Intercole Net Falls in Half; Operating Profit Up

Intercole Inc., a diversified manufacturing and oil-refining company based in Laguna Niguel, said Monday that net income for the first half of its 1985 fiscal year fell 51% despite a strong increase in operating profits.

The holding company’s net income for the period ended Jan. 31 totaled $1.7 million, down from $3.4 million for the same period in fiscal 1984. Almost all of Intercole’s profit for the first half of 1984, however, came from non-recurring gains in the first quarter rather than from operations, which netted the company only about $100,000. Intercole said its first-half sales rose 99%, to $21.5 million from $10.8 million.

For the second quarter, Intercole said profits totaled $938,000, more than 10 times the $91,000 reported for the same period a year ago. Second-quarter revenues were up 78%, to $11.4 million from $6.46 million.

The company also said Monday that it has scheduled an April 16 shareholder meeting to vote on the proposed sale of Intercole to a private investor group, including certain directors and officers, for $28 million in cash, or $9.09 per share.

The investor group is headed by the privately owned Northern Group Inc. of Seattle, which is acting on behalf of an institutionally backed investment fund it manages.

The acquisition offer was announced in mid-December and the company’s stock, which had been selling on the American Stock Exchange in the $6.50 to $7 range, immediately jumped to $9.25. Intercole shares closed Monday at $8.75, down from $8.88 on Friday.

James Burra, Intercole’s vice president for finance, said Monday that the company’s operating results for the first half were greatly bolstered by the performance of West Penn Wire Corp. of Pittsburgh, which Intercole acquired 14 months ago.

West Penn, he said, accounted for sales of $10.8 million during the first half, or 50% of Intercole’s total revenue for the period.

The company’s profits for the second half of fiscal 1984 were swollen by a $731,000 gain on the sale of a machinery division and by a $2.6-million gain from the termination of a contract at an independent New Jersey oil refinery in which Intercole holds a 20% interest.

In addition to its oil refinery investment, Intercole manufactures auto and truck tire molds and processing machinery used in the rubber and plastics industries. The company also produces machinery used in the manufacture of metal products and electronic wire.