Integer Holdings Corp (ITGR) 2007 Q2 法說會逐字稿

Welcome, everyone, to the second quarter Greatbatch, Inc., earnings conference call. Before we begin, I would like to read the Safe Harbor Statement. This presentation and our press release contains forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995 and involves a number of risks and uncertainties. These risks and uncertainties are described in the Company's annual report and form 10-K. The statements are based upon Greatbatch Incorporated's current expectations and actual results could differ materially from those stated or implied. The Company assumes no obligations to update forward-looking information included in this conference call to reflect changed assumptions, the occurrence of unanticipated events or changes in future operating results, financial conditions or prospects.

I would now like to turn the call over to today's host, Treasurer and Director of Investor Relations, Mr. Tony Borowicz. Please, proceed, sir.

All right, thank you, [Michelle]. And, thank you all and welcome to the second quarter Greatbatch earnings conference call. On the call today are Thomas Hook, President and Chief Executive Officer. Tom Mazza, Senior Vice President and Chief Financial Officer, and also joining us today is Susan Campbell, our Senior Vice President of Medical Power Group.

In terms of today's agenda, Tom hook will discuss the sales highlights and provide summary comments on the Enpath acquisition. Also update you on our midyear strategic imperative review. Next, Susan will discuss the signing of the agreement with Boston Scientific, and Tom Mazza will provide an overview of the second quarter results and also help decipher for you our 2007 guidance. As we've done in the past, we are including slide visuals that go along with this presentation which you can access on our web site. All of the numbers we're referencing in our prepared remarks can be reviewed on the slides that are accompanying the call today.

With that, now let me turn the call over to Tom Hook.

Thank you, Tony, good morning. I'm pleased to report that we achieved record sales for the second consecutive quarter of $78.5 million an 11% increase over last year. Adjusted earnings per share of $0.57 represents an increase of 90% over the $0.30 earned last year. Operating margin adjusted for move and acquisition related costs, as well as asset dispositions improved to 17.8% compared to 15.3% last year on a comparable basis. The increase is attributable to improved gross margins of 40.4% and higher earnings contribution from the increased sales volume.

Let me start out by providing an explanation of the sales highlights. Medical sales of $67.6 million increased by 13% compared to $59.8 million last year. An increase of $7.8 million. ICD capacitor sales of 7.9 million accounted for approximately 1/3 of the increase in the quarter. The majority of this increase came from a single capacitor customer. As we reported last quarter, the higher volume was due to a customer supply issue which extended into the second quarter. We do not expect this higher level of volume to continue in the second half and sales should normalize to a range of $5 million per quarter.

In addition to higher ICD capacitor volume, we also experienced an uptick in ICD battery volume with sales increasing by 25% from last year. The increase was primarily due to a customer adoption of the QHR battery technology. (inaudible) sales were also strong in the second quarter increasing 19% from last year due to a customer new product launch in inventory builds. Partially offsetting the aforementioned growth was lower enclosure volume. Sales to one customer were lower for both [brady and tacky] shields. The decrease can be attributed to inventory reductions by this customer partially as a result of improved operating performance of our globe facility in Minneapolis.

On the commercial side, sales were flat compared to last year. We experienced significantly lower volume in the oil and gas market with sales declining by 28% from last year. The decrease is attributable to lower drilling activity, particularly in Canada, partially due to the warmer weather which inhibits drilling activity. In addition, sales were negatively impacted by inventory adjustments by a key oil and gas customer. This commercial customer completed a number of acquisitions in 2006 which resulted in a temporary rebalancing of their inventory position. The lower oil and gas sales were offset by increased sales of power sources used in ocean, seismic and pipeline inspection applications. We're reiterating our commercial sales guidance provided at the beginning of the year of 10% sales growth and expect full-year commercial sales to be in the range of $48 million.

In the second quarter, we completed two significant strategic events. First, we purchased Enpath Medical for approximately $105 million in cash. And second, we signed a contract extension with Boston Scientific for batteries, capacitors and closure products. I'll discuss the strategic of the Enpath deal then I'll turn the call over to our Senior VP of Medical Power, Susan Campbell, to discuss the merits of the Boston Scientific contract.

As you are aware, we completed the acquisition of Enpath on June 15th. Included in our second quarter results, our Enpath sales of $1.6 million for the two weeks in June we owned the company. My initial impressions of the Enpath management and products are very encouraging. Thus far, the integration is going very well. The CEO and CFO have both departed the company during the quarter. I remain very confident that the management team in place can drive the additional organic growth targets and lead to the new product development programs currently underway.

I have been spending several weeks a month in Minneapolis working with the management team to facilitate the integration of the Enpath strategic plan with that of the Greatbatch plan. We have identified and are in the process of implementing a significant investment in research and engineering programs that will extend across several of Enpath product lines. One example of the increased investment is in the area of MRI technology. We're investing in engineering talent to combine the Greatbatch MRI filtering technology with the Enpath leads products. We believe this important investment will provide breakthrough technology for both CRM and neurostimulation applications.

In addition to the investment in research and engineering, we're also utilizing the talent in both companies to drive product and process improvements across our organization. The Enpath organization is in a good position to capitalize on the increased organic growth given the plant consolidation efforts that were completed prior to the acquisition. The strategic benefits of the acquisitions are numerous. Most notably, the acquisition broadens our presence in the CRM and neurostimulation markets, provides for diversification into the interventional radiology market, diversifies our product line offering to existing customers such as spine, peripheral and vascular product. Adds significant new blue chip customers such as CR Barden and Angiodynamics and is synergistic with our own MRI initiatives.

I will now turn the call over to Susan Campbell to discuss the important contract entered into with one of our major customers in the CRM market, Boston Scientific.

Thanks, Tom. As many of you are aware, our battery and capacitor contract expired with Boston Scientific at the end of last year. We've been supplying them on a P.O. to P.O. basis since then while currently working on a new contract. I'm pleased to report that we have signed a new contract effective July 1, 2007, which runs through December 31, 2010. The contract covers CRM batteries, ICD capacitors and enclosure products. Overall, this agreement reflects a balanced position. The agreement provides Greatbatch with minimum volume commitment and enables Boston Scientific to continue their dual source strategy. The agreement provides for pricing incentives for increased business commitment and for the first time, establishes minimum volume commitments for high and low rate batteries, ICD capacitors and enclosure products. In addition, both companies have agreed to meet periodically to share ideas.

In summary, we're very pleased with the level of commitment and the continued partnership with such an important customer as Boston Scientific. We look forward to the continued long-standing relationship, as we support each other in our respective growth strategies.

Let me now turn the call back over to Tom Hook.

Thank you, Susan. The new contract with Boston Scientific consumed a lot of creative energy both internally and externally, and I would like to thank Susan and her team along with members of the Boston Scientific team, they were instrumental in getting this important deal completed.

Now, before I turn the call over to Tom Mazza to discuss our financial results, let me provide with you a midyear review status report with respect to our progress on our strategic imperatives. During our most recent long-range planning process, we set six strategic imperatives for the Company. The first imperative was to protect our core business which we measure in terms of our organic growth. Our year over year organic growth rate for the first six months of this year was 9% which represents an above market rate of growth. Needless to say, our progress on protecting our core growth has been strong and has been further strengthened with long-term agreements we now have in place with all of our major customers.

Our second imperative is to obtain critical mass. The acquisition of both Enpath and BIOMEC represent the first step in increasing our market presence. Our deal follower remains very active as we continue to look for companies that meet our strategic profile and will allow us to increase our product offering to both our existing customer and potential new customers as well.

Our third and fourth imperatives, involve investments in both advancing our technology and establishing investments in our customers. We continue to make great strides in advancing our technology. In addition to the investments in our core technologies, such as our Q series batteries, we continue to make investments in new and emerging technologies. Our significant investment in expanding our MRI capabilities is one such example. Furthermore, we continue to evaluate minority investments in a number of emerging technologies such as our investment at Intellect Medical. This investment will allow us to be on the forefront of new and innovative neurostimulation therapies. This is just one example of the type of investments in our customers that we're making on both the medical and commercial sides of our business.

Our fifth strategic imperative is to enhance our associate performance. Our goal is to provide advanced opportunities for our associates within the Company. We have made significant investment in the succession planning process in order to continuously provide education and training to advance our talent base. Our short term and long-term incentive programs have also been enhanced in order to provide the right level of compensation and incentives to reward and promote advancement within the organization.

Our sixth and final imperative is to continuously improve the operating profitability of the Company. As measured by operating margin. As noted earlier, we achieved nearly an 18% operating margin in the quarter and continue to make strides in achieving our goal of 20% operating margin in the near term.

A key initiative with respect to reaching our 20% operating margin goal is the completion of our companywide consolidation plan. To date, we have successfully moved 70% of the revenue between facilities while streamlining our manufacturing footprint. In the quarter, we closed our Carson City facility and are in process of consolidating our Columbia, Maryland facility into Tijuana. We have extended the closure of this facility by one quarter and are now planning to transfer manufacturing of our feedthroughs and coded components by the end of this year. The one quarter delay has to do with more rigorous product testing requirements regarding our coded components. Once completed, we will have manufacturing sites in four locations, western New York, Minneapolis, Tijuana and Massachusetts. It is anticipated that the plant consolidation projects will have generated $10 million in annual operating savings. With the moot cost behind us and the excess capacity eliminated, the consolidation savings will enable us to achieve sustainable operating margins of 20% over the long run.

In addition to the plant consolidation we have also recently commenced two additional projects that will improve our efficiency and also significantly increase our manufacturing capacity in our commercial business. First, we're move moving our corporate headquarters from a leased facility in Clarence, New York, to our research and development and technology center in Clarence. A building which we own. This will allow us to improve communications by centrally locating our key personnel.

Second, we have commenced the construction on a new 80,000 square foot commercial power manufacturing plant. The plant will be located in Raynham, Massachusetts near by the current location. This facility will more than double our manufacturing floor space and will have additional expansion capacity as well. This investment speaks to the significant growth opportunities we see in our commercial business. We continue to look for strategic investments to broaden our product offering and extend our market reach in this important segment of the business.

At this time, let me turn the call over to Tom Mazza to provide a review of our financial results and to update our financial guidance for 2007.

Thanks, Tom. As Tom has outlined, I will provide a brief overview of this quarter's results. Next, I'll walk you through our revised guidance for 2007. Given the acquisitions of BIOMEC and Enpath in the quarter, there are many moving parts which I will attempt to reconcile.

In terms of our second quarter results we reported sales of 78.5 million, an increase of 11% over last year. Two weeks' worth of Enpath sales totaling 1.6 million were included in this quarter's results. Excluding resales, second quarter revenue growth was approximately 9% compared to last year. Our gross margin improved to 40.4% in the quarter reflecting an increased profit contribution resulting from the record sales volume. Both SG&A and RD&E we're spending more in line with the previous quarter spending levels. Our operating income adjusted for the on going move related expenses and also for the purchase accounting costs, which I will describe later in this presentation, was $14 million. An increase of 30% over the same period last year. Again, the increase is the result of higher profit contribution, resulting from the increased volume, coupled with favorable product mix and cost improvements.

Turning to our 2007 financial guidance, let me explain the adjustments we're making to increase both our sales and earnings projections. We're increasing our sales guidance to a range of 320 to 325 million, up 20 to 25 million from our previous range of 295 to 305. The inclusion of Enpath accounts for 20 to $21 million of this increase. The balance of the increase comes from approved medical segment sales. Let me point out that ICD capacitor sales contributed an additional 7 to 8 million in the first half revenue that we do not expect to repeat in the second half. Adjusting for this and excluding Enpath, we're expecting the core business to increase by 3% over the first half in the second half.

In terms of GAAP EPS, we're estimating that we'll earn between $0.78 to $0.82 per share based on a total share count of 24.5 million. Our previous GAAP guide guidance was $1.40 to $1.46. The reason for this [reduction] is primarily due to the expenses pertaining to the acquisitions of BIOMEC and Enpath. For the year, we expect purchase accounting charges for the two acquisitions of approximately $0.76 Adjusting for these charges, and move related expenses of approximately $0.15, earnings per share is projected to be in the range of $1.57 to $1.64 per share. This compares to our previous adjusted GAAP guidance of $1.41 to $1.48 per share.

Let me provide with you a reconciliation as guidance to help you understand the numbers. Please refer to slide 15 that accompanies this presentation for the detailed financial schedule. I'll start the reconciliation for our new GAAP guidance of .78 cents -- or $0.78 . Included in this calculation are plant relocation costs of $0.15 . These costs are up about $0.02 from our previous guidance to account for the extension of the Columbia facility closed by one quarter. In addition to the plant moved costs, the GAAP guidance includes $0.76 for acquisition, related purchase accounting entries. These charges consist of $0.66 for the write-off of the in process R&D for Enpath, $0.06 for the BIOMEC being in process R&D and $0.04 in other purchase price adjustments.

As reported in the first quarter, we recorded a gain on exchange of our debentures of $0.12 . Excluding the gain along with the aforementioned $0.76 in purchase accounting charges and $0.15 in move related expenses, our revised adjusted GAAP guidance is in the range of $1.57 to $1.64, this represents an increase of $0.16 from our previous guidance range of $1.41 to $1.48 per share. $0.22 of this increase comes from earnings improvements in the core Greatbatch medical and commercial segments along with other lower corporate expenses. $0.06 per share, or approximately $3 million pretax, is being reinvested in various research engineering projects in the second half of this year to accelerate the level of our organic growth particularly in the Enpath business.

Regarding the core Enpath operations, as we indicated at the time of purchase, the transaction was expected to be neutral in year one excluding the purchase accounting charges. Our guidance assumed that the acquisition is in fact neutral in 2007. The incremental Enpath earnings from operations are offset by the reduced interest income resulting from using the 105 million in cash for this transaction. Hopefully this reconciliation helps you to understand the composition of the earnings.

This is a good point to stop and turn the call over to the moderator to facilitate the

Thank you, sir. (OPERATOR INSTRUCTIONS) Our first question comes from the line of Keay Nakae of Unterberg. Please, proceed.

Yes, good morning. Could you tell us what percent of your ICD batteries is represented by QHR at this point?

We don't break the percentage out and give too much clarity on that. Only that it has been -- since its implementation last year, it has been a positive trend. We don't, for confidentiality reasons, that apply to customers, break it out since there is just a limited amount of customers using it and the majority of them are in qualification. But it's definitely an upward, positive trend.

Okay. Could I ask Susan if the new contract with Boston Sci, does that specifically include minimum volumes for QHR at Boston Sci?

It includes minimum volume commitments for high rate battery products. It does not [sell] out QHR specifically.

Finally, what was the pro forma revenue in the quarter for Enpath?

We're not going to discuss it at that level. We are predicting for the year that it will be zero. It will either be accretive or diluted but things will be basically break even for the year.

This is Tony. I will just add that revenue for the quarter was 1.6 million. We did talk about the second half revenue to be the in the range of 20 to 21. So, on a pro forma basis, that's a $40 million run rate.

Ok. Thank you.

Our next question comes from the line of Jason Mills of Canaccord Adams. Please, proceed.

Thanks, guys. Congratulations on a first half. Can you hear me okay?

Just fine. Yes.

Great. Perhaps, maybe,Tom, could you ask Susan or yourself to go over with us the new Boston Scientific contract in a little bit more detail relative to the details of the previous contract that expire, I believe at the end of 2006, where, maybe, I know you can't speak to specifics necessarily on minimums but maybe sort of trends within -- between contracts that you see positives and maybe where you compromised a little bit. If you could give us more detail to help us understand? Obviously that's an important contract for you.

Certainly. I'll let Susan give a little bit more color and I'll highlight the things that may be adventurous that she misses.

Yes. From my perspective, I think the most significant changes in the agreement are first of all, for the first time, we have our enclosure product line that we traditionally went on a P.O. to P.O. basis included in the agreement. That would be the first trend that I would highlight. And then, certainly given the fact that Boston Scientific has been focused on a dual source strategy, the minimum commitment, for the first time, I also think are significant. I can't provide any details on the percentages by product line, but in general, having the enclosure product line under contract and then the commitment around minimum is significant.

Also, this will be, basically, a three and a half year agreement, so that's also, I think ,a good length of time, I think it demonstrates that the relationship that we (inaudible) perspective between the companies is very healthy. We also have comprehensive terms and conditions in place, so that we do have a placeholder page in the agreement for filtered see throughs that perhaps will be added on in the future. We do have a current agreement with Boston that's in place until December 31st of this year for filtered see throughs. But, we do have now comprehensive terms and conditions in place which would make it easy to amend the current agreements to include that product line as well. Tom, is there anything you would like to add?

No. Very good summary. Good to have the agreement done and the relationship cemented. Now, we have to do the hard work and Susan's team in particular to make sure we have a very strong operating performance to deliver to Boston Scientific.

Great. And Tom, do you think just anecdotally, your ability to, I guess it's a two-part question. The manufacturing consolidation initiatives that you guys talk about, it has been going on, to my recollection, the better part of the last four years. Certainly you've invested a lot of time and resources, financial resources, human resources in that. And it seemed optimize and improve your scalability of your organization. Bo you think that helped you in servicing Boston Scientific perhaps, if it is Boston Scientific, in the first half of the year when they needed your help. Was that perhaps a big deal for them, with respect to going ahead and deciding to sign this agreement with you, do you think?

I think -- first of all, I haven't really been here three years yet. So, I think we've been busy on the consolidation projects for around that time. Just to make sure we're accurate on the statement. I think everything we've done to improve our operating performance has helped our customer confidence dramatically, as we've shown how to grow the Company profitably and to do the relocations professionally without product quality issues, and has done a great job with our customer base to -- and that's due to hard work with Susan Campbell, Mauricio Arellano and now in process, Sue Bratton's team, to make the results and also show the performance to the customers, are very confident in our ability to handle these moves at the same time of innovating and launching products for them. And, I think, it would be hard for me to believe that wasn't a significant decision point in what was being done to enter into the contract, both for Boston Scientific as well as other customers is our performance certainly is one of the key indicators for them to -- who they want to partner with and to what degree.

That's helpful. One quick follow-up and I'll get back in queue with respect to one of the bigger import markets for you, the ICD market. You, in the past, over the last 18 months have done very, very well in Europe and has helped you grow faster than overall market rates it seems worldwide. Vis-a-vis European expansion and getting a bigger portion as a [supply] team over there. Could you talk about the continuation of that and just an update there as well as the domestic market? I know you have visibility to some degree near term into orders and what's going on in the market. Perhaps you could give us some color without giving quantitative details there to help us sort of better understand your perspective on the ICD market as we enter the second half of the year? I think many of us are expecting that that market improves a little bit but it doesn't get back to the kind of growth rates we saw a couple of years ago quite yet.

I could give you some qualitative comments. That probably will be helpful. I wouldn't want to break it down quantitatively in one -- just to be careful on the confidentiality but also for --

I understand.

It is a little bit lumpy quarter to quarter. So it's just tough to sometimes trend to predict. I still see the International markets very strong from our customers -- key customers in Europe, as well as from our U.S. customers, [the tell] overseas, and while there has certainly been some dynamics in the U.S. market, the non-U.S. markets have tended to be -- continue to be healthy. In the ICD segment in particular. We're benefiting two ways. One, because the markets are growing, and two, because we've done a very good job of partnering with our International customers and being able to win contracts to implement new levels of technology for a variety of products, not just the ICD batteries but into the high energy capacitors as well as other passive components like feedthroughs and filters. And we've done a very nice job of making sure our operating performance with the moves in combination has been very strong in addressing any issues or concerns. It has resulted in some of the moves being extended, but it certainly has increased the confidence of our customers to partner with us. That effectively in turn has driven our business which has been a nice pickup.

Domestically, I think you know our view is very consistent with what the major OEMs as well as the Street is currently advocating. There is certainly a healthy measure of uncertainty in the market right now. We're doing a very good job to our customers, concentrating on delivering them value-driven technology for them to do their innovations and platform developments off of to be extremely cost focused and cost-effective for them. And embodying those in the key contracts we've signed, in particular so far the big customers we have, is why we've been able to pick up some nice gains on the revenue side, is due to that technology implementation. We know when the ICD market continues to improve and get healthy, that's a favorable factor in our favor that we'll be able to pick up and gain some momentum on that as well. We certainly have seen stabilization and some encouraging signs. But we're still playing conservatively and pragmatically with how we're running the business so we can make sure that we're not getting overheated.

Thanks, guys.

Our next question comes from the line of Tim Nelson of Piper Jaffray. Please proceed.

Good morning. Could you give us a little more color on the incremental investments you're making for the balance of the year in terms of what you're going to get for those? Where you're targeting them and whether or not they're continuing?

Certainly. First of all, one of the drivers of the Enpath transaction was our interest in the lead product line in particular. That's also a very healthy product line in introducer product as well as catheters. One of the areas that we wanted to do incremental investment were to focus dollars on expanding the research and engineering team in those product lines. Some for specific applications like implementing it in a product that will enable MRI enablement for lead wire sets. Which we launched and talked about at the May, Heart Rhythm Society meeting, when we were in Denver. The Enpath transaction is also in conjunction with that to leverage Enpath's lead development expertise in this business with the filtering technology of [Raybash]. And we want to be able to speed up opportunities for that development not just in leads but the other product area.

So, we're focusing more research development in engineering money into those groups. We're going to do a small office area expansion and lab expansion within the Plymouth Minnesota facility. We're going to make room for probably a doubling to tripling of the size of the teams up there. But that will be a continuing investment. We're very bullish on this market. It is not just the MRI project. We have multiple other projects beneath that but I don't want to highlight today for competitive reasons. But we look at this investment as an ongoing portion of the organic growth strategy now that we own Enpath, and the integration plans, and we also have plans to continue to enhance this with other technology acquisitions to continue to build strength in these areas.

Speaking of (inaudible) targeted at Enpath, can you give us the status on some of the new product approvals and market launches that Enpath is planning on, like the arterial [chase] and the new [lip] products, how are those going?

I could but what I would like to be able to do is in that, I've spent the last month at Enpath and I'm immersing myself in a lot of activities up there and working with the management team to actively plan and strategize. I would like to wait another quarter before I give a lot of color on Enpath. Because I'll be able to more appropriately gauge the time lines of given the activity that is on an uptick plan there, and right now, largely, the projects are on schedule, and the general goal is for us is to implement more capability in the organization to speed them up. So, one of the things that we plan on doing at the third quarter call is to highlight where we're at Enpath in more detail with regards to the individual projects and where we find the new time lines for implementation and launch out for those key initiatives and to which ones in addition to those we're adding in their timing as well.

I can relate to that. And the last question is on the tax rate. The tax rate to use for the rest of the year is 47.5? Did I get that right? Would that be an ongoing rate for next year?

No, Tim. Yes, 47.5 is the right rate to use for the balance of 2007. The primary reason for that is -- major reason for that is the fact that the in process R&D write-off related to the Enpath acquisition is not tax-deductible but we do not see that to be the rate going forward in 2008. It will be closer to the effective rate of 35 or somewhere around that. We'll give our guidance later in the year.

Thanks.

(OPERATOR INSTRUCTIONS) Our next question comes from the line of Stan Mann of Mann Family Investments.

Great job, gentlemen. Some simple questions. Depreciation and amortization for 2007, do you have any estimates?

It's basically -- yes, depreciation and amortization should be in line with the first six months in the second six months with the exception of Enpath, it should be pretty good in line. We don't see any major changes.

And Tom, acquisitions, you keep mentioning you keep looking for acquisitions. I assume there are some in the near term cycle, and could you speak to where you're look, if it is commercial power more likely than some of the medical device areas?

Well, we have a team of individuals in the Company that include myself and Tom Mazza and Tony Borowicz, that are focusing a lot of our time on the investments to make to expand the Company from an inorganic basis. We've engaged the business unit leadership in this and also some external parties to help us. We're looking earnestly both at the medical and commercial markets, and have deals that we consider in the funnel, in the negotiation phase, on both sides, both medically and commercial, that we have a focused, strategic plan on where we want to make our product line entries, concentrated in markets that are of particular interest to us as well as in components technology that are of particular interest to us that are complimentary to what we do today that will allow us to push forward our strategic imperatives that I reviewed earlier in the call.

I would fully expect that over the next year that we'll continue to do, not only acquisitions of product lines and companies, but also most importantly, incremental investments in technologies that may be are at earlier stages that we find very important for our long-term success. And the number of people involved in the Company are literally dozens that participate and interface with this on a daily basis. It is a very concentrated effort around our second imperative to obtain critical mass and also to diversify the company.

Thank you.

That does conclude today's question-and-answer session. I would like to turn the call back over to Tony Borowicz for any closing remarks.

Ok, great. Thank you. I guess we answered all of the questions effectively.

Stan, just one follow-up on your question. DNA is running 5.5 per quarter which is 22 million for the year. On top of that, another $10 million of stock-based compensation expense. You want to roll that in your 32 million in total.

Again, thanks, everyone for participating on this call. I would like to remind you that both the audio portion of this call, as well as the slide visuals, will be archived on our web site at Greatbatch.com and you can access those slides for the next 90 days. Again, thanks everyone for joining us today.

Ladies and gentlemen, thank you for your participation, that concludes today's conference. Have a great day.