a portion of the Note equal to approximately $23.94, (ii) approximately
.97 shares of Company Common Stock, and (iii) approximately .25 shares of
Company Series A Preferred Stock.
All of the Stockholders of Polycold voted in favor of the Merger by a
Unanimous Written Consent of Stockholders In Lieu of A Special Meeting, dated
November 24, 1997, and are signatories to the Agreement.
The Company currently expects that the portion of the consideration
represented by the Note will, upon payment, be financed internally by the
Company or by Bank borrowings.
Prior to the Merger, Polycold was engaged in the manufacture of large
capacity, cryogenic systems. All plant, equipment and other physical property
acquired in the Merger will continue to be used primarily as they were prior
to the Merger. As contemplated by the Agreement, Ronald W. Sykes, an officer,
director and shareholder of Polycold, has entered into an Employment Agreement
with Intermagnetics, dated November 24, 1997, pursuant to which he has assumed
the position of Vice President and General Manager of Merger Sub. In addition
Dale Missimer, former Polycold Chairman and Chief Executive Officer, has entered
into a five year consulting agreement to ensure a smooth transition.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
Item 7(a). Financial Statements of Business Acquired.
Audited financial statements of Polycold Systems International as of and
for the nine months ended September 30, 1997.
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Financial Statements
September 30, 1997
(With Independent Auditors' Report Thereon)
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Polycold Systems International, Inc.:
We have audited the accompanying balance sheet of Polycold Systems
International, Inc. (the Company) as of September 30, 1997 and the related
statement of income, stockholders' equity, and cash flows for the nine months
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 audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit 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 audit provides 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 Polycold Systems International,
Inc. as of September 30, 1997, and the results of its operations and its cash
flows for the nine months then ended in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
San Francisco, California
January 13, 1998
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Balance Sheet
September 30, 1997
Assets
Current assets:
Cash and cash equivalents $ 521,409
Short term investments 2,633,797
Accounts receivable, less bad debt allowance of $30,000 2,693,030
Inventory, net of obsolescence reserve of $20,000 1,153,004
Prepaid income taxes 5,446
Net deferred tax asset 272,622
Prepaid expenses and other current assets 15,800
----------
Total current assets 7,295,108
Property and equipment, net 461,421
Other assets 22,111
----------
Total assets $7,778,640
==========
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 397,160
Accrued expenses 855,384
Accrued sales taxes 12,250
Deferred revenue 24,157
Notes payable to bank 5,768
----------
Total current liabilities 1,294,719
----------
Shareholders' equity:
Class A common voting stock, no par value, 400,000 shares authorized,
264,400 shares issued and outstanding 291,308
Class B common non-voting stock, no par value, 100,000 shares authorized, 20,487 shares issued
and outstanding 52,576
Retained earnings 6,140,037
----------
Total shareholders' equity 6,483,921
----------
Total liabilities and shareholders' equity $7,778,640
==========
See accompanying notes to financial statements.
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Statement of Income
Nine months ended September 30, 1997
Sales $ 12,167,049
Cost of goods sold 6,736,315
------------
Gross profit 5,430,734
Operating expenses:
Sales commissions 442,764
Other selling and marketing 1,526,938
General and administrative 1,864,134
------------
3,833,836
------------
Operating income 1,596,898
Other income (expense):
Interest income 117,928
Interest expense (3,113)
Other income, net 6,359
------------
121,174
------------
Income before income taxes 1,718,072
Income taxes 712,345
------------
Net income $ 1,005,727
============
See accompanying notes to financial statements.
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Statement of Stockholders' Equity
Nine months ended September 30, 1997
Class A common Class B common
voting stock non-voting stock Total
--------------------- --------------------- Retained stockholders'
Shares Amount Shares Amount earnings equity
------- --------- ------ --------- --------- ---------
Balances, as of December 31, 1996 261,100 $ 225,308 19,987 $ 42,576 5,134,310 5,402,194
Issuance of common stock 3,300 66,000 500 10,000 -- 76,000
Net income -- -- -- -- 1,005,727 1,005,727
------- --------- ------ --------- --------- ---------
Balances, as of September 30, 1997 264,400 $ 291,308 20,487 $ 52,576 6,140,037 6,483,921
======= ========= ====== ========= ========= =========
See accompanying notes to financial statements.
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Statement of Cash Flows
Nine months ended September 30, 1997
Cash flows from operating activities:
Net income $ 1,005,727
Adjustments to reconcile net income to net cash (used in) provided by operating
activities:
Depreciation 99,885
Loss on disposal of property and equipment 85,748
Deferred income tax 50,403
Changes in operating assets and liabilities:
Accounts receivable (451,602)
Inventory (127,229)
Prepaid income taxes (5,446)
Prepaid expenses and other current assets (14,012)
Accounts payable (20,192)
Accrued expenses (34,413)
Accrued income taxes (387,626)
Accrued sales tax 12,250
Deferred revenue (103,182)
-----------
Net cash provided by operating activities 110,311
Cash flows from investing activities:
Proceeds from maturity of U.S. Treasury debt securities 1,305,424
Purchase of U.S. Treasury debt securities (1,151,012)
Purchase of other short-term investments (252,648)
Purchase of property and equipment (158,698)
-----------
Net cash used in investing activities (256,934)
Cash flows from financing activities:
Principal payments under notes payable to bank (48,214)
Issue of common stock 76,000
-----------
Net cash provided by financing activities 27,786
-----------
Net decrease in cash and cash equivalents (118,837)
Cash and cash equivalents at January 1, 1997 640,246
-----------
Cash and cash equivalents at September 30, 1997 $ 521,409
===========
Supplemental disclosures of cash flow information: Cash paid during the year
for:
Interest $ 3,113
===========
Income tax $ 907,131
===========
See accompanying notes to financial statements.
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Notes to Financial Statements
September 30, 1997
(1) Organization of the Company
Polycold Systems International, Inc., a California company, was
incorporated in June 1974 as Marin Tek, Inc. In January 1992, Marin
Tek, Inc. merged Polycold Systems, Inc., its then wholly owned
subsidiary corporation, into itself. The resulting company was named
Polycold Systems International, Inc.
The Company manufactures and distributes super cooling units throughout
the United States, Europe and Asia.
On November 24, 1997, the Company completed the sale of all its
outstanding issued or issuable shares to Intermagnetics General
Corporation.
(2) Summary of Significant Accounting Policies
Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with a remaining
maturity of three months or less at the date of the acquisition to be
cash equivalents.
Short Term Investments
Short term investments consist mainly of certificate of deposits and U.S.
Treasury debt securities which have a maturity of less than two years. In
accordance with Statement of Financial Accounting Standards No. 115,
Accounting for Certain Investments in Debt and Equity Securities, the
Company has classified all short term investments as available for sale.
Available for sale securities are stated at fair value with unrealized
gains and losses included as a separate component of stockholders'
equity.
Concentration of Credit Risk
The Company sells its products to a diversified group of customers in the
United States, Europe and Asia. The Company extends credit based on an
evaluation of each customer's financial condition and generally requires
no collateral from its customers. Credit losses, if any have been
provided for in the balance sheet and have been within management's
expectation.
Overseas sales are made to foreign distributors who sell to the end
customer. As of September 30, 1997, the amounts owed by three
distributors amounted to 63% of the gross accounts receivable balance.
In addition, the Company has a concentration of credit risk with
respect to cash deposited in a commercial bank that is in excess of
federally insured amounts.
1
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Notes to Financial Statements, Continued
Revenue Recognition
Revenue from product sales is recognized upon product shipment. Any
deposits received by the Company in advance of product shipment is shown
as deferred revenue on the balance sheet. Provisions for estimated
warranty repairs and returns and allowances are provided as sales are
recorded.
Foreign Currency Transactions
Revenue and expense transactions are recorded and translated into U.S.
dollars at the foreign exchange rate in effect on the transaction date.
Inventories
Inventories are stated at the lower of cost or market, using the
first-in, first out method.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation.
Depreciation is computed using the straight-line method based upon the
useful lives of the respective assets or the lease term, generally three
to five years. During 1996, the Company adopted Statement of Financial
Accounting Standards (SFAS) No.121, Accounting for the Impairment of
Long-Lived Assets and for Long Lived Assets to Be Disposed Of. The
adoption of SFAS No. 121 did not have a material impact on the Company's
financial position.
Income Taxes
Income taxes are accounted for using the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amount of existing assets and liabilities and their respective
tax bases and operating loss and tax credit carryforwards. Deferred tax
assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences
are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
(3) Short Term Investments
As of September 30, 1997, there were no material differences between
cost and fair value of available-for-sale securities.
2
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(4) Inventories
Inventories consist of the following at September 30, 1997:
Raw materials $ 794,497
Work in process/finished goods 378,507
-----------
1,173,004
Less reserve for obsolescence (20,000)
-----------
$ 1,153,004
===========
(5) Related Party Transactions
In May 1997, the Company transferred three of its autos at a net book
value of $85,748 to individuals who are both shareholders and directors
of the Company for no costs as incentive bonuses.
The Company leases its main facility from one of its shareholders.
Monthly payments are $15,802. The basic lease ends in December 1997. On
November 24, 1997, the Company exercised an option existing in the lease
and entered into an agreement with the shareholders to extend the lease
for a period of five years to December 2002.
(6) Property and Equipment
A summary of property and equipment as of September 30, 1997 follows:
Leasehold improvements $ 613,434
Machinery and equipment 382,133
Autos and trucks 104,987
Computers 52,629
Furniture and fixtures 26,663
-----------
1,179,846
Less accumulated depreciation and amortization (718,425)
-----------
$ 461,421
===========
3
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(7) Accrued Expenses
Accrued expenses consist of the following at September 30, 1997:
Commissions $156,469
Payroll tax 148,524
Pension contributions 143,876
Warranty accrual 138,000
Vacation and sick leave accrual 135,000
Accrual for discounts and returns 70,000
Wages and salaries 63,515
--------
$855,384
========
(8) Notes Payable to Bank
The Company has two loans with original principal balances totaling
$53,062 with a bank. The loans are secured by two company cars. The loans
bear interest at 8.25% per annum. Amounts outstanding on these loans as
of September 30, 1997 are $5,768. The loans were fully repaid subsequent
to September 30, 1997.
In May 1997, the Company entered into a $500,000 revolving line of
credit expiring in May 1998. The facility bears interest at 8.5% per
annum and is unsecured. As of September 30, 1997, there were no
borrowings under this line.
(9) Pension Plans
The Company has a defined contribution pension plan for eligible
employees. Employer's contributions are determined annually and equal 10%
of eligible employee's compensation as defined.
The Company has a 401(k) retirement plan for eligible employees. Under
the provisions of the plan, employees may make contributions in
accordance with limits imposed by the Internal Revenue Service. The
Company matches employee contributions up to certain limits and may also
contribute additional amounts on a discretionary basis.
4
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(10) Income Taxes
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at
September 30, 1997 are presented below:
Deferred income tax asset:
Provision for returns and discounts $ 28,200
Obsolescence reserve 8,000
Allowance for doubtful accounts 12,000
Accrued warranty 55,200
Accrued vacation 54,000
Inventory costs capitalized for income tax purposes 124,800
State taxes 51,901
---------
Deferred tax asset 334,101
Deferred income tax liability:
Property and equipment, principally due to differences in depreciation (61,479)
---------
Net deferred tax asset $ 272,622
=========
There was no valuation allowance for deferred tax assets as of
September 30, 1997.
Income tax expense consisted of the following for the period ended
September 30, 1997:
Current Deferred Total
-------- -------- --------
Federal $501,926 42,843 544,769
State 160,016 7,560 167,576
-------- -------- --------
Total $661,942 50,403 712,345
======== ======== ========
The actual income tax expense differs from the "expected" income tax expense,
computed by applying the U.S. federal income statutory tax rate of 34% to
income before income taxes as follows:
Computed "expected" tax expense $584,145 34.0%
Increase (reduction) resulting from:
State income tax, net of federal income tax benefit 105,455 6.2%
Other permanent difference 22,745 1.3%
-------- ----
$712,345 41.5%
======== ====
5
POLYCOLD SYSTEMS INTERNATIONAL, INC.
Notes to Financial Statements, Continued
(11) Lease Commitments
The Company leases its facilities and certain equipment under operating
leases, extending through August 2002. As of September 30, 1997, future
minimum lease payments under non-cancelable operating leases are as
follows:
Twelve months ending
September 30,
--------------------
1998 $ 126,561
1999 58,599
2000 43,044
2001 43,044
2002 38,505
---------
Total future minimum lease payments
under operating leases $ 309,753
=========
Total rental expense under operating lease was approximately $201,000 for
the nine months ended September 30, 1997.
As stated in note 5 the Company leases its main facility from one of its
shareholders.
(12) Shareholders' Equity
Except for voting rights and the entitlement to notice to shareholder
meetings which attach to Class A common voting stock but not to Class B
common non-voting stock, all other rights attaching to the common stock
are equal.
6
Item 7(b). Pro Forma Financial Information.
A Pro Forma Condensed Consolidated Balance Sheet of Intermagnetics
General Corporation ("IGC") and Polycold Systems International, Inc.
("Polycold") is presented as of August 24, 1997 and Pro Forma Condensed
Consolidated Statements of Income for IGC and Polycold are presented for
the three months ended August 24, 1997 and the fiscal year ended May 25, 1997.
The amounts and adjustments presented herein have been prepared by the
Registrant based upon assumptions deemed proper by it. The Pro Forma Financial
Statements presented herein are shown for illustrative purposes only and are not
necessarily indicative of the future financial position or results of operations
of the Registrant that would have actually occurred had the transaction as
described under Item 2, been in effect as of the date for the periods presented.
Intermagnetics General Corporation and Polycold Systems International, Inc.
Pro Forma Condensed Consolidated Balance Sheet
August 24, 1997
(Dollars in Thousands)
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Balance Sheet as of
August 24,1997, gives effect to the acquisition by Intermagnetics General
Corporation (IGC) of Polycold Systems International, Inc. (Polycold), which
was consummated on November 24, 1997, as if it occurred on August 24, 1997. The
Pro Forma Condensed Consolidated Balance Sheet should be read in conjunction
with the related Pro Forma Condensed Consolidated Statements of Income and the
notes to the Pro Forma Condensed Consolidated Financial Statements appearing
elsewhere herein.
Pro Forma
Historical Adjustments IGC - Polycold
------------------------ ----------- Pro Forma
IGC Polycold Note 1 Consolidated
--------- --------- ----------- ---------------
ASSETS
Current Assets
Cash and short-term investments $ 9,311 $ 3,155 $ 0 $ 12,466
Trade accounts receivable 17,294 2,693 0 19,987
Costs and estimated earnings in
excess of billings on uncompleted
contracts 4,854 0 0 4,854
Inventories 28,054 1,153 0 29,207
Prepaid expenses & other current assets 3,989 294 0 4,283
--------- --------- --------- ---------
63,502 7,295 0 70,797
Property, Plant and Equipment (Net) 28,333 461 0 28,794
Investments 13,281 0 0 13,281
Excess costs over net assets acquired 9,372 10,316 19,688
Other Assets 3,611 23 0 3,634
--------- --------- --------- ---------
$ 118,099 $ 7,779 $ 10,316 $ 136,194
========= ========= ========= =========
LIABILITIES & SHAREHOLDERS' EQUITY
Current Liabilities
Current portion of long-term debt $ 262 $ 0 $ 0 $ 262
Accounts payable 5,224 397 0 5,621
Note payable 6,821 6,821
Salaries, wages and related expenses 2,705 0 352 3,057
Customer advances 1,073 0 0 1,073
Other liabilities and accrued expenses 3,732 898 128 4,758
--------- --------- --------- ---------
12,996 1,295 7,301 21,592
Long-Term Debt 29,058 0 0 29,058
Deferred Income Taxes 829 0 0 829
Shareholders' Equity
Preferred Stock, par value $.10 per share:
Issued and outstanding -- 69,992 shares 0 0 6,999 6,999
Common Stock, par value $.10 per share:
Issued and outstanding -- 12,978,099 shares 1,270 344 (316) 1,298
Additional paid-in capital 75,489 0 2,472 77,961
Retained earnings (1,182) 6,140 (6,140) (1,182)
Unrealized gain on investment 1,474 0 0 1,474
Foreign currency translation 133 0 0 133
--------- --------- --------- ---------
77,184 6,484 3,015 86,683
Common stock in treasury (1,968) 0 0 (1,968)
--------- --------- --------- ---------
75,216 6,484 3,015 84,715
--------- --------- --------- ---------
$ 118,099 $ 7,779 $ 10,316 $ 136,194
========= ========= ========= =========
Intermagnetics General Corporation and Polycold Systems International, Inc.
Pro Forma Condensed Consolidated Statement of Income
Three Months Ended August 24,1997
(Dollars in Thousands except per share amounts)
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Statement of Income for
the three months ended August 24, 1997, gives effect to the acquisition by
Intermagnetics General Corporation (IGC) of Polycold Systems International, Inc.
(Polycold), using the purchase method of accounting as if the acquisition had
taken place at the beginning of IGC's prior fiscal year. The Pro Forma Condensed
Consolidated Statement of Income should be read in conjunction with the related
Pro Forma Condensed Consolidated Balance Sheet and the notes to the Pro Forma
Condensed Consolidated Financial Statements appearing elsewhere herein.
Historical Pro Forma IGC - Polycold
----------------------------- Adjustments Pro Forma
IGC Polycold Note 2 Consolidated
------------ ------------ ------------ -------------
Net Sales $ 21,020 $ 4,372 $ 0 $ 25,392
Other Revenue 486 38 (87) 437
------------ ------------ ------------ ------------
21,506 4,410 (87) 25,829
Costs and expenses:
Costs of products sold 13,135 2,372 172 15,679
Product research and development 2,113 0 0 2,113
Marketing, general and administrative 4,912 1,582 0 6,494
Interest and other expense 503 0 0 503
Equity in net income of unconsolidated affiliate 87 0 0 87
------------ ------------ ------------ ------------
20,750 3,954 172 24,876
------------ ------------ ------------ ------------
Income before income taxes 756 456 (259) 953
Provision for income taxes 295 256 (34) 517
------------ ------------ ------------ ------------
NET INCOME $ 461 $ 200 $ (225) $ 436
============ ============ ============ ============
NET INCOME PER SHARE $ 0.04 $ 0.03
============ ============
(Primary and Fully diluted)
Weighted average shares outstanding
during period (Primary and Fully Diluted)
plus common stock equivalents 12,898,337 12,898,337
Shares issued in acquisition - Common Stock 276,048 276,048
- Common Stock Equivalents 624,609 624,609
------------ ------------ ------------
Pro Forma Weighted average shares
outstanding during period (Primary and Fully Diluted)
plus common stock equivalents 12,898,337 900,657 13,798,994
============ ============ ============
Intermagnetics General Corporation and Polycold Systems International, Inc.
Pro Forma Condensed Consolidated Statement of Income
Year Ended May 25, 1997
(Dollars in Thousands except per share amounts)
(UNAUDITED)
The following unaudited Pro Forma Condensed Consolidated Statement of Income
for the year ended May 25,1997, gives effect to the acquisition by
Intermagnetics General Corporation (IGC) of Polycold Systems International Inc.
(Polycold), using the purchase method of accounting as if the acquisition had
taken place at the beginning of IGC's fiscal year. The Pro Forma Condensed
Consolidated Statement of Income should be read in conjunction with the related
Pro Forma Condensed Consolidated Balance Sheet and the notes to the Pro Forma
Condensed Consolidated Financial Statements appearing elsewhere herein.
Historical Pro Forma IGC - Polycold
--------------------------- Adjustments Pro Forma
IGC Polycold Note 3 Consolidated
------------ ------------ ------------ -------------
Net Sales $ 87,052 $ 14,639 $ 0 $ 101,691
Other Revenue 2,961 137 (260) 2,838
------------ ------------ ------------ ------------
90,013 14,776 (260) 104,529
Costs and expenses:
Costs of products sold 61,022 8,471 688 70,181
Product research and development 6,851 0 0 6,851
Marketing, general and administrative 15,836 4,421 0 20,257
Interest and other expense 2,087 13 98 2,198
Equity in net income of unconsolidated affiliate 182 0 0 182
------------ ------------ ------------ ------------
85,978 12,905 786 99,669
------------ ------------ ------------ ------------
Income before income taxes 4,035 1,871 (1,046) 4,860
Provision for income taxes 1,420 817 (140) 2,097
------------ ------------ ------------ ------------
NET INCOME $ 2,615 $ 1,054 $ (906) $ 2,763
============ ============ ============ ============
NET INCOME PER SHARE $ 0.21 $ 0.21
============ ============
(Primary and Fully diluted)
Weighted average shares outstanding
during period (Primary and Fully Diluted)
plus common stock equivalents 12,543,076 12,543,076
Shares issued in acquisition - Common Stock 276,048 276,048
- Common Stock Equivalents 454,811 454,811
------------ ------------ ------------
Pro Forma Weighted average shares
outstanding during period (Primary and Fully Diluted)
plus common stock equivalents 12,543,076 730,859 13,273,935
============ ============ ============
Notes to Pro Forma Condensed Consolidated Financial Statements
NOTE 1
The Proforma Condensed Consolidated Balance Sheet includes adjustments as of the
closing date to reflect the acquisition of Polycold using the purchase method of
accounting. The Pro Forma adjustments reflected in the Balance Sheet are as
follows:
Consideration for Polycold
- --------------------------------------------------------------------------------
Note Payable $ 6,821
Common Stock 28
Additional Paid in Capital 2,472
Preferred Stock 6,999
Related Expenses 480
-------
Total Consideration 16,800
Polycold Equity 6,484
-------
Excess of Cost over Net Assets Acquired $10,316
=======
Excess of Cost over Net Assets Acquired is based on preliminary application of
the purchase method of accounting. This value will be finalized in accordance
with APB16. Additionally, the Excess of Cost over Net Assets Acquired will be
amortized over 15 years. The preferred stock issued as part of the purchase
consideration is redeemable in cash or common stock, at the Company's option,
at a value of $6,999 million. Common stock was valued at the average market
price for a few days surrounding November 24, 1997.
NOTE 2
In connection with the Pro Forma Condensed Consolidated Statement of Income for
the three months ended August 24, 1997, the following pro forma adjustments were
made:
Decrease in interest income resulting from payout
of note issued in transaction $ 87
Amortization of Excess of Cost over Net Assets Acquired 172
Decrease in income tax relating to increased interest expense (34)
-----
Decrease in net income $ 225
=====
NOTE 3
In connection with the Pro Forma Condensed Consolidated Statement of Income for
the year ended May 25, 1997, the following pro forma adjustments were made:
Increase in interest expense resulting from the note
issued as part of the purchase price $ 98
Decrease in interest income resulting from payout of
note issued in transaction 260
Amortization of Excess of Cost over Net Assets Acquired 688
Decrease in income tax relating to increased interest expense
and reduced interest income (140)
-----
Decrease in net income $ 906
=====
NOTE 4
The dates used in this financial information reflect IGC's fiscal periods. The
corresponding date for Polycold's Balance Sheet is September 30, 1997 and the
Statements of Income are for the three months ended September 30, 1997 and the
year ended June 30, 1997.
Item 7(c). Exhibits.
23. Consent of Independent Accountants
The Board of Directors
Polycold Systems International, Inc.:
We consent to the inclusion of our report dated January 13, 1998, with respect
to the balance sheet of Polycold Systems International, Inc. as of September
30, 1997, and the related statements of income, stockholders' equity and cash
flows for the nine months ended September 30, 1997, which report appears in the
Form 8-K, as amended, of Intermagnetics General Corporation dated November 24,
1997.
/s/ KPMG PEAT MARWICK LLP
San Francisco, California
February 5, 1998
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: February 5, 1998
By: /s/ Michael C. Zeigler
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Michael C. Zeigler
Chief Financial Officer