Greatbatch, Inc. Reaffirms 2012 Guidance, Announces Preliminary 2012 Sales, and Provides 2013 Guidance

  Greatbatch, Inc. Reaffirms 2012 Guidance, Announces Preliminary 2012 Sales,
  and Provides 2013 Guidance

  Completion of consolidation initiatives, reduced R&D expenses, and organic
                      growth fuels 2013 earnings growth

JPMorgan Healthcare Conference 2013

Business Wire

FRISCO, Texas -- January 8, 2013

Greatbatch, Inc. (NYSE: GB), today announced preliminary sales results for its
fiscal year ended December 28, 2012, and provided fiscal 2013 guidance. The
2013 guidance will be referenced in a presentation by Thomas J. Hook, Chief
Executive Officer and President of Greatbatch Inc., on Thursday January 10,
2013, at the 31st Annual J.P. Morgan Healthcare Conference in San Francisco.
The company will be discussing its strategy for long term growth and
profitability.

  *Preliminary revenue for 2012 increased approximately 13.5% over the prior
    year to $645 million driven primarily by the acquisition of MicroPower, a
    provider of portable medical solutions, in December 2011.
  *Preliminary 2012 Adjusted Operating Margin and Adjusted Diluted EPS are in
    line with previously discussed guidance of the lower-end of 11.5% to 12.5%
    and $1.75 to $1.85 ranges, respectively, as a result of expense management
    during the year and a decrease in estimated incentive compensation payout.
  *Fiscal 2013 sales are expected to increase in the range of 2% to 5%
    primarily driven by growth in the Portable Medical and Vascular product
    lines. Organic growth is expected to be in the range of 5% to 8% for 2013,
    after adjusting for the disposition of certain Orthopaedic products as
    previously announced.

  *Adjusted Operating Margin in 2013 is targeted to be 12.0% to 12.5%.
  *Adjusted Diluted EPS growth in 2013 is expected to be in the range of 7%
    to 13%.

CEO Comments

Commenting on 2012’s preliminary results, Thomas J. Hook said, “Growth rates
in portable medical and cardiac rhythm management exceeded our revenue
guidance in 2012 and vascular revenue growth was at the high-end of our
guidance expectations. Along with firm expense management and incentive
compensation adjustments, we were able to offset the negative impact of our
Orthopaedic operations on earnings.” Hook continued,

“We are confident about our outlook for fiscal 2013, our performance this year
will be predominantly driven by three factors:

  *5-8% organic growth driven by Portable Medical, Vascular and Orthopaedic
    (adjusted for product dispositions) along with above market growth in
    Cardiac and Neuromodulation
  *The benefits of our consolidation and integration effort in our
    Orthopaedic operations; and
  *Reduction in research and development expenses as our Algostim project
    nears PMA submission.”

“We look forward to providing greater detail during our earnings call on
February 25, 2013, and at our Investor Day meeting on March 18, 2013.”

Financial Guidance

For 2013, Greatbatch estimates annual revenue growth rates for its product
lines are as follows:

                       Preliminary                        
                              2012
                                                        Estimated               2013
                              Revenue                   2013                    Estimated
                                                        Annual                  Revenue
Product Line           (millions)         Growth           (millions)
                                                        Rate (%)
Cardiac &                     $308                      0% - 2%                 $308 -
Neuromodulation                                                                 $314
Vascular                      $53                       7% - 13%                $56 - $60
Orthopaedic                   $119                      (5%) - 0%               $113 -
                                                                                $119
Portable                      $80                       15% - 20%               $92 - $96
Medical
Energy & Other         $85                7%               $91 - $91
Total Sales            $645               2% - 5%          $660 -
                                                                                $680
                                                                                

Adjusted Operating Income as a % of Sales                 12.0% - 12.5%
                                                                 
Annual Medical Device Tax impact approximately                  $1.5M - $2.5M
                                                                 
Adjusted Effective Tax Rate (includes only the
2013 benefit of
the recently reenacted R&D Tax Credit)                          33% to 35%
                                                                 
Adjusted Diluted EPS                                            $1.90 - $2.00
                                                                 

Adjusted operating income for 2013 is expected to consist of GAAP operating
income minus non-recurring, unusual or infrequently occurring items such as
acquisition, consolidation and integration charges, certain RD&E expenditures
and asset disposition/write-down charges, totaling approximately $11.5 million
to $14.0 million. This range has been significantly reduced from the prior
year as we have essentially completed our productivity and consolidation
initiatives. Included in the above range are residual design verification
testing (“DVT”) costs in the range of $4.8 to $5.8 million to complete the
Algostim project. We have included a table below showing the estimated Other
Operating Expenses (“OOE”) for 2012 compared to 2013.

                                                   
                                       2012 Current               2013
                                       Forecast                   Forecast
Description                     (millions)          (millions)
Consolidation Projects -               $5.0 - $5.4                $1.6 - $1.8
Other
Consolidation Projects -               $25.0 -                    $4.2 - $5.2
Swiss Closure                          $26.0
Oracle
Upgrade/Integration                    $5.0 - $5.5                $0.7 - $0.8
Costs
Electrochem –                          $1.1 - $1.8                $0.2 - $0.4
Acquisition/Sensors
Other                           $1.7 - $2.0         -
Total Forecasted OOE            $37.8 -             $6.7 - $8.2
2012-2013                              $40.7
DVT Builds                      $5.2 - $5.3         $4.8 - $5.8
Total Add Backs to              $43.0 -             $11.5 -
Operating Income                       $46.0                      $14.0
                                                                  

About Greatbatch, Inc.

Greatbatch, Inc. (NYSE: GB) provides top-quality technologies to industries
that depend on reliable, long-lasting performance through its brands
Greatbatch Medical, Electrochem and QiG Group. Greatbatch Medical develops and
manufactures critical medical device technologies for the cardiac, neurology,
vascular and orthopaedic markets. Electrochem designs and manufactures
batteries for high-end niche applications in the portable medical, energy,
military, and other markets. The QiG Group empowers the design and development
of new medical devices for our core markets. Additional information about the
Company is available at www.greatbatch.com.

Use of Non-GAAP Financial Information

In addition to our results reported in accordance with generally accepted
accounting principles (“GAAP”), we provide adjusted operating income and
margin, adjusted net income and adjusted earnings per diluted share. These
adjusted amounts consist of GAAP amounts excluding the following adjustments
to the extent occurring during the period: (i) acquisition-related charges,
(ii) facility consolidation, optimization, manufacturing transfer and system
integration charges, (iii) asset write-down and disposition charges, (iv)
severance charges in connection with corporate realignments or a reduction in
force (v) litigation charges and gains, (vi) the impact of non-cash charges to
interest expense due to the accounting change for convertible debt,(vii)
unusual or infrequently occurring items, (viii) certain R&D expenditures (such
as medical device DVT expenses in connection with developing our
Neuromodulation platform), (ix) gain/loss on the sale of investments, (x) the
income tax (benefit) related to these adjustments and (xi) Certain tax charges
related to the consolidation of our Swiss Orthopaedic facility. Adjusted
earnings per diluted share were calculated by dividing adjusted net income for
diluted earnings per share by diluted weighted average shares outstanding. We
believe that the presentation of adjusted operating income and margin,
adjusted net income and adjusted diluted earnings per share provides important
supplemental information to management and investors seeking to understand the
financial and business trends relating to our financial condition and results
of operations.

Forward-Looking Statements

Some of the statements in this press release, including the information
provided under the caption “Financial Guidance,” 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: our dependence upon a limited number
of customers; customer ordering patterns; product obsolescence; our inability
to market current or future products; pricing/vertical integration pressure
from customers; our ability to timely and successfully implement our cost
reduction and plant consolidation initiatives (including the consolidation of
our Swiss Orthopaedic operations); our reliance on third party suppliers for
raw materials, products and subcomponents; our inability to maintain high
quality standards for our products; challenges to our intellectual property
rights; product liability claims; our inability to successfully consummate and
integrate acquisitions and to realize synergies; our unsuccessful expansion
into new markets; our ability to realize a return on our substantial RD&E
investments, including system and device products; our inability to obtain
licenses to key technology; regulatory changes or consolidation in the
healthcare industry; global economic factors including currency exchange rates
and interest rates; the resolution of various legal actions and other risks
and uncertainties described in the Company’s Annual Report on Form 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.

Contact:

Greatbatch, Inc.
Marco Benedetti, 716-759-5856
Vice President Financial Planning and Analysis, Investor Relations & Treasurer
mbenedetti@greatbatch.com
 
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