Greatbatch Inc. lost $20.6 million in the third quarter as the $34.5 million verdict

against the Clarence medical device and battery maker in a lawsuit filed by a competitor wiped

out the firm's weakening operating profits.

Greatbatch's loss equaled 90 cents per share and compared with a profit of $6.5 million, or

28 cents per share, a year earlier. The loss was entirely due to the money Greatbatch set

aside to cover the verdict in a lawsuit filed by Ion Geophysical Corp. alleging that

Greatbatch fraudulently used Ion's product designs to develop its own competing product.

Greatbatch is appealing the verdict.

The cost of the verdict easily wiped out Greatbatch's profits from its operations during

the quarter. Greatbatch's operating profits tumbled by 29 percent to $13,6 million, or 32

cents per share, from $19.2 million, or 44 cents per share, a year earlier, as growth slowed

to 5 percent at its cardiac rhythm management business, while sales of its orthopedic products

plunged as fewer people had elective surgery.

The operating profits were 4 cents worse than the 36 cents per share that analysts were

expecting.

Greatbatch also cut its revenue forecast for the current year to between $520 million and

$535 million, down from its previous prediction that sales would range between $550 million

and $600 million.

Greatbatch executives said the reduction stemmed partly from the 11 percent drop in

third-quarter sales and the expectation that demand will remain low for the company's

orthopedic products for the rest of this year.

Greatbatch's overall sales during the third quarter dropped to $121.5 million from $136.2

million, with medical product revenues sliding by 10 percent and sales at its commercial

battery business dropping by 16 percent.

Sales of Greatbatch's orthopedic products tumbled by 39 percent during the quarter as

patients had fewer elective surgeries because of the weak economy and physicians and hospitals

cut their inventories of orthopedic products because of the recession and an uncertain

regulatory environment, the company said.