IntriCon Reports 2013 First-Quarter Results

  IntriCon Reports 2013 First-Quarter Results

    Medical Rises 17 Percent from Year-ago Period, 7 Percent Sequentially

Business Wire

ARDEN HILLS, Minn. -- April 22, 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 first quarter ended March 31, 2013.

For the 2013 first quarter, the company reported net sales of $14.6 million,
versus $16.5 million in the prior-year period. IntriCon had a net loss of
$(471,000), or $(0.08) per diluted share, compared to net income of $243,000,
or $0.04 per diluted share, for the 2012 first quarter.

“Consistent with historical revenue cycles, we reported a more moderate 2013
first quarter,” said Mark S. Gorder, president and chief executive officer of
IntriCon. “Driven by increased activity from our largest customer, Medtronic,
our medical business posted its strongest revenue quarter ever. However, this
growth was offset by continued sluggishness in the conventional hearing health
market, the planned softness in our program with hi HealthInnovations, and a
professional audio slowdown due to U.S. Government sequestration.”

As a percentage of 2013 first-quarter sales, healthcare-related revenue
(hearing health and medical combined) totaled 84.5 percent (35.8 percent
hearing health and 48.7 percent medical), with professional audio
communications at 15.5 percent. This compares to 2012 healthcare-related
revenue of 82.8 percent (45.9 percent hearing health and 36.9 percent
medical), with professional audio communications at 17.2 percent.

Gross profit margins decreased to 23.8 percent from 25.2 percent in the
prior-year first quarter. The decrease was primarily due to lower sales
volume, partially offset by a favorable product mix within the medical market.

According to Gorder, the company continued to transfer select, labor-intensive
programs in its medical and hearing health businesses to its Singapore and
Indonesia facilities during the first quarter. To drive margin improvement and
remain competitive from a cost standpoint, IntriCon will continue these shifts
throughout 2013.

Business Update

Sales in IntriCon’s medical business rose 17.0 percent in the first quarter.
The growth, as previously stated, was primarily due to increased activity from
Medtronic in preparation for a new product line launch. The company expects
medical sales going forward to moderate in the second quarter as Medtronic
works through the inventory build, and then to strengthen in the second half
of the year.

Within cardiac, IntriCon has secured initial orders for its wireless cardiac
diagnostic monitor Sirona™ for delivery in the third quarter. 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.

Within hearing health, IntriCon continues to experience softness in the
conventional market which is consistent with overall industry trends. The slow
growth in the conventional hearing aid channel is primarily due to the high
device costs and inconveniences in the distribution channel. The company
believes these factors have created an opportunity for alternative care models
such as the insurance channel and the personal sound amplifier product (PSAP)
market.

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. And while we do not anticipate that hi
HealthInnovations will ramp until the second half of the year, we remain very
optimistic about the progress that has been made and the long term prospects
of this market-changing program.

“We also recently unveiled Audion4™, our new four-channel hearing aid
amplifier, at AudiologyNOW!. The latest amplifier in our Audion family,
Audion4 broadens our amplifier product offering—giving manufacturers even more
options to be competitive in today's emerging value sector of the hearing
health market.”

IntriCon's Audion4 is a feature-rich amplifier designed to fit a wide array of
applications. In addition to multiple compression channels, the amplifier has
a complete set of proven adaptive features which greatly improve the user
experience.

On the professional audio front, first-quarter sales moderated to more
historical levels as expected. The decline was due to U.S. Government
sequestration related to IntriCon’s security business and the conclusion of
the company’s Singapore Government contract. Over the next few quarters
IntriCon anticipates securing additional contracts with both governments.

Looking Ahead

Concluded Gorder, “In early 2013 we met some headwinds and we face near-term
challenges. We are closely monitoring these challenges and will continue to
adjust our cost structure accordingly. Longer term, we’re confident in our
ability drive shareholder value. Our technology portfolio, global
manufacturing infrastructure and key customer relationships have positioned us
well to aggressively drive growth in the value hearing health and medical
biotelemetry markets.”

Conference Call Today

As previously announced, the company will hold an investment community
conference call today, Monday, April 22, 2013, beginning at 4:00 p.m. CT. Mark
Gorder, president and chief executive officer, and Scott Longval, chief
financial officer, will review first-quarter performance and discuss the
company’s strategies. To join the conference call, dial: 1-877-941-9205
(international 1-480-629-9818) and provide the conference identification
number 4613638 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 Monday, April 29, 2013. To access the replay, dial
1-800-406-7325 (international 1-303-590-3030) and enter access code: 4613638.

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, 2012. 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)
                                                         
                                              March 31,         March 31,
                                              2013              2012
                                              (Unaudited)       (Unaudited)
                                                                
Sales, net                                  $ 14,633          $ 16,524
Cost of sales                                11,149          12,367   
Gross profit                                  3,484             4,157
                                                                
Operating expenses:
Sales and marketing                           892               875
General and administrative                    1,659             1,626
Research and development                     1,301           1,137    
Total operating expenses                     3,852           3,638    
Operating income (loss)                       (368     )        519
                                                                
Interest expense                              (153     )        (179     )
Equity in income (loss) of partnerships       (58      )        (24      )
Other income (expense)                       98              (39      )
Income (loss) before income taxes             (481     )        277
                                                                
Income tax expense (benefit)                 (10      )       34       
Net income (loss)                           $ (471     )      $ 243      
                                                                
Net income (loss) per share:
Basic                                       $ (0.08    )      $ 0.04
Diluted                                     $ (0.08    )      $ 0.04
                                                                
Average shares outstanding:
Basic                                         5,687             5,654
Diluted                                       5,687             5,933
                                                                         


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

                                              March 31,       December 31,
                                                2013              2012
                                                (Unaudited)
Current assets:
Cash                                          $ 172             $ 226
Restricted cash                                 550               563
Accounts receivable, less allowance for
doubtful accounts of $166 at March 31,          7,108             7,171
2013 and $154 at December 31, 2012
Inventories                                     11,635            11,117
Other current assets                           1,977           1,483    
Total current assets                            21,442            20,560
                                                                  
Machinery and equipment                         40,650            40,796
Less: Accumulated depreciation                 34,343          34,012   
Net machinery and equipment                     6,307             6,784
                                                                  
Goodwill                                        9,709             9,709
Investment in partnerships                      715               773
Other assets, net                              1,250           1,306    
Total assets                                  $ 39,423         $ 39,132   
Current liabilities:
Checks written in excess of cash              $ 849             $ 637
Current maturities of long-term debt            2,509             2,945
Accounts payable                                4,171             4,045
Accrued salaries, wages and commissions         2,007             1,786
Deferred gain                                   110               110
Income taxes payable                            2                 96
Other accrued liabilities                      2,915           2,048    
Total current liabilities                       12,563            11,667
                                                                  
Long-term debt, less current maturities         7,015             7,222
Other postretirement benefit obligations        582               590
Accrued pension liabilities                     495               510
Deferred gain                                   248               275
Other long-term liabilities                    106             146      
Total liabilities                               21,009            20,410
Commitments and contingencies
Shareholders’ equity:
Common stock, $1.00 par value per share;
20,000 shares authorized; 5,693 and 5,687
shares issued and outstanding at March          5,693             5,687
31, 2013 and December 31, 2012,
respectively
Additional paid-in capital                      15,950            15,797
Accumulated deficit                             (2,831   )        (2,360   )
Accumulated other comprehensive loss           (398     )       (402     )
Total shareholders' equity                     18,414          18,722   
Total liabilities and shareholders’           $ 39,423         $ 39,132   
equity
                                                                           

Contact:

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