IntriCon 2012 Fourth-Quarter Sales Rise 15.1 Percent

  IntriCon 2012 Fourth-Quarter Sales Rise 15.1 Percent

 Company Reports Quarterly and Annual Gains Across All Businesses; Returns to
                                Profitability

Business Wire

ARDEN HILLS, Minn. -- February 13, 2013

IntriCon Corporation (NASDAQ: IIN), a designer, developer, manufacturer and
distributor of miniature and micro-miniature body-worn devices, today
announced financial results for its fourth quarter and year ended December 31,
2012.

For the 2012 fourth quarter, the company reported net sales of $16.7 million,
an increase of 15.1 percent from the prior-year period. IntriCon had net
income of $332,000, or $0.06 per diluted share, compared to a net loss of
$(352,000), or $(0.06) per diluted share, for the 2011 fourth quarter.

“We are pleased to have delivered growth across all markets for both the
quarter and year – in fact our body-worn device segment had a record year,”
said Mark S. Gorder, president and chief executive officer of IntriCon.

“Our medical business posted its strongest revenue quarter ever, driven by
increased activity from our largest customer, Medtronic, among others. In
hearing health, our non-conventional personal sound amplifier products,  drove
modest quarterly growth despite continued softness in the conventional hearing
health market. And in professional audio communications we delivered
significant gains, with sales increasing 44 percent over the 2011 fourth
quarter on strong demand for securities products domestically and headset
products internationally.”

As a percentage of 2012 fourth-quarter sales, healthcare-related revenue
(hearing health and medical combined) totaled 72.7 percent (32.8 percent
hearing health and 39.9 percent medical), with professional audio
communications at 27.3 percent. This compares to 2011 healthcare-related
revenue of 78.2 percent (37.4 percent hearing health and 40.8 percent
medical), with professional audio communications at 21.8 percent.

Gross profit margins increased to 23.5 percent from 23.1 percent in the
prior-year fourth quarter. The gain was primarily due to higher sales volume,
partially offset by an unfavorable product mix within the professional audio
communications market.

Said Gorder, “As part of our margin enhancement program, we continued to
transfer select, labor-intensive programs to our Singapore and Indonesia
facilities during the fourth quarter. In an effort to drive further margin
improvement and remain competitive from a cost standpoint, we will continue
that shift in 2013. We’re also working to increase the percentage of
proprietary IntriCon technology in all of our products by investing in our
core technologies—this also will have a favorable effect on margins as we move
through the 2013 year.”

IntriCon reduced its operating expenses in the fourth quarter 2.8 percent,
despite higher sales, reflecting the company’s ongoing focus on expense
management.

Full-Year Results
For the 2012 year, IntriCon reported net sales of $63.9 million and net income
of $709,000, or $0.12 per diluted share. This is up from 2011 net sales of
$56.1 million and a net loss of $(1.4 million), or $(0.25) per diluted share.
Hearing health sales rose 13.2 percent over the prior year, with medical and
professional audio up 6.7 percent and 29.4 percent, respectively. Included in
2012 full-year results was a one-time gain of $822,000, or $0.14 per diluted
share, from the previously disclosed sale of the company’s 50-percent
ownership interest in Global Coils, to its Switzerland-based joint venture
partner, Audemars SA.

As a percentage of 2012 sales, healthcare-related revenue totaled 75.5 percent
(37.2 percent hearing health and 38.3 percent medical), with professional
audio communications at 24.5 percent. This compares to 2011 healthcare-related
revenue of 78.4 percent (37.5 percent hearing health and 40.9 percent
medical), with professional audio communications at 21.6 percent.

Gross profit margins for 2012 were 23.4 percent, up from 22.6 percent in the
prior year, primarily due to volume increases, partially offset by an
unfavorable product mix.

hi HealthInnovations
As previously disclosed, IntriCon satisfied hi HealthInnovations’ initial
product ramp-up needs for hearing aids early in 2012. As a result, minimal new
orders were received in the second half of 2012. The company remains
optimistic about the long-term prospects of this program.

Said Gorder, “hi HealthInnovations continues to make progress  building the
infrastructure to provide high-quality, affordable hearing health care to a
broad range of customers. During the year, UnitedHealthcare expanded its hi
HealthInnovation' program to more than 26 million people enrolled in its
employer-sponsored and individual health benefit plans. We expect that this
will open up additional opportunities for IntriCon and that new orders will be
received in the second half of 2013.”

Business Update
Within IntriCon’s medical business, year-over-year sales rose 12.6 percent in
the fourth quarter. The growth, as previously stated, was primarily due to
increased activity from various large medical customers, most notably
Medtronic. Near term, the company expects medical sales going forward to
continue to strengthen.

On the cardiac front, IntriCon continues to deliver demo units of its two
FDA-approved wireless cardiac diagnostic monitoring (CDM) devices—Centauri™
and Sirona™— to targeted customers to compile feedback. Additionally, the
company is expanding its CDM sales and marketing infrastructure, to further
advance its cardiac program and elevate its devices with market-demanded
features.

Said Gorder, “Our technology connects patients and caregivers in
non-traditional ways. We help shift the point of care from traditional
settings such as hospitals, to non-traditional settings like the home. We
accomplish this with devices that are more advanced, smaller and lightweight.
In 2013, we will focus more capital and resources in sales and marketing to
expand our reach to other large medical device manufacturers and healthcare
companies.”

Within hearing health, IntriCon continues to experience softness in the
conventional market. Said Gorder, “The 13.2 percent growth we experienced
during the year came primarily from our hi HealthInnovations work, and
non-conventional personal sound amplifier products. And in 2013, while we
don’t anticipate hi HealthInnovations to ramp until the second half of the
year, there are several growth opportunities that give us optimism for the
longer term to strengthen our position as a supplier to the value hearing
health market.

“First, we continue to develop new technology to improve the user experience.
Our Audion6™, a six-channel hearing aid amplifier, is a notable example.
Audion6 is a feature-rich amplifier that fits a wide array of applications and
has a complete set of proven adaptive features.

“Second, hearing health technology is evolving beyond traditional hearing aid
applications. Devices can now wirelessly stream music, television, audio or a
companion’s voice—making them significantly more versatile and effective than
traditional hearing devices. In addition, this technology and functionality
holds great potential in the non-conventional personal sound amplifier
market.”

Fourth-quarter professional audio communications sales remained very strong,
up more than 44 percent from the prior-year period. The company completed
delivery on its significant contract with the Singapore government during the
quarter, providing technically advanced headsets to be worn in difficult
listening environments. Professional audio sales going forward are expected to
moderate to more historical levels.

Heightened Focus on Marketing
Said Gorder, “Over the past five years we have invested heavily in our
technology portfolio and global manufacturing infrastructure. Better
understanding customer and market needs, and evolving our technology portfolio
to meet those needs, as well as developing new products and product platforms,
is the next step in our strategic plan.

“To that end, we will be increasing investments in marketing and sales in 2013
to advance us down that path. That process has already begun and we expect to
add additional staff and resources throughout the year to build customer
relationships, market knowledge and sales.”

Looking Ahead
Concluded Gorder, “As a business, our primary goals are to build revenue,
improve margins and grow our bottom line. We plan to do so by: placing a
heightened focus on marketing; raising the percentage of proprietary IntriCon
technology we incorporate in our products; and leveraging our low-cost
manufacturing footprint.

“Consistent with historical revenue cycles we anticipate a more moderate 2013
first quarter in comparison to our 2012 fourth quarter. That being said, we
are optimistic about our opportunities in 2013 and our ability to execute and
deliver growth.”

Conference Call Today
As previously announced, the company will hold an investment community
conference call today, Wednesday, February 13, 2013, beginning at 4:00 p.m.
CT. Mark Gorder, president and chief executive officer, and Scott Longval,
chief financial officer, will review fourth-quarter performance and discuss
the company’s strategies. To join the conference call, dial: 1-877-941-6009
(international 1-480-629-9818) and provide the conference identification
number 4596685 to the operator.

A replay of the conference call will be available one hour after the call ends
through 11:59 p.m. CT on Tuesday, February 19, 2013. To access the replay,
dial 1-800-406-7325 (international 1-303-590-3030) and enter access code:
4596685.

About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation designs, develops
and manufactures miniature and micro-miniature body-worn devices. These
advanced products help medical, healthcare and professional communications
companies meet the rising demand for smaller, more intelligent and better
connected devices. IntriCon has facilities in the United States, Asia and
Europe. The company’s common stock trades under the symbol “IIN” on the NASDAQ
Global 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 are “forward-looking statements” within the meaning of the
Securities Exchange Act of 1934, as amended. 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 other factors are 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, 2011. 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.



IntriCon Corporation
Consolidated Condensed Statements of Operations
(in thousands, except per share data)

                  (Unaudited)
                    Three Months Ended             Twelve Months Ended
                    December 31,   December        December     December
                                     31,             31,            31,
                    2012             2011            2012           2011
Sales, net          $  16,665        $  14,474       $ 63,933       $ 56,058
Cost of sales         12,748         11,131       48,957       43,392 
Gross profit           3,917            3,343          14,976         12,666
                                                                    
Operating
expenses:
Sales and              961              763            3,324          3,185
marketing
General and            1,215            1,415          5,958          5,797
administrative
Research and          1,181          1,276        4,694        4,876  
development
Total operating       3,357          3,454        13,976       13,858 
expenses
Operating              560              (111   )       1,000          (1,192 )
income (loss)
                                                                    
Interest               (166    )        (178   )       (755   )       (609   )
expense
Equity in
income (loss)          (39     )        (143   )       (116   )       174
of partnerships
Gain on sale of
investment in          --               --             822            --
partnership
Other income          (14     )       10           (78    )      42     
(expense), net
Income (loss)
from before            341              (422   )       873            (1,585 )
income taxes
                                                                    
Income tax
expense               9              (70    )      164          (160   )
(benefit)
                                                                    
Net income          $  332          $  (352   )     $ 709         $ (1,425 )
(loss)
                                                                    
Net income
(loss) per
share:
Basic               $  0.06          $  (0.06  )     $ 0.13         $ (0.25  )
Diluted             $  0.06          $  (0.06  )     $ 0.12         $ (0.25  )
                                                                    
                                                                    
Average shares
outstanding:
Basic                  5,678            5,623          5,669          5,599
Diluted                5,819            5,623          5,888          5,599
                                                                             


IntriCon Corporation
Consolidated Condensed Balance Sheets
(in thousands, except per share data)

At December 31,                                    2012         2011
Current assets:
Cash                                                 $ 226          $ 119
Restricted cash                                        563            540
Accounts receivable, less allowance for doubtful
accounts of $154 and $223 at December 31, 2012         7,171          8,545
and 2011, respectively
Inventories                                            11,117         11,720
Refundable income taxes                                --             82
Other current assets                                  1,483        652    
Total current assets                                   20,560         21,658
                                                                    
Machinery and equipment                                40,796         39,170
Less: Accumulated depreciation                        34,012       32,164 
Net machinery and equipment                            6,784          7,006
                                                                    
Goodwill                                               9,709          9,709
Investment in partnerships                             773            1,283
Other assets, net                                     1,306        1,074  
Total assets                                         $ 39,132      $ 40,730 
                                                                    
Current liabilities:
Checks written in excess of cash                     $ 637          $ 396
Current maturities of long-term debt                   2,945          2,883
Accounts payable                                       4,045          6,298
Accrued salaries, wages and commissions                1,786          1,617
Deferred gain                                          110            110
Partnership payable                                    --             240
Income taxes payable                                   96             --
Other accrued liabilities                             2,048        1,907  
Total current liabilities                              11,667         13,451
                                                                    
Long-term debt, less current maturities                7,222          8,217
Other postretirement benefit obligations               590            685
Accrued pension liabilities                            510            431
Deferred gain                                          275            385
Other long-term liabilities                           146          115    
Total liabilities                                      20,410         23,284
Commitments and contingencies
                                                                    
Shareholders’ equity:
Common stock, $1.00 par value per share; 20,000
shares authorized; 5,687 and 5,646 shares issued       5,687          5,646
and outstanding at December 31, 2012 and 2011,
respectively.
Additional paid-in capital                             15,797         15,259
Accumulated deficit                                    (2,360 )       (3,069 )
Accumulated other comprehensive loss                  (402   )      (390   )
Total shareholders' equity                            18,722       17,446 
Total liabilities and shareholders’ equity           $ 39,132      $ 40,730 

Contact:

At IntriCon:
Scott Longval, CFO, 651-604-9526
slongval@intricon.com
or
At Padilla Speer Beardsley:
Matt Sullivan, 612-455-1700
msullivan@padillaspeer.com
 
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