-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M9KwdaVf6177RQlzTUrJphJNHHWeuKGLtzM3nRhXtMZpjXqO+15S99Rcsa6oeHAk 8rPopw7BaUokOjesUwlDtQ== 0001157523-07-001296.txt : 20070208 0001157523-07-001296.hdr.sgml : 20070208 20070208160101 ACCESSION NUMBER: 0001157523-07-001296 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070208 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070208 DATE AS OF CHANGE: 20070208 FILER: COMPANY DATA: COMPANY CONFORMED NAME: GREATBATCH, INC. CENTRAL INDEX KEY: 0001114483 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 161531026 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-16137 FILM NUMBER: 07592631 BUSINESS ADDRESS: STREET 1: 9645 WEHRLE DRIVE CITY: CLARENCE STATE: NY ZIP: 14031 BUSINESS PHONE: 716-759-5600 MAIL ADDRESS: STREET 1: 9645 WEHRLE DRIVE CITY: CLARENCE STATE: NY ZIP: 14031 FORMER COMPANY: FORMER CONFORMED NAME: WILSON GREATBATCH TECHNOLOGIES INC DATE OF NAME CHANGE: 20000511 8-K 1 a5329968.txt GREATBATCH, INC. 8-K U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------- FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of Report (Date of earliest event reported) February 8, 2007 ---------------- GREATBATCH, INC. ---------------- (Exact name of registrant as specified in its charter) Delaware 1-16137 16-1531026 - -------------------------------------------------------------------------------- (State or other jurisdiction of (Commission File Number) (IRS Employer incorporation) Identification No.) 9645 Wehrle Drive, Clarence, New York 14031 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (716) 759-5600 -------------- Not Applicable - -------------------------------------------------------------------------------- (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Item 2.02. Results of Operations and Financial Condition --------------------------------------------- On February 8, 2007, Greatbatch, Inc. (the "Company") issued a press release announcing its results for the quarter and fiscal year ended December 29, 2006. A copy of the release is furnished with this report as Exhibit 99.1 and is incorporated by reference into this Item 2.02. The information contained in this report under Item 2.02 is being furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section. The information contained in this report under Item 2.02 shall not be incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing. Item 9.01. Financial Statements and Exhibits --------------------------------- (d) Exhibits 99.1 Press Release dated February 8, 2007. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: February 8, 2007 GREATBATCH, INC. By: /s/ Thomas J. Mazza ------------------- Thomas J. Mazza Senior Vice President and Chief Financial Officer EXHIBIT NUMBER DESCRIPTION - ------ ----------- 99.1 Press Release of Greatbatch, Inc. dated February 8, 2007. EX-99.1 2 a5329968ex99_1.txt EXHIBIT 99.1 PRESS RELEASE Exhibit 99.1 Greatbatch, Inc. Reports Fourth Quarter and Full-Year 2006 Results Sales for Year Grow by 12% to Record Level CLARENCE, N.Y.--(BUSINESS WIRE)--Feb. 8, 2007--Greatbatch, Inc. (the "Company") (NYSE: GB) today reported its results for the fourth quarter and year ended December 29, 2006. 2006 Highlights -- Achieved record sales for: -- Total Company - sales of $271 million, an increase of 12% compared to $241 million in 2005 -- Implantable Medical Components ("IMC") - sales of $227 million, an increase of 9% compared to $208 million in 2005 -- Electrochem Commercial Power ("ECP") - sales of $44 million, an increase of 33% compared to $33 million in 2005 -- Met all of the milestones for the consolidation of feedthrough manufacturing from Columbia, Maryland to Tijuana, Mexico and medical research and development into the Technology Development Center in Clarence, New York. -- Received ISO 13485 Certification for our Tijuana, Mexico facility. -- Executed a plan in November 2006 for consolidating our corporate and business unit organization structure. -- Operating Income, excluding selected charges and incremental FAS 123R expenses, increased by 24% to $44 million compared to $35 million in 2005 (See Table B for reconciliation to GAAP). -- Cash and short-term investments increased by $30 million to $143 million as of December 29, 2006. Results for Quarter -- Total Company - sales of $63 million, up 7% from $59 million in the fourth quarter of 2005. -- IMC - sales of $53 million, up 4% from $51 million in the fourth quarter of 2005. -- The increase was primarily due to sales of new assembly products and continued growth in coated electrodes and molded components. -- 2005 sales included approximately $5 million of additional revenue related to customer field actions, primarily impacting ICD batteries and capacitors. Adjusting for this effect, sales increased by 15%. -- ECP - sales of $10 million, up 31% from $7.7 million in the fourth quarter of 2005, led by continued strength in the oil and gas and telematics markets. -- Diluted Earnings Per Share ("EPS") was $0.06. Adjusted EPS, which excludes facilities move-related expenses, asset dispositions, severance costs associated with November's consolidation and incremental stock-based compensation under FAS123R, was $0.28 (See Table A for reconciliation to GAAP), which compares to adjusted EPS of $0.13 in the fourth quarter of 2005. Commenting on full-year results, Thomas Hook, Chief Executive Officer, said: "I am very pleased with the improvements we are seeing in our operating and financial metrics. Despite a soft underlying ICD market, we achieved record sales results in both our medical and commercial segments. We grew faster than our markets by capturing share and we continue to introduce new product offerings that enhance our competitive market position. Looking ahead to 2007, we expect sales growth of 10%, which reflects our confidence to continue to grow faster than the underlying markets. "With respect to our consolidation plan, we are about two-thirds of the way through our three-year planned initiatives and expect to conclude these activities in 2007. We continue to make significant progress and fully anticipate achieving the long-term cost savings targets. In addition, based on our continued success in growing our commercial business, we are launching a new initiative to expand our manufacturing capacity and capabilities for commercial power sources. We anticipate completing this expansion in early 2008," Hook concluded. 4th Quarter Sales Summary The following table summarizes the Company's sales by business unit and major product line for the fourth quarters of 2006 and 2005 (in thousands): 2006 2005 % Business Unit/Product Lines 4th Qtr. 4th Qtr. Change - --------------------------------------------------------------------- Implantable Medical Components: ICD Batteries $10,011 $11,020 -9% Pacemaker & Other Batteries 4,934 4,791 +3% ICD Capacitors 3,374 5,109 -34% Feedthroughs 16,634 13,283 +25% Enclosures 4,761 5,097 -7% Other Medical 13,350 11,878 +12% ---------- ---------- Total Implantable Medical Components 53,064 51,178 +4% Electrochem Commercial Power 10,079 7,679 +31% ---------- ---------- Total Sales $63,143 $58,857 +7% ========== ========== 4th Quarter Profit & Loss Summary The following table summarizes selected information derived from the condensed consolidated statements of operations for the fourth quarters in 2006 and 2005 (in thousands): 2006 2005 % 4th Qtr. 4th Qtr. Change - --------------------------------------------------------------------- Cost of Sales $40,747 $40,347 +1% Cost of Sales as % of Sales 64.5% 68.6% SG&A Expenses $10,594 $7,439 +42% SG&A Expenses as % of Sales 16.8% 12.6% RD&E Expenses, net $6,163 $5,543 +11% RD&E Expenses, net as % of Sales 9.8% 9.4% Operating Income $1,132 $1,161 -2% Operating Margin 1.8% 2.0% The cost of sales percentage improved from last year as lower manufacturing costs and lower excess capacity costs more than offset the change in product mix stemming from higher sales of lower margin assembly products and lower medical battery sales volume. The increase in SG&A expenses is primarily due to the expensing of stock options under FAS123R, CEO transition costs and an increased level of incentive compensation. The increase in net RD&E expenses is primarily due to a planned increase in spending on new development programs, coupled with lower customer reimbursements for development charges in the current quarter compared to the fourth quarter of last year. The other operating expense in the current quarter consists of: -- Carson City and Columbia consolidations/relocations $1.9 million -- Asset dispositions and other $0.1 million -- Severance for November 2006 Consolidation $2.5 million Full-Year 2007 Financial Guidance 2007 Guidance % Change - ---------------------------------------------------------------------- Sales (000's) $295,000 - $305,000 +9% - +13% GAAP EPS (1) $1.16 - $1.22 +59% - +67% EPS - adjusted (2) $1.28 - $1.35 +9% - +15% Diluted weighted average shares outstanding (000's) 26,000 Effective tax rate less than 35% Capital spending (000's) (3) $35,000 - $45,000 (1) Includes the impact of stock-based compensation under FAS123R of $0.12 to $0.15. (2) Excludes plant relocation/asset dispositions of $0.10 to $0.13. Includes continued excess capacity costs associated with delayed closure of filtered feedthrough facility. Includes expansion of commercial power facility of approximately (3) $20 million. Table A: GAAP EPS Reconciliation 2006 2005 2006 2005 4th Qtr. 4th Qtr. Year Year - ---------------------------------------------------------------------- GAAP EPS: $0.06 $0.00 $0.73 $0.46 Carson City facility closure/relocation 0.01 0.05 0.07 0.13 Columbia facility closure/relocation 0.06 0.03 0.13 0.03 Medical power facility closure/relocation - 0.01 0.02 0.09 Asset dispositions and other 0.01 0.02 0.14 0.18 Severance 0.09 - 0.06 0.05 Corporate development expenses - - 0.02 - Tijuana start-up costs - 0.02 - 0.04 Costs to exit a development agreement - - - 0.04 --------- --------- -------- -------- Other operating expense 0.17 0.13 0.44 0.56 Incremental stock-based compensation 0.05 - 0.12 - --------- --------- -------- -------- EPS - adjusted $0.28 $0.13 $1.29 $1.02 ========= ========= ======== ======== Diluted weighted average shares outstanding (000's) 22,100 21,900 26,300 21,800 ========= ========= ======== ======== (Other operating expense and stock-based compensation tax-affected at: 18.4% for Q4 2006, 31.5% for full year 2006 and 34.6%, full year rate, for 2005 periods.) Table B: Operating Income Reconciliation (dollars in thousands): 2006 2005 2006 2005 4th Qtr. 4th Qtr. Year Year - ---------------------------------------------------------------------- Operating Income as reported: $1,132 $1,161 $22,376 $16,886 Carson City facility closure/relocation 288 1,713 2,743 4,440 Columbia facility closure/relocation 1,579 1,055 5,125 1,134 Medical power facility closure/relocation 56 483 623 2,806 Asset dispositions & other 90 579 5,272 6,104 Severance 2,494 - 2,494 1,505 Corporate development expenses - - 801 - Tijuana start-up costs - 537 - 1,402 Costs to exit development agreement - - - 1,183 --------- --------- -------- -------- Other operating expense 4,507 4,367 17,058 18,574 Incremental stock-based compensation (1) 1,445 - 4,366 - --------- --------- -------- -------- Operating income - adjusted $7,084 $5,528 $43,800 $35,460 ========= ========= ======== ======== Operating margin - adjusted 11.2% 9.4% 16.2% 14.7% ========= ========= ======== ======== (1) Approximately 80% in SG&A 12% RD&E 8% Cost of Sales Conference Call The Company will host a conference call today, Thursday, February 8, 2007 at 4:30 p.m. E.T. to discuss its quarterly results. The scheduled conference call will be webcast live and is accessible through the Company's website at www.greatbatch.com. An audio replay will also be available beginning from 7:00 p.m. E.T. on February 8, 2007 until February 15, 2007. To access the replay, dial 888-286-8010 (U.S.) or 617-801-6888 (International) and enter the passcode 42567570. 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 and plant consolidation 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 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 Greatbatch, Inc. Greatbatch, 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. GREATBATCH, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - Unaudited (In thousands except per share amounts) - ---------------------------------------------------------------------- Three months ended Year ended Dec. 29, Dec. 30, Dec. 29, Dec. 30, 2006 2005 2006 2005 Sales $ 63,143 $ 58,857 $271,142 $241,097 Cost and expenses: Cost of sales - excluding amortization of intangible assets 39,798 39,389 164,885 151,543 Cost of sales - amortization of intangible assets 949 958 3,813 3,841 Selling, general and administrative expenses 10,594 7,439 38,785 31,528 Research, development and engineering costs, net 6,163 5,543 24,225 18,725 Other operating expense, net 4,507 4,367 17,058 18,574 --------- --------- --------- --------- Operating income 1,132 1,161 22,376 16,886 Interest expense 1,172 1,137 4,605 4,613 Interest income (1,709) (1,089) (5,775) (3,113) Other (income) expense, net (39) (9) 12 (78) --------- --------- --------- --------- Income before provision for income taxes 1,708 1,122 23,534 15,464 Provision for income taxes 314 1,054 7,408 5,357 --------- --------- --------- --------- Net income $ 1,394 $ 68 $ 16,126 $ 10,107 ========= ========= ========= ========= Earnings per share: Basic $ 0.06 $ - $ 0.74 $ 0.47 Diluted $ 0.06 $ - $ 0.73 $ 0.46 Weighted average shares outstanding: Basic 21,900 21,700 21,800 21,600 Diluted 22,100 21,900 26,300 21,800 GREATBATCH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS - Unaudited (In thousands) ASSETS Dec. 29, Dec. 30, 2006 2005 Current assets: Cash and cash equivalents $ 71,147 $ 46,403 Short-term investments 71,416 65,746 Accounts receivable, net 31,285 29,997 Inventories 57,667 45,184 Refundable income taxes 1,569 928 Deferred income taxes 5,899 6,257 Prepaid expenses and other current assets 2,343 1,488 ---------- ---------- Total current assets 241,326 196,003 Property, plant, and equipment, net 91,869 97,705 Intangible assets, net 56,330 60,143 Goodwill 155,039 155,039 Other assets 3,263 4,021 ---------- ---------- Total assets $ 547,827 $ 512,911 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 12,657 $ 13,678 Accrued expenses and other current liabilities 29,618 29,903 Current portion of long-term debt - 464 ---------- ---------- Total current liabilities 42,275 44,045 Convertible subordinated notes 170,000 170,000 Deferred income taxes 35,859 30,261 ---------- ---------- Total liabilities 248,134 244,306 ---------- ---------- Stockholders' equity: Preferred stock - - Common stock 22 22 Additional paid-in capital 227,187 215,614 Treasury stock (205) - Retained earnings 69,165 53,039 Accumulated other comprehensive income (loss) 3,524 (70) ---------- ---------- Total stockholders' equity 299,693 268,605 ---------- ---------- Total liabilities and stockholders' equity $ 547,827 $ 512,911 ========== ========== CONTACT: Greatbatch, Inc. Anthony W. Borowicz Treasurer and Director, Investor Relations 716-759-5809 tborowicz@greatbatch.com -----END PRIVACY-ENHANCED MESSAGE-----