Large
accelerated filer [ ]
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Accelerated
filer [X]
|
|
Non-accelerated
filer [ ]
|
Smaller
reporting company
[ ]
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Page
|
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COVER
PAGE
|
1
|
|
TABLE
OF CONTENTS
|
2
|
|
ITEM 1. | ||
3
|
||
4
|
||
5
|
||
6
|
||
7
|
||
ITEM 2. | ||
33
|
||
ITEM 3. |
50
|
|
ITEM 4. |
52
|
|
ITEM 1. |
53
|
|
ITEM 1A. |
53
|
|
ITEM 2. |
53
|
|
ITEM 3. |
53
|
|
ITEM 4. |
53
|
|
ITEM 5. |
54
|
|
ITEM 6. |
54
|
|
54
|
||
54
|
CONDENSED
CONSOLIDATED BALANCE SHEETS - Unaudited
|
||||||||
(in
thousands except share and per share data)
|
||||||||
As
of
|
||||||||
September
26,
|
December
28,
|
|||||||
ASSETS
|
2008
|
2007
|
||||||
Current
assets:
|
||||||||
Cash
and cash equivalents
|
$ | 20,015 | $ | 33,473 | ||||
Short-term
investments available for sale
|
- | 7,017 | ||||||
Accounts
receivable, net of allowance of $1,997 in 2008
|
||||||||
and
$758 in 2007
|
84,806 | 56,962 | ||||||
Inventories,
net of reserve
|
98,833 | 71,882 | ||||||
Refundable
income taxes
|
1,401 | 377 | ||||||
Deferred
income taxes
|
7,899 | 6,469 | ||||||
Prepaid
expenses and other current assets
|
5,460 | 5,044 | ||||||
Total
current assets
|
218,414 | 181,224 | ||||||
Property,
plant and equipment, net
|
171,297 | 114,946 | ||||||
Amortizing
intangible assets, net
|
92,301 | 71,268 | ||||||
Trademarks
and tradenames
|
36,117 | 32,582 | ||||||
Goodwill
|
299,858 | 248,540 | ||||||
Other
assets
|
14,947 | 15,291 | ||||||
Total
assets
|
$ | 832,934 | $ | 663,851 | ||||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 53,792 | $ | 33,433 | ||||
Accrued
expenses and other current liabilities
|
35,345 | 30,975 | ||||||
Total
current liabilities
|
89,137 | 64,408 | ||||||
Long-term
debt
|
352,315 | 241,198 | ||||||
Deferred
income taxes
|
43,855 | 35,346 | ||||||
Other
long-term liabilities
|
4,419 | 228 | ||||||
Total
liabilities
|
489,726 | 341,180 | ||||||
Stockholders'
equity:
|
||||||||
Preferred
stock, $0.001 par value, authorized 100,000,000
|
||||||||
shares;
no shares issued or outstanding in 2008 or 2007
|
- | - | ||||||
Common
stock, $0.001 par value, authorized 100,000,000
|
||||||||
shares;
22,910,699 shares issued and outstanding in 2008 and
|
||||||||
22,477,340
shares issued and 22,470,299 shares outstanding in 2007
|
23 | 22 | ||||||
Additional
paid-in capital
|
248,570 | 238,574 | ||||||
Treasury
stock, at cost, no shares in 2008 and 7,041 shares in 2007
|
- | (140 | ) | |||||
Retained
earnings
|
94,275 | 84,215 | ||||||
Accumulated
other comprehensive income
|
340 | - | ||||||
Total
stockholders’ equity
|
343,208 | 322,671 | ||||||
Total
liabilities and stockholders' equity
|
$ | 832,934 | $ | 663,851 |
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
AND
COMPREHENSIVE INCOME - Unaudited
|
||||||||||||||||
(in
thousands except per share data)
|
||||||||||||||||
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Sales
|
$ | 136,242 | $ | 79,009 | $ | 400,044 | $ | 234,331 | ||||||||
Costs
and expenses:
|
||||||||||||||||
Cost
of sales - excluding amortization
|
||||||||||||||||
of
intangible assets
|
92,779 | 48,647 | 285,856 | 141,697 | ||||||||||||
Cost
of sales - amortization of intangible assets
|
1,710 | 1,222 | 5,141 | 3,164 | ||||||||||||
Selling,
general and administrative expenses
|
15,681 | 11,362 | 52,685 | 32,130 | ||||||||||||
Research,
development and engineering costs, net
|
6,793 | 8,423 | 23,722 | 21,856 | ||||||||||||
Acquired
in-process research and development
|
- | (2,260 | ) | 2,240 | 16,093 | |||||||||||
Other
operating expense, net
|
3,565 | 1,275 | 7,474 | 4,796 | ||||||||||||
Operating
income
|
15,714 | 10,340 | 22,926 | 14,595 | ||||||||||||
Interest
expense
|
3,268 | 2,112 | 9,908 | 5,345 | ||||||||||||
Interest
income
|
(142 | ) | (1,586 | ) | (663 | ) | (6,028 | ) | ||||||||
Gain
on sale of investment security
|
- | - | - | (4,001 | ) | |||||||||||
Gain
on extinguishment of debt
|
- | - | - | (4,473 | ) | |||||||||||
Other
(income) expense, net
|
(234 | ) | 70 | (1,597 | ) | 156 | ||||||||||
Income
before provision for income taxes
|
12,822 | 9,744 | 15,278 | 23,596 | ||||||||||||
Provision
for income taxes
|
5,193 | 4,744 | 5,218 | 11,326 | ||||||||||||
Net
income
|
$ | 7,629 | $ | 5,000 | $ | 10,060 | $ | 12,270 | ||||||||
Earnings
per share:
|
||||||||||||||||
Basic
|
$ | 0.34 | $ | 0.23 | $ | 0.45 | $ | 0.55 | ||||||||
Diluted
|
$ | 0.33 | $ | 0.22 | $ | 0.44 | $ | 0.54 | ||||||||
Weighted
average shares outstanding:
|
||||||||||||||||
Basic
|
22,557 | 22,214 | 22,493 | 22,129 | ||||||||||||
Diluted
|
24,087 | 23,872 | 22,697 | 24,739 | ||||||||||||
Comprehensive
income:
|
||||||||||||||||
Net
income
|
$ | 7,629 | $ | 5,000 | $ | 10,060 | $ | 12,270 | ||||||||
Foreign
currency translation adjustment
|
(4,914 | ) | - | 366 | - | |||||||||||
Unrealized
loss on interest rate swap, net of tax
|
(351 | ) | - | (26 | ) | - | ||||||||||
Unrealized
loss on short-term investments:
|
||||||||||||||||
Unrealized
loss on short-term investments
|
||||||||||||||||
during
the period, net of tax
|
(20 | ) | - | - | (869 | ) | ||||||||||
Less:
reclassification adjustment for net realized gain on
|
||||||||||||||||
short-term
investments during the period, net of tax
|
- | - | - | (2,601 | ) | |||||||||||
(20 | ) | - | - | (3,470 | ) | |||||||||||
Other
comprehensive income (loss)
|
(5,285 | ) | - | 340 | (3,470 | ) | ||||||||||
Comprehensive
income
|
$ | 2,344 | $ | 5,000 | $ | 10,400 | $ | 8,800 | ||||||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS - Unaudited
|
||||||||
(in
thousands)
|
||||||||
Nine
months ended
|
||||||||
September
26,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Cash flows from
operating activities:
|
||||||||
Net
income
|
$ | 10,060 | $ | 12,270 | ||||
Adjustments
to reconcile net income to net cash provided
|
||||||||
by
operating activities:
|
||||||||
Depreciation
and amortization
|
35,206 | 18,539 | ||||||
Stock-based
compensation
|
8,073 | 7,092 | ||||||
Gain
on sale of investment security
|
- | (4,001 | ) | |||||
Gain
on extinguishment of debt
|
- | (4,473 | ) | |||||
Acquired
in-process research and development
|
2,240 | 16,093 | ||||||
Other
non-cash gains
|
75 | (126 | ) | |||||
Deferred
income taxes
|
2,837 | (8,378 | ) | |||||
Changes
in operating assets and liabilities:
|
||||||||
Accounts
receivable
|
(17,205 | ) | (8,205 | ) | ||||
Inventories
|
(8,055 | ) | (4,936 | ) | ||||
Prepaid
expenses and other current assets
|
46 | (610 | ) | |||||
Accounts
payable
|
15,555 | 8,721 | ||||||
Accrued
expenses and other current liabilities
|
(631 | ) | (4,090 | ) | ||||
Income
taxes refundable/payable
|
(1,163 | ) | 2,946 | |||||
Net
cash provided by operating activities
|
47,038 | 30,842 | ||||||
Cash flows from
investing activities:
|
||||||||
Purchase
of short-term investments
|
(2,010 | ) | (59,208 | ) | ||||
Proceeds
from maturity/disposition of short-term investments
|
9,027 | 109,971 | ||||||
Acquisition
of property, plant and equipment
|
(35,830 | ) | (10,852 | ) | ||||
Purchase
of cost method investments
|
(2,550 | ) | (1,750 | ) | ||||
Acquisitions,
net of cash acquired
|
(104,817 | ) | (109,737 | ) | ||||
Other
investing activities
|
266 | 407 | ||||||
Net
cash used in investing activities
|
(135,914 | ) | (71,169 | ) | ||||
Cash flows from
financing activities:
|
||||||||
Borrowings
(repayments) under short-term line of credit
|
- | (1,000 | ) | |||||
Principal
payments of long-term debt
|
(40,651 | ) | (6,093 | ) | ||||
Proceeds
from issuance of long-term debt
|
117,000 | 76,000 | ||||||
Debt
issuance costs
|
- | (6,619 | ) | |||||
Issuance
of common stock
|
956 | 2,699 | ||||||
Excess
tax benefits from stock-based awards
|
171 | 377 | ||||||
Repurchase
of treasury stock
|
(793 | ) | (205 | ) | ||||
Net
cash provided by financing activities
|
76,683 | 65,159 | ||||||
Effect
of foreign currency exchange rates on cash and cash
equivalents
|
(1,265 | ) | - | |||||
Net
increase (decrease) in cash and cash equivalents
|
(13,458 | ) | 24,832 | |||||
Cash
and cash equivalents, beginning of year
|
33,473 | 71,147 | ||||||
Cash
and cash equivalents, end of period
|
$ | 20,015 | $ | 95,979 | ||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
CONDENSED
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY - Unaudited
|
||||||||||||||||||||||||||||||||
(in
thousands)
|
||||||||||||||||||||||||||||||||
Accumulated
|
||||||||||||||||||||||||||||||||
Additional
|
Treasury
|
Other
|
Total
|
|||||||||||||||||||||||||||||
Common
Stock
|
Paid-In
|
Stock
|
Retained
|
Comprehensive
|
Stockholders'
|
|||||||||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Shares
|
Amount
|
Earnings
|
Income
|
Equity
|
|||||||||||||||||||||||||
Balance,
December 28, 2007
|
22,477 | $ | 22 | $ | 238,574 | (7 | ) | $ | (140 | ) | $ | 84,215 | $ | - | $ | 322,671 | ||||||||||||||||
Stock-based
compensation
|
- | - | 4,808 | - | - | - | - | 4,808 | ||||||||||||||||||||||||
Grant/forfeiture
of restricted stock
|
94 | 1 | (793 | ) | 36 | 793 | - | - | 1 | |||||||||||||||||||||||
Vesting
of restricted stock units
|
51 | - | - | - | - | - | - | - | ||||||||||||||||||||||||
Exercise
of stock options
|
61 | - | 956 | - | - | - | - | 956 | ||||||||||||||||||||||||
Repurchase
of shares to settle employee tax
|
||||||||||||||||||||||||||||||||
witholding
on vested restricted stock and
|
||||||||||||||||||||||||||||||||
restricted
stock units
|
- | - | - | (29 | ) | (653 | ) | - | - | (653 | ) | |||||||||||||||||||||
Tax
impact from stock based awards
|
- | - | 80 | - | - | - | - | 80 | ||||||||||||||||||||||||
Shares
issued in connection with
|
||||||||||||||||||||||||||||||||
the
Quan Emerteq acquisition
|
60 | - | 1,473 | - | - | - | - | 1,473 | ||||||||||||||||||||||||
Shares
contributed to 401(k) Plan
|
168 | - | 3,472 | - | - | - | - | 3,472 | ||||||||||||||||||||||||
Net
income
|
- | - | - | - | - | 10,060 | - | 10,060 | ||||||||||||||||||||||||
Total
other comprehensive income
|
- | - | - | - | - | - | 340 | 340 | ||||||||||||||||||||||||
Balance,
September 26, 2008
|
22,911 | $ | 23 | $ | 248,570 | - | $ | - | $ | 94,275 | $ | 340 | $ | 343,208 | ||||||||||||||||||
The
accompanying notes are an integral part of these condensed consolidated
financial statements.
|
1.
|
BASIS
OF PRESENTATION
|
2.
|
ACQUISITIONS
|
As
of
|
||||
(in
thousands)
|
January
7, 2008
|
|||
Assets
acquired
|
||||
Current
assets
|
$ | 34,190 | ||
Property,
plant and equipment
|
25,534 | |||
Acquired
IPR&D
|
2,240 | |||
Amortizing
intangible assets
|
28,902 | |||
Trademarks
and tradenames
|
3,514 | |||
Goodwill
|
45,073 | |||
Other
assets
|
1,275 | |||
Total
assets acquired
|
140,728 | |||
Liabilities
assumed
|
||||
Current
liabilities
|
25,634 | |||
Long-term
liabilities
|
32,600 | |||
Total
liabilities assumed
|
58,234 | |||
Purchase
price
|
$ | 82,494 |
Fair
value
assigned
|
Weighted
average
amortization
period
(years)
|
Weighted
average
discount
rate
|
|||||||||||
Amortizing intangible
assets
|
|||||||||||||
Customer
relationships
|
$ | 16,111 | 20 | 13 | % | ||||||||
Technology
and patents
|
11,771 | 15 | 14 | % | |||||||||
Noncompete
agreements
|
1,020 | 5 | 13 | % | |||||||||
$ | 28,902 | 17 | 13 | % | |||||||||
Trademarks
and tradenames
|
$ | 3,514 |
indefinite
|
13 | % | ||||||||
Acquired
IPR&D
|
$ | 2,240 | - | 14 | % |
Three
months ended
|
Nine
months ended
|
||||||||||||||||
(Unaudited)
|
September
26,
2008
|
September
28,
2007
|
September
26,
2008
|
September
28,
2007
|
|||||||||||||
Sales
|
$ | 136,242 | $ | 119,386 | $ | 414,859 | $ | 379,746 | |||||||||
Net
income
|
7,629 | 5,686 | 16,632 | 23,097 | |||||||||||||
Earnings
per share:
|
|||||||||||||||||
Basic
|
$ | 0.34 | $ | 0.25 | $ | 0.74 | $ | 1.04 | |||||||||
Diluted
|
$ | 0.33 | $ | 0.25 | $ | 0.72 | $ | 0.98 |
3.
|
SUPPLEMENTAL
CASH FLOW INFORMATION
|
Nine
months ended
|
||||||||
September
26,
|
September
28,
|
|||||||
2008
|
2007
|
|||||||
Noncash
investing and financing activities (in thousands):
|
||||||||
Net
unrealized loss on available-for-sale securities
|
$ | - | $ | (869 | ) | |||
Unrealized
loss on interest rate swap, net
|
(26 | ) | - | |||||
Common
stock contributed to 401(k) Plan
|
3,472 | 2,956 | ||||||
Property,
plant and equipment purchases included
|
||||||||
in
accounts payable
|
4,170 | 1,958 | ||||||
Deferred
financing fees and acquisition costs included in
|
||||||||
accrued
expenses and other current liabilities
|
293 | 1,029 | ||||||
Exchange
of convertible subordinated notes
|
- | 117,782 | ||||||
Shares
issued in connection with a 2007 business acquisition
|
1,473 | - | ||||||
Cash
paid during the period for:
|
||||||||
Interest
|
$ | 6,020 | $ | 2,429 | ||||
Income
taxes
|
2,643 | 16,718 | ||||||
Acquisition
of noncash assets and liabilities:
|
||||||||
Assets
acquired
|
$ | 167,195 | $ | 126,182 | ||||
Liabilities
assumed
|
58,906 | 15,678 |
4.
|
INVENTORIES
|
September
26,
|
December
28,
|
||||||||
2008
|
2007
|
||||||||
Raw
materials
|
$ | 45,545 | $ | 38,561 | |||||
Work-in-process
|
29,861 | 19,603 | |||||||
Finished
goods
|
23,427 | 13,718 | |||||||
Total
|
$ | 98,833 | $ | 71,882 |
5.
|
INTANGIBLE
ASSETS
|
Gross
carrying
amount
|
Accumulated
amortization
|
Foreign
currency
translation
|
Net
carrying
amount
|
||||||||||||||
September 26,
2008
|
|||||||||||||||||
Purchased
technology and patents
|
$ | 81,639 | $ | (34,113 | ) | $ | 98 | $ | 47,624 | ||||||||
Customer
relationships
|
46,094 | (3,299 | ) | 218 | 43,013 | ||||||||||||
Other
|
3,508 | (1,854 | ) | 10 | 1,664 | ||||||||||||
Total
amortizing intangible assets
|
$ | 131,241 | $ | (39,266 | ) | $ | 326 | $ | 92,301 | ||||||||
December 28,
2007
|
|||||||||||||||||
Purchased
technology and patents
|
$ | 69,813 | $ | (28,968 | ) | $ | - | $ | 40,845 | ||||||||
Customer
relationships
|
29,983 | (840 | ) | - | 29,143 | ||||||||||||
Other
|
2,660 | (1,380 | ) | - | 1,280 | ||||||||||||
Total
amortizing intangible assets
|
$ | 102,456 | $ | (31,188 | ) | $ | - | $ | 71,268 |
|
Aggregate
amortization expense for the third quarter of 2008 and 2007 was $2.6
million and $1.6 million,
respectively. Aggregate amortization expense for the nine
months ended September 26, 2008 and September 28, 2007 was $8.1 million
and $3.6 million, respectively. As of September 26, 2008,
amortization expense is estimated to be $2.7 million for the remainder of
2008, $10.1 million for 2009, $9.6 million for 2010, $9.5 million for
2011, $9.4 million for 2012 and $8.6 million for
2013.
|
|
The
change in trademarks and tradenames during 2008 is as follows (in
thousands):
|
Balance
at December 28, 2007
|
$ | 32,582 | |||
Acquired
in 2008
|
3,514 | ||||
Foreign
currency translation
|
21 | ||||
Balance
at September 26, 2008
|
$ | 36,117 |
The
change in goodwill during 2008 is as follows (in
thousands):
|
IMC
|
Electrochem
|
Total
|
|||||||||||
Balance
at December 28, 2007
|
$ | 238,810 | $ | 9,730 | $ | 248,540 | |||||||
Adjustments
to goodwill related to 2007 acquisitions
|
(29 | ) | 213 | 184 | |||||||||
Goodwill
recorded for 2008 acquisitions
|
51,288 | - | 51,288 | ||||||||||
Foreign
currency translation
|
(154 | ) | - | (154 | ) | ||||||||
Balance
at September 26, 2008
|
$ | 289,915 | $ | 9,943 | $ | 299,858 |
6.
|
LONG-TERM
DEBT
|
September
26,
|
December
28,
|
||||||||
2008
|
2007
|
||||||||
Revolving
line of credit
|
$ | 110,000 | $ | - | |||||
Convertible
subordinated notes
|
|||||||||
2.25%
convertible subordinated notes I, due 2013
|
52,218 | 52,218 | |||||||
2.25%
convertible subordinated notes II, due 2013
|
197,782 | 197,782 | |||||||
Unamortized
discount
|
(7,685 | ) | (8,802 | ) | |||||
Total
convertible subordinated notes
|
242,315 | 241,198 | |||||||
Total
long-term debt
|
$ | 352,315 | $ | 241,198 |
Balance
at December 28, 2007
|
$ | 6,411 | |||
Financing
costs deferred
|
14 | ||||
Amortization
during the period
|
(993 | ) | |||
Balance
at September 26, 2008
|
$ | 5,432 |
7.
|
PENSION
PLANS
|
|
The
change in the net pension liability for the first nine months of 2008 is
as follows (in thousands):
|
Balance
at December 28, 2007
|
$ | - | |||
Acquired
in 2008
|
3,534 | ||||
Net
periodic pension cost
|
581 | ||||
Foreign
currency translation
|
7 | ||||
Balance
at September 26, 2008
|
$ | 4,122 |
Nine
months ended
|
|||||
September
26,
2008
|
|||||
Service
cost
|
$ | 532 | |||
Interest
cost
|
377 | ||||
Expected
return on plan assets
|
(328 | ) | |||
Net
pension cost
|
$ | 581 |
Discount
rate
|
3.9 | % | |||
Expected
rate of return on plan assets
|
4.0 | % | |||
Salary
growth
|
2.6 | % |
Asset
Category:
|
Target
|
Actual
|
|||||||
Bonds
|
60 | % | 52 | % | |||||
Equity
|
25 | % | 32 | % | |||||
Other
|
15 | % | 16 | % | |||||
100 | % | 100 | % |
Remainder
2008
|
$ | 242 | |||
2009
|
975 | ||||
2010
|
874 | ||||
2011
|
940 | ||||
2012
|
1,045 | ||||
2013-2017
|
5,747 |
8.
|
FAIR
VALUE MEASUREMENTS
|
Fair
value measurements at reporting date using
|
|||||||||||||||||
Description
|
At
September
26,
2008
|
Quoted
prices
in
active
markets
for
identical
assets
(Level 1)
|
Significant
other
observable
inputs
(Level
2)
|
Significant
unobservable
inputs
(Level
3)
|
|||||||||||||
Liabilities
|
|||||||||||||||||
Interest
rate swap
|
$ | (40 | ) | $ | - | $ | (40 | ) | $ | - |
9.
|
STOCK-BASED
COMPENSATION
|
Number
of
stock
options
|
Weighted
average
exercise
price
|
Weighted
average
remaining
contractual
life
(in
years)
|
Aggregate
intrinsic
value(1)
(in
millions)
|
||||||||||||||
Outstanding
at December 28, 2007
|
1,744,022 | $ | 25.04 | ||||||||||||||
Granted
|
442,630 | 20.09 | |||||||||||||||
Exercised
|
(60,560 | ) | 15.79 | ||||||||||||||
Forfeited
or Expired
|
(113,400 | ) | 26.09 | ||||||||||||||
Outstanding
at September 26, 2008
|
2,012,692 | $ | 24.17 | 7.2 | $ | 5.8 | |||||||||||
Exercisable
at September 26, 2008
|
960,380 | $ | 25.39 | 5.8 | $ | 2.3 |
|
(1) |
Intrinsic
value is calculated for in-the-money options (exercise price less than
market price) outstanding and/or exercisable as the difference between the
market price of our common shares as of September 26, 2008 ($25.78) and
the exercise price of the underlying options, multiplied by the number of
options outstanding and/or
exercisable.
|
Nine
months ended
|
|||||||||
September
26,
|
September
28,
|
||||||||
2008
|
2007
|
||||||||
Weighted-average
fair value
|
$ | 7.94 | $ | 12.33 | |||||
Risk-free
interest rate
|
2.92 | % | 4.62 | % | |||||
Expected
volatility
|
40 | % | 41 | % | |||||
Expected
life (in years)
|
5.2 | 5.4 | |||||||
Expected
dividend yield
|
0 | % | 0 | % | |||||
Weighted
average
|
|||||||||
Activity
|
fair
value
|
||||||||
Nonvested
at December 28, 2007
|
282,134 | $ | 24.96 | ||||||
Shares
granted
|
141,793 | 20.06 | |||||||
Shares
vested
|
(94,221 | ) | 23.72 | ||||||
Shares
forfeited
|
(11,570 | ) | 22.15 | ||||||
Nonvested
at September 26, 2008
|
318,136 | $ | 23.24 |
10.
|
OTHER
OPERATING EXPENSES
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(a)
2005 facility shutdowns and consolidations
|
$ | 335 | $ | 1,040 | $ | 672 | $ | 4,289 | ||||||||
(b)
2007 & 2008 facility shutdowns and consolidations
|
1,322 | 126 | 2,954 | 408 | ||||||||||||
(c)
Integration costs
|
1,812 | - | 3,876 | - | ||||||||||||
Asset
dispositions and other
|
96 | 109 | (28 | ) | 99 | |||||||||||
$ | 3,565 | $ | 1,275 | $ | 7,474 | $ | 4,796 |
|
a.
|
Severance
and retention - $7.4 million;
|
|
b.
|
Production
inefficiencies and revalidation - $1.6
million;
|
|
c.
|
Accelerated
depreciation and asset write-offs - $1.1
million;
|
|
d.
|
Personnel
- $5.9 million; and
|
|
e.
|
Other
- $2.8 million.
|
Severance
and
retention
|
Production
inefficiencies
and
revalidation
|
Personnel
|
Other
|
Total
|
|||||||||||||||||
Balance,
December 29, 2006
|
$ | 2,904 | $ | - | $ | - | $ | - | $ | 2,904 | |||||||||||
Restructuring
charges
|
1,405 | 1,037 | 1,678 | 577 | 4,697 | ||||||||||||||||
Cash
payments
|
(2,459 | ) | (1,037 | ) | (1,678 | ) | (577 | ) | (5,751 | ) | |||||||||||
Balance,
December 28, 2007
|
$ | 1,850 | $ | - | $ | - | $ | - | $ | 1,850 | |||||||||||
Restructuring
charges
|
159 | 42 | 193 | 278 | 672 | ||||||||||||||||
Cash
payments
|
(1,798 | ) | (42 | ) | (193 | ) | (278 | ) | (2,311 | ) | |||||||||||
Balance,
September 26, 2008
|
$ | 211 | $ | - | $ | - | $ | - | $ | 211 |
|
a.
|
Severance
and retention - $1.5 million - $1.9
million;
|
|
b.
|
Production
inefficiencies and revalidation - $1.6 million - $2.0
million;
|
|
c.
|
Accelerated
depreciation and asset write-offs - $1.6 million - $2.0
million;
|
|
d.
|
Personnel
- $0.3 million - $0.4 million; and
|
|
e.
|
Other
- $0.5 million - $0.6
million.
|
Severance
and
retention
|
Production
inefficiencies
and
revalidation
|
Accelerated
depreciation/
asset
write-offs
|
Personnel
|
Other
|
Total
|
||||||||||||||||||||
Balance,
December 29, 2006
|
$ | 570 | $ | - | $ | - | $ | - | $ | - | $ | 570 | |||||||||||||
Restructuring
charges
|
- | - | 531 | - | - | 531 | |||||||||||||||||||
Write-offs
|
- | - | (531 | ) | - | - | (531 | ) | |||||||||||||||||
Cash
payments
|
- | - | - | - | - | - | |||||||||||||||||||
Balance,
December 28, 2007
|
$ | 570 | $ | - | $ | - | $ | - | $ | - | $ | 570 | |||||||||||||
Restructuring
charges
|
1,439 | 461 | 788 | 82 | 184 | 2,954 | |||||||||||||||||||
Write-offs
|
- | - | (788 | ) | - | - | (788 | ) | |||||||||||||||||
Cash
payments
|
(1,756 | ) | (461 | ) | - | (82 | ) | (184 | ) | (2,483 | ) | ||||||||||||||
Balance,
September 26, 2008
|
$ | 253 | $ | - | $ | - | $ | - | $ | - | $ | 253 |
|
a.
|
Severance
and retention - $2.1 million to $2.5
million;
|
|
b.
|
Production
inefficiencies and revalidation - $0.3 million to $0.5
million;
|
|
c.
|
Accelerated
depreciation and asset write-offs - $1.5 million to $1.7
million;
|
|
d.
|
Personnel
- $1.2 million to $1.4 million; and
|
|
e.
|
Other
- $0.6 million to $0.9 million.
|
11.
|
INCOME
TAXES
|
12.
|
COMMITMENTS
AND CONTINGENCIES
|
Beginning
balance at June 27, 2008
|
$ | 1,373 | |||
Additions
to warranty reserve
|
577 | ||||
Warranty
claims paid
|
(209 | ) | |||
Ending
balance at September 26, 2008
|
$ | 1,741 |
13.
|
EARNINGS
PER SHARE (“EPS”)
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Numerator
for basic earnings per share:
|
||||||||||||||||
Net
income
|
$ | 7,629 | $ | 5,000 | $ | 10,060 | $ | 12,270 | ||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Interest
expense on convertible notes and related
deferred
financing fees, net of tax
|
223 | 223 | - | 1,175 | ||||||||||||
Numerator
for diluted earnings per share
|
$ | 7,852 | $ | 5,223 | $ | 10,060 | $ | 13,445 | ||||||||
Denominator
for basic earnings per share:
|
||||||||||||||||
Weighted
average shares outstanding
|
22,557 | 22,214 | 22,493 | 22,129 | ||||||||||||
Effect
of dilutive securities:
|
||||||||||||||||
Convertible
subordinated notes
|
1,296 | 1,296 | - | 2,270 | ||||||||||||
Stock
options and unvested restricted stock
|
234 | 362 | 204 | 340 | ||||||||||||
Dilutive
potential common shares
|
1,530 | 1,658 | 204 | 2,610 | ||||||||||||
Denominator
for diluted earnings per share
|
24,087 | 23,872 | 22,697 | 24,739 | ||||||||||||
Basic
earnings per share
|
$ | 0.34 | $ | 0.23 | $ | 0.45 | $ | 0.55 | ||||||||
Diluted
earnings per share
|
$ | 0.33 | $ | 0.22 | $ | 0.44 | $ | 0.54 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Time
based stock options and restricted stock
|
1,375,000 | 319,000 | 1,509,259 | 600,000 | ||||||||||||
Performance
based stock options and
|
||||||||||||||||
restricted
stock units
|
276,000 | 338,000 | 276,000 | 338,000 | ||||||||||||
Convertible
subordinated notes
|
- | - | 1,296,000 | - |
14.
|
COMPREHENSIVE
INCOME
|
15.
|
BUSINESS
SEGMENT AND GEOGRAPHIC INFORMATION
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
Sales:
|
2008
|
2007
|
2008
|
2007
|
||||||||||||
IMC
|
||||||||||||||||
CRM/Neuromodulation
|
$ | 64,859 | $ | 56,956 | $ | 187,848 | $ | 188,159 | ||||||||
Therapy
Delivery
|
14,521 | 10,047 | 46,824 | 11,632 | ||||||||||||
Orthopedic
|
37,940 | - | 106,700 | - | ||||||||||||
Total
IMC
|
117,320 | 67,003 | 341,372 | 199,791 | ||||||||||||
Electrochem
|
18,922 | 12,006 | 58,672 | 34,540 | ||||||||||||
Total
sales
|
$ | 136,242 | $ | 79,009 | $ | 400,044 | $ | 234,331 | ||||||||
Segment
income from operations:
|
||||||||||||||||
IMC
|
$ | 17,904 | $ | 10,930 | $ | 30,590 | $ | 18,147 | ||||||||
Electrochem
|
3,126 | 2,445 | 8,122 | 7,577 | ||||||||||||
Total
segment income from operations
|
21,030 | 13,375 | 38,712 | 25,724 | ||||||||||||
Unallocated
operating expenses
|
(5,316 | ) | (3,035 | ) | (15,786 | ) | (11,129 | ) | ||||||||
Operating
income as reported
|
15,714 | 10,340 | 22,926 | 14,595 | ||||||||||||
Unallocated
other income (expense)
|
(2,892 | ) | (596 | ) | (7,648 | ) | 9,001 | |||||||||
Income
before provision for
|
||||||||||||||||
income
taxes as reported
|
$ | 12,822 | $ | 9,744 | $ | 15,278 | $ | 23,596 |
Three
months ended
|
Nine
months ended
|
||||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||||
Sales
by geographic area:
|
|||||||||||||||||
United
States
|
$ | 66,327 | $ | 39,189 | $ | 198,442 | $ | 110,174 | |||||||||
Non-Domestic
locations:
|
|||||||||||||||||
France
|
19,237 | 4,019 | 55,854 | 10,516 | |||||||||||||
United
Kingdom
|
19,575 | 13,289 | 52,414 | 51,553 | |||||||||||||
Puerto
Rico
|
13,707 | 11,131 | 40,457 | 28,615 | |||||||||||||
All
other
|
17,396 | 11,381 | 52,877 | 33,473 | |||||||||||||
Consolidated
sales
|
$ | 136,242 | $ | 79,009 | $ | 400,044 | $ | 234,331 |
As
of
|
|||||||||
September
26,
|
December
28,
|
||||||||
2008
|
2007
|
||||||||
Long-lived
tangible assets:
|
|||||||||
United
States
|
$ | 143,142 | $ | 111,364 | |||||
Non-Domestic
locations
|
43,102 | 18,873 | |||||||
Consolidated
long-lived assets
|
$ | 186,244 | $ | 130,237 |
Three
months ended
|
Nine
months ended
|
||||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
||||||||||||||
2008
|
2007
|
2008
|
2007
|
||||||||||||||
Customer
A
|
17%
|
25%
|
17%
|
|
26%
|
||||||||||||
Customer
B
|
14%
|
20%
|
13%
|
26%
|
|||||||||||||
Customer
C
|
13%
|
18%
|
13%
|
15%
|
|||||||||||||
Customer
D
|
13%
|
0%
|
12%
|
0%
|
|||||||||||||
Total
|
57%
|
63%
|
55%
|
67%
|
16.
|
IMPACT
OF RECENTLY ISSUED ACCOUNTING
STANDARDS
|
|
1.
|
Continue
the evolution of our Q series high rate ICD
batteries;
|
|
2.
|
Continue
development of MRI compatible product
lines;
|
|
3.
|
Integrate
Biomimetic coating technology with therapy delivery
devices;
|
|
4.
|
Complete
design of next generation steerable
catheters;
|
|
5.
|
Further
minimally invasive surgical techniques for orthopedics
industry;
|
|
6.
|
Develop
disposable instrumentation;
|
|
7.
|
Provide
wireless sensing solutions to commercial customers;
and
|
|
8.
|
Develop
a charging platform for commercial secondary
offering.
|
|
·
|
Severance
and retention - $7.4 million;
|
|
·
|
Production
inefficiencies and revalidation - $1.6
million;
|
|
·
|
Accelerated
depreciation and asset write-offs - $1.1
million;
|
|
·
|
Personnel
- $5.9 million; and
|
|
·
|
Other
- $2.8 million.
|
|
·
|
Severance
and retention - $1.5 million - $1.9
million;
|
|
·
|
Production
inefficiencies and revalidation - $1.6 million - $2.0
million;
|
|
·
|
Accelerated
depreciation and asset write-offs - $1.6 million - $2.0
million;
|
|
·
|
Personnel
- $0.3 million - $0.4 million; and
|
|
·
|
Other
- $0.5 million - $0.6 million.
|
|
a.
|
Severance
and retention - $2.1 million to $2.5
million;
|
|
b.
|
Production
inefficiencies and revalidation - $0.3 million to $0.5
million;
|
|
c.
|
Accelerated
depreciation and asset write-offs - $1.5 million to $1.7
million;
|
|
d.
|
Personnel
- $1.2 million to $1.4 million; and
|
|
e.
|
Other
- $0.6 million to $0.9 million.
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||||||||||||||||||
September
26,
|
September
28,
|
$
|
%
|
September
26,
|
September
28,
|
$
|
%
|
|||||||||||||||||||||||||
In
thousands, except per share data
|
2008
|
2007
|
Change
|
Change
|
2008
|
2007
|
Change
|
Change
|
||||||||||||||||||||||||
IMC
|
||||||||||||||||||||||||||||||||
CRM/Neuromodulation
|
$ | 64,859 | $ | 56,956 | 7,903 | 14 | % | $ | 187,848 | $ | 188,159 | (311 | ) | 0 | % | |||||||||||||||||
Therapy
Delivery
|
14,521 | 10,047 | 4,474 | 45 | % | 46,824 | 11,632 | 35,192 |
NA
|
|||||||||||||||||||||||
Orthopedic
|
37,940 | - | 37,940 |
NA
|
106,700 | - | 106,700 |
NA
|
||||||||||||||||||||||||
Total
IMC
|
117,320 | 67,003 | 50,317 | 75 | % | 341,372 | 199,791 | 141,581 | 71 | % | ||||||||||||||||||||||
Electrochem
|
18,922 | 12,006 | 6,916 | 58 | % | 58,672 | 34,540 | 24,132 | 70 | % | ||||||||||||||||||||||
Total
sales
|
136,242 | 79,009 | 57,233 | 72 | % | 400,044 | 234,331 | 165,713 | 71 | % | ||||||||||||||||||||||
Cost
of sales -
excluding
amortization
of intangible
assets
|
92,779 | 48,647 | 44,132 | 91 | % | 285,856 | 141,697 | 144,159 | 102 | % | ||||||||||||||||||||||
Cost
of sales - amortization
|
||||||||||||||||||||||||||||||||
of
intangible assets
|
1,710 | 1,222 | 488 | 40 | % | 5,141 | 3,164 | 1,977 | 62 | % | ||||||||||||||||||||||
Total
Cost of Sales
|
94,489 | 49,869 | 44,620 | 89 | % | 290,997 | 144,861 | 146,136 | 101 | % | ||||||||||||||||||||||
Cost
of sales as a % of sales
|
69.4 | % | 63.1 | % | 6.3 | % | 72.7 | % | 61.8 | % | 10.9 | % | ||||||||||||||||||||
Selling,
general, and
administrative
expenses
(SG&A)
|
15,681 | 11,362 | 4,319 | 38 | % | 52,685 | 32,130 | 20,555 | 64 | % | ||||||||||||||||||||||
SG&A
as a % of sales
|
11.5 | % | 14.4 | % | -2.9 | % | 13.2 | % | 13.7 | % | -0.5 | % | ||||||||||||||||||||
Research,
development
and
engineering costs,
net
(RD&E)
|
6,793 | 8,423 | (1,630 | ) | -19 | % | 23,722 | 21,856 | 1,866 | 9 | % | |||||||||||||||||||||
RD&E
as a % of sales
|
5.0 | % | 10.7 | % | -5.7 | % | 5.9 | % | 9.3 | % | -3.4 | % | ||||||||||||||||||||
Other
operating expense, net
|
3,565 | (985 | ) | 4,550 |
NA
|
9,714 | 20,889 | (11,175 | ) | -53 | % | |||||||||||||||||||||
Operating
income
|
15,714 | 10,340 | 5,374 | 52 | % | 22,926 | 14,595 | 8,331 | 57 | % | ||||||||||||||||||||||
Operating
margin
|
11.5 | % | 13.1 | % | -1.6 | % | 5.7 | % | 6.2 | % | -0.5 | % | ||||||||||||||||||||
Interest
expense
|
3,268 | 2,112 | 1,156 | 55 | % | 9,908 | 5,345 | 4,563 | 85 | % | ||||||||||||||||||||||
Interest
income
|
(142 | ) | (1,586 | ) | 1,444 | -91 | % | (663 | ) | (6,028 | ) | 5,365 | -89 | % | ||||||||||||||||||
Other
(income) expense, net
|
(234 | ) | 70 | (304 | ) |
NA
|
(1,597 | ) | (8,318 | ) | 6,721 | -81 | % | |||||||||||||||||||
Provision
for income taxes
|
5,193 | 4,744 | 449 | 9 | % | 5,218 | 11,326 | (6,108 | ) | -54 | % | |||||||||||||||||||||
Effective
tax rate
|
40.5 | % | 48.7 | % | -8.2 | % | 34.2 | % | 48.0 | % | -13.8 | % | ||||||||||||||||||||
Net
income
|
$ | 7,629 | $ | 5,000 | $ | 2,629 | 53 | % | $ | 10,060 | $ | 12,270 | $ | (2,210 | ) | -18 | % | |||||||||||||||
Net
margin
|
5.6 | % | 6.3 | % | -0.7 | % | 2.5 | % | 5.2 | % | -2.7 | % | ||||||||||||||||||||
Diluted
earnings per share
|
$ | 0.33 | $ | 0.22 | $ | 0.11 | 50 | % | $ | 0.44 | $ | 0.54 | $ | (0.10 | ) | -19 | % |
September
26, 2008
|
||||||||
Three
months
|
Nine
months
|
|||||||
ended
|
ended
|
|||||||
Impact
of 2008 and 2007 acquisitions
(a)
|
8.3 | % | 8.1 | % | ||||
Inventory
step-up amortization(b)
|
-0.8 | % | 1.3 | % | ||||
Mix
change (c)
|
1.4 | % | 1.1 | % | ||||
Volume
(d)
|
-2.4 | % | 0.4 | % | ||||
Other
|
-0.2 | % | 0.0 | % | ||||
Total
percentage point change to cost of sales as a
|
||||||||
percentage
of sales
|
6.3 | % | 10.9 | % |
(a)
|
We
completed seven acquisitions from the second quarter of 2007 to the first
quarter of 2008. The acquired companies are currently operating
with a higher cost of sales percentage than our legacy businesses due to
less efficient operations and products/contracts that generally carry
lower margins. We are currently in the process of applying our
“Lean” manufacturing processes to their operations and formalizing plans
for plant consolidation in order to lower cost of sales as a percentage of
sales. These initiatives, as well as increased sales volumes,
are expected to help improve our cost of sales percentage over the next
two years.
|
(b)
|
In
connection with our acquisitions in 2008 and 2007, the value of inventory
on hand was stepped-up to reflect the fair value at the time of
acquisition. This stepped-up value is amortized to cost of
sales – excluding intangible amortization as the inventory to which the
adjustment relates is sold. The inventory step-up amortization
was $6.4 million and $1.3 million for the first nine months of 2008 and
2007, respectively and $1.1 million for the third quarter of
2007. No inventory step-up amortization was recorded in the
third quarter of 2008.
|
(c)
|
The
revenue increase from 2007, excluding acquisitions, was primarily from
higher feedthrough, assembly and commercial battery sales, which generally
have lower margins. Additionally, revenue from coated
components, which is generally a higher margin product, was lower due to a
customer recall issue.
|
(d)
|
This
decrease in cost of sales is primarily due to higher production of legacy
products (mainly feedthrough, assembly and commercial battery), which
absorb a higher amount of fixed costs such as plant overhead and
depreciation. The higher commercial battery production resulted
from the building of safety stock in anticipation of the move of the
Canton facility to the new Raynham
facility.
|
September
26, 2008
|
||||||||
Three
months
|
Nine
months
|
|||||||
ended
|
ended
|
|||||||
Impact
of 2008 and 2007 acquisitions
(a)
|
$ | 3,798 | $ | 14,687 | ||||
Amortization
(b)
|
513 | 2,468 | ||||||
Enpath
litigation fees
(c)
|
80 | 3,935 | ||||||
Other
|
(72 | ) | (535 | ) | ||||
Net
increase in SG&A
|
$ | 4,319 | $ | 20,555 |
(a)
|
We
completed seven acquisitions from the second quarter of 2007 to the first
quarter of 2008. Personnel working for the acquired companies
in functional areas such as Finance, Human Resources and Information
Technology were the primary drivers of this increase. The
remaining increase was for consulting, travel and other administrative
expenses to operate these areas. We are currently in the
process of consolidating our administrative operations in order to lower
SG&A costs. These initiatives are expected to be
implemented by the end of 2009 as we move to a shared services environment
and convert all systems to one ERP
system.
|
(b)
|
In
connection with our acquisitions in 2008 and 2007, the value of customer
relationships and non-compete agreements were recorded at fair value at
the time of acquisition. These intangible assets are amortized
to SG&A over their estimated useful
lives.
|
(c)
|
Amount
represents legal fees incurred in connection with the patent infringement
action filed by Pressure Products Medical Supplies, Inc. against Enpath in
2006 which continued to be defended during the current quarter – see
“Litigation.”
|
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
Research
and development costs
|
$ | 4,534 | $ | 4,493 | $ | 14,193 | $ | 12,035 | ||||||||
Engineering
costs
|
4,774 | 5,389 | 16,867 | 12,511 | ||||||||||||
Less
cost reimbursements
|
(2,515 | ) | (1,459 | ) | (7,338 | ) | (2,690 | ) | ||||||||
Engineering
costs, net
|
2,259 | 3,930 | 9,529 | 9,821 | ||||||||||||
Total
research and development and
|
||||||||||||||||
engineering
costs, net
|
$ | 6,793 | $ | 8,423 | $ | 23,722 | $ | 21,856 |
Three
months ended
|
Nine
months ended
|
|||||||||||||||
September
26,
|
September
28,
|
September
26,
|
September
28,
|
|||||||||||||
2008
|
2007
|
2008
|
2007
|
|||||||||||||
(a)
2005 facility shutdowns and consolidations
|
$ | 335 | $ | 1,040 | $ | 672 | $ | 4,289 | ||||||||
(a)
2007 & 2008 facility shutdowns and
consolidations
|
1,322 | 126 | 2,954 | 408 | ||||||||||||
(a)
Integration costs
|
1,812 | - | 3,876 | - | ||||||||||||
Asset
dispositions and other
|
96 | 109 | (28 | ) | 99 | |||||||||||
$ | 3,565 | $ | 1,275 | $ | 7,474 | $ | 4,796 |
(a)
|
Refer
to the “Cost Savings and Consolidation Efforts” discussion for disclosure
related to the timing and level of remaining expenditures for these items
as of September 26, 2008.
|
September
26,
|
December
28,
|
|||||||
(Dollars
in millions)
|
2008
|
2007
|
||||||
Cash
and cash equivalents and short-term investments
(a)(b)
|
$ | 20.0 | $ | 40.5 | ||||
Working
capital
(b)
|
$ | 129.3 | $ | 116.8 | ||||
Current
ratio (b)
|
2.5:1.0
|
2.8:1.0
|
(a)
|
Short-term
investments consist of investments acquired with maturities that exceed
three months and are less than one year at the time of
acquisition.
|
(b)
|
Cash
and cash equivalents and short-term investments decreased primarily due to
the cash used to acquire Precimed and the Chaumont Facility and capital
expenditures which were funded by $76.3 million of net cash received from
borrowings and $47.7 million of cash flow generated from
operations. Our working capital and current ratio remained
relatively consistent with year-end amounts. We expect cash
generated from operations to be sufficient to fund our consolidation and
integration initiatives, future capital expenditures and to make debt
service payments.
|
Payments
due by period
|
||||||||||||||||||||
Total
|
Remainder
of
2008
|
2009-2010
|
2011-2012
|
After
2012
|
||||||||||||||||
Long-term
debt obligations (a)
|
$ | 403,256 | $ | 2,534 | $ | 20,270 | $ | 127,639 | $ | 252,813 | ||||||||||
Operating
lease obligations
(b)
|
10,473 | 642 | 3,667 | 2,795 | 3,369 | |||||||||||||||
Purchase
obligations (b)
|
20,719 | 4,494 | 16,225 | - | - | |||||||||||||||
Pension
obligations
(c)
|
9,823 | 242 | 1,849 | 1,985 | 5,747 | |||||||||||||||
Total
|
$ | 444,271 | $ | 7,912 | $ | 42,011 | $ | 132,419 | $ | 261,929 |
(a)
|
Includes
the annual interest expense on the convertible debentures of 2.25%, or
$5.6 million, and on our variable-rate revolving line of credit of $4.5
million based upon the period end weighted average interest rate of
4.1%. These amounts assume the 2010 conversion feature is not
exercised on the $52.2 million of 2.25% convertible subordinated notes
issued in May 2003 and that the amount outstanding on our revolving line
of credit is not repaid until the expiration of the facility in May
2012. These amounts also do not include the impact of our $80
million notional interest rate swap entered into to hedge a portion of the
outstanding revolving line of credit. See Note 6 – “Long-Term Debt” of the
Notes to the Condensed Consolidated Financial Statements in this Form 10-Q
for additional information about our long-term debt
obligations.
|
(b)
|
See
Note 12 – “Commitments and Contingencies” of the Notes to the Condensed
Consolidated Financial Statements in this Form 10-Q for additional
information about our operating lease and purchase
obligations.
|
(c)
|
See
Note 7 – “Pension Plans” of the Notes to the Condensed Consolidated
Financial Statements in this Form 10-Q for additional information about
our pension plan obligations acquired in connection with the Precimed and
Chaumont Facility acquisitions. These amounts do not include
any potential future contributions to the pension plan that may be
necessary if the rate of return earned on the pension plan assets is not
sufficient to fund the rate of increase of our pension
liability. Future cash contributions may be
required.
|
|
•
|
future
sales, expenses and profitability;
|
|
•
|
the
future development and expected growth of our business and the markets we
operate in;
|
|
•
|
our
ability to successfully execute our business model and our business
strategy;
|
|
•
|
our
ability to identify trends within the implantable medical devices, medical
components, and commercial power sources markets and to offer products and
services that meet the changing needs of those
markets;
|
|
•
|
projected
capital expenditures; and
|
|
•
|
trends
in government regulation.
|
|
·
|
Enpath
Medical, Inc. (“Enpath”) on June 15,
2007
|
|
·
|
IntelliSensing,
LLC on October 26, 2007
|
|
·
|
Quan
Emerteq, LLC (“Quan”) on November 16,
2007
|
|
·
|
Engineered
Assemblies Corporation (“EAC”) on November 16,
2007
|
|
·
|
P
Medical Holding SA on January 7,
2008
|
|
·
|
DePuy
Orthopedics Chaumont, France manufacturing facility on February 11,
2008
|
Dated: November
4, 2008
|
GREATBATCH,
INC.
By /s/ Thomas J.
Hook
Thomas
J. Hook
President
and Chief Executive Officer
(Principal
Executive Officer)
|
By /s/ Thomas J.
Mazza
Thomas
J. Mazza
Senior
Vice President and Chief Financial Officer
(Principal
Financial Officer)
|
|
By /s/ Marco F.
Benedetti
Marco
F. Benedetti
Corporate
Controller
(Principal
Accounting Officer)
|
Exhibit
No.
|
Description
|
|
3.1
|
Amended
and Restated Certificate of Incorporation, as amended (incorporated by
reference to Exhibit 3.1 to our quarterly report on Form 10-Q for the
period ended June 27, 2008).
|
|
3.2
|
Amended
and Restated Bylaws (incorporated by reference to Exhibit 3.2 to our
quarterly report on Form 10-Q for the period ended March 29,
2002).
|
|
31.1*
|
Certification
of Chief Executive Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act.
|
|
31.2*
|
Certification
of Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities
Exchange Act.
|
|
32*
|
Certification
of Chief Executive Officer and Chief Financial Officer pursuant to 18
U.S.C. Section 1350 as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
|