Exhibit 99.1
Wilson Greatbatch Technologies, Inc. Reports Results for Fourth
Quarter and Full Year 2003
CLARENCE, N.Y.--(BUSINESS WIRE)--Feb. 10, 2004--Wilson Greatbatch
Technologies, Inc. (the "Company") (NYSE: GB) today reported its
financial results for the fourth quarter and full year ended December
31, 2003.
Net sales totaled $49.4 million during the fourth quarter of 2003,
an increase of 4.3% over the fourth quarter of 2002. Net income during
the quarter totaled $4.5 million, or $0.21 per diluted share, compared
to $5.0 million, or $0.23 per diluted share, in the prior year's
fourth quarter.
Net sales totaled $216.4 million for the full year 2003, an
increase of 29.3% over the prior full year. Net income for the full
year 2003 totaled $23.3 million, or $1.08 per diluted share, compared
to $14.4 million, or $0.68 per diluted share, in the prior full year.
The results include one-time charges totaling $0.05 per diluted share
in 2003 and $0.12 per diluted share in 2002.
Edward F. Voboril, Chairman, President and Chief Executive Officer
commented, "We are very pleased with the record performance we
achieved during 2003. Our sales increase was led by our medical
technology products, which grew organically by 25%. This reflects our
solid market position in components sold to the major Cardiac Rhythm
Management ("CRM") device manufacturers. Furthermore, we improved our
operating leverage by growing operating income and net income at a
faster rate than sales. Our operating margin increased to 17.7% during
the full year 2003, compared to 15.5% during 2002.
Mr. Voboril continued, "As anticipated, sales to our CRM customers
slowed in the fourth quarter. This was primarily due to inventory
reduction initiatives by certain CRM customers. We continue to remain
positive about the long-term growth prospects of the CRM market and
our solid position in that market," Voboril concluded.
Sales
The following table summarizes the Company's sales by product line
for the fourth quarters and full years in 2003 and 2002 (in
thousands):
Product Lines 2003 2002 % 2003 2002 %
4th Qtr 4th Qtr Change Full Year Full Year Change
Medical
Technology:
Medical
Batteries:
ICDs $8,853 $7,174 +23% $41,494 $28,518 +46%
Pacemakers 4,500 4,591 -2% 22,535 20,354 +11%
Other
Devices 1,209 560 +116% 3,662 3,035 +21%
-------- -------- -------- --------- --------- ------
Total Medical
Batteries 14,562 12,325 +18% 67,691 51,907 +30%
Capacitors 8,802 7,485 +18% 31,668 24,678 +28%
Components 20,201 21,441 -6% 90,862 65,316 +39%
-------- -------- -------- --------- --------- ------
Total Medical
Technology 43,565 41,251 +6% 190,221 141,901 +34%
Commercial Power
Sources 5,806 6,064 -4% 26,144 25,395 +3%
-------- -------- -------- --------- --------- ------
Total Revenues $49,371 $47,315 +4% $216,365 $167,296 +29%
During the fourth quarter of 2003, sales of Implantable
Cardioverter Defibrillator ("ICD") batteries and capacitors increased
by a combined 20.4% over the prior year fourth quarter. For the full
year, ICD battery and capacitor sales grew by 37.5%, indicative of the
strength in the CRM market and our positioning in that marketplace.
Also contributing to the medical technology growth were sales of
"Other Devices", driven primarily by sales of components used in Left
Ventricular Assist Devices ("LVADs") and pain management therapy. The
overall growth rate in the medical technology segment was impacted by
reduced sales of Components (feedthroughs, enclosures and engineered
components) due to the slowdown in CRM customer shipments. For the
full year, sales of these medical components increased organically by
20%.
In the Commercial Power Sources (non-medical) segment, the fourth
quarter sales decrease was due to an inventory reduction by a major
customer and softness in the oil and gas market. For the full year,
total sales were within our expectations.
Profit & Loss Summary
The following table summarizes selected information derived from
the condensed consolidated statement of operations for the fourth
quarters and full years in 2003 and 2002 (in thousands):
2003 2002 2003 2002
4th Qtr 4th Qtr Full Year Full Year
Gross Profit $19,838 $20,475 $89,828 $70,898
Gross Margin 40.2% 43.3% 41.5% 42.4%
SG&A Expenses $7,257 $7,059 $30,384 $24,369
SG&A Expenses as % of Sales 14.7% 14.9% 14.0% 14.6%
RD&E Expenses, net $3,843 $3,926 $16,991 $14,440
RD&E Expenses, net as % of Sales 7.8% 8.3% 7.9% 8.6%
Operating Income $7,181 $7,872 $38,200 $25,906
Operating Margin 14.5% 16.6% 17.7% 15.5%
Gross margin during the quarter was lower than the prior year
fourth quarter, primarily due to the unfavorable effect of spreading
fixed manufacturing expenses over lower production volumes. An
additional impact on gross margin was the higher costs associated with
the hiring of additional plant management personnel. The year over
year gross margin decrease was primarily due to the costs incurred to
consolidate the commercial battery plants, the hiring of additional
plant management personnel and the impact of including the lower
margin enclosure products for the full year of 2003. The gross margin
impact of these three factors was approximately 300 basis points for
the year.
SG&A expenses during the quarter remained relatively flat in
absolute dollars versus the prior year. For the full year, expenses
increased by 24.7% compared to last year in absolute dollars, but
declined as a percent of sales due to improved operating leverage.
RD&E expenses during the quarter remained relatively flat compared
to the fourth quarter of last year in absolute dollars. For the full
year, expenses increased by 17.7% compared to last year in absolute
dollars, but decreased as a percent of sales compared to last year as
sales growth has outpaced spending.
Financial Outlook for 2004
Management expects total sales for 2004 to be in the range of
$240-$245 million, an increase of 11-13% over last year. Medical
technology sales are expected to be between $214-$217 million, an
increase of 13-14%. Commercial power sources sales are expected to be
in the range of $26-$28 million, an increase of 0%-7%. Based on this
sales growth, management expects diluted earnings per share to be in
the range of $1.37-$1.43, an increase of 27-32% over 2003 levels. The
earnings growth is primarily due to increased sales volume, continued
benefits from the Six Sigma and lean manufacturing initiatives, and
improved operating leverage of the existing infrastructure. The
earnings guidance also factors in changes in selling prices on
selected medical components, higher insurance premiums, one-time costs
for start-up of the new battery plant and increased costs for
compliance with Sarbanes-Oxley requirements.
The Company expects capital spending in 2004 to be in the range of
$37-$42 million compared to $12.3 million in 2003. This elevated level
of spending is primarily due to the build-out of the new medical
battery plant and the continuing impact of the information technology
system implementation.
Conference Call
Mr. Voboril and Lawrence P. Reinhold, the Company's Executive Vice
President and Chief Financial Officer, will discuss fourth quarter
2003 financial results in a conference call scheduled for today,
Tuesday, February 10, at 5:00 p.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; product
obsolescence; inability to market current or future products; pricing
pressure from customers; 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 99.2 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 batteries, capacitors, precision
components and enclosures used in implantable medical devices and
other technically demanding applications. The Company has operations
in New York, Maryland, Massachusetts, Nevada and Minnesota. 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 Year Ended
December 31, December 31,
2003 2002 (a) 2003 2002 (a)
Sales $49,371 $47,315 $216,365 $167,296
Cost of sales 29,533 26,840 126,537 96,398
-------- -------- --------- ---------
Gross profit 19,838 20,475 89,828 70,898
Selling, general and
administrative expenses 7,257 7,059 30,384 24,369
Research, development and
engineering costs, net 3,843 3,926 16,991 14,440
Amortization of intangible assets 793 893 3,217 3,702
Other operating expense 764 725 1,036 2,481
-------- -------- --------- ---------
Operating income 7,181 7,872 38,200 25,906
Interest expense 1,149 1,050 4,101 3,752
Interest income (318) (128) (702) (442)
Early extinguishment of debt - - 1,603 -
Other expense (income), net (5) 18 (118) 1,631
-------- -------- --------- ---------
Income before income taxes 6,355 6,932 33,316 20,965
Provision for income taxes 1,832 1,973 10,028 6,604
-------- -------- --------- ---------
Net income $4,523 $4,959 $23,288 $14,361
======== ======== ========= =========
Diluted earnings per share $0.21 $0.23 $1.08 $0.68
Diluted average shares
outstanding 21,632 21,359 21,534 21,227
(a) Reclassified for consistency with 2003 presentation.
Wilson Greatbatch Technologies, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
(In thousands)
ASSETS December 31,
2003 2002
Current assets:
Cash, cash equivalents and short-term
investments $131,045 $4,608
Accounts receivable, net 23,726 19,310
Inventories 28,598 34,908
Prepaid expenses and other current assets 3,591 3,339
Refundable income taxes 583 3,038
Deferred income taxes 3,163 3,349
Asset held for sale 3,658 -
--------- ---------
Total current assets 194,364 68,552
Property, plant, and equipment, net 63,735 64,699
Intangible assets, net 51,441 55,804
Goodwill 119,521 119,407
Deferred income taxes 2,896 -
Other assets 6,286 3,789
--------- ---------
Total assets $438,243 $312,251
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $4,091 $5,726
Accrued expenses and other current liabilities 18,968 13,872
Current portion of long-term debt 850 8,750
--------- ---------
Total current liabilities 23,909 28,348
Long-term debt, net of current portion 928 76,250
Long-term convertible notes 170,000 -
Deferred income taxes 7,251 136
Other long-term liabilities 815 654
--------- ---------
Total liabilities 202,903 105,388
--------- ---------
Stockholders' equity:
Preferred stock - -
Common stock 21 21
Additional paid-in capital 207,969 202,279
Deferred stock-based compensation (1,185) -
Retained earnings 28,714 5,426
Treasury stock, at cost (179) (863)
--------- ---------
Total stockholders' equity 235,340 206,863
--------- ---------
Total liabilities and stockholders' equity $438,243 $312,251
========= =========
CONTACT: Wilson Greatbatch Technologies, Inc., Clarence
Lawrence P. Reinhold
Executive Vice President and Chief Financial Officer
716-759-5602
lreinhold@greatbatch.com
or
Anthony W. Borowicz
Treasurer and Director, Investor Relations
716-759-5809
tborowicz@greatbatch.com