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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended June 28, 2002

Commission File Number 1-16137

WILSON GREATBATCH TECHNOLOGIES, INC.
(Exact name of Registrant as specified in its charter)

10,000 Wehrle Drive
Clarence, New York
14031
(Address of principal executive offices)
(Zip Code)

(716) 759-6901
(Registrant's telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [__]

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

WILSON GREATBATCH TECHNOLOGIES, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Quarter Ended June 28, 2002
(Unaudited)

The following discussion should be read in conjunction with our condensed consolidated financial statements (including the notes thereto) included elsewhere herein.

Introduction

We are a leading developer and manufacturer of power sources, feedthroughs and wet tantalum capacitors used in implantable medical devices. We also develop and manufacture other components used in implantable medical devices. We leverage our core competencies in technology and manufacturing to develop and produce power sources for commercial applications that demand high performance and reliability.

Total revenues for the quarter ended June 28, 2002 were $38.3 million, a $5.3 million, or 16%, increase from $33.0 million for the second quarter of 2001. The increase included revenues in the second quarter of 2002 of Greatbatch-Sierra, which we acquired in June 2001.

Medical. Total medical revenues for the three months ended June 28, 2002 were $31.6 million, a $5.7 million, or 22%, increase from the $25.9 million for the second quarter of 2001. Implantable power source revenues for the second quarter of 2002 were $12.8 million, an increase of $0.7 million, or 6%, from $12.1 million for the quarter ended June 29, 2001. This increase was primarily due to increased customer demand for our implantable cardioverter defibrillators (ICD) batteries as well as CFx and Lithium Ion cells. Emerging Technologies is a new business unit within the Company in 2002. This business unit includes implantable drug pumps and rechargeable lithium-ion battery technology for implantable devices, such as in hearing-assist, artificial heart, and left ventricular assist devices. This unit had revenues for the quarter ended June 28, 2002 of $0.2 million. Capacitor revenues for the quarter ended June 28, 2002 were $5.6 million, an increase of $1.2 million, or 28%, from $4.3 million in the second quarter of 2001. The increase is attributable to the acceptance of our capacitors in the defibrillator market. Sales of medical components were $13.0 million for the second quarter of 2002, an increase of $3.5 million, or 37%, from $9.5 million in the quarter ended June 29, 2001. The increase was primarily due to the inclusion of revenues from Greatbatch-Sierra.

Total medical revenues for the six months ended June 28, 2002 were $62.0 million, a $13.4 million, or 28% increase from $48.5 million for the first half of 2001. Implantable power source revenues for the first half of 2002 were $25.2 million, a $1.9 million or an 8% increase, from $23.3 million for the six months ended June 29, 2001. This increase is primarily due to our customers' increased demand for ICD batteries. Partially offsetting this increase was a $0.5 million decline in royalty revenues as compared to the prior year's first half. These royalties were payable from Medtronic on patents that have subsequently expired. Emerging Technologies revenues for the first half of 2002 were $0.8 million. Capacitor revenues for the six months ended June 28, 2002 were $11.3 million, an increase of $3.5 million, or 44%, from $7.8 million for the first half of 2001. This revenue growth is attributable to increased demand for capacitors over 2001 levels. Sales of medical components were $24.6 million during the six months ended June 28, 2002, an increase of $7.2 million, or 41%, from $17.4 million for the first half of 2001. This increase was primarily due to the inclusion of revenues from Greatbatch-Sierra in 2002.

Commercial. Commercial power sources revenues for the quarter ended June 28, 2002 were $6.7 million, a decrease of $0.4 million, or 5%, from $7.1 million for the second quarter of 2001. Commercial power sources revenues for the first half of 2002 were $12.7 million, a decrease of $1.3 million, or 10%, from $14.0 million for the six months ended June 29, 2001. For both the quarter, and the year to date periods, the decrease was related to a decreased level of exploration in the oil and gas industry.

Gross profit for the quarter ended June 28, 2002 was $15.6 million, an increase of $1.0 million, or 7%, from $14.6 million for the second quarter of 2001. Gross margin for the second quarter of 2002 decreased to 41% from 44% for the second quarter of 2001. The decline was primarily due to manufacturing and production yield issues at Greatbatch-Sierra.

Gross profit for the six months ended June 28, 2002 was $31.6 million, an increase of $3.0 million, or 10%, from $28.6 million for the first half of 2002. Gross margin for the first half of 2002 decreased to 42% from 46% for the first half of 2001. Manufacturing and production yield issues at Greatbatch-Sierra, along with reduced royalty revenues compared to the first half of 2001, were the primary contributors to the reduced gross profit rate.

Selling, general and administrative expenses for the quarter ended June 28, 2002 were $5.4 million, an increase of $0.8 million, or 18%, from $4.5 million for the three months ended June 29, 2001. As a percentage of total revenues, selling, general and administrative expenses in the second quarter of 2002 remained constant at 14% as compared to the same period in 2001.

Selling, general and administrative expenses for the six months ended June 28, 2002 were $11.0 million, an increase of $2.7 million, or 32%, from $8.3 million for the first half of 2001. As a percentage of total revenues, selling, general and administrative expenses in the first half of 2002 were 15%, as compared to 13% in the first half of 2001. The increase in selling, general and administrative expenses is primarily due to the inclusion of costs associated with Greatbatch-Sierra in 2002, costs associated with our Six Sigma™ quality initiatives, the development of our Emerging Technologies infrastructure, and expenses related to ongoing patent activity.

Research, development and engineering expenses for both the quarter ended June 28, 2002 and the quarter ended June 29, 2001 were $3.4 million. As a percentage of total revenues, research, development and engineering expenses were 9% in the second quarter of 2002 as compared to 10% for the second quarter of 2001.

Research, development and engineering expenses for the six months ended June 28, 2002 were $7.0 million, an increase of $0.4 million, or 7%, from $6.6 million in the first half of 2001. As a percentage of total revenues, research, development and engineering expenses were 9% in the first half of 2002 as compared to 10% for the first half of 2001. We expect to maintain our spending on research, development and engineering at a level that will support the new technologies demanded by the implantable medical device markets.

Intangible amortization for the second quarter of 2002 was $0.9 million as compared to $1.7 million for the three months ended June 29, 2001. For the first half of 2002, intangible amortization was $1.8 million as compared to $3.4 million for the six months ended June 29, 2001. The reduction in amortization expense for both the quarter, and year to date periods was due to cessation of the amortization for goodwill and other intangible assets with indefinite lives effective December 29, 2001, the beginning of our fiscal year 2002.

Net interest expense was $0.5 million for the quarter ended June 28, 2002, a decrease of $0.2 million, or 21% from $0.7 million for the quarter ended June 29, 2001. For the six months ended June 28, 2002, interest expense was $1.3 million, a decline of $0.1 million, or 8%, from $1.4 million for the first half of 2001. The decrease in both periods is primarily due to increased interest income earned on investments.

Our effective tax rate for the second quarter, and first six months of 2002 was 33.0% as compared to 37.5% and 37.2% for the second quarter, and first half of 2001. Our effective tax rate in 2002 is anticipated to decline relative to 2001 due to the benefits of tax planning projects.

Income before extraordinary loss was $3.6 million in the second quarter of 2002 versus $2.6 million for the second quarter of 2001. For the six months ended June 28, 2002, income before extraordinary loss was $6.9 million as compared to $5.6 million for the first half of 2001. The increase for both periods was primarily due to the increase in operating income, the decrease in interest expense, and the reduced tax rate in 2002 as compared to 2001. Diluted earnings per share from continuing operations were $0.17 for the second quarter of 2002 and $0.14 for the second quarter of 2001. Diluted earnings per share from continuing operations were $0.33 for the first half of 2002 and $0.29 for the first half of 2001.

If the provisions of SFAS No. 142 had been implemented on the first day of fiscal year 2001, income from continuing operations and diluted earnings per share from continuing operations for second quarter 2001 would have been $3.1 million and $0.16, respectively. For the first half of 2001, income from continuing operations and diluted earnings per share would have been $6.5 million and $0.34, respectively.

The extraordinary loss of $3.0 million, net of taxes, for the six months ended June 29, 2001 has no comparable amount in 2002. The loss in 2001 was associated with the restructuring of our long-term debt in the first quarter of 2001 and the related write-off of deferred financing fees, a call premium paid, and loan discounts associated with the previous long-term debt.

Net income for the three months ended June 28, 2002 was $3.6 million as compared to net income of $2.6 million for the second quarter of 2001. This increase was primarily due to the increase in operating income, the decrease in interest expense, and the reduced tax rate in 2002 as compared to 2001. Diluted earnings per share for the second quarter of 2002 were $0.17 versus $0.14 per diluted share for the second quarter of 2001. If SFAS No. 142 had been implemented on the first day of fiscal year 2001, net income and diluted earnings per share for second quarter 2001 would have been $3.1 million and $0.16, respectively.

Net income for the first half of 2002 was $6.9 million as compared to net income of $2.6 million for first half of 2001. This increase was due to the increase in operating income, the decrease in interest expense, and the reduced tax rate in 2002 as compared to 2001, as well as the extraordinary loss in 2001 that is not present in 2002. Diluted earnings per share for the first half of 2002 were $0.33 versus $0.13 per diluted share for the first half of 2001. If SFAS No. 142 had been implemented on the first day of fiscal year 2001, net income and diluted earnings per share for the first half of 2001 would have been $3.5 million and $0.18, respectively.

The restructuring of our senior and subordinated debt in 2001 at more favorable terms, the receipt of the proceeds from our secondary offering of stock in July 2001, and the acquisition of Greatbatch-Sierra contributed to a solid balance sheet position at June 28, 2002. Total assets at June 28, 2002 were $285.7 million compared to $283.5 million at December 28, 2001.

At June 28, 2002 we had $40.3 million of cash and cash equivalents. Cash provided by operating activities for the six month period ended June 28, 2002 was $7.6 million as compared to $8.5 million for the same period ended June 29, 2001. While higher net income in the first half of 2002 had a positive effect on cash provided by operating activities as compared to the first half of 2001, this increase was off-set by a year to year net reduction in accounts payable of $5.7 million, attributable to normal payment patterns on payable balances outstanding.

Net cash used in investing activities was $8.0 million in the six months ended June 28, 2002 as compared to a use of $52.4 million in the six months ended June 29, 2001. The acquisition of Greatbatch-Sierra represents $47.4 million of the usage for the period ended June 29, 2001. Capital expenditures were $8.0 million and $2.5 million for the first half of 2002 and 2001, respectively.

Cash used by financing activities for the six month period ending June 28, 2002 was $2.5 million, compared with cash provided by financing activities of $44.7 million for the same period ended June 29, 2001. In the first six months of 2002, substantially all of the cash used in financing activities was for debt repayment. In the first half of 2001, we used $40.0 million of proceeds from a new term loan to pay off the remaining $15.2 million of our senior debt and the remaining $18.3 million of our 13% subordinated notes. In June 2001, we amended our credit facility to borrow an additional $47.0 million in order to finance the acquisition of Greatbatch-Sierra.

We believe that cash generated from operations and available credit lines will be sufficient to meet our working capital needs and planned capital expenditures for the near term. Capital expenditures for 2002 are expected to increase from historical levels, as we invest in increased production capacity and product development opportunities. These investments include completion of an expansion to our research and development facilities, which began in 2001.

We acquired Globe Tool and Manufacturing, Inc. (Globe) effective July 9, 2002. We paid $48.0 million in cash, assumed debt of $9.0 million, and paid $2.0 million in acquisition related expenses. We used $30.0 million of cash on hand and financed the balance of the acquisition with bank debt. In order to fund the acquisition, we amended our existing credit facility in July 2002 by $20 million, from $100 million to $120 million in total. Under the terms of our credit agreement, the increased leverage ratio will raise our interest expense by approximately 1% point, to 4.3% at current London Interbank Offered Rates, or LIBOR rates. The use of cash on hand for the acquisition will also lower our interest income by approximately $0.5 million annually.

Our capital structure consists of interest-bearing debt and equity. Interest-bearing debt as a percentage of our total capitalization decreased to 26% at June 28, 2002 compared to 28% at December 28, 2001. Our long-term debt at June 28, 2002 consisted primarily of the $71.0 million term loan.

In January 2001, we entered into a $60.0 million credit facility consisting of a $40.0 million term loan and a $20.0 million revolving line of credit. In June 2001, we amended our credit facility to facilitate the acquisition of Greatbatch-Sierra. The amendment provided for a $100.0 million facility consisting of an $80.0 million term loan and a $20.0 million revolving line of credit. Both the term loan and revolving line of credit have a term of five years, maturing in July 2006. The amended credit facility is secured by our accounts receivable and inventories and requires us to comply with various quarterly financial covenants related to EBITDA, as defined in the credit agreement, and ratios of leverage, interest and fixed charges as they relate to EBITDA. The Company is in compliance with these quarterly financial covenants. Both the term loan and revolving line of credit bear interest at a rate that varies with our level of leverage. Through June 28, 2002, the applicable interest rates for both the term loan and the revolving line of credit were prime less 0.75%, or LIBOR, plus 1.25%, at the Company's option.

At June 28, 2002, there was $71.0 million outstanding on the term loan and no amounts outstanding under the revolving line of credit. The weighted average interest rate as of June 28, 2002 for the term loan was 3.2%.

We do not believe that inflation has had a significant effect on our operations to date.

In August 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets (SFAS No. 143). SFAS No. 143 establishes accounting standards for the recognition and measurement of an asset retirement obligation and its associated asset retirement cost. It also provides accounting guidance for legal obligations associated with the retirement of tangible long-lived assets. SFAS No. 143 is effective in fiscal years beginning after June 15, 2002, with early adoption permitted. The Company expects that the provisions of SFAS No. 143 will not have a material impact on its consolidated financial statements upon adoption. The Company plans to adopt SFAS No. 143 effective December 30, 2002, the beginning of fiscal year 2003.

Some of the statements contained in this Quarterly Report on Form 10-Q and other written and oral statements made from time to time by us and our representatives, are not statements of historical or current fact. As such, they 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. We have based these forward-looking statements on our current expectations, which are subject to known and unknown risks, uncertainties and assumptions. They include statements relating to:

• future revenues, expenses and profitability;
   
• the future development and expected growth of our business and the implantable medical device industry;
   
• our ability to successfully execute our business model and our business strategy;
   
• our ability to identify trends within the industries for implantable medical devices, medical components and commercial power sources and to offer products and services that meet the changing needs of those markets;
   
• projected capital expenditures; and
   
• trends in government regulation.

You can identify forward-looking statements 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 only predictions. Actual events or results may differ materially from those suggested by these forward-looking statements. In evaluating these statements and our prospects generally, you should carefully consider the factors set forth below. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary factors and to others contained throughout this report. We are under no duty to update any of the forward-looking statements after the date of this report or to conform these statements to actual results.

Although it is not possible to create a comprehensive list of all factors that may cause actual results to differ from the results expressed or implied by our forward-looking statements or that may affect our future results, some of these factors include the following: dependence upon a limited number of customers, product obsolescence, inability to market current or future products, pricing pressure from customers, reliance on third party suppliers for raw materials, products and subcomponents, fluctuating operating results, inability to maintain high quality standards for our products, challenges to our intellectual property rights, product liability claims, inability to successfully consummate and integrate acquisitions, unsuccessful expansion into new markets, competition, inability to obtain licenses to key technology, regulatory changes or consolidation in the healthcare industry, and other risks and uncertainties described in the Company's Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.

Under the existing credit facility prior to the Globe acquisition, both the term loan and any borrowings under the line of credit bear interest at fluctuating market rates. An analysis of the impact on our interest rate sensitive financial instruments of a hypothetical 10% change in short-term interest rates shows an impact on expected 2002 earnings of approximately $0.3 million of higher or lower earnings, depending on whether short-term rates rise or fall by 10%. The discussion and the estimated amounts referred to above include forward-looking statements of market risk which involve certain assumptions as to market interest rates. Actual future market conditions may differ materially from such assumptions. Accordingly, the forward-looking statements should not be considered projections of future events by the Company.

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At the Company's Annual Meeting of stockholders held on May 17, 2002, the stockholders approved the following:

ITEM 5.    Other Information.

                    None.

EXHIBIT INDEX

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.