-----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, NUZzv7871QmOyenvI9hd9C6VR83l/ovC/jzRrJMpujsZdkc+Hy/D/NTgIyLOwwzt g3qRksNNz6GtLnzRPqblFg== 0001157523-07-007980.txt : 20070807 0001157523-07-007980.hdr.sgml : 20070807 20070807170014 ACCESSION NUMBER: 0001157523-07-007980 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20070807 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20070807 DATE AS OF CHANGE: 20070807 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: 071032332 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 a5466673.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) August 7, 2007 -------------- GREATBATCH, INC. ---------------- (Exact name of registrant as specified in its charter) Delaware 1-16137 16-1531026 - ---------------------------- ------------------------ ------------------- (State or other jurisdiction (Commission File Number) (IRS Employer of 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 August 7, 2007, Greatbatch, Inc. (the "Company") issued a press release announcing its results for the quarter ended June 29, 2007. 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 August 7, 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: August 7, 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 August 7, 2007. EX-99.1 2 a5466673ex991.txt EXHIBIT 99.1 Exhibit 99.1 Greatbatch, Inc. Reports Record Quarterly Sales of $78 million CLARENCE, N.Y.--(BUSINESS WIRE)--Aug. 7, 2007--Greatbatch, Inc. (the "Company") (NYSE: GB) today reported its results for the second quarter ended June 29, 2007. Business Highlights -- Total Company - record sales of $78.5 million, an increase of 11% compared to $70.6 million in 2006. -- Implantable Medical Components ("IMC") - record sales of $67.6 million, an increase of 13% compared to $59.8 million in 2006, driven by growth of ICD batteries, ICD capacitors and feedthroughs. -- Electrochem Commercial Power ("ECP") - sales of $10.9 million, which were consistent with last year. -- Acquired Biomec, Inc. for $11.4 million. -- Biomec is a medical device design and engineering company, located in Cleveland, Ohio. -- Acquired Enpath Medical Inc. for approximately $105 million. -- Enpath is a medical products company engaged in designing, developing, manufacturing and marketing single use medical device products for the cardiac rhythm management ("CRM"), neuromodulation and interventional radiology markets. Annual sales for 2006 were approximately $37 million -- Carson City, Nevada plant ceased operations on July 15, 2007 with all manufacturing successfully transferred to the Tijuana facility. -- Columbia, Maryland shutdown scheduled to be completed by the end of the fourth quarter of 2007. -- Electrochem Commercial Power facility expansion initiated and scheduled for completion in mid - 2008. -- Realized pretax gain of $4.0 million on sale of non-strategic investment. -- Finalized Boston Scientific supply agreement for batteries, capacitors and enclosures through 2010. -- Earnings per share for the quarter were $0.51, excluding $0.66 in charges related to the write-off of acquired in-process research and development related to the above mentioned acquisitions, compared to $0.21 for 2006. Commenting on the second quarter results, Thomas J. Hook, President & Chief Executive Officer, said: "I'm very pleased with the results for the first half of 2007. We had two consecutive quarters of record sales. This increased sales volume combined with our manufacturing initiatives have led to increased operating margins. "On a strategic front, we completed two key acquisitions in the quarter. The Biomec acquisition gives us design capabilities and establishes some key clinical relationships in the emerging neurostimulation market. Enpath represents an exciting opportunity that further expands our product and service offerings to the CRM and neurostimulation marketplaces. This acquisition broadens our market reach into the vascular segment with the introducer product line as well as adding several major new OEM customers. These acquisitions are key steps in our long-term growth strategy." 2nd Quarter Sales Summary The following table summarizes the Company's sales by business unit and major product line for the second quarters of 2007 and 2006 (in thousands): Business Unit/Product Lines 2007 2006 % 2nd Qtr. 2nd Qtr. Change - --------------------------------------------------------------------- Implantable Medical Components ("IMC"): ICD Batteries $13,741 $10,994 25% Pacemaker & Other Batteries 5,903 5,930 0% ICD Capacitors 7,892 5,339 48% Feedthroughs 17,010 14,301 19% Enclosures 5,994 7,105 -16% Introducers, Catheters and Leads 1,585 - N/A Other Medical 15,467 16,087 -4% --------- -------- Total Implantable Medical Components 67,592 59,756 13% Electrochem Commercial Power ("ECP") 10,870 10,842 0% --------- -------- Total Sales $78,462 $70,598 11% ========= ======== 2nd Quarter Profit & Loss Summary The following table summarizes selected information derived from the condensed consolidated statements of operations for the second quarters in 2007 and 2006 (in thousands): 2007 2006 % 2nd Qtr. 2nd Qtr. Change - --------------------------------------------------------------------- Cost of Sales $46,756 $43,821 7% Cost of Sales as % of Sales 59.6% 62.1% SG&A Expenses $10,735 $9,865 9% SG&A Expenses as % of Sales 13.7% 14.0% RD&E Expenses, net $6,981 $6,142 14% RD&E Expenses, net as % of Sales 8.9% 8.7% Operating Income $(6,351) $7,127 -189% Operating Margin -8.1% 10.1% Effective Tax Rate NA 34.5% The cost of sales percentage decreased from last year primarily due to favorable mix- and volume- related variances. Sales were higher in the product lines that typically carry better margins. The increase in SG&A expenses is primarily due to higher sales & marketing expenses and the inclusion of Enpath operations for two weeks. The increase in net RD&E expenses is primarily due to a planned increase in spending on new development programs. The other operating expense in the current quarter consists of: - -- Carson City and Columbia closures/relocations $ 1.6 million - -- ECP building expansion $ 0.1 million - -- Asset dispositions and other $ 0.3 million As a result of $16.1 million of the in-process research and development write-off not being deductible for tax purposes, the effective tax rate for 2007 is now expected to be approximately 47.5%. Full-Year 2007 Financial Guidance We are increasing our sales guidance by $20 million to $25 million to reflect the inclusion of six months of Enpath sales and increased sales to CRM customers. We are increasing our adjusted guidance by a net of $0.16 per share based on our strong first half results. This is net of increased hiring and manpower costs related to investment in development projects primarily in the areas of MRI compatibility, leads and other technologies in the range of $0.05 and $0.08. Our GAAP EPS guidance for 2007 has been decreased by approximately $0.62, which includes the write-off of in-process research and development related to the acquisitions of Biomec and Enpath of $0.72 and $0.04 for other acquisition related adjustments. Current Previous - ------------------------------------------------- ------------------- Sales (000's) $320,000 - $325,000 $295,000 - $305,000 GAAP EPS (1)(4) $0.78 - $0.82 $1.40 - $1.46 EPS - adjusted (1)(2)(3)(4)(5) $1.57 - $1.64 $1.41 - $1.48 Diluted weighted average shares outstanding (000's) 24,500 24,500 Effective tax rate 47.5% 32.5% Capital spending (000's) (6) $35,000 - $45,000 $35,000 - $45,000 (1) Includes the impact of stock-based compensation under FAS123(R) of $0.12 to $0.15. (2) Excludes plant relocation/asset dispositions of $0.14 to $0.16. Includes continued excess capacity costs associated with delayed closure of filtered feedthrough facility. (3) Excludes gain on exchange of debentures of $0.12. (4) Includes $0.11 gain on sale of investment realized in Q2 2007. (5) Excludes write-off of in-process research and development costs of $0.72 and $0.04 for other acquisition related adjustments. (6) Includes expansion of Electrochem Commercial Power facility of approximately $20 million. Table A: Operating Income Reconciliation (in thousands): 2007 2006 2007 2006 2nd Qtr. 2nd Qtr. YTD YTD - --------------------------------------------------------------------- Operating income (loss) as reported: $ (6,351) $ 7,127 $ 4,255 $ 17,179 In-process Research and Development 18,353 - 18,353 - ---------- --------- -------- -------- Sub-total 12,002 7,127 22,608 17,179 ---------- --------- -------- -------- Adjustments: Carson City facility closure/relocation 188 850 574 2,078 Columbia facility closure/relocation 1,372 1,410 2,675 2,333 Medical power facility closure/relocation - 52 - 567 ECP building expansion 145 - 282 - Asset dispositions & other 283 540 (10) 534 Corporate development expenses - 791 - 800 ---------- --------- -------- -------- Operating Income - adjusted $ 13,990 $ 10,770 $ 26,129 $ 23,491 ========== ========= ======== ======== Operating margin - adjusted 17.8% 15.3% 16.8% 16.9% ========== ========= ======== ======== Table B: Net Income Reconciliation (in thousands): 2007 2006 2007 2006 2nd Qtr. 2nd Qtr. YTD YTD - --------------------------------------------------------------------- Net income (loss) as reported:$ (3,399) $ 4,843 $ 7,270 $ 11,493 In-process Research and Development 17,621 - 17,621 - Remaining tax cost for IPR&D (3,152) - (3,152) - ---------- --------- -------- -------- Sub-total 11,070 4,843 21,739 11,493 ---------- --------- -------- -------- Adjustments: Carson City facility closure/relocation 127 561 387 1,371 Columbia facility closure/relocation 926 931 1,806 1,540 Medical power facility closure/relocation - 34 - 374 ECP building expansion 98 - 190 - Asset dispositions & other 191 356 (7) 352 Corporate development expenses - 522 - 528 ---------- --------- -------- -------- Sub-total 12,412 7,247 24,115 15,658 ---------- --------- -------- -------- Gain on extinguishment of debt - - (3,019) - ---------- --------- -------- -------- Net income adjusted $ 12,412 $ 7,247 $ 21,096 $ 15,658 ========== ========= ======== ======== Note: 1) Tax Rate utilized was 34% for 2006 and 32.5% for 2007 except for the IPR&D write-off. 2) 2nd quarter 2007 includes $2.7 million in net after tax gain on sale of investment. Table C: GAAP EPS Reconciliation: 2007 2006 2007 2006 2nd Qtr. 2nd Qtr. YTD YTD - --------------------------------------------------------------------- Diluted EPS as reported: $ (0.15) $ 0.21 $ 0.33 $ 0.50 In-process Research and Development 0.80 - 0.80 - Remaining tax cost for IPR&D (0.14) - (0.14) - --------- --------- -------- -------- Sub-total 0.51 0.21 0.99 0.50 --------- --------- -------- -------- Adjustments: Carson City facility closure/relocation 0.01 0.02 0.02 0.05 Columbia facility closure/relocation 0.04 0.04 0.08 0.06 Medical power facility closure/relocation - - - 0.01 ECP building expansion - - 0.01 - Asset dispositions & other 0.01 0.01 - 0.01 Corporate development expenses - 0.02 - 0.02 --------- --------- -------- -------- Sub-total 0.57 0.30 1.10 0.65 --------- --------- -------- -------- Gain on extinguishment of debt - - (0.14) - --------- --------- -------- -------- Diluted EPS adjusted $ 0.57 $ 0.30 $ 0.96 $ 0.65 ========= ========= ======== ======== Note: 1) Tax Rate utilized was 34% for 2006 and 32.5% for 2007 except for the IPR&D write-off. 2) 2nd quarter 2007 includes $0.12 gain on sale of investment. 3) Assumes shares outstanding of 22 million for 2007 and 26 million for 2006 Conference Call The Company will host a conference call on Wednesday, August 8, 2007 at 8:00 a.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 11:00 a.m. E.T. on August 8, 2007 until August 15, 2007. To access the replay, dial 888-286-8010 (U.S.) or 617-801-6888 (International) and enter the passcode 11475636. 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 medical devices for the cardiac rhythm management, neurostimulation and interventional radiology markets. Additionally, Greatbatch supplies commercial power sources for 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 Six months ended ended June 29, June 30, June 29, June 30, 2007 2006 2007 2006 -------- -------- ----------------- Sales $ 78,462 $ 70,598 $155,322 $138,705 Cost and expenses: Cost of sales - excluding amortization of intangible assets 45,762 42,863 93,050 82,378 Cost of sales - amortization of intangible assets 994 958 1,942 1,916 Selling, general and administrative expenses 10,735 9,865 20,768 18,880 Research, development and engineering costs, net 6,981 6,142 13,433 12,040 Acquired in-process research and development 18,353 - 18,353 - Other operating expense, net 1,988 3,643 3,521 6,312 -------- -------- -------- -------- Operating income (loss) (6,351) 7,127 4,255 17,179 Interest expense 2,089 1,163 3,233 2,298 Interest income (2,586) (1,353) (4,442) (2,545) Gain on sale of investment security (4,001) - (4,001) - Gain on extinguishment of debt - - (4,473) - Other (income) expense, net 102 (76) 86 (120) -------- -------- -------- -------- Income (loss) before provision for income taxes (1,955) 7,393 13,852 17,546 Provision for income taxes 1,444 2,550 6,582 6,053 -------- -------- -------- -------- Net income (loss) $(3,399) $ 4,843 $ 7,270 $ 11,493 ======== ======== ======== ======== Earnings (loss) per share: Basic $ (0.15) $ 0.22 $ 0.33 $ 0.53 Diluted $ (0.15) $ 0.21 $ 0.33 $ 0.50 Weighted average shares outstanding: Basic 22,200 21,800 22,100 21,800 Diluted 22,200 26,200 22,350 26,200 GREATBATCH, INC. CONDENSED CONSOLIDATED BALANCE SHEETS - Unaudited (In thousands) ASSETS June 29, December 29, 2007 2006 ----------- ------------- Current assets: Cash and cash equivalents $ 81,509 $ 71,147 Short-term investments available for sale 39,290 71,416 Accounts receivable, net 34,980 31,285 Inventories 63,953 57,667 Refundable income taxes - 1,569 Deferred income taxes 6,948 5,899 Prepaid expenses and other current assets 3,473 2,343 ----------- ------------- Total current assets 230,153 241,326 Property, plant, and equipment, net 101,003 91,869 Intangible assets, net 81,292 56,330 Goodwill 207,378 155,039 Other assets 13,671 3,263 ----------- ------------- Total assets $ 633,497 $ 547,827 =========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 22,898 $ 12,657 Accrued expenses and other current liabilities 27,658 29,618 ----------- ------------- Total current liabilities 50,556 42,275 Convertible subordinated notes 240,506 170,000 Deferred income taxes 30,193 35,859 Other long-term liabilities 141 - ----------- ------------- Total liabilities 321,396 248,134 ----------- ------------- Stockholders' equity: Preferred stock - - Common stock 22 22 Additional paid-in capital 235,644 227,187 Treasury stock - (205) Retained earnings 76,435 69,165 Accumulated other comprehensive income - 3,524 ----------- ------------- Total stockholders' equity 312,101 299,693 ----------- ------------- Total liabilities and stockholders' equity $ 633,497 $ 547,827 =========== ============= CONTACT: Greatbatch, Inc. Anthony W. Borowicz Treasurer and Director, Investor Relations 716-759-5809 tborowicz@greatbatch.com -----END PRIVACY-ENHANCED MESSAGE-----