EX-99.1 2 a4879261ex99.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Wilson Greatbatch Technologies, Inc. Reports Record Quarterly Sales; Increases Sales and Earnings Guidance for 2005 CLARENCE, N.Y.--(BUSINESS WIRE)--May 3, 2005--Wilson Greatbatch Technologies, Inc. (the "Company") (NYSE: GB) today reported its results for the first quarter ended March 31, 2005. Business Summary -- Recorded all-time record sales results of $56.4 million, led by strong sales of ICD batteries, enclosures, coated components and commercial power sources. -- Shipped the first assembly products from facility in Tijuana, Mexico. Remaining construction phases of Tijuana facility are proceeding as planned. -- Completed the construction of medical battery portion of new advanced battery plant in Alden, NY. Began moving the manufacturing equipment from existing medical battery plant and expect to complete move by mid 2005. Planning for the capacitor manufacturing move is underway and expect to complete construction by mid 2005. Anticipate the move will complete by the third quarter of 2005. -- Signed a modification to an existing agreement with a major customer, which includes a significant increase in contractual minimum quantities of wet tantalum capacitors and extended agreement through the first quarter of 2006. -- Successfully completed 2004 Sarbanes-Oxley Section 404 assessment and received an unqualified audit opinion from independent auditors. Net sales totaled $56.4 million during the first quarter of 2005, an increase of 2% from the first quarter of 2004. Net income totaled $4.0 million, and diluted earnings per share were $0.19; compared to $0.29 in the prior year. The Company included the effect of the conversion of the convertible subordinated notes into common stock in the weighted average share and diluted earnings per share calculations using the if-converted method, as long as the effect is dilutive. There was no impact on the first quarter of 2005. The impact on the first quarter of 2004 resulted in a restatement of diluted earnings per share of $0.02, from $0.31 to $0.29 per share. Edward F. Voboril, Chairman, President and Chief Executive Officer commented, "We are very pleased with the record sales results and the strong start to 2005. The CRM market growth remains very healthy as evidenced by our strong sales in our ICD batteries and enclosure products. In addition, we are placing increased selling and marketing emphasis on our commercial battery product line, which is already resulting in additional volume." "The increased sales volume coupled with the cost reductions programs put in place, resulted in earnings per share of $0.19 for the first quarter. These earnings are inclusive of $2.4 million in selective pre-tax charges primarily for severance and for start-up expenses pertaining to the Tijuana, Mexico facility. In the quarter, we commenced shipments on assembly products manufactured in Tijuana, which marks an important strategic milestone for the Company," Voboril concluded. Sales Summary The following table summarizes the Company's sales by business unit and major product line for the first quarters of 2005 and 2004 (in thousands): Business Unit/Product Lines 2005 2004 % 1st Qtr 1st Qtr Change ------------------------------------------ -------- --------- -------- Implantable Medical Components ("IMC"): ------------------------------------------ -------- --------- -------- ICD Batteries $10,751 $9,420 +14% ------------------------------------------ -------- --------- -------- Pacemaker & Other Batteries 5,255 5,694 -8% ------------------------------------------ -------- --------- -------- ICD Capacitors 4,297 8,408 -49% ------------------------------------------ -------- --------- -------- Feedthroughs 13,682 13,727 +0% ------------------------------------------ -------- --------- -------- Enclosures 6,547 5,397 +21% ------------------------------------------ -------- --------- -------- Other Medical 7,333 5,632 +30% ------------------------------------------ -------- --------- -------- Total Implantable Medical Components 47,865 48,278 -1% ------------------------------------------ -------- --------- -------- Electrochem Commercial Power ("ECP") 8,493 7,247 +17% ------------------------------------------ -------- --------- -------- Total Sales $56,358 $55,525 +2% ------------------------------------------ -------- --------- -------- The decrease in capacitor sales, due to lower demand by a major customer, was partially offset by increased volume for ICD batteries and enclosures, and a significant increase in coated component sales reflecting higher demand for the Company's titanium nitride coatings. The Company commenced shipments on its assembly components at its Tijuana facility in March 2005. Sales for these assembly components were de minimis and are included in the Other Medical category. The 17% increase in ECP sales is primarily due to increased demand for power sources used in pipeline inspections. Driving this increase in demand is Federal legislation, which requires more frequent inspections, and an increase in our sales and marketing commercialization efforts. Profit & Loss Summary The following table summarizes selected information derived from the condensed consolidated statement of operations for the first quarters in 2005 and 2004 (in thousands): 2005 2004 % 1st Qtr 1st Qtr Change -------------------------------------------- ------------ ------------ Gross Profit $20,787 $23,175 -10% -------------------------------------------- ------------ ------------ Gross Margin 36.9% 41.7% -------------------------------------------- ------------ ------------ -------------------------------------------- ------------ ------------ SG&A Expenses $6,766 $6,925 - 2% -------------------------------------------- ------------ ------------ SG&A Expenses as % of Sales 12.0% 12.5% -------------------------------------------- ------------ ------------ -------------------------------------------- ------------ ------------ RD&E Expenses, net $4,401 $4,881 -10% -------------------------------------------- ------------ ------------ RD&E Expenses, net as % of Sales 7.8% 8.8% -------------------------------------------- ------------ ------------ -------------------------------------------- ------------ ------------ Other Operating Expense $2,388 $221 +981% -------------------------------------------- ------------ ------------ -------------------------------------------- ------------ ------------ Operating Income $6,274 $10,373 - 40% -------------------------------------------- ------------ ------------ Operating Margin 11.1% 18.7% -------------------------------------------- ------------ ------------ -------------------------------------------- ------------ ------------ Effective Tax Rate 30.0% 30.5% -------------------------------------------- ------------ ------------ The decrease in gross margin of 480 basis points was primarily due to excess capacity costs at the Tijuana, Mexico plant and at the wet tantalum capacitor facility. The lower SG&A expenses is primarily due to the cost reduction measures put in place in the second half of 2004. The decrease in RD&E expenses is primarily due to engineering cost reduction measures and increased reimbursement on new product development projects. The increase in other operating expenses is primarily due to severance costs of $1.5 million, asset write-offs of $0.5 million, and $0.4 million for expenses related to the closure of the Carson City plant and the transfer of the manufacturing operation to the Tijuana facility. Outlook Considering the Company's first quarter performance and the prevailing strength of the core Medical and Commercial markets, the Company now expects sales to be in the range of $210 to $225 million; an increase of $5 million from the previous sales guidance range. The Company also increased its earnings per share guidance by $0.05 and is now anticipating earnings per share will be in the range of $0.12 to $0.20. As previously announced, this earnings guidance includes selective charges of $0.60 - $0.63 per share, representing costs for the Alden and Tijuana startups, excess capacity, restructuring charges and the Carson City plant consolidation. Capital spending is expected to be in the range of $30 to $35 million, unchanged from the Company's previous guidance. Earnings per share guidance for 2005 excludes the effect of expensing stock options. Consistent with the Securities and Exchange Commission's announcement amending the compliance dates for Financial Accounting Standards Board Statement ("FAS") 123R, the Company will begin implementing FAS123R when it becomes effective, which is currently anticipated to be the first quarter of 2006. Conference Call Mr. Voboril and Lawrence P. Reinhold, the Company's Executive Vice President and Chief Financial Officer, will discuss first quarter 2005 financial results in a conference call scheduled for today, Tuesday, May 3, at 10:00 a.m. EDT. The conference call will be webcast live and is accessible through the Company's website at www.greatbatch.com or at CCBN's individual investor center at www.companyboardroom.com. The webcast will also include presentation visuals. The webcast will be archived on both websites for future on-demand replay. Forward-Looking Statements Some of the statements in this press release and other written and oral statements made from time to time by the Company and its representatives are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended, and involve a number of risks and uncertainties. These statements can be identified by terminology such as "may," "will," "should," "could," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are based on the Company's current expectations. The Company's actual results could differ materially from those stated or implied in such forward-looking statements. Risks and uncertainties that could cause actual results to differ materially from those stated or implied by such forward-looking statements include, among others, the following matters affecting the Company: dependence upon a limited number of customers; customer ordering patterns; product obsolescence; inability to market current or future products; pricing pressure from customers; our ability to timely and successfully implement our cost reduction initiatives; reliance on third party suppliers for raw materials, products and subcomponents; fluctuating operating results; inability to maintain high quality standards for our products; challenges to our intellectual property rights; product liability claims; inability to successfully consummate and integrate acquisitions; unsuccessful expansion into new markets; competition; inability to obtain licenses to key technology; regulatory changes or consolidation in the healthcare industry; and other risks and uncertainties described in the Company's Annual Report on Form 10-K, including Exhibit 99.1 thereto, and in other periodic filings with the Securities and Exchange Commission. The Company assumes no obligation to update forward-looking information in this press release whether to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects, or otherwise. About Wilson Greatbatch Technologies Wilson Greatbatch Technologies, Inc. (NYSE: GB) is a leading developer and manufacturer of critical components used in implantable medical devices and other technically demanding applications. Additional information about the Company is available at www.greatbatch.com. WILSON GREATBATCH TECHNOLOGIES, INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) (In thousands except per share amounts) Three months ended March 31 2005 2004 Sales $56,358 $55,525 Cost of sales 35,571 32,350 ---------- ---------- Gross profit 20,787 23,175 Selling, general and administrative expenses 6,766 6,925 Research, development and engineering costs, net 4,401 4,881 Amortization of intangible assets 958 775 Other operating expense, net 2,388 221 ---------- ---------- Operating income 6,274 10,373 Interest expense 1,131 1,160 Interest income (575) (313) Other expense (income), net - 2 ---------- ---------- Income before income taxes 5,718 9,524 Provision for income taxes 1,715 2,905 ---------- ---------- Net income $4,003 $6,619 ========== ========== Diluted earnings per share $0.19 $0.29 WILSON GREATBATCH TECHNOLOGIES, INC. CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited) (In thousands) ASSETS March 31, December 31, 2005 2004 Current assets: Cash and cash equivalents $78,860 $89,473 Short-term investments 6,876 2,759 Accounts receivable, net 29,672 24,288 Inventories 32,277 34,027 Refundable income taxes 3,972 3,673 Deferred income taxes 3,622 3,622 Prepaid expenses and other current assets 5,987 4,637 ---------- ------------- Total current assets 161,266 162,479 Property, plant, and equipment, net 97,791 92,210 Intangible assets, net 63,021 63,984 Goodwill 156,772 156,772 Other assets 4,317 4,493 ---------- ------------- Total assets $483,167 $479,938 ========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $7,006 $8,971 Accrued expenses and other current liabilities 14,840 18,109 Current portion of long-term debt 890 1,000 ---------- ------------- Total current liabilities 22,736 28,080 Long-term debt, net of current portion 408 652 Convertible subordinated notes 170,000 170,000 Deferred income taxes 26,988 25,029 ---------- ------------- Total liabilities 220,132 223,761 ---------- ------------- Stockholders' equity: Preferred stock - - Common stock 21 21 Additional paid-in capital 214,791 212,131 Deferred stock-based compensation (693) (833) Treasury stock, at cost - (95) Retained earnings 48,974 44,971 Accumulated other comprehensive income (58) (18) ---------- ------------- Total stockholders' equity 263,035 256,177 ---------- ------------- Total liabilities and stockholders' equity $483,167 $479,938 ========== ============= CONTACT: Wilson Greatbatch Technologies, Inc. Lawrence P. Reinhold, 716-759-5602 lreinhold@greatbatch.com or Anthony W. Borowicz, 716-759-5809 tborowicz@greatbatch.com