Greatbatch, Inc. Reports Fourth Quarter and Full-Year 2006 Results.Sales for Year Grow by 12% to Record Level CLARENCE, N.Y. -- Greatbatch, Inc. (the "Company") (NYSE NYSE See: New York Stock Exchange : 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 feed·through n. A conductor connecting two circuits on opposite sides of a printed circuit board. manufacturing from Columbia, Maryland Columbia is a census-designated place and planned community in Howard County, Maryland, United States. It is a suburb of Baltimore, and, to a lesser degree, Washington, DC. It began with the idea that a city could enhance its residents' quality of life. to Tijuana, Mexico and medical research and development into the Technology Development Center in Clarence, New York Clarence is a town located in the northeastern part of Erie County, New York, United States. The population was 26,123 at the 2000 census. Clarence is also the name of a postal district in the south part of the town with ZIP code 14031. . * Received ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 13485 Certification for our Tijuana, Mexico facility. * Executed a plan in November 2006 for consolidating our corporate and business unit organization structure. * Operating Income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , excluding selected charges and incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. FAS 123R expenses, increased by 24% to $44 million compared to $35 million in 2005 (See Table B for reconciliation to GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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 diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of ("EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. ") 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 Thomas Hook was an Ontario real estate agent and political figure. He represented Toronto Southeast in the Legislative Assembly of Ontario from 1914 to 1919 as a Conservative member. He was born in England and came to Canada with his family around 1867. , 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 ICD International Classification of Diseases (of the World Health Organization); intrauterine contraceptive device. ICD abbr. 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 The Three-Year Plan of Reconstructing the Economy (Polish: Trzyletni Plan Odbudowy Gospodarki) was a centralized plan created by the Polish communist government to rebuild Poland after the devastation of the Second World War. 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. 4(th) 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): [TABLE OMITTED] 4(th) Quarter Profit & Loss Summary The following table summarizes selected information derived from the condensed con·dense v. con·densed, con·dens·ing, con·dens·es v.tr. 1. To reduce the volume or compass of. 2. To make more concise; abridge or shorten. 3. Physics a. consolidated statements of operations for the fourth quarters in 2006 and 2005 (in thousands): [TABLE OMITTED] 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 (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. 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 Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. in the current quarter consists of: * Carson City Carson City, city (1990 pop. 40,443), state capital, W Nev., in the Eagle valley; inc. 1875. The city is a trade center for a mining and agricultural area. State government is the major employer, and tourism is economically important. 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 [TABLE OMITTED] Table A: GAAP EPS Reconciliation [TABLE OMITTED] (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): [TABLE OMITTED] 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 forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. 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 ob·so·les·cent adj. 1. Being in the process of passing out of use or usefulness; becoming obsolete. 2. Biology Gradually disappearing; imperfectly or only slightly developed. ; 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 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. [TABLE OMITTED] [TABLE OMITTED] |
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