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Greatbatch Confidential. Not for Distribution. 1
Historical Pro Forma Information2014 & 2015 Total Year
Four Quarters of 2015
First Quarter of 2016
Greatbatch Confidential. Not for Distribution. 2
Non-GAAP Financial MeasuresThe Company uses non-GAAP financial measures, including the measures provided in this presentation, to describe its operating results as well as the pro forma effect of the recent merger. Our management team believes that the presentation of these measures provides useful information to investors and that these measures may assist investors in evaluating the Company’s operations period over period. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.
Greatbatch Confidential. Not for Distribution. 3
Assumptions• The following slides present pro forma results as if the Greatbatch acquisition of
Lake Region Medical occurred at the beginning of Fiscal Year 2014.
• We have estimated the impact to depreciation, amortization, interest and taxes based on the preliminary purchase price allocation, which is subject to change, and could differ materially from the final purchase price allocation.
• Pro forma financial statements exclude the results of QiG Group (Nuvectra), which was spun-off on March 14, 2016.
• The 2014 pro forma financial statements were adjusted to include the full year impact of Accellent’s Lake Region Medical acquisition in March 2014.
• Pro forma net income and Adjusted EPS were computed using a 32.4% effective tax rate for Lake Region merger and related adjustments and 35% for financing and Nuvectra adjustments. These rates were computed by applying the statutory tax rates of the relevant jurisdictions to the estimated preliminary pro forma adjustments for those jurisdictions. These rates do not reflect our effective tax rate, which include other items and may be significantly different than the rates assumed for purposes of preparing the pro forma financial statements for a variety of factors.
Greatbatch Confidential. Not for Distribution. 4
Assumptions (con’t)• Pro forma financial statements have not been adjusted for expected synergies of
$25 million in year one and up to at least $60 million after three years.
• Pro forma interest expense was computed using a 5.7% weighted average interest rate.
• These pro forma financial statements will not agree to the 8-K/A pro forma financial statements filed by the Company in connection with the Lake Region Medical acquisition as those statements do not adjust for the spin-off of Nuvectra or the results of Lake Region Medical prior to being acquired in March 2014 by Accellent.
• During periods of net income, weighted average shares include the dilutive impact of outstanding equity awards for purposes of EPS calculations. During periods of net loss, weighted average shares do not include the dilutive impact of outstanding equity awards as they are antidilutive to the EPS calculations.
Greatbatch Confidential. Not for Distribution. 5
Product Mapping: Prior vs New ViewGreatbatch Medical Lake Region Medical New Greatbatch, Inc.
Advanced Surgical
Cardio and Vascular
Elimination of Intersegment Sales
Advanced Surgical, Orthopaedics, and
Portable Medical
Cardio and Vascular
Cardiac/Neuromodulation
Electrochem
Elimination of Intersegment Sales
Orthopaedic
Portable Medical
Vascular
Cardiac/Neuromodulation
Energy, Military, Environmental
QiG
Elimination of Intersegment Sales
Greatbatch Confidential. Not for Distribution. 6
Greatbatch Medical Revenue-Recast*
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments, which may or may not differ from the product line presentation shown above.
Segm ent FY 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 FY 2015 Q1 2016
Advanced Surgical, Orthopaedics,
and Portable Medical
$ 439,558 $ 105,7 7 3 $ 108,830 $ 98,7 63 $ 105,17 7 $ 418,543 $ 91 ,329
Cardio and Vascular 563,852 138,084 144,7 10 146,853 132,616 562,263 133,650
Cardiac/Neuromodulation 395,394 98,866 109,157 93,849 110,890 412,7 62 95,895
Electrochem 81 ,7 57 17 ,7 10 16,545 11 ,97 7 13,217 59,449 11 ,67 2
Elimination of intersegment sales (11 ,613) (2,566) (2,325) (3,022) (2,266) (10,17 9) (1 ,488)
T otal Net Sales $ 1 ,468,948 $ 357 ,867 $ 37 6,917 $ 348,420 $ 359,634 $ 1 ,442,838 $331,058
Greatbatch Confidential. Not for Distribution. 7
(in thousands, except per share data) YTD 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 YTD 2015 Q1 2016
Sales 1,468,948$ 357,867$ 376,917$ 348,420$ 359,634$ 1,442,838$ 331,058$
Cost of sales 1,090,580 259,660 270,470 250,073 282,377 1,062,580 240,244
Gross profit 378,368 98,207 106,447 98,347 77,257 380,258 90,814
Operating expenses:
Selling, general and administrative expenses 173,657 44,510 46,770 41,727 38,117 171,124 39,975
Research, development and engineering costs, net 43,119 11,751 11,390 12,883 10,145 46,169 14,476
Other operating expenses, net 59,965 11,834 13,190 19,152 40,528 84,704 20,036
Total operating expenses 276,741 68,095 71,350 73,762 88,790 301,997 74,487
Operating income 101,627 30,112 35,097 24,585 (11,533) 78,261 16,327
Interest expense 108,024 26,853 26,787 31,506 40,576 125,722 27,617
(Gain) loss on cost and equity method investments (4,370) (498) (42) (4,579) 1,769 (3,350) (1,301)
Loss on debt extinguishment 53,421 - - - - - -
Other (income) expense, net 62 (1,148) 340 3,541 16,839 19,572 (2,420)
Income (loss) before provision (benefit) for income taxes (55,510) 4,905 8,012 (5,883) (70,717) (63,683) (7,569)
Provision (benefit) for income taxes (33,448) 356 (713) (1,240) (23,228) (24,825) 1,716
Net Income (loss) (22,062)$ 4,549$ 8,725$ (4,643)$ (47,489)$ (38,858)$ (9,285)$
Earnings (loss) per share:
Basic (0.74)$ 0.15$ 0.29$ (0.15)$ (1.54)$ (1.27)$ (0.30)$
Diluted (0.74)$ 0.15$ 0.28$ (0.15)$ (1.54)$ (1.27)$ (0.30)$
Weighted average shares outstanding:
Basic 29,805 30,244 30,453 30,516 30,838 30,513 30,718
Diluted 29,805 31,259 31,353 30,516 30,838 30,513 30,718
Pro Forma Income Statement Summary by Period
Greatbatch Confidential. Not for Distribution. 8
Combined EBITDA, As AdjustedSummary by Period
YTD 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 YTD 2015 Q1 2016
Net income (loss) (22,062)$ 4,549$ 8,725$ (4,643)$ (47,489)$ (38,858)$ (9,285)$
Interest expense 108,024 26,853 26,787 31,506 40,576 125,722 27,617
Provision for income taxes (33,448) 356 (713) (1,240) (23,228) (24,825) 1,716
Depreciation and amortization 95,649 25,619 25,624 24,970 23,133 99,346 22,143
Reported EBITDA 148,163 57,377 60,423 50,593 (7,008) 161,385 42,191
Reconciling items impacting EBITDA
Inventory stepup amortization 29,523 - - - 22,986 22,986 -
IP related litigation 2,502 700 1,459 1,127 1,131 4,417 1,907
Stock-based compensation 14,542 2,632 4,719 3,774 441 11,566 1,875
Impairment of intangible assets and goodwill 26,800 - - - - - -
Consolidation and optimization 17,030 9,204 10,272 9,047 6,288 34,811 6,649
Acquisition and integration 11,665 1,832 1,802 6,805 32,060 42,499 9,965
Asset dispositions, severance and other 4,470 798 1,116 3,300 2,180 7,394 3,422
Loss on debt extinguishment 53,421 - - - 18,864 18,864 -
Noncash loss (gain) on cost and equity method investments (1,190) (498) (42) (1,178) 1,993 275 (639)
Miscellaneous Other Adjustment - - - - - - -
EBITDA, as adjusted 306,926$ 72,045$ 79,749$ 73,468$ 78,935$ 304,197$ 65,370$
Greatbatch Confidential. Not for Distribution. 9
Combined EPS, As AdjustedSummary by Period
Combined
Net Income
Per
Share (2)
Combined
Net Income
Per
Share (2)
Combined
Net Income
Per
Share (2)
Combined
Net Income
Per
Share (2)
Combined
Net Income
Per
Share (2)
Combined
Net Income
Per
Share (2)
Combined
Net Income
Per
Share (2)
Net income (loss) as reported (22,062)$ (0.71)$ 4,549$ 0.15$ 8,725$ 0.28$ (4,643)$ (0.15)$ (47,489)$ (1.49)$ (38,858)$ (1.23)$ (9,285)$ (0.30)$
Adjustments:
Inventory stepup amortization (COS) 19,977 0.64 - - - - - - 15,605 0.49 15,605 0.50 - -
IP related litigation 1,626 0.05 455 0.01 948 0.03 733 0.02 735 0.02 2,871 0.09 1,240 0.04
Amortization of intangibles 28,040 0.90 8,211 0.26 8,204 0.26 8,115 0.26 7,225 0.23 31,755 1.01 6,657 0.21
Impairment of intangible assets and goodwill 18,117 0.58 - - - - - - - - - - - -
Consolidation and optimization (OOE) 10,516 0.34 6,930 0.22 7,865 0.25 6,934 0.22 5,127 0.16 26,856 0.85 5,314 0.17
Acquisition and integration (OOE) 7,945 0.26 1,240 0.04 1,222 0.04 5,929 0.19 23,612 0.74 32,003 1.02 6,511 0.21
Asset dispositions, severance and other (OOE) 3,711 0.12 548 0.02 720 0.02 2,557 0.08 1,796 0.06 5,621 0.18 3,509 0.11
Lake Region Medical transaction costs (interest) - - - - - - 3,112 0.10 9,054 0.28 12,166 0.39 - -
R&D tax credit - - 430 0.01 430 0.01 430 0.01 (1,290) (0.04) - - - -
Loss on debt extinguishment 34,724 1.12 - - - - - - 12,262 0.39 12,262 0.39 - -
Loss (gain) on cost and equity method investments, net (2,841) (0.09) (324) (0.01) (27) - (2,976) (0.09) 1,150 0.04 (2,177) (0.07) (846) (0.03) -
Adjusted net income and dilutive EPS 99,753$ 3.22$ 22,039$ 0.71$ 28,087$ 0.90$ 20,191$ 0.64$ 27,787$ 0.87$ 98,104$ 3.11$ 13,100$ 0.42$
Adjusted diluted weighted average shares (1)
31,015 31,259 31,353 31,481 31,805 31,504 31,253
(2)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
Q1 2016
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes of Pro
Forma EPS calculation.
Q4 2015 YTD 2015YTD 2014 Q3 2015Q1 2015 Q2 2015
Greatbatch Confidential. Not for Distribution. 10
Pro Forma Revenue*FY 2014
Product LineGreatbatch,
Recast Lake Region
Medical, Recast Reclassification
Adjustment
Nuvectra Revenue Divested
Pro Forma Adjustments
Combined Pro Forma
Revenue
Advanced Surgical, Orthopaedics, and Portable Medical $216,339 $223,219 $ - $ - $ - $439,558
Cardio and Vascular 58,770 533,819 (68,169) - 39,432 563,852
Cardiac/Neuromodulation 330,921 - 68,169 (3,696) - 395,394
Electrochem 81,757 - - - - 81,757
Elimination of intersegment sales - (4,774) - - (6,839) (11,613)
Total Net Sales $687,787 $752,264 $ - $(3,696) $32,593 $1,468,948
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Greatbatch Confidential. Not for Distribution. 11
Pro Forma Revenue*Q1 2015
Product LineGreatbatch,
Recast Lake Region
Medical, Recast Reclassification
Adjustment
Nuvectra Revenue Divested
Pro Forma Adjustments
Combined Pro Forma
Revenue
Advanced Surgical, Orthopaedics, and Portable Medical $ 52,638 $ 53,135 $ - $ - $ - $ 105,773
Cardio and Vascular 10,356 146,528 (18,800) - - 138,084
Cardiac/Neuromodulation 80,616 - 18,800 (550) - 98,866
Electrochem 17,710 - - - - 17,710
Elimination of intersegment sales - (1,385) - - (1,181) (2,566)
Total Net Sales $ 161,320 $ 198,278 $ - $ (550) $ (1,181) $ 357,867
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Greatbatch Confidential. Not for Distribution. 12
Pro Forma Revenue*Q2 2015
Product LineGreatbatch,
Recast Lake Region
Medical, Recast Reclassification
Adjustment
Nuvectra Revenue Divested
Pro Forma Adjustments
Combined Pro Forma
Revenue
Advanced Surgical, Orthopaedics, and Portable Medical $53,181 $55,649 $ - $ - $ - $108,830
Cardio and Vascular 12,907 149,720 (17,917) - - 144,710
Cardiac/Neuromodulation 92,257 - 17,917 (1,017) - 109,157
Electrochem 16,545 - - - - 16,545
Elimination of intersegment sales - (1,077) - - (1,248) (2,325)
Total Net Sales $174,890 $204,292 $ - $(1,017) $(1,248) $376,917
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Greatbatch Confidential. Not for Distribution. 13
Pro Forma Revenue*Q3 2015
Product LineGreatbatch,
Recast Lake Region
Medical, Recast Reclassification
AdjustmentNuvectra Revenue
Divested Pro Forma
Adjustments
Combined Pro Forma
Revenue
Advanced Surgical, Orthopaedics, and Portable Medical $44,976 $53,787 $ - $ - $ - $98,763
Cardio and Vascular 14,107 152,159 (19,413) - - 146,853
Cardiac/Neuromodulation 75,577 - 19,413 (1,141) - 93,849
Electrochem 11,977 - - - - 11,977
Elimination of intersegment sales - (1,369) - - (1,653) (3,022)
Total Net Sales $146,637 $204,577 $ - $(1,141) $(1,653) $348,420
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Greatbatch Confidential. Not for Distribution. 14
Pro Forma Revenue*Q4 2015
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Product Line
Greatbatch,
Recast
Lake Region
Medical, Recast
October 2015 (1)
Reclassification
Adjustm ent
Nuvectra
Revenues
Divested
Pro Form a
Adjustm ents
Com bined Pro
Form a
Revenue
Advanced Surgical
Orthopaedics and Portable
Medical 92,590$ 12,587$ -$ -$ -$ 105,17 7$
Cardio and Vascular 105,890 31 ,051 (4,325) - - 132,616
Cardiac/Neuromodulation 107 ,614 - 4,325 (1 ,049) - 110,890
Electrochem 13,217 - - - - 13,217
Elimination of intersegment
sales (1 ,7 44) (280) - - (242) (2,266)
T otal Net Sales 317 ,567$ 43,358$ -$ (1,049)$ (242)$ 359,634$
1 The following amounts represent one month (October 2015) of Lake Region Medical historical statements prior to completion of the merger and consolidation
with Greatbatch, Inc. The remaining two months during the fourth quarter are included as part of Greatbatch's results within "Greatbatch Recast" column.
Greatbatch Confidential. Not for Distribution. 15
Pro Forma Revenue*FY 2015
*Product line sales have been recast to reflect the reclassification of Greatbatch, Inc. and Lake Region net sales from the historical product lines to the product line associated with those revenues that will be utilized for future revenue reporting. As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Product Line Greatbatch, Recast
Lake Region
Medical, Recast
Reclassification
Adjustm ent
Nuvectra
Revenues
Divested
Pro Form a
Adjustm ents
Com bined
Pro Form a
Revenue
Advanced Surgical
Orthopaedics and Portable
Medical 243,385$ 17 5,158$ -$ -$ -$ 418,543$
Cardio and Vascular 143,260 47 9,458 (60,455) - - 562,263
Cardiac/Neuromodulation 356,064 - 60,455 (3,7 57 ) - 412,7 62
Electrochem 59,449 - - - - 59,449
Elimination of intersegment
sales (1 ,7 44) (4,111) - - (4,324) (10,17 9)
T otal Net Sales 800,414$ 650,505$ -$ (3,7 57 )$ (4,324)$ 1,442,838$
Greatbatch Confidential. Not for Distribution. 16
Pro Forma Revenue*Q1 2016
*As a result of the Lake Region Medical acquisition and Spin-off of Nuvectra, we are reevaluating our operating and reporting segments which may or may not differ from the product line presentation shown above.
Product Line
Historical
Greatbatch
Nuvectra
Revenues Divested
Com bined Pro
Form a Revenue
Advanced Surgical
Orthopaedics and Portable
Medical 91,329$ -$ 91 ,329$
Cardio and Vascular 133,650 - 133,650
Cardiac/Neuromodulation 97 ,07 5 (1 ,180) 95,895
Electrochem 11,67 2 - 11 ,67 2
Elimination of intersegment
sales (1 ,488) - (1 ,488)
T otal Net Sales 332,238$ (1,180)$ 331,058$
Greatbatch Confidential. Not for Distribution. 17
(in thousands, except per share data)
Greatbatch, Inc.
Historical
Lake Region
Adjusted
Historical
LRM
Reclassifications (1)
Merger and
Related
Pro Forma
Adjustments (2)
Financing and
Related
Pro Forma
Adjustments (3)
Greatbatch, Inc.
Pro Forma
Combined
Nuvectra
Pro Forma
Adjustments (4)
Greatbatch, Inc.
Post Spin-Off
Pro Forma
Combined
A B C D E F=A+B+C+D+E G F+G
Sales 687,787$ 752,264$ -$ 32,593$ -$ 1,472,644$ (3,696)$ 1,468,948$
Cost of sales 456,389 573,616 (1,695) 64,039 - 1,092,349 (1,769) 1,090,580
Gross profit (loss) 231,398 178,648 1,695 (31,446) - 380,295 (1,927) 378,368
Operating expenses:
Selling, general and administrative expenses 90,602 82,676 (13,086) 20,169 - 180,361 (6,704) 173,657
Research, development and engineering costs, net 49,845 8,763 (4) 1,087 - 59,691 (16,572) 43,119
Other operating expenses, net 15,297 55,017 14,785 (25,039) - 60,060 (95) 59,965
Total operating expenses 155,744 146,456 1,695 (3,783) - 300,112 (23,371) 276,741
Operating income (loss) 75,654 32,192 - (27,663) - 80,183 21,444 101,627
Interest expense 4,252 63,096 - 56 40,620 108,024 - 108,024
Gain on cost and equity method investments (4,370) - - - - (4,370) - (4,370)
Loss on debt extinguishment - 53,421 - - - 53,421 - 53,421
Other (income) expense, net (807) 887 - (18) - 62 - 62
Income (loss) before provision (benefit) for income taxes 76,579 (85,212) - (27,701) (40,620) (76,954) 21,444 (55,510)
Provision (benefit) for income taxes 21,121 (38,882) - (8,975) (14,217) (40,953) 7,505 (33,448)
Net Income (loss) 55,458$ (46,330)$ -$ (18,726)$ (26,403)$ (36,001)$ 13,939$ (22,062)$
Earnings (loss) per share:
Basic 2.23$ (1.21)$ (0.74)$
Diluted 2.14$ (1.21)$ (0.74)$
Weighted average shares outstanding:
Basic 24,825 4,980 29,805 29,805
Diluted 25,975 4,980 29,805 29,805
1
2
3
4
Certain reclassifications have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation. These adjustments reclassify certain items from Cost
of Sales, SG&A, and R&D to Other Operating Expenses.
These adjustments reflect preliminary pro forma adjustments as a result of the acquisition of Lake Region Medical including preliminary step-ups to inventory, PP&E, and intangible assets
and elimination of intercompany sales between Lake Region and Greatbatch. Additionally, amounts include the pro forma impact of the former Lake Region Medical acquired by Accellent in
March 2014.
Pro Forma adjustments related to refinancing debt agreements as a result of the acquisition of Lake Region Medical.
In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG Group (Nuvectra).
Pro Forma Income Statement FY 2014
Greatbatch Confidential. Not for Distribution. 18
Pro Forma Income Statement Q1 2015
(in thousands, except per share data)
Greatbatch, Inc.
Historical
Lake Region
Adjusted
Historical
LRM
Reclassifications (1)
Merger and
Related
Pro Forma
Adjustments (2)
Financing and
Related
Pro Forma
Adjustments (3)
Greatbatch, Inc.
Pro Forma
Combined
Nuvectra
Pro Forma
Adjustments (4)
Greatbatch, Inc.
Post Spin-Off
Pro Forma
Combined
A B C D E F=A+B+C+D+E G F+G
Sales 161,320$ 198,278$ -$ (1,181)$ -$ 358,417$ (550)$ 357,867$
Cost of sales 108,922 149,165 (1,366) 3,321 - 260,042 (382) 259,660
Gross profit (loss) 52,398 49,113 1,366 (4,502) - 98,375 (168) 98,207
Operating expenses:
Selling, general and administrative expenses 22,609 20,473 (1,855) 5,501 - 46,728 (2,218) 44,510
Research, development and engineering costs, net 12,545 2,238 - 7 - 14,790 (3,039) 11,751
Other operating expenses, net 7,855 6,868 3,221 (5,686) - 12,258 (424) 11,834
Total operating expenses 43,009 29,579 1,366 (178) - 73,776 (5,681) 68,095
Operating income (loss) 9,389 19,534 - (4,324) - 24,599 5,513 30,112
Interest expense 1,120 14,721 - - 11,012 26,853 - 26,853
Gain on cost and equity method investments (498) - - - - (498) - (498)
Other (income) expense, net (1,053) (95) - - - (1,148) - (1,148)
Income (loss) before provision (benefit) for income taxes 9,820 4,908 - (4,324) (11,012) (608) 5,513 4,905
Provision (benefit) for income taxes 1,812 1,869 - (1,401) (3,854) (1,574) 1,930 356
Net Income (loss) 8,008$ 3,039$ -$ (2,923)$ (7,158)$ 966$ 3,583$ 4,549$
Earnings (loss) per share:
Basic 0.32$ 0.03$ 0.15$
Diluted 0.31$ 0.03$ 0.15$
Weighted average shares outstanding:
Basic 25,264 4,980 30,244 30,244
Diluted 26,219 5,040 31,259 31,259
1
2
3
4
Certain reclassifications have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation. These adjustments reclassify certain items from Cost
of Sales, SG&A, and R&D to Other Operating Expenses.
These adjustments reflect preliminary pro forma adjustments as a result of the acquisition of Lake Region Medical including preliminary step-ups to inventory, PP&E, and intangible assets
and elimination of intercompany sales between Lake Region and Greatbatch.
Pro Forma adjustments related to refinancing debt agreements as a result of the acquisition of Lake Region Medical.
In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG Group (Nuvectra).
Greatbatch Confidential. Not for Distribution. 19
Pro Forma Income Statement Q2 2015
(in thousands, except per share data)
Greatbatch, Inc.
Historical
Lake Region
Adjusted
Historical
LRM
Reclassifications (1)
Merger and
Related
Pro Forma
Adjustments (2)
Financing and
Related
Pro Forma
Adjustments (3)
Greatbatch, Inc.
Pro Forma
Combined
Nuvectra
Pro Forma
Adjustments (4)
Greatbatch, Inc.
Post Spin-Off
Pro Forma
Combined
A B C D E F=A+B+C+D+E G F+G
Sales 174,890$ 204,292$ -$ (1,248)$ -$ 377,934$ (1,017)$ 376,917$
Cost of sales 116,939 152,518 (1,736) 3,200 - 270,921 (451) 270,470
Gross profit (loss) 57,951 51,774 1,736 (4,448) - 107,013 (566) 106,447
Operating expenses:
Selling, general and administrative expenses 24,104 21,964 (2,734) 5,494 - 48,828 (2,058) 46,770
Research, development and engineering costs, net 13,063 3,045 (73) 7 - 16,042 (4,652) 11,390
Other operating expenses, net 7,750 6,317 4,543 (5,386) - 13,224 (34) 13,190
Total operating expenses 44,917 31,326 1,736 115 - 78,094 (6,744) 71,350
Operating income (loss) 13,034 20,448 - (4,563) - 28,919 6,178 35,097
Interest expense 1,206 14,943 - - 10,638 26,787 - 26,787
Gain on cost and equity method investments (42) - - - - (42) - (42)
Other (income) expense, net (65) 405 - - - 340 - 340
Income (loss) before provision (benefit) for income taxes 11,935 5,100 - (4,563) (10,638) 1,834 6,178 8,012
Provision (benefit) for income taxes 2,652 (326) - (1,478) (3,723) (2,875) 2,162 (713)
Net Income (loss) 9,283$ 5,426$ -$ (3,085)$ (6,915)$ 4,709$ 4,016$ 8,725$
Earnings (loss) per share:
Basic 0.36$ 0.15$ 0.29$
Diluted 0.35$ 0.15$ 0.28$
Weighted average shares outstanding:
Basic 25,473 4,980 30,453 30,453
Diluted 26,313 5,040 31,353 31,353
1
2
3
4
Certain reclassifications have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation. These adjustments reclassify certain items from Cost
of Sales, SG&A, and R&D to Other Operating Expenses.
These adjustments reflect preliminary pro forma adjustments as a result of the acquisition of Lake Region Medical including preliminary step-ups to inventory, PP&E, and intangible assets
and elimination of intercompany sales between Lake Region and Greatbatch.
Pro Forma adjustments related to refinancing debt agreements as a result of the acquisition of Lake Region Medical.
In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG Group (Nuvectra).
Greatbatch Confidential. Not for Distribution. 20
Pro Forma Income Statement Q3 2015
(in thousands, except per share data)
Greatbatch, Inc.
Historical
Lake Region
Adjusted
Historical
LRM
Reclassifications (1)
Merger and
Related
Pro Forma
Adjustments (2)
Financing and
Related
Pro Forma
Adjustments (3)
Greatbatch, Inc.
Pro Forma
Combined
Nuvectra
Pro Forma
Adjustments (4)
Greatbatch, Inc.
Post Spin-Off
Pro Forma
Combined
A B C D E F=A+B+C+D+E G F+G
Sales 146,637$ 204,577$ -$ (1,653)$ -$ 349,561$ (1,141)$ 348,420$
Cost of sales 94,991 154,757 (2,004) 2,737 - 250,481 (408) 250,073
Gross profit (loss) 51,646 49,820 2,004 (4,390) - 99,080 (733) 98,347
Operating expenses:
Selling, general and administrative expenses 22,308 19,709 (1,864) 5,488 - 45,641 (3,914) 41,727
Research, development and engineering costs, net 14,299 2,630 (1) 6 - 16,934 (4,051) 12,883
Other operating expenses, net 13,844 6,697 3,869 (5,456) - 18,954 198 19,152
Total operating expenses 50,451 29,036 2,004 38 - 81,529 (7,767) 73,762
Operating income (loss) 1,195 20,784 - (4,428) - 17,551 7,034 24,585
Interest expense 5,825 14,914 - - 10,767 31,506 - 31,506
Gain on cost and equity method investments (4,579) - - - - (4,579) - (4,579)
Other (income) expense, net (57) 3,598 - - - 3,541 - 3,541
Income (loss) before provision (benefit) for income taxes 6 2,272 - (4,428) (10,767) (12,917) 7,034 (5,883)
Provision (benefit) for income taxes (16) 1,518 - (1,435) (3,769) (3,702) 2,462 (1,240)
Net Income (loss) 22$ 754$ -$ (2,993)$ (6,998)$ (9,215)$ 4,572$ (4,643)$
Earnings (loss) per share:
Basic -$ (0.30)$ (0.15)$
Diluted -$ (0.30)$ (0.15)$
Weighted average shares outstanding:
Basic 25,536 4,980 30,516 30,516
Diluted 26,441 4,980 30,516 30,516
1
2
3
4
Certain reclassifications have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation. These adjustments reclassify certain items from Cost of
Sales, SG&A, and R&D to Other Operating Expenses.
These adjustments reflect preliminary pro forma adjustments as a result of the acquisition of Lake Region Medical including preliminary step-ups to inventory, PP&E, and intangible assets
and elimination of intercompany sales between Lake Region and Greatbatch.
Pro Forma adjustments related to refinancing debt agreements as a result of the acquisition of Lake Region Medical.
In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG Group (Nuvectra).
Greatbatch Confidential. Not for Distribution. 21
(in thousands, except per share data)
Greatbatch, Inc.
Historical
Lake Region
Adjusted Historical-
October 2015 (1)
LRM
Reclassifications (2)
Merger and
Related
Pro Forma
Adjustments (3)
Financing and
Related
Pro Forma
Adjustments (4)
Greatbatch, Inc.
Pro Forma
Combined
Nuvectra
Pro Forma
Adjustments (5)
Greatbatch, Inc.
Post Spin-Off
Pro Forma
Combined
A B C D E F=A+B+C+D+E G F+G
Sales 317,567$ 43,358$ -$ (242)$ -$ 360,683$ (1,049)$ 359,634$
Cost of sales 244,427 37,123 234 1,242 - 283,026 (649) 282,377
Gross profit (loss) 73,140 6,235 (234) (1,484) - 77,657 (400) 77,257
Operating expenses:
Selling, general and administrative expenses 33,509 5,133 (5) 1,831 - 40,468 (2,351) 38,117
Research, development and engineering costs, net 13,088 743 - 2 - 13,833 (3,688) 10,145
Other operating expenses, net 37,015 5,325 (229) (1,531) - 40,580 (52) 40,528
Total operating expenses 83,612 11,201 (234) 302 - 94,881 (6,091) 88,790
Operating income (loss) (10,472) (4,966) - (1,786) - (17,224) 5,691 (11,533)
Interest expense 25,362 13,429 - - 1,785 40,576 - 40,576
Loss on cost and equity method investments 1,769 - - - - 1,769 - 1,769
Other (income) expense, net (142) 16,981 - - - 16,839 - 16,839
Income (loss) before provision (benefit) for income taxes (37,461) (35,376) - (1,786) (1,785) (76,408) 5,691 (70,717)
Provision (benefit) for income taxes (12,554) (11,462) - (579) (625) (25,220) 1,992 (23,228)
Net Income (loss) (24,907)$ (23,914)$ -$ (1,207)$ (1,160)$ (51,188)$ 3,699$ (47,489)$
Earnings (loss) per share:
Basic (0.85)$ -$ -$ -$ -$ (1.66)$ -$ (1.54)$
Diluted (0.85)$ -$ -$ -$ -$ (1.66)$ -$ (1.54)$
Weighted average shares outstanding:
Basic 29,178 - - 1,660 - 30,838 - 30,838
Diluted 29,178 - - 1,660 - 30,838 - 30,838
1
2
3
4
5
Certain reclassifications have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation. These adjustments reclassify certain items
from Cost of Sales, SG&A, and R&D to Other Operating Expenses.
These adjustments reflect preliminary pro forma adjustments as a result of the acquisition of Lake Region Medical including preliminary step-ups to inventory, PP&E, and intangible
assets and elimination of intercompany sales between Lake Region and Greatbatch.
Pro Forma adjustments related to refinancing debt agreements as a result of the acquisition of Lake Region Medical.
In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG Group (Nuvectra).
The following amounts represent one month (October 2015) of Lake Region Medical historical statements prior to completion of the merger and consolidation with Greatbatch, Inc.
The remaining two months during the fourth quarter are included as part of Greatbatch's results within "Greatbatch, Inc Historcial" column.
Pro Forma Income Statement Q4 2015
Greatbatch Confidential. Not for Distribution. 22
Pro Forma Income Statement FY 2015
(in thousands, except per share data)
Greatbatch, Inc.
Historical
Lake Region
Adjusted
Historical
LRM
Reclassifications (1)
Merger and
Related
Pro Forma
Adjustments (2)
Financing and
Related
Pro Forma
Adjustments (3)
Greatbatch, Inc.
Pro Forma
Combined
Nuvectra
Pro Forma
Adjustments (4)
Greatbatch, Inc.
Post Spin-Off
Pro Forma
Combined
A B C D E F=A+B+C+D+E G F+G
Sales 800,414$ 650,505$ -$ (4,324)$ -$ 1,446,595$ (3,757)$ 1,442,838$
Cost of sales 565,279 493,563 (4,872) 10,500 - 1,064,470 (1,890) 1,062,580
Gross profit (loss) 235,135 156,942 4,872 (14,824) - 382,125 (1,867) 380,258
Operating expenses:
Selling, general and administrative expenses 102,530 67,279 (6,458) 18,314 - 181,665 (10,541) 171,124
Research, development and engineering costs, net 52,995 8,656 (74) 22 - 61,599 (15,430) 46,169
Other operating expenses, net 66,464 25,207 11,404 (18,059) - 85,016 (312) 84,704
Total operating expenses 221,989 101,142 4,872 277 - 328,280 (26,283) 301,997
Operating income (loss) 13,146 55,800 - (15,101) - 53,845 24,416 78,261
Interest expense 33,513 58,007 - - 34,202 125,722 - 125,722
Gain on cost and equity method investments (3,350) - - - - (3,350) - (3,350)
Other (income) expense, net (1,317) 20,889 - - - 19,572 - 19,572
Income (loss) before provision (benefit) for income taxes (15,700) (23,096) - (15,101) (34,202) (88,099) 24,416 (63,683)
Provision (benefit) for income taxes (8,106) (8,401) - (4,893) (11,971) (33,371) 8,546 (24,825)
Net Income (loss) (7,594)$ (14,695)$ -$ (10,208)$ (22,231)$ (54,728)$ 15,870$ (38,858)$
Earnings (loss) per share:
Basic (0.29)$ (1.79)$ (1.27)$
Diluted (0.29)$ (1.79)$ (1.27)$
Weighted average shares outstanding:
Basic 26,363 4,150 30,513 30,513
Diluted 26,363 4,150 30,513 30,513
1
2
3
4
Certain reclassifications have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation. These adjustments reclassify certain items from
Cost of Sales, SG&A, and R&D to Other Operating Expenses.
These adjustments reflect preliminary pro forma adjustments as a result of the acquisition of Lake Region Medical including preliminary step-ups to inventory, PP&E, and intangible
assets and elimination of intercompany sales between Lake Region and Greatbatch.
Pro Forma adjustments related to refinancing debt agreements as a result of the acquisition of Lake Region Medical.
In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG Group (Nuvectra).
Greatbatch Confidential. Not for Distribution. 23
(in thousands, except per share data)
Historical
Greatbatch
Nuvectra
Pro Forma
Adjustments (1)
Greatbatch, Inc. Post
Spin-Off
Pro Forma Combined
A B A+B
Sales 332,238$ (1,180)$ 331,058$
Cost of sales 240,770 (526) 240,244
Gross profit (loss) 91,468 (654) 90,814
Operating expenses:
Selling, general and administrative expenses 41,888 (1,913) 39,975
Research, development and engineering costs, net 17,306 (2,830) 14,476
Other operating expenses, net 21,140 (1,104) 20,036
Total operating expenses 80,334 (5,847) 74,487
Operating income (loss) 11,134 5,193 16,327
Interest expense 27,617 - 27,617
Gain on cost and equity method investments (1,301) - (1,301)
Other (income) expense, net (2,420) - (2,420)
Income (loss) before provision (benefit) for income taxes (12,762) 5,193 (7,569)
Provision (benefit) for income taxes (102) 1,818 1,716
Net Income (loss) (12,660)$ 3,375$ (9,285)$
Earnings (loss) per share:
Basic (0.41)$ (0.30)$
Diluted (0.41)$ (0.30)$
Weighted average shares outstanding:
Basic 30,718 30,718
Diluted 30,718 30,718
1 In presenting pro forma financial statements for all applicable periods, the Company excluded the balances associated with the spin-off of QiG
Group (Nuvectra) on March 14, 2016.
Pro Forma Income Statement Q1 2016
Greatbatch Confidential. Not for Distribution. 24
Combined EBITDA, As AdjustedFY 2014
Greatbatch, Inc.
Lake Region
Medical (1)
Pro Forma
Adjustment Nuvectra
Combined Pro
Forma
Net income (loss) 55,458$ (46,330)$ (45,129)$ 13,939$ (22,062)$
Interest expense 4,252 63,096 40,676 - 108,024
Provision for income taxes 21,121 (38,882) (23,192) 7,505 (33,448)
Depreciation and amortization 37,197 50,803 8,710 (1,061) 95,649
Reported EBITDA 118,028 28,687 (18,935) 20,383 148,163
Reconciling items impacting EBITDA
Inventory stepup amortization 260 6,263 23,000 - 29,523
IP related litigation 2,502 - - - 2,502
Stock-based compensation 12,893 1,649 - - 14,542
Impairment of intangible assets and goodwill - 26,800 - - 26,800
Consolidation and optimization 11,188 5,842 - - 17,030
Acquisition and integration 3 11,662 - 11,665
Asset dispositions, severance and other 4,106 459 - (95) 4,470
Loss on debt extinguishment - 53,421 - - 53,421
Noncash loss (gain) on cost and equity method
investments (1,190) - - - (1,190)
EBITDA, as adjusted 147,790$ 134,783$ 4,065$ 20,288$ 306,926$
1 Certain adjustments have been made to Lake Region Medical's historical statements to conform to
Greatbatch, Inc's presentation. These adjustments exclude certain items from adjusted EBITDA to conform
to Greatbatch, Inc's methodology.
Greatbatch Confidential. Not for Distribution. 25
Combined EBITDA, As AdjustedQ1 2015
Greatbatch, Inc.
Lake Region
Medical (1)
Pro Forma
Adjustment Nuvectra
Combined Pro
Forma
Net income (loss) 8,008$ 3,039$ (10,081)$ 3,583$ 4,549$
Interest expense 1,120 14,721 11,012 - 26,853
Provision for income taxes 1,812 1,869 (5,255) 1,930 356
Depreciation and amortization 9,178 12,270 4,324 (153) 25,619
Reported EBITDA 20,118 31,899 (0) 5,360 57,377
Reconciling items impacting EBITDA
Inventory stepup amortization - - - - -
IP related litigation 700 - - - 700
Stock-based compensation 2,253 379 - - 2,632
Impairment of intangible assets and goodwill - - - - -
Consolidation and optimization 7,160 2,468 - (424) 9,204
Acquisition and integration 66 1,766 - - 1,832
Asset dispositions, severance and other 629 169 - - 798
Loss on debt extinguishment - - - - -
Noncash loss (gain) on cost and equity method
investments (498) - - - (498)
EBITDA, as adjusted 30,428$ 36,681$ (0)$ 4,936$ 72,045$
1 Certain adjustments have been made to Lake Region Medical's historical statements to conform to
Greatbatch, Inc's presentation. These adjustments exclude certain items from adjusted EBITDA to conform to
Greatbatch, Inc's methodology.
Greatbatch Confidential. Not for Distribution. 26
Combined EBITDA, As AdjustedQ2 2015
Greatbatch, Inc.
Lake Region
Medical (1)
Pro Forma
Adjustment Nuvectra
Combined Pro
Forma
Net income (loss) 9,283$ 5,426$ (10,000)$ 4,016$ 8,725$
Interest expense 1,206 14,943 10,638 - 26,787
Provision for income taxes 2,652 (326) (5,201) 2,162 (713)
Depreciation and amortization 9,016 12,190 4,563 (145) 25,624
Reported EBITDA 22,157 32,233 0 6,033 60,423
Reconciling items impacting EBITDA
Inventory stepup amortization - - - - -
IP related litigation 1,459 - - - 1,459
Stock-based compensation 3,719 1,000 - - 4,719
Impairment of intangible assets and goodwill - - - - -
Consolidation and optimization 6,569 3,737 - (34) 10,272
Acquisition and integration 98 1,704 - - 1,802
Asset dispositions, severance and other 1,083 33 - - 1,116
Loss on debt extinguishment - - - -
Noncash loss (gain) on cost and equity method
investments (42) - - - (42)
EBITDA, as adjusted 35,043$ 38,707$ 0$ 5,999$ 79,749$
1 Certain adjustments have been made to Lake Region Medical's historical statements to conform to
Greatbatch, Inc's presentation. These adjustments exclude certain items from adjusted EBITDA to conform
to Greatbatch, Inc's methodology.
Greatbatch Confidential. Not for Distribution. 27
Combined EBITDA, As AdjustedQ3 2015
Greatbatch, Inc.
Lake Region
Medical (1)
Pro Forma
Adjustment Nuvectra
Combined Pro
Forma
Net income (loss) 22$ 754$ (9,991)$ 4,572$ (4,643)$
Interest expense 5,825 14,914 10,767 - 31,506
Provision for income taxes (16) 1,518 (5,204) 2,462 (1,240)
Depreciation and amortization 8,747 11,934 4,428 (139) 24,970
Reported EBITDA 14,578 29,120 (0) 6,895 50,593
Reconciling items impacting EBITDA
Inventory stepup amortization - - - - -
IP related litigation 1,127 - - - 1,127
Stock-based compensation 3,027 747 - - 3,774
Impairment of intangible assets and goodwill - - - - -
Consolidation and optimization 5,473 3,376 - 198 9,047
Acquisition and integration 5,202 1,603 - - 6,805
Asset dispositions, severance and other 3,169 131 - - 3,300
Loss on debt extinguishment - - - - -
Noncash loss (gain) on cost and equity method
investments (1,178) - - - (1,178)
EBITDA, as adjusted 31,398$ 34,977$ (0)$ 7,093$ 73,468$
1 Certain adjustments have been made to Lake Region Medical's historical statements to conform to
Greatbatch, Inc's presentation. These adjustments exclude certain items from adjusted EBITDA to
conform to Greatbatch, Inc's methodology.
Greatbatch Confidential. Not for Distribution. 28
Combined EBITDA, As AdjustedQ4 2015
Greatbatch, Inc.
Lake Region Medical
October 2015 (1)
Pro Forma
Adjustment Nuvectra Combined Pro Forma
Net income (loss) (24,907)$ (23,914)$ (2,367)$ 3,699$ (47,489)$
Interest expense 25,362 13,429 1,785 - 40,576
Provision for income taxes (12,554) (11,462) (1,204) 1,992 (23,228)
Depreciation and amortization 17,691 3,806 1,786 (150) 23,133
Reported EBITDA 5,592 (18,141) - 5,541 (7,008)
Reconciling items impacting EBITDA
Inventory stepup amortization 22,986 - - - 22,986
IP related litigation 1,131 - - - 1,131
Stock-based compensation 288 153 - - 441
Impairment of intangible assets and goodwill - - - - -
Consolidation and optimization 7,191 (851) - (52) 6,288
Acquisition and integration 28,083 3,977 - - 32,060
Asset dispositions, severance and other 1,741 439 - - 2,180
Loss on debt extinguishment - 18,864 - - 18,864
Noncash loss (gain) on cost and equity method
investments 1,993 - - - 1,993
EBITDA, as adjusted 69,005$ 4,441$ -$ 5,489$ 78,935$
1 Certain adjustments have been made to Lake Region Medical's historical statements to conform to Greatbatch, Inc's presentation.
These adjustments exclude certain items from adjusted EBITDA to conform to Greatbatch, Inc's methodology. The following
amounts represent one month (October 2015) of Lake Region Medical historical statements prior to completion of the merger and
consolidation with Greatbatch, Inc. The remaining two months during the fourth quarter are included as part of Greatbatch's
results within "Greatbatch, Inc." column.
Greatbatch Confidential. Not for Distribution. 29
Combined EBITDA, As AdjustedFY 2015
Greatbatch, Inc.
Lake Region
Medical (1)
Pro Forma
Adjustment Nuvectra
Combined Pro
Forma
Net income (loss) (7,594)$ (14,695)$ (32,439)$ 15,870$ (38,858)$
Interest expense 33,513 58,007 34,202 - 125,722
Provision for income taxes (8,106) (8,401) (16,864) 8,546 (24,825)
Depreciation and amortization 44,632 40,200 15,101 (587) 99,346
Reported EBITDA 62,445 75,111 - 23,829 161,385
Reconciling items impacting EBITDA
Inventory stepup amortization 22,986 - - - 22,986
IP related litigation 4,417 - - - 4,417
Stock-based compensation 9,287 2,279 - - 11,566
Impairment of intangible assets and goodwill - - - - -
Consolidation and optimization 26,393 8,730 - (312) 34,811
Acquisition and integration 33,449 9,050 - - 42,499
Asset dispositions, severance and other 6,622 772 - - 7,394
Loss on debt extinguishment - 18,864 - - 18,864
Noncash loss (gain) on cost and equity method
investments 275 - - - 275
EBITDA, as adjusted 165,874$ 114,806$ -$ 23,517$ 304,197$
1 Certain adjustments have been made to Lake Region Medical's historical statements to conform to
Greatbatch, Inc's presentation. These adjustments exclude certain items from adjusted EBITDA to conform to
Greatbatch, Inc's methodology.
Greatbatch Confidential. Not for Distribution. 30
Combined EBITDA, As AdjustedQ1 2016
Greatbatch, Inc. Nuvectra
Combined Pro
Forma
Net income (loss) (12,660)$ 3,375$ (9,285)$
Interest expense 27,617 - 27,617
Provision for income taxes (102) 1,818 1,716
Depreciation and amortization 22,413 (270) 22,143
Reported EBITDA 37,268 4,923 42,191
Reconciling items impacting EBITDA
IP related litigation 1,907 - 1,907
Stock-based compensation 2,029 (154) 1,875
Impairment of intangible assets and goodwill - - -
Consolidation and optimization 6,649 - 6,649
Acquisition and integration 9,965 - 9,965
Asset dispositions, severance and other 4,526 (1,104) 3,422
Loss on debt extinguishment - - -
Noncash loss (gain) on cost and equity method
investments (639) - (639)
EBITDA, as adjusted 61,705$ 3,665$ 65,370$
Greatbatch Confidential. Not for Distribution. 31
Combined EPS, As AdjustedFY 2014
Greatbatch,
Inc.
Lake Region
Medical
Pro Forma
Adjustment Nuvectra
Combined Net
Income Per Share (2)
Net income as reported 55,458$ (46,330)$ (45,129)$ 13,939$ (22,062)$ (0.71)$
Adjustments:
Inventory stepup amortization (COS) 195 4,234 15,548 - 19,977 0.64
IP related litigation 1,626 - - - 1,626 0.05
Amortization of intangibles 9,637 16,926 1,477 - 28,040 0.90
Impairment of intangible assets and goodwill - 18,117 - - 18,117 0.58
Consolidation and optimization (OOE) 6,567 3,949 - - 10,516 0.34
Acquisition and integration (OOE) 61 7,884 - - 7,945 0.26
Asset dispositions, severance and other (OOE) 3,463 310 - (62) 3,711 0.12
Loss on debt extinguishment - 34,724 - - 34,724 1.12
Loss (gain) on cost and equity method investments, net (2,841) - - - (2,841) (0.09)
Adjusted net income and dilutive EPS 74,166$ 39,814$ (28,104)$ 13,877$ 99,753$ 3.22$
Adjusted diluted weighted average shares (1)
25,975 5,040 31,015
(2)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes of
Pro Forma EPS calculation.
Greatbatch Confidential. Not for Distribution. 32
Combined EPS, As AdjustedQ1 2015
Greatbatch,
Inc.
Lake Region
Medical
Pro Forma
Adjustment Nuvectra
Combined Net
Income Per Share (2)
Net income as reported 8,008$ 3,039$ (10,081)$ 3,583$ 4,549$ 0.15$
Adjustments:
IP related litigation 455 - - - 455 0.01
Amortization of intangibles 2,366 3,844 2,001 - 8,211 0.26
Consolidation and optimization (OOE) 5,538 1,668 - (276) 6,930 0.22
Acquisition and integration (OOE) 46 1,194 - - 1,240 0.04
Asset dispositions, severance and other (OOE) 434 114 - - 548 0.02
R&D tax credit 400 30 - - 430 0.01
Loss (gain) on cost and equity method investments, net (324) - - - (324) (0.01)
Adjusted net income and dilutive EPS 16,923$ 9,889$ (8,080)$ 3,307$ 22,039$ 0.71$
Adjusted diluted weighted average shares (1)
26,219 5,040 31,259
(2)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes of
Pro Forma EPS calculation.
Greatbatch Confidential. Not for Distribution. 33
Combined EPS, As AdjustedQ2 2015
Greatbatch,
Inc
Lake Region
Medical
Pro Forma
Adjustment Nuvectra
Combined Net
Income Per Share (2)
Net income as reported 9,283$ 5,426$ (10,000)$ 4,016$ 8,725$ 0.28$
Adjustments:
IP related litigation 948 - - - 948 0.03
Amortization of intangibles 2,359 3,641 2,204 - 8,204 0.26
Consolidation and optimization (OOE) 5,361 2,526 - (22) 7,865 0.25
Acquisition and integration (OOE) 70 1,152 - - 1,222 0.04
Asset dispositions, severance and other (OOE) 698 22 - - 720 0.02
R&D tax credit 400 30 - - 430 0.01
Loss (gain) on cost and equity method investments, net (27) - - - (27) -
Adjusted net income and dilutive EPS 19,092$ 12,797$ (7,796)$ 3,994$ 28,087$ 0.90$
Adjusted diluted weighted average shares (1)
26,313 5,040 31,353
(2)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes of Pro
Forma EPS calculation.
Greatbatch Confidential. Not for Distribution. 34
Combined EPS, As AdjustedQ3 2015
Greatbatch,
Inc.
Lake Region
Medical
Pro Forma
Adjustment Nuvectra
Combined Net
Income Per Share (2)
Net income as reported 22$ 754$ (9,991)$ 4,572$ (4,643)$ (0.15)$
Adjustments:
IP related litigation 733 - - - 733 0.02
Amortization of intangibles 2,271 3,688 2,156 - 8,115 0.26
Consolidation and optimization (OOE) 4,523 2,282 - 129 6,934 0.22
Acquisition and integration (OOE) 4,845 1,084 - - 5,929 0.19
Asset dispositions, severance and other (OOE) 2,468 89 - - 2,557 0.08
Lake Region Medical transaction costs (interest) 3,112 - - - 3,112 0.10
R&D tax credit 400 30 - - 430 0.01
Loss (gain) on cost and equity method investments, net (2,976) - - - (2,976) (0.09)
Adjusted net income and dilutive EPS 15,398$ 7,927$ (7,835)$ 4,701$ 20,191$ 0.64$
Adjusted diluted weighted average shares (1)
26,441 5,040 31,481
(2)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes
of Pro Forma EPS calculation.
Greatbatch Confidential. Not for Distribution. 35
Combined EPS, As AdjustedQ4 2015
Greatbatch,
Inc.
Lake Region
Medical October
2015 (1)
Pro Forma
Adjustment Nuvectra
Combined Net
Income Per Share (3)
Net income as reported (24,907)$ (23,914)$ (2,367)$ 3,699$ (47,489)$ (1.49)$
Adjustments:
IP related litigation 735 - - - 735 0.02
Inventory step-up amortization 15,605 - - - 15,605 0.49
Amortization of intangibles 5,277 1,035 913 - 7,225 0.23
Consolidation and optimization (OOE) 5,736 (575) - (34) 5,127 0.16
Acquisition and integration (OOE) 20,924 2,688 - - 23,612 0.74
Asset dispositions, severance and other (OOE) 1,499 297 - - 1,796 0.06
Lake Region Medical transaction costs (interest) 3,039 6,015 - - 9,054 0.28
R&D tax credit (1,200) (90) - - (1,290) (0.04)
Loss (gain) on cost and equity method investments, net 1,150 - - - 1,150 0.04
Loss on debt extinguishment - 12,262 - - 12,262 0.39
Adjusted net income and dilutive EPS 27,858$ (2,282)$ (1,454)$ 3,665$ 27,787$ 0.87$
Adjusted diluted weighted average shares (2) 30,125 1,680 31,805
(3)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
(2)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes of
Pro Forma EPS calculation.
(1)The following amounts represent one month (October 2015) of Lake Region Medical historical statements prior to completion of the merger
and consolidation with Greatbatch, Inc. The remaining two months during the fourth quarter are included as part of Greatbatch's results within
"Greatbatch, Inc." column.
Greatbatch Confidential. Not for Distribution. 36
Combined EPS, As AdjustedFY 2015
Greatbatch,
Inc.
Lake Region
Medical
Pro Forma
Adjustment Nuvectra
Combined Net
Income Per Share (2)
Net income as reported (7,594)$ (14,695)$ (32,439)$ 15,870$ (38,858)$ (1.23)$
Adjustments:
IP related litigation 2,871 - - - 2,871 0.09
Inventory step-up amortization 15,605 - - - 15,605 0.50
Amortization of intangibles 12,273 12,208 7,274 - 31,755 1.01
Consolidation and optimization (OOE) 21,158 5,901 - (203) 26,856 0.85
Acquisition and integration (OOE) 25,885 6,118 - - 32,003 1.02
Asset dispositions, severance and other (OOE) 5,099 522 - - 5,621 0.18
Lake Region Medical transaction costs (interest) 6,151 6,015 - - 12,166 0.39
R&D tax credit - - - - - -
Loss (gain) on cost and equity method investments, net (2,177) - - - (2,177) (0.07)
Loss on debt extinguishment - 12,262 - - 12,262 0.39
Adjusted net income and dilutive EPS 79,271$ 28,331$ (25,165)$ 15,667$ 98,104$ 3.11$
Adjusted diluted weighted average shares (1)
27,304 4,200 31,504
(2)The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes dilutive impact for purposes of
Pro Forma EPS calculation.
Greatbatch Confidential. Not for Distribution. 37
Combined EPS, As AdjustedQ1 2016
Historical
Greatbatch Nuvectra
Combined Net
Income Per Share (2)
Net income as reported (12,660)$ 3,375$ (9,285)$ (0.30)$
Adjustments:
IP related litigation 1,240 - 1,240 0.04
Inventory step-up amortization - - - -
Amortization of intangibles 6,691 (34) 6,657 0.21
Consolidation and optimization (OOE) 5,314 5,314 0.17
Acquisition and integration (OOE) 6,511 - 6,511 0.21
Asset dispositions, severance and other (OOE) 4,226 (717) 3,509 0.11
Lake Region Medical transaction costs (interest) - - - -
R&D tax credit - - - -
Loss (gain) on cost and equity method investments, net (846) - (846) (0.03)
Loss on debt extinguishment - - - -
Adjusted net income and dilutive EPS 10,476$ 2,624$ 13,100$ 0.42$
Adjusted diluted weighted average shares (1) 31,253 31,253
(1)During periods of Net Income (as adjusted for the above reconciling items), weighted average shares includes
dilutive impact for purposes of Pro Forma EPS calculation.(2)
The per share data in this table has been rounded to the nearest $0.01 and therefore may not sum to the total.