Greatbatch, Inc. Reports Record Quarterly Sales of $78 million.CLARENCE, N.Y. -- Greatbatch, Inc. (the "Company") (NYSE NYSE See: New York Stock Exchange : 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 (Internet Mail Consortium, Santa Cruz, CA, www.imc.org) An industry trade association founded in 1996 by Paul Hoffman and Dave Crocker that promotes Internet e-mail standards and features. ") - record sales of $67.6 million, an increase of 13% compared to $59.8 million in 2006, driven by growth of ICD ICD International Classification of Diseases (of the World Health Organization); intrauterine contraceptive device. ICD abbr. batteries, ICD capacitors and feedthroughs. * Electrochem Commercial Power ("ECP (Enhanced Capabilities Port) See IEEE 1284. 1. ECP - Engineering Change Proposal. 2. ECP - Enhanced Capabilities Port. 3. ECP - Extended Capabilities Port. 4. ECP - Extended Concurrent Prolog. ") - 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 "Cleveland" redirects here. For the Cleveland metropolitan area, see . For other uses, see Cleveland (disambiguation). Cleveland is a city in the U.S. state of Ohio and the county seat of Cuyahoga County, the most populous county in the state. . * 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 Cardiac rhythm management is a field of treatment in cardiology. The purpose is managing cardiac rhythm disorders. Usually it involves artificial pacemakers and/or implantable cardioverter-defibrillator therapy as well as antiarrhythmia drugs. ("CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. "), neuromodulation and interventional radiology interventional radiology Imaging A subspecialty of radiology that provides Diagnostic information–eg, CT-guided 'skinny' needle biopsies and dye injection for analysis of various lumina and tracts–eg, arteriography, cholangiography, antegrade markets. Annual sales for 2006 were approximately $37 million * Carson City, Nevada The Consolidated Municipality of Carson City is the capital of the State of Nevada. A 2006 population estimate places its population at 57,701[1]. Carson City is now an independent city and is its own Metropolitan Statistical Area. plant ceased operations on July 15, 2007 with all manufacturing successfully transferred to the Tijuana facility. * 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. 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 See finalization. Boston Scientific The Boston Scientific Corporation (NYSE: BSX) (abbreviated BSC), is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a range of interventional medical specialties, including interventional cardiology, peripheral interventions, 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 Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: . "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 (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and customers. These acquisitions are key steps in our long-term growth strategy." 2(nd) 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): [TABLE OMITTED] 2(nd) 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 second quarters in 2007 and 2006 (in thousands): [TABLE OMITTED] 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 1. (application) MRI - Magnetic Resonance Imaging. 2. MRI - Measurement Requirements and Interface. compatibility, leads and other technologies in the range of $0.05 and $0.08. Our GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). 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. 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.
[TABLE OMITTED]
(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 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. Reconciliation (in thousands): [TABLE OMITTED] Table B: Net Income Reconciliation (in thousands): [TABLE OMITTED] Table C: GAAP EPS Reconciliation: [TABLE OMITTED] 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 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 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. [TABLE OMITTED] [TABLE OMITTED] |
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