Exhibit 99.1
Wilson Greatbatch Technologies, Inc. Reports First Quarter Results;
Company Reports 10% Increase In Earnings
CLARENCE, N.Y.--(BUSINESS WIRE)--May 11, 2004--Wilson Greatbatch
Technologies, Inc. (the "Company") (NYSE: GB) today reported its
results for the first quarter ended March 31, 2004.
Business Summary:
During the quarter, the Company made progress on all of its 2004
strategic objectives, including:
-- Signed a development agreement with an additional capacitor
customer and commenced product development.
-- Signed a QHR (formerly referred to as Quasar) high rate
battery development agreement with another major CRM customer.
-- Completed the acquisition of Nanogram Devices Corporation
("NDC").
-- Successfully implemented the ERP business platform for the
Electrochem business.
-- Achieved 18.7% operating margin.
Net sales totaled $55.5 million during the first quarter of 2004,
an increase of 1% over the first quarter of 2003. Net income for the
first quarter increased by 10% to $6.6 million from $6.0 million a
year ago, and diluted earnings per share increased by 11% to $0.31
compared with $0.28 in the prior year.
Edward F. Voboril, Chairman, President and Chief Executive Officer
commented, "We are pleased with our performance in the first quarter.
Our operating margins continued to improve through the effective
utilization of our infrastructure. In addition, we completed a number
of strategically important initiatives in the quarter. We acquired
NDC, a research and development company focused on developing
nanoscale materials, and we signed new development contracts for our
wet tantalum capacitor and next generation battery technology. These
initiatives demonstrate our long-term commitment to our goal of being
the leading component supplier to the CRM industry, having the most
advanced technology, the highest quality and the lowest cost," Voboril
concluded.
Sales Summary
The following table summarizes the Company's sales by business
unit and major product line for the first quarters in 2004 and 2003
(in thousands):
Business Unit/Product Lines 2004 2003 %
1st Qtr 1st Qtr Change
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Implantable Medical Components:
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ICD Batteries $ 9,420 $10,760 -12%
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Pacemaker & Other Batteries 5,689 6,420 -11%
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ICD Capacitors 8,408 7,148 +18%
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Feedthroughs 13,755 11,173 +23%
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Enclosures 5,397 6,934 -22%
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Other 5,609 5,593 +0%
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Total Implantable Medical Components 48,278 48,029 +1%
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Electrochem Power Solutions 7,247 6,829 +6%
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Total Sales $55,525 $54,857 +1%
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The overall increase in Implantable Medical Components is
comprised of a 4% increase in unit volume and a 3% decrease in selling
price. The price decrease impacted most product lines. The remaining
change in sales reflects strong demand for EMI filtered feedthroughs,
the commencement of sales to an additional capacitor customer and
normal quarterly sales volume fluctuations.
The Electrochem Power Solutions increase is a result of higher
demand for products used in domestic oceanographic applications and
from an increase in international sales of specialty batteries.
Profit & Loss Summary
The following table summarizes selected information derived from
the condensed consolidated statement of operations for the first
quarters in 2004 and 2003 (in thousands):
2004 2003 %
1st Qtr 1st Qtr Change
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Gross Profit $23,175 $22,813 +2%
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Gross Margin 41.7% 41.6%
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SG&A Expenses $ 6,925 $ 7,691 -10%
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SG&A Expenses as % of Sales 12.5% 14.0%
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RD&E Expenses, net $ 4,881 $ 4,560 +7%
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RD&E Expenses, net as % of Sales 8.8% 8.3%
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Operating Income $10,373 $ 9,677 +7%
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Operating Margin 18.7% 17.6%
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Effective Tax Rate 30.5% 31.5% -1%
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Gross margin remained relatively flat compared to last year.
Electrochem Power Solutions margins improved over last year,
reflecting the cost reductions achieved from the consolidation of the
Company's two commercial battery manufacturing facilities completed in
2003. However, lower selling prices, medical battery volume and
additional manufacturing management personnel offset these cost
reductions.
Lower SG&A expense is primarily is due to cost controls, the
timing of certain expenditures, and the elimination of certain general
management positions resulting from an internal reorganization from
four business units to two business units.
RD&E expenses include $0.2 million of incremental development
costs from the Greatbatch Technologies Advanced Research Lab, which
was created from the acquisition of NDC during March, as well as
additional RD&E management personnel.
The income tax rate reduction results primarily from the benefits
from various federal and state planning initiatives.
In the quarter, the Company used approximately $45.4 million in
cash (including $0.4 million in direct transaction costs) for the
purchase of NDC. The Company obtained an independent valuation of the
assets acquired in the acquisition and has preliminarily allocated the
purchase price as follows:
Property and equipment $ 0.7
- ------------------------------------------------
Other assets/(liabilities) (0.9)
- ------------------------------------------------
Patented/Unpatented Technology 16.5
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Deferred taxes (5.8)
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Goodwill 34.9
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Total purchase price $ 45.4
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Pursuant to the valuation, the status of NDC's technology was
sufficiently advanced such that technical feasibility requirements
were met at the acquisition date; consequently, no in-process R&D
charge was recorded.
Revised 2004 Guidance
The Company reaffirmed that as a result of the acquisition of NDC,
operating expenses (RD&E, SG&A and amortization) will increase by a
total of $6-$7 million in 2004. Adjusting for this additional
operating expense, and for lowered interest income due to the use of
cash, management expects full year 2004 diluted earnings per share to
be in the range of $1.14 -$1.22. Our previously reported full year
guidance was $1.37 - $1.43.
Conference Call
Mr. Voboril and Lawrence P. Reinhold, the Company's Executive Vice
President and Chief Financial Officer, will discuss first quarter 2004
financial results in a conference call scheduled for today, Tuesday,
May 11, 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, including those
statements made under the headings "Revised 2004 Guidance", 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 99.1 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
March 31,
2004 2003
Sales $55,525 $54,857
Cost of sales 32,350 32,044
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Gross profit 23,175 22,813
Selling, general and administrative expenses 6,925 7,691
Research, development and engineering costs, net 4,881 4,560
Amortization of intangible assets 775 815
Other operating expense, net 221 70
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Operating income 10,373 9,677
Interest expense 1,160 931
Interest income (313) (9)
Other expense (income), net 2 (58)
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Income before income taxes 9,524 8,813
Provision for income taxes 2,905 2,776
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Net income $ 6,619 $ 6,037
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Diluted earnings per share $ 0.31 $ 0.28
Diluted average shares outstanding 21,692 21,354
Wilson Greatbatch Technologies, Inc.
Condensed Consolidated Balance Sheet
(Unaudited)
(In thousands)
ASSETS March 31, Dec. 31,
2004 2003
Current assets:
Cash and cash equivalents $ 74,253 $119,486
Short-term investments 7,649 11,559
Accounts receivable, net 27,491 23,726
Inventories 31,379 28,598
Prepaid expenses and other current assets 3,426 3,591
Refundable income taxes 591 583
Deferred income taxes 3,163 3,163
Asset available for sale 3,600 3,658
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Total current assets 151,552 194,364
Property, plant, and equipment, net 68,129 63,735
Intangible assets, net 67,161 51,441
Goodwill 156,664 119,521
Deferred income taxes 2,896 2,896
Other assets 6,332 6,286
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Total assets $452,734 $438,243
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,541 $ 4,091
Accrued expenses and other current liabilities 14,212 18,968
Current portion of long-term debt 612 850
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Total current liabilities 20,365 23,909
Long-term debt, net of current portion 879 928
Convertible subordinated notes 170,000 170,000
Deferred income taxes 15,246 7,251
Other long-term liabilities 815 815
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Total liabilities 207,305 202,903
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Stockholders' equity:
Preferred stock - -
Common stock 21 21
Additional paid-in capital 211,092 207,969
Deferred stock-based compensation (1,017) (1,185)
Treasury stock, at cost - (179)
Retained earnings 35,333 28,714
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Total stockholders' equity 245,429 235,340
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Total liabilities and stockholders' equity $452,734 $438,243
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CONTACT: Wilson Greatbatch Technologies, Inc.
Lawrence P. Reinhold, 716-759-5602
lreinhold@greatbatch.com
Anthony W. Borowicz, 716-759-5809
tborowicz@greatbatch.com