Establishes Low-Cost Manufacturing Facility in
For the 2011 second quarter, the company reported net sales of
"We believe we are well positioned to serve markets with strong growth
prospects long term. However, the continued economic softness has
clearly applied pressure on all of our core businesses," said
"We are pleased that hearing health revenues were up over the year-ago period. Additionally, our medical revenues increased sequentially from the first quarter. However, they were lower than historical levels as a few of our large medical customers experienced fluctuations in demand and are working through inventory levels above their immediate needs. We continue to believe this lull in medical orders is temporary, and are working very closely with our customers to monitor the situation.
"In professional audio communications, orders were impacted by delays in funding for government sponsored programs—this was particularly evident in our security business. Funding is now in place and we anticipate this portion of the business to rebound during the second half of the year."
Hearing health revenue rose 7.4 percent from the 2010 second quarter as certain niches within the market continued to strengthen. Medical and professional audio communications declined 11.4 percent and 17.5 percent, respectively, from the prior-year period due to the factors noted above.
Said Gorder, "Although we are disappointed with our performance in medical and professional audio communications, the long-term fundamentals remain strong. We believe the market demand for small, lightweight advanced body-worn monitoring and communication devices is increasing, as evidenced by recent design wins. Our hearing health business continues to benefit from market acceptance of our innovative digital signal processing, or DSP, circuits, such as our new Overtus™ DSP amplifier."
As a percentage of total 2011 second-quarter revenue, IntriCon's medical business contributed 41 percent, with hearing health and professional audio communications contributing 38 percent and 21 percent, respectively. This compares to 44 percent, 33 percent and 23 percent for medical, hearing health and professional audio communications, respectively, in the 2010 second quarter.
Gross profits in the 2011 second quarter were 22.7 percent, down from 27.0 percent in the prior-year period, mainly due to lower sales volume and unfavorable sales mix.
For the 2011 six-month period,
Gross profits for the 2011 six months were 22.5 percent, down from 26.1 percent in the prior-year period, again primarily due to lower sales volume and unfavorable sales mix.
As previously announced,
Said Gorder, "We are very excited about the market potential of the APT device. With its small, comfortable, open in-the-canal fit, APT has established a new product category in hearing health. We are in the process of finalizing fitting modifications that we believe will ultimately increase market penetration."
On the core technology front, IntriCon's PhysioLink wireless technology is currently being incorporated into various product platforms. According to Gorder, PhysioLink enables audio and data streaming to ear-worn and body-worn applications over distances of up to five meters. This advanced wireless technology has applications across multiple markets—including medical, hearing health and professional audio communications.
The first product platform to incorporate the PhysioLink wireless
technology will be Sirona, the company's second-generation wireless
cardiac diagnostic monitoring (CDM) device. This small, rechargeable
product platform can be used as an event recorder, holter monitor or a
wireless event recorder.
Company Establishes Batam,
In order to further reduce manufacturing costs, the company announced that it has established a new manufacturing facility in Batam,
Said Gorder, "It's imperative that we have low-cost manufacturing options to drive continued margin improvement. This new facility gives us that, as well as the ability to pursue the potential high-volume hearing health and professional audio communications opportunities that we're seeing right now in the marketplace."
Conference Call Today
As previously announced, the company will hold an investment community conference call today,
A replay of the conference call will be available one hour after the
call ends through
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", "anticipate", "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 prospects in the miniature body-worn device arena, new products and their timing, strategic alliances, future growth and expansion, expansion into new manufacturing facilities, market fundamentals, future financial condition and performance, prospects and the positioning of
|Consolidated Condensed Statements of Operations (in thousands, except per share data)|
|Three Months Ended||Six Months Ended|
|June 30,||June 30,||June 30,||June 30,|
|Cost of sales||10,784||10,903||21,472||21,781|
|Sales and marketing||885||835||1,688||1,622|
|General and administrative||1,492||1,493||2,896||2,937|
Research and development
|Total operating expenses||3,402||3,433||6,858||6,783|
|Operating income (loss)||(243)||598||(619)||924|
|Equity in income (loss) of partnerships||120||--||329||(12)|
|Other (expense) income||(29)||42||(37)||86|
|Income (loss) from continuing operations before|
|income taxes and discontinued operations||(297)||468||(614)||656|
|Income tax expense (benefit)||(3)||64||(30)||75|
|Income (loss) before discontinued operations||(294)||404||(584)||581|
|Loss from discontinued operations, net of|
|Gain on sale of discontinued operations, net of|
|Net income (loss)||$||(294)||$||269||$||(584)||$||287|
|Basic income (loss) per share:|
|Net income (loss)||$||(0.05)||$||0.05||$||(0.10)||$||0.05|
|Diluted income (loss) per share:|
|Net income (loss)||$||(0.05)||$||0.05||$||(0.10)||$||0.05|
|Average shares outstanding:|
Consolidated Condensed Balance Sheets (in thousands, except per share data)
|June 30, 2011||December 31,|
|Accounts receivable, less allowance for doubtful accounts of $220 at|
|June 30, 2011 and $219 at December 31, 2010||7,541||8,228|
|Refundable income taxes||63||--|
|Other current assets||1,047||446|
|Total current assets||18,465||17,764|
|Machinery and equipment||37,168||36,610|
Less: Accumulated depreciation
|Net machinery and equipment||5,955||6,426|
|Investment in partnerships||1,438||1,109|
|Other assets, net||1,064||1,259|
|Checks written in excess of cash||$||15||$||409|
|Current maturities of long-term debt||2,129||2,095|
|Accrued salaries, wages and commissions||2,152||1,593|
|Income taxes payable||--||24|
|Other accrued liabilities||1,247||1,497|
|Total current liabilities||9,841||9,149|
|Long-term debt, less current maturities||6,641||6,465|
|Other postretirement benefit obligations||698||710|
|Long-term partnership payable||240||240|
|Deferred income taxes||167||169|
|Accrued pension liabilities||473||464|
|Other long-term liabilities||14||4|
|Commitments and contingencies|
|Common stock, $1.00 par value per share; 20,000 shares authorized;|
|6,094 and 6,073 shares issued; 5,578 and 5,557 shares outstanding|
|at June 30, 2011 and December 31, 2010, respectively||6,094||6,073|
|Additional paid-in capital||15,783||15,644|
|Accumulated other comprehensive loss||(268)||(237)|
Less: 516 common shares held in treasury, at cost
|Total shareholders' equity||18,117||18,571|
|Total liabilities and shareholders' equity||$||36,631||$||36,267|
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