Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 28, 2017 | Jun. 30, 2016 | |
DEI [Abstract] | |||
Entity Registrant Name | GLOBUS MEDICAL INC | ||
Entity Central Index Key | 1,237,831 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 95,972,637 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 1,663,176,412 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
ASSETS | ||
Cash and cash equivalents | $ 132,639 | $ 60,152 |
Restricted cash | 477 | 26,119 |
Short-term marketable securities | 157,673 | 220,877 |
Accounts receivable, net of allowances of $2,771 and $2,513, respectively | 91,983 | 77,681 |
Inventories | 112,692 | 105,260 |
Prepaid expenses and other current assets | 14,502 | 7,351 |
Income taxes receivable | 3,800 | 8,672 |
Deferred income taxes | 0 | 38,687 |
Total current assets | 513,766 | 544,799 |
Property and equipment, net of accumulated depreciation of $166,711 and $139,114, respectively | 124,229 | 114,743 |
Long-term marketable securities | 60,444 | 48,762 |
Note receivable | 30,000 | 0 |
Intangible assets, net | 61,706 | 33,242 |
Goodwill | 105,926 | 91,964 |
Other assets | 928 | 590 |
Deferred income taxes | 30,638 | 0 |
Total assets | 927,637 | 834,100 |
LIABILITIES AND EQUITY | ||
Accounts payable | 17,472 | 15,971 |
Accrued expenses | 46,401 | 53,769 |
Income taxes payable | 1,911 | 763 |
Business acquisition liabilities, current | 14,108 | 12,188 |
Total current liabilities | 79,892 | 82,691 |
Business acquisition liabilities, net of current portion | 5,972 | 21,126 |
Deferred income taxes | 7,876 | 13,260 |
Other liabilities | 1,819 | 1,699 |
Total liabilities | 95,559 | 118,776 |
Commitments and contingencies (Note 15) | ||
Equity: | ||
Additional paid-in capital | 211,725 | 192,629 |
Accumulated other comprehensive loss | (8,642) | (1,958) |
Retained earnings | 628,899 | 524,558 |
Total equity | 832,078 | 715,324 |
Total liabilities and equity | 927,637 | 834,100 |
Class A Common | ||
Equity: | ||
Common stock | 72 | 71 |
Class B Common | ||
Equity: | ||
Common stock | $ 24 | $ 24 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Allowance for doubtful accounts | $ 2,771 | $ 2,513 |
Equity: | ||
Common stock, shares authorized (in shares) | 785,000,000 | |
Common stock, shares issued | 95,929,916 | 95,319,722 |
Common stock, shares outstanding | 95,929,916 | 95,319,722 |
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment | $ 166,711 | $ 139,114 |
Class A Common | ||
Equity: | ||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued | 72,052,360 | 71,442,166 |
Common stock, shares outstanding | 72,052,360 | 71,442,166 |
Class B Common | ||
Equity: | ||
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 275,000,000 | 275,000,000 |
Common stock, shares issued | 23,877,556 | 23,877,556 |
Common stock, shares outstanding | 23,877,556 | 23,877,556 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | |||
Sales | $ 563,994 | $ 544,753 | $ 474,371 |
Cost of goods sold | 134,705 | 132,333 | 110,769 |
Gross profit | 429,289 | 412,420 | 363,602 |
Operating expenses: | |||
Research and development | 44,532 | 36,312 | 31,166 |
Selling, general and administrative | 222,156 | 210,241 | 188,632 |
Provision for litigation | 3,156 | (11,268) | 5,667 |
Amortization of intangibles | 3,478 | 1,561 | 712 |
Acquisition related costs | 1,826 | 3,352 | (937) |
Total operating expenses | 275,148 | 240,198 | 225,240 |
Operating income | 154,141 | 172,222 | 138,362 |
Interest income, net | 3,057 | 1,304 | 805 |
Foreign currency transaction loss | (482) | (1,159) | (899) |
Other income | 563 | 438 | 374 |
Total other income, net | 3,138 | 583 | 280 |
Income before income taxes | 157,279 | 172,805 | 138,642 |
Income tax provision | 52,938 | 60,021 | 46,157 |
Net income | $ 104,341 | $ 112,784 | $ 92,485 |
Earnings per share: | |||
Basic | $ 1.09 | $ 1.19 | $ 0.98 |
Diluted | $ 1.08 | $ 1.17 | $ 0.97 |
Weighted average shares outstanding: | |||
Basic | 95,647 | 95,046 | 94,227 |
Dilutive stock options | 785 | 1,027 | 1,230 |
Diluted | 96,432 | 96,073 | 95,457 |
Anti-dilutive stock options excluded from weighted average calculation | 5,481 | 3,348 | 1,666 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net income | $ 104,341 | $ 112,784 | $ 92,485 |
Other comprehensive loss: | |||
Unrealized loss on marketable securities, net of tax | (48) | (55) | (96) |
Foreign currency translation loss | (6,636) | (246) | (552) |
Total other comprehensive loss | (6,684) | (301) | (648) |
Comprehensive income | $ 97,657 | $ 112,483 | $ 91,837 |
Consolidated Statements of Equi
Consolidated Statements of Equity - USD ($) shares in Thousands, $ in Thousands | Total | Additional Paid-in Capital | Accumulated Other Comprehensive Income | Retained Earnings | Class A CommonCommon Stock | Class B CommonCommon Stock |
Balance, Shares at Dec. 31, 2013 | 66,065 | 27,378 | ||||
Total stockholders' equity, beginning of period at Dec. 31, 2013 | $ 472,360 | $ 153,987 | $ (1,009) | $ 319,289 | $ 66 | $ 27 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | $ 7,111 | 7,111 | ||||
Exercise of stock options (shares) | 1,263 | 1,263 | ||||
Exercise of stock options | $ 9,738 | 9,736 | $ 2 | |||
Tax benefit related to nonqualified stock options excercised | 4,408 | 4,408 | ||||
Conversion of stock, converted (shares) | (3,500) | |||||
Conversion of stock, amount converted | $ (3) | |||||
Conversion of stock, issued (shares) | 3,500 | |||||
Conversion of stock, amount issued | $ 3 | |||||
Comprehensive income | 91,837 | (648) | 92,485 | |||
Balance, Shares at Dec. 31, 2014 | 70,828 | 23,878 | ||||
Total stockholders' equity, end of period at Dec. 31, 2014 | 585,454 | 175,242 | (1,657) | 411,774 | $ 71 | $ 24 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | $ 9,860 | 9,860 | ||||
Exercise of stock options (shares) | 614 | 614 | ||||
Exercise of stock options | $ 5,477 | 5,477 | $ 0 | |||
Tax benefit related to nonqualified stock options excercised | 2,050 | 2,050 | ||||
Comprehensive income | 112,483 | (301) | 112,784 | |||
Balance, Shares at Dec. 31, 2015 | 71,442 | 23,878 | ||||
Total stockholders' equity, end of period at Dec. 31, 2015 | 715,324 | 192,629 | (1,958) | 524,558 | $ 71 | $ 24 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | $ 11,652 | 11,652 | ||||
Exercise of stock options (shares) | 610 | 610 | ||||
Exercise of stock options | $ 5,874 | 5,873 | $ 1 | |||
Tax benefit related to nonqualified stock options excercised | 1,571 | 1,571 | ||||
Comprehensive income | 97,657 | (6,684) | 104,341 | |||
Balance, Shares at Dec. 31, 2016 | 72,052 | 23,878 | ||||
Total stockholders' equity, end of period at Dec. 31, 2016 | $ 832,078 | $ 211,725 | $ (8,642) | $ 628,899 | $ 72 | $ 24 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities: | |||
Net income | $ 104,341 | $ 112,784 | $ 92,485 |
Adjustments to reconcile net income to net cash provided by operating activities | |||
Depreciation and amortization | 38,771 | 24,084 | 21,754 |
Amortization of premium on marketable securities | 4,068 | 3,354 | 2,680 |
Write-down for excess and obsolete inventories | 12,836 | 9,924 | 6,962 |
Stock-based compensation expense | 11,382 | 9,639 | 7,111 |
Excess tax benefit related to nonqualified stock options | (1,571) | (2,050) | (4,408) |
Allowance for doubtful accounts | 685 | 1,465 | 318 |
Change in fair value of contingent consideration | 2,866 | 3,118 | (1,131) |
Non-cash settlement of accrued expenses | (4,632) | (8,405) | 0 |
Impairment of intangible assets | 3,472 | 0 | 0 |
Change in deferred income taxes | (3,810) | 6,235 | (4,379) |
(Increase)/decrease in: | |||
Restricted cash | 25,641 | (2,749) | (23,370) |
Accounts receivable | (4,668) | (4,193) | (12,667) |
Inventories | (10,503) | (19,327) | (18,001) |
Prepaid expenses and other assets | 4,568 | (1,203) | (249) |
Increase/(decrease) in: | |||
Accounts payable | (23) | (3,825) | 4,628 |
Accounts payable to related party | 0 | (5,359) | 2,703 |
Accrued expenses and other liabilities | (18,164) | (878) | 5,149 |
Income taxes payable/receivable | 6,634 | (657) | (413) |
Net cash provided by operating activities | 171,893 | 121,957 | 79,172 |
Cash flows from investing activities: | |||
Purchases of marketable securities | (287,263) | (297,707) | (251,422) |
Maturities of marketable securities | 281,885 | 188,702 | 184,567 |
Sales of marketable securities | 52,802 | 57,728 | 27,737 |
Purchases of property and equipment | (40,909) | (50,760) | (24,754) |
Issuance of note receivable | (30,000) | 0 | 0 |
Acquisition of businesses, net of cash acquired | (76,068) | (48,513) | (36,128) |
Net cash used in investing activities | (99,553) | (150,550) | (100,000) |
Cash flows from financing activities: | |||
Payment of business acquisition liabilities | (5,404) | (1,200) | (1,200) |
Proceeds from exercise of stock options | 5,874 | 5,477 | 9,738 |
Excess tax benefit related to nonqualified stock options | 1,571 | 2,050 | 4,408 |
Net cash provided by financing activities | 2,041 | 6,327 | 12,946 |
Effect of foreign exchange rate on cash | (1,894) | 153 | 185 |
Net increase/(decrease) in cash and cash equivalents | 72,487 | (22,113) | (7,697) |
Cash and cash equivalents, beginning of period | 60,152 | 82,265 | 89,962 |
Cash and cash equivalents, end of period | 132,639 | 60,152 | 82,265 |
Supplemental disclosures of cash flow information: | |||
Interest paid | 35 | 9 | 32 |
Income taxes paid | $ 50,087 | $ 57,100 | $ 51,096 |
BACKGROUND AND SUMMARY OF SIGNI
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Background and Summary of Significant Accounting Policies | BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) The Company Globus Medical, Inc., together with its subsidiaries, is a medical device company focused on the design, development and commercialization of musculoskeletal implants. We are currently focused on implants that promote healing in patients with spine disorders. We have also recently begun to develop a robotic surgical navigation device and products to treat patients who have experienced orthopedic traumas, although those development efforts are still ongoing and we currently have no robotic or orthopedic trauma products that are cleared by the U.S. Food and Drug Administration for sale. We are an engineering-driven company with a history of rapidly developing and commercializing advanced products and procedures that assist surgeons in effectively treating their patients, respond to evolving surgeon needs and address new treatment options. Since our inception in 2003, we have launched over 170 products and offer a product portfolio addressing a broad array of spinal pathologies. We are headquartered in Audubon, Pennsylvania, and market and sell our products through our exclusive sales force in the United States, as well as within North, Central and South America, Europe, Asia, Africa and Australia. The sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors. The terms the “Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries. (b) Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). Certain reclassifications have been made to prior period statements to conform to the current period presentation. During the fourth quarter of 2016, we self-identified and recorded non-cash prior period adjustments primarily related to depreciation and scrap expense for our instruments and cases. This $1.8 million net cumulative adjustment related to the period beginning in 2013 and through 2015 and resulted in a $5.5 million pre-tax increase in depreciation and a $3.7 million pre-tax decrease in scrap and provision for excess and obsolete inventory, both of which are components of our cost of goods sold on our consolidated statement of income. We performed the analysis required by Staff Accounting Bulletin No. 99, Materiality , and Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year Misstatements When Quantifying Misstatements in Current Year Financial Statements , and determined that the effect of the adjustments was not material to the financial position, results of operations or cash flows of any prior fiscal year from both a quantitative and qualitative perspective and is not material to the full fiscal year 2016. (c) Principles of Consolidation The accompanying consolidated financial statements include the accounts of Globus and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. (d) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, write-down for excess and obsolete inventory, useful lives of assets, the outcome of litigation, recoverability of intangible assets and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results. (e) Foreign Currency Translation The functional currency of our foreign subsidiaries is generally their local currency. Assets and liabilities of the foreign subsidiaries are translated at the period end currency exchange rate and revenues and expenses are translated at an average currency exchange rate for the period. The resulting foreign currency translation gains and losses are included as a component of accumulated other comprehensive income. Gains and losses arising from intercompany foreign transactions are included in other income, net on the consolidated statement of income. (f) Cash and Cash Equivalents Cash and cash equivalents include cash on hand and all highly liquid investments with a maturity of three months or less when purchased. (g) Restricted Cash In December 2014, we set aside cash for the payment of a portion of the DePuy Synthes and Bianco litigation. We classified this cash as restricted, as the amount was placed in escrow to be used for payment of the litigation obligations, should we not be successful with our appeals. On January 13, 2016, we settled our litigation with DePuy Synthes and made a payment of $7.9 million and recovered approximately $8.4 million related to that settlement shortly thereafter. As of December 31, 2016 , we have $0.5 million of restricted cash remaining related to the Bianco matter. See “Note 15. Commitments and Contingencies” below for more details regarding these litigations. (h) Accounts Receivable and Allowance for Doubtful Accounts The majority of our accounts receivable is composed of amounts due from hospitals. We carry our accounts receivable at cost less an allowance for doubtful accounts. On a regular basis, we evaluate our accounts receivable and estimate an allowance for doubtful accounts, as needed, based on various factors such as our customers’ current credit conditions, length of time past due, and the general economy as a whole. Receivables are written off against the allowance when they are deemed uncollectible and have historically been immaterial. (i) Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, are primarily cash and cash equivalents and accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising our customer base. We perform ongoing credit evaluations of our customers and generally do not require collateral. There was no customer that accounted for 10% or more of sales for the years ended December 31, 2016 , 2015 , and 2014 , respectively. (j) Marketable Securities Our marketable securities include municipal bonds, corporate debt securities, commercial paper, securities of U.S. government-sponsored agencies and asset-backed securities, and are classified as available-for-sale as of December 31, 2016 . Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive income on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets. We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made. (k) Inventories I nventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories. (l) Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Additions or improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation and amortization are provided using the straight-line method over the related useful lives of the assets. When assets are sold or otherwise disposed of, the related property, equipment, and accumulated depreciation amounts are relieved from the accounts, and any gain or loss is recorded in the consolidated statements of income. (m) Goodwill and Intangible Assets Goodwill represents the excess purchase price over the fair values of the identifiable assets acquired less the liabilities assumed. Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount, to the fair value of the reporting unit. The fair values are estimated using an income and discounted cash flow approach. We annually perform a qualitative test for impairment as permitted under Financial Accounting Standards Board (“FASB”) authoritative guidance. During the years ended December 31, 2016 , 2015 and 2014 , we did not record any impairment charges related to goodwill. Intangible assets consist of purchased in-process research and development (“IPR&D”), supplier network, patents, customer relationships and non-compete agreements. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to seventeen years. Intangible assets are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis. During the years ended December 31, 2016 , 2015 and 2014 , we did not record any impairment charges related to our finite-lived intangible assets. IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset. If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value. During 2016, we recorded an impairment charge of $3.5 million related to one of our IPR&D projects as a component of acquisition related costs. There were no impairments of IPR&D during the years ended December 31, 2015 or 2014 . (n) Impairment of Long-Lived Assets We periodically evaluate the recoverability of the carrying amount of long-lived assets, which include property and equipment, as well as whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. An impairment is assessed when the undiscounted future cash flows from the use and eventual disposition of an asset group are less than its carrying value. If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset group. Our fair value methodology is based on quoted market prices, if available. If quoted market prices are not available, an estimate of fair value is made based on prices of similar assets or other valuation techniques including present value techniques. During the years ended December 31, 2016 , 2015 and 2014 , we did not record any impairment charges related to long-lived assets. (o) Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold. (p) Research and Development Research and development costs are expensed as incurred. Research and development costs include salaries, employee benefits, supplies, consulting services, clinical services and clinical trial costs, and facilities costs. Costs incurred in obtaining technology licenses and patents are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future use. (q) Stock-Based Compensation The cost for employee and non-employee director awards is measured at the grant date based on the fair value of the award. The fair value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period (generally the vesting period of the equity award). Awards issued to non-employees are recorded at their fair value as determined in accordance with authoritative guidance, and are periodically revalued as the awards vest and are recognized as expense over the requisite service period. The determination of the fair value of stock options is made utilizing the Black-Scholes option-pricing model which is affected by our stock price and a number of assumptions, including expected volatility, expected term, risk-free interest rate and expected dividends. As we became a publicly traded entity in 2012, historic volatility for our common stock is insufficient to estimate expected volatility. As a result, we estimate volatility based on a consistently defined peer group of public companies that we believe collectively provides a reasonable basis for estimating volatility. We intend to continue to use the consistently defined group of publicly traded peer companies to determine volatility in the future until sufficient information regarding volatility of the price of our shares of Class A common stock becomes available or the selected companies are no longer suitable for this purpose. The expected term of the stock options is determined utilizing the simplified method given the limited extent of our historical data. The risk-free interest rate assumption is based on observed interest rates of U.S. Treasury securities appropriate for the expected terms of the stock options. The dividend yield assumption is based on the history and expectation of no dividend payouts. (r) Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which such items are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established to offset any deferred tax assets if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Significant judgment is required in determining income tax provisions and in evaluating tax positions. We will establish additional provisions for income taxes when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold that a tax position is more likely than not to be sustained upon examination by the taxing authority. In the normal course of business, we and our subsidiaries are examined by various federal, state, and foreign tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of the provision for income taxes. We periodically assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability, and deferred taxes in the period in which the facts that give rise to a revision become known. (s) Fair Value of Financial Instruments As of December 31, 2016 , the carrying values of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses approximate their respective fair values based on their short-term nature. We classify our financial assets and liabilities that are measured at fair value into one of the three categories based upon inputs used to determine fair value. See “Note 6. Fair Value Measurements” below for more details regarding inputs and classifications. (t) Advertising Expense We expense advertising costs as they are incurred. Advertising expense was $0.9 million , $0.4 million and $0.5 million , for the years ended December 31, 2016 , 2015 , and 2014 , respectively. (u) Legal Costs We expense legal costs related to loss contingencies as incurred. (v) Acquisition Related Costs Acquisition related costs represents the change in fair value of business acquisition related contingent consideration; costs related to integrating recently acquired businesses including but not limited to costs to exit or convert contractual obligations, severance, and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition related professional fees. (w) Medical Device Excise Tax Effective as of January 1, 2013, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively “PPACA”) imposed a medical device excise tax (“MDET”) of 2.3% on any entity that manufactures or imports certain medical devices offered for sale in the United States. We account for the MDET as a component of our cost of goods sold. For the years ended December 31, 2015 and 2014 , we recognized expenses of $8.1 million and $7.1 million , respectively. The Consolidated Appropriations Act of 2016, which was signed into law in December 2015, includes a two-year suspension on the medical device excise tax, effective January 1, 2016. Without further legislative action, the tax will automatically be reinstated for certain medical device sales in the United States starting on January 1, 2018. (x) Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) . ASU 2014-09 amends the guidance in former Topic 605, Revenue Recognition , and most other existing revenue guidances in US GAAP. Under the new standard, an entity will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the entity expects to be entitled in exchange for those goods or services and provide additional disclosures. As amended, the effective date for public entities is annual reporting periods beginning after December 15, 2017 and interim periods therein. Early adoption is not permitted prior to the first quarter of 2017. We will adopt ASU 2014-09 effective January 1, 2018 using the modified retrospective method (retrospective application with the cumulative effect of initially applying the guidance recognized at the date of initial application). This update will not have a material impact on our financial position, results of operations, and disclosures. In July 2015, the FASB released ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB’s Simplification Initiative. This update is intended to more closely align the measurement of inventory under GAAP with the measurement of inventory under International Financial Reporting Standards. Within the scope of the update, an entity is required to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonable and predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for all public entities for fiscal years beginning after December 15, 2016, including interim reporting periods within that period, and is required to be applied prospectively, with early adoption permitted. We adopted ASU 2015-11 on January 1, 2017. This update will not have a material impact on our financial position, results of operations, and disclosures. In September 2015, the FASB released ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Prior to the issuance of the standard, entities were required to retrospectively apply adjustments made to provisional amounts recognized in a business combination. The amendments in ASU 2015-16 require an entity to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. We adopted ASU 2015-16 on January 1, 2016. This update did not have a material impact on our financial position, results of operations, and disclosures. In November 2015, the FASB released ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that all deferred income taxes are classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 also aligns the presentation of deferred taxes with that of International Financial Reporting Standards. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted for all entities as of the beginning of an interim or annual reporting period. We adopted ASU 2015-17 prospectively effective March 31, 2016, therefore prior periods were not adjusted. In February 2016, the FASB released ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases with terms greater than 12 months, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures. In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which will simplify the income tax consequences, accounting for forfeitures, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted, and will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. We believe that the impact of this update will not have a material impact on our financial position, results of operations, and disclosures. We adopted ASU 2016-09 on January 1, 2017. In August 2016, the FASB released ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which addresses whether to present certain specific cash flow items as operating, investing or financing activities. ASU 2016-15 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. We will adopt ASU 2016-15 on January 1, 2018. We believe that the impact of this update will not have a material impact on our consolidated statements of cash flows. In October 2016, the FASB released ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). ASU 2016-16 removes the current exception in US GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. This update is effective for public entities for annual reporting periods beginning after December 15, 2017. Early adoption is permitted and should be in the first interim period if an entity issues interim financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2016 | |
Business Combinations [Abstract] | |
Business Acquisitions | ACQUISITIONS Alphatec International On September 1, 2016 (the “Closing Date”), Globus Medical Ireland, Ltd. (“Globus Ireland”), a private limited company existing under the laws of Ireland and an indirect wholly-owned subsidiary of Globus, acquired from Alphatec Holdings, Inc., a Delaware corporation (“Alphatec”) and a publicly traded medical devices company, (i) substantially all of the assets and certain liabilities of Alphatec’s subsidiaries in the United Kingdom, Italy, the Netherlands, Germany and Hong Kong and (ii) all of the outstanding equity interests of Alphatec’s subsidiaries in Japan, Brazil, China, Singapore and Australia (“Alphatec International”) pursuant to a Purchase and Sale Agreement entered into on July 25, 2016 (the “Purchase Agreement” and the “Acquisition”). The aggregate consideration for the transaction was approximately $77.8 million , subject to customary adjustment after closing for certain working capital items as provided in the Purchase Agreement. The Acquisition provides us immediate access to Japan and increased presence and penetration in other key geographies, roughly doubling our international sales. We also acquired a talent pool of international sales professionals as well as an extensive network of international distributors. In addition, in connection with the Acquisition, Globus Ireland entered into a supply agreement with Alphatec, pursuant to which Alphatec will supply products to Globus Ireland and its newly-acquired subsidiaries for up to five years after the Closing Date as we seek to transition those customers to Globus products. We accounted for the acquisition under the purchase method of accounting, and as a result, recorded preliminary goodwill of approximately $14.8 million . Amounts recognized for assets acquired and liabilities assumed are based on preliminary purchase price allocations and on certain management judgments. These preliminary allocations are based on an analysis of the estimated fair values of assets acquired and liabilities assumed, including identifiable tangible assets, and estimates of the useful lives of tangible assets. The final purchase price allocations will be completed after we finalize our third-party appraisal, review all available data, and complete our own internal assessments. We expect to complete our final purchase price allocations in mid-2017. Any additional adjustments resulting from finalization of the purchase price allocations for Alphatec International will affect the amount assigned to goodwill. Based on our preliminary purchase price allocations, we estimate that $9.1 million of the goodwill from this acquisition is deductible for tax purposes. The results of operations of Alphatec International have been included in our results of operations from the date of acquisition. Net sales contributed by Alphatec International from the acquisition date through December 31, 2016 were $18.6 million while earnings were break-even, and the earnings reflect amortization of acquired intangible assets and acquisition related costs of $2.6 million and amortization of inventory step up of $1.1 million . As of December 31, 2016 , we recorded the following preliminary purchase price allocation for the identifiable tangible and intangible assets and liabilities of Alphatec International: (In thousands) Consideration: Cash paid at closing $ 80,000 Net working capital adjustment due (2,217 ) Fair value of consideration $ 77,783 Identifiable assets acquired and liabilities assumed: Cash acquired $ 4,010 Accounts receivable 12,402 Inventory 10,579 Customer relationships 38,800 Property and equipment 4,800 Deferred tax assets 1,436 Other assets 8,092 Accounts payable and accrued expenses (8,119 ) Deferred tax liabilities (9,002 ) Total identifiable net assets 62,998 Goodwill 14,785 Total allocated purchase price $ 77,783 The following unaudited pro forma information is based on our historical data and our assumptions for consolidated results of operations, and gives effect to our acquisition of Alphatec International as if the acquisition had occurred on January 1, 2015. These unaudited pro forma results include adjustments having a continuing impact on our consolidated statements of income. These adjustments primarily consist of: adjustments to the fair value of inventory, adjustments to depreciation for the fair value and depreciable lives of property and equipment, amortization of intangibles, interest income and adjustments to tax expense based on consolidated pro forma results. These results have been prepared using assumptions our management believes are reasonable, are not necessarily indicative of the actual results that would have occurred if the acquisition had occurred on January 1, 2015, and are not necessarily indicative of the results that may be achieved in the future, including but not limited to operating synergies that we may realize as a result of the acquisition. Year Ended (pro forma, unaudited, in thousands, except per share amounts) December 31, December 31, Net sales $ 595,698 $ 598,386 Net income 110,611 115,181 Earnings per share: Basic $ 1.16 $ 1.21 Diluted $ 1.15 $ 1.20 Branch Medical Group, Inc. On February 25, 2015, we entered into an agreement to acquire Branch Medical Group, Inc. (“BMG”), a related-party manufacturer of high precision medical devices located in Audubon, PA. We closed this acquisition on March 11, 2015, for $57.0 million in cash, $5.3 million in deferred consideration, and $0.9 million of closing working capital adjustments. The amount payable to BMG on the date of acquisition of $5.2 million was also settled in connection with the acquisition. The deferred consideration was a holdback of a portion of the sale price, to allow time to properly account for all working capital adjustments in the event of an unfavorable adjustment to the sellers. The full holdback amount of $5.3 million was paid in cash in July 2016. As previously disclosed in our definitive proxy statement, BMG had been a related-party supplier since 2005. As of February 24, 2015, David C. Paul's wife, David D. Davidar's wife, and David M. Demski collectively owned approximately 49% of the outstanding stock of BMG. In addition, since February 2010, Mr. Paul's wife and Mr. Davidar's wife had served as directors of BMG. Prior to the acquisition, we purchased products and services from BMG pursuant to a standard Supplier Quality Agreement entered into in September 2010. We accounted for the acquisition under the purchase method of accounting, and as a result, recorded goodwill of $39.0 million . The results of operations of BMG have been included in our results of operations from the date of acquisition. Amounts recognized for assets acquired and liabilities assumed are based on purchase price allocations and on certain management judgments. These allocations are based on an analysis of the estimated fair values of assets acquired and liabilities assumed, including identifiable tangible assets, and estimates of the useful lives of tangible assets. We completed our final purchase price allocations during September 2015 and the final purchase price adjustments were not material. The goodwill from this acquisition is not deductible for tax purposes. The table below represents the final purchase price allocation for the identifiable tangible and intangible assets and liabilities of BMG: (In thousands) Consideration: Cash paid at closing $ 57,042 Deferred consideration 5,290 Closing adjustments payable 944 Fair value of consideration $ 63,276 Identifiable assets acquired and liabilities assumed: Cash acquired $ 9,026 Accounts receivable 88 Inventory 4,753 Other assets 444 Property and equipment 14,862 Accounts payable and accrued expenses (1,585 ) Deferred tax liability, net (3,280 ) Total identifiable net assets 24,308 Goodwill 38,968 Total allocated purchase price $ 63,276 We believe the vertical integration opportunity afforded by BMG will strengthen Globus, both operationally and financially. We expect this acquisition, together with other investments in our in-house manufacturing capabilities, to enable us to achieve our goal of in-house production of approximately one-half of our spinal implant product purchases by 2018. The following updated unaudited pro forma information is based on historical data, and gives effect to our acquisition of BMG as if the acquisition had occurred on January 1, 2014. These unaudited pro forma results include adjustments having a continuing impact on our consolidated statements of income. These adjustments consist of: elimination of intercompany sales/purchase transactions and the related profit, adjustments to depreciation for the fair value and depreciable lives of property and equipment, adjustments in the capitalization of overhead costs and adjustments to tax expense based on consolidated pro forma results. These results have been prepared using assumptions our management believes are reasonable, but not necessarily indicative of the actual results that would have occurred if the acquisition had occurred on January 1, 2014, and are not necessarily indicative of the results that may be achieved in the future, including but not limited to operating synergies that we may realize as a result of the acquisition. Year Ended (pro forma, unaudited, in thousands, except per share amounts) December 31, December 31, Net sales $ 544,578 $ 474,544 Net income 115,915 92,945 Earnings per share: Basic $ 1.22 $ 0.99 Diluted $ 1.21 $ 0.97 Transplant Technologies of Texas, Ltd. On October 23, 2014, we entered into an equity interest purchase agreement with Transplant Technologies of Texas, Ltd. (“TTOT”), an allograft tissue processor located in San Antonio, Texas, pursuant to which we acquired 100% of the equity interests for $36.1 million . In addition to the initial purchase price, we may be obligated to make milestone payments of up to $15.0 million over three years based primarily on sales thresholds from the product lines we acquired. TTOT was privately held and provides human tissue products including bone allografts, biomaterials, and soft tissue products for spine, orthopedics, sports medicine, dental, and wound care markets and represents a key step in fulfilling our strategy of building a broad business in regenerative biologics. While we continue to partner with third party suppliers for some of our existing allograft products, the acquisition of TTOT expanded our suite of regenerative biologics products. We believe this acquisition will also improve our capabilities for the development of new and innovative human allograft tissue products in the future. We accounted for the acquisition under the purchase method of accounting, and as a result, recorded goodwill of $34.6 million . The results of operations of TTOT have been included in our results of operations from the date of acquisition. Amounts recognized for assets acquired and liabilities assumed are based on purchase price allocations and on certain management judgments. These allocations are based on an analysis of the estimated fair values of assets acquired and liabilities assumed, including identifiable tangible and intangible assets, and estimates of the useful lives of tangible and amortizable intangible assets. We completed our final purchase price allocations during March 2015 and the final purchase price adjustments subsequent to December 31, 2014 were not material. The goodwill from this acquisition is deductible for tax purposes. The table below represents the final purchase price allocation for the identifiable tangible and intangible assets of TTOT: (In thousands) Consideration: Cash paid at closing $ 36,128 Contingent consideration 11,300 (1) Fair value of consideration $ 47,428 Identifiable assets acquired and liabilities assumed: Inventory $ 9,599 Supplier network 4,000 Customer relationships 1,600 Accounts receivable 1,529 Equipment 518 Trade names 300 Other assets 292 Accounts payable and accrued expenses (5,034 ) Total identifiable net assets 12,804 Goodwill 34,624 Total allocated purchase price $ 47,428 (1) The contingent consideration relates to the achievement of certain sales milestones. As of December 31, 2014, the aggregate, undiscounted amount of contingent consideration that we could pay related to the acquisitions ranges from zero to $15.0 million (see “Note 6. Fair Value Measurements” below). |
NOTE RECEIVABLE
NOTE RECEIVABLE | 12 Months Ended |
Dec. 31, 2016 | |
Note Receivable [Abstract] | |
Note Receivable Disclosure | NOTE RECEIVABLE On September 1, 2016, in connection with the Alphatec International Acquisition, we entered into a Credit, Security and Guaranty Agreement (the “Credit Agreement”) with Alphatec and Alphatec Spine, Inc. (“Alphatec Spine” and together with Alphatec, the “Alphatec Borrowers”), pursuant to which we made available to the Alphatec Borrowers a senior secured term loan facility in an amount not to exceed $30.0 million . On the Closing Date, we made an initial loan of $25.0 million and the Alphatec Borrowers issued a note for such amount to us. On December 20, 2016, the remaining $5.0 million was drawn by the Alphatec Borrowers and added to the note. The Credit Agreement contains customary operational and financial covenants, including a fixed charge coverage ratio to be maintained by the Alphatec Borrowers, and provides us with a security interest in all of the assets of the Alphatec Borrowers. The Credit Agreement has a scheduled maturity date five years from the Closing Date. The term loan interest rate for the first two years following the Closing Date will be priced at the London Interbank Offered Rate (“ LIBOR ”) plus 8.0% , subject to a 9.5% floor. The term loan interest rate thereafter will be LIBOR plus 13.0% . Interest accrues on the note receivable based on the contractual terms of the note. We consider a note to be impaired when, based on current information or factors (such as payment history, value of collateral and assessment of the borrower’s current creditworthiness), it is probable that the principal and interest payments will not be collected according to the note agreement. As of December 31, 2016 , we do not consider this note to be impaired. We believe that the note’s carrying value approximates its fair value. |
INTANGIBLE ASSETS
INTANGIBLE ASSETS | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets Disclosure [Abstract] | |
Intangible Assets Disclosure | INTANGIBLE ASSETS A summary of intangible assets is presented below: December 31, 2016 (In thousands) Weighted- Gross Accumulated Amortization Intangible In-process research & development — $ 20,460 $ — $ 20,460 Supplier network 10.0 4,000 (867 ) 3,133 Customer relationships & other intangibles 6.8 40,936 (5,201 ) 35,735 Patents 16.1 3,035 (657 ) 2,378 Total intangible assets $ 68,431 $ (6,725 ) $ 61,706 December 31, 2015 (In thousands) Weighted- Gross Accumulated Amortization Intangible In-process research & development — $ 24,560 $ — $ 24,560 Supplier network 10.0 4,000 (467 ) 3,533 Customer relationships & other intangibles 7.3 5,525 (2,384 ) 3,141 Patents 17.0 2,495 (487 ) 2,008 Total intangible assets $ 36,580 $ (3,338 ) $ 33,242 During 2016, we recorded an impairment charge of $3.5 million related to one of our IPR&D projects as a component of acquisition related costs. We used a discounted future cash flow analysis to determine the f air value used to determine the impairment charge. For intangible assets subject to amortization as of December 31, 2016 , the following is the expected future amortization: (In thousands) Annual Amortization Year ending December 31: 2017 $ 6,889 2018 6,338 2019 6,200 2020 5,934 2021 5,698 Thereafter 10,187 Total $ 41,246 |
MARKETABLE SECURITIES
MARKETABLE SECURITIES | 12 Months Ended |
Dec. 31, 2016 | |
Marketable Securities [Abstract] | |
Investments in Debt and Marketable Equity Securities (and Certain Trading Assets) Disclosure | MARKETABLE SECURITIES The composition of our short-term and long-term marketable securities is as follows: December 31, 2016 (In thousands) Contractual Maturity (in years) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds Less than 1 $ 114,826 $ 2 $ (88 ) $ 114,740 Corporate debt securities Less than 1 36,020 21 (4 ) 36,037 Commercial paper Less than 1 6,898 — (2 ) 6,896 Total short-term marketable securities $ 157,744 $ 23 $ (94 ) $ 157,673 Long-term: Municipal bonds 1-2 $ 30,207 $ — $ (137 ) $ 30,070 Corporate debt securities 1-2 15,278 9 (40 ) 15,247 Asset backed securities 1-2 10,146 6 (1 ) 10,151 Securities of U.S. government-sponsored agencies 1-2 5,002 — (26 ) 4,976 Total long-term marketable securities $ 60,633 $ 15 $ (204 ) $ 60,444 December 31, 2015 (In thousands) Contractual Maturity (in years) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds Less than 1 $ 108,402 $ 15 $ (81 ) $ 108,336 Corporate debt securities Less than 1 53,759 2 (57 ) 53,704 Commercial paper Less than 1 42,149 3 (1 ) 42,151 Securities of U.S. government-sponsored agencies Less than 1 14,511 4 (4 ) 14,511 Asset backed securities Less than 1 2,175 — — 2,175 Total short-term marketable securities $ 220,996 $ 24 $ (143 ) $ 220,877 Long-term: Municipal bonds 1-2 $ 18,508 $ — $ (25 ) $ 18,483 Corporate debt securities 1-2 12,033 — (25 ) 12,008 Asset backed securities 1-2 18,294 — (23 ) 18,271 Total long-term marketable securities $ 48,835 $ — $ (73 ) $ 48,762 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS Under the accounting for fair value measurements and disclosures, fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories: Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities; Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques. The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows: Balance at (In thousands) December 31, Level 1 Level 2 Level 3 Assets Cash equivalents $ 76,157 $ 957 $ 75,200 $ — Municipal bonds 144,810 — 144,810 — Corporate debt securities 51,284 — 51,284 — Commercial paper 6,896 — 6,896 — Asset-backed securities 10,151 — 10,151 — Securities of U.S. government-sponsored agencies 4,976 — 4,976 — Liabilities Contingent consideration 19,849 — — 19,849 Balance at (In thousands) December 31, Level 1 Level 2 Level 3 Assets Cash equivalents $ 12,700 $ 1,701 $ 10,999 $ — Municipal bonds 126,819 — 126,819 — Corporate debt securities 65,712 — 65,712 — Commercial paper 42,151 — 42,151 — Asset-backed securities 20,446 — 20,446 — Securities of U.S. government-sponsored agencies 14,511 — 14,511 — Liabilities Contingent consideration 26,617 — — 26,617 Our marketable securities are classified as Level 2 within the fair value hierarchy, as we measure their fair value using market prices for similar instruments and inputs such as actual trade data, benchmark yields, broker/dealer quotes and other similar data obtained from quoted market prices or independent pricing vendors. Assets and Liabilities That Are Measured at Fair Value on a Nonrecurring Basis The purchase price of business acquisitions is primarily allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values on the acquisition dates, with the excess recorded as goodwill. We utilize Level 3 inputs in the determination of the initial fair value. Non-financial assets such as goodwill, intangible assets, and property, plant, and equipment are subsequently measured at fair value when there is an indicator of impairment and recorded at fair value only when an impairment is recognized. We assess the impairment of intangible assets annually or whenever events or changes in circumstances indicate that the carrying amount of an intangible asset may not be recoverable. The fair value of our goodwill and intangible assets is not estimated if there is no change in events or circumstances that indicate the carrying amount of an intangible asset may not be recoverable. Contingent consideration represents our contingent milestone, performance and revenue-sharing payment obligations related to our acquisitions and is measured at fair value, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of contingent consideration uses assumptions we believe would be made by a market participant. We assess these estimates on an ongoing basis as additional data impacting the assumptions is obtained. The balances of the fair value of contingent consideration are recognized within business acquisition liabilities on our consolidated balance sheets, and the changes in the fair value of contingent consideration are recognized within acquisition related costs in the consolidated statements of income. The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs: Fair Value at (In thousands) December 31, Valuation technique Unobservable input Range Discount rate 3.1 % - 8.5 % Revenue-based payments $ 15,218 Discounted cash flow Probability of payment 87.0 % - 97.5 % Projected year of payment 2017 - 2029 Discount rate 5.3 % - 13.5 % Milestone-based payments $ 4,631 Discounted cash flow Probability of payment 80.0 % - 100.0 % Projected year of payment 2016 - 2020 The following table provides a reconciliation of the beginning and ending balances of contingent payments associated with acquisitions during the years ended December 31, 2016 and December 31, 2015 : Year Ended (In thousands) December 31, December 31, Beginning balance $ 26,617 $ 24,335 Purchase price contingent consideration — — Contingent payments (5,002 ) (836 ) Non-cash settlement of certain contingent consideration (4,632 ) — Changes in fair value of contingent consideration 2,866 3,118 Ending balance $ 19,849 $ 26,617 During 2016, we recorded non-cash settlements of certain business acquisition liabilities of $4.6 million related to two of our previous acquisitions as a component of acquisition related costs. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | INVENTORIES (In thousands) December 31, 2016 December 31, 2015 Raw materials $ 13,257 $ 12,308 Work in process 10,747 7,091 Finished goods 88,688 85,861 Total $ 112,692 $ 105,260 |
PROPERTY & EQUIPMENT
PROPERTY & EQUIPMENT | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property And Equipment | PROPERTY AND EQUIPMENT (In thousands) Useful Life December 31, 2016 December 31, 2015 Land — $ 8,271 $ 8,254 Buildings and improvements 30 22,225 19,809 Equipment 5-7 49,919 40,998 Instruments 3 173,668 147,961 Modules and cases 3 21,692 28,519 Other property and equipment 3-5 15,165 8,316 290,940 253,857 Less: accumulated depreciation (166,711 ) (139,114 ) Total $ 124,229 $ 114,743 Instruments are hand-held devices used by surgeons to install implants during surgery. Modules and cases are used to store and transport the instruments and implants. Depreciation expense related to property and equipment was as follows: Year Ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Depreciation $ 35,293 $ 22,522 $ 21,044 Included in the 2016 amount is $5.5 million related to amounts recognized in the current year related to the prior period adjustment. In addition, there was a $2.1 million impact to the current year activity due to the adjustment. For additional information regarding the prior period adjustment, please see “Note 1. Background and Summary of Significant Accounting Policies; (b) Basis of Presentation” above. |
ACCRUED EXPENSES
ACCRUED EXPENSES | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | ACCRUED EXPENSES (In thousands) December 31, December 31, Compensation and other employee-related costs $ 23,214 $ 21,151 Legal and other settlements and expenses 734 13,617 Accrued non-income taxes 6,946 6,808 Royalties 4,671 6,787 Other 10,836 5,406 Total accrued expenses $ 46,401 $ 53,769 The current year accrual for legal and other settlements and expenses, which includes accruals for settlement and verdict costs, decreased due primarily to the recognition of the Depuy Synthes Settlement Agreement. For additional information regarding litigation, please refer to “Note 15. Commitments and Contingencies” below. |
DEBT
DEBT | 12 Months Ended |
Dec. 31, 2016 | |
Debt Disclosure [Abstract] | |
Debt | DEBT Line of Credit In May 2011 , we entered into a credit agreement with Wells Fargo Bank related to a revolving credit facility that provides for borrowings up to $50.0 million . At our request, and with the approval of the bank, the amount of borrowings available under the revolving credit facility can be increased to $75.0 million . The revolving credit facility includes up to a $25.0 million sub-limit for letters of credit. As amended to date, the revolving credit facility extends to May 2017 . Cash advances bear interest at our option either at a fluctuating rate per annum equal to the daily LIBOR in effect for a one -month period plus 0.75% , or a fixed rate for a one - or three -month period equal to LIBOR plus 0.75% . The credit agreement governing the revolving credit facility also subjects us to various restrictive covenants, including the requirement to maintain maximum consolidated leverage. The covenants also include limitations on our ability to repurchase shares, to pay cash dividends or to enter into a sale transaction. As of December 31, 2016 , we were in compliance with all financial covenants under the credit agreement, there were no outstanding borrowings under the revolving credit facility and available borrowings were $50.0 million . We may terminate the credit agreement at any time on ten days’ notice without premium or penalty. |
EQUITY
EQUITY | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Equity | EQUITY Our amended and restated Certificate of Incorporation provides for a total of 785,000,000 authorized shares of common stock. Of the authorized number of shares of common stock, 500,000,000 shares are designated as Class A common stock (“Class A Common”), 275,000,000 shares are designated as Class B common stock (“Class B Common”) and 10,000,000 shares are designated as Class C common stock (“Class C Common”). The holders of Class A Common are entitled to one vote for each share of Class A Common held. The holders of Class B Common are entitled to 10 votes for each share of Class B Common held. The holders of Class A Common and Class B Common vote together as one class of common stock. The Class C Common is nonvoting. Except for voting rights, the Class A Common, Class B Common and Class C Common have the same rights and privileges. Our issued and outstanding common shares by Class were as follows: (Shares) Class A Common Class B Common Total December 31, 2016 72,052,360 23,877,556 95,929,916 December 31, 2015 71,442,166 23,877,556 95,319,722 The tables below present the changes in each component of accumulated other comprehensive loss, including current period other comprehensive loss and reclassifications out of accumulated other comprehensive loss: (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive loss, net of tax, at December 31, 2014 $ (64 ) $ (1,593 ) $ (1,657 ) Other comprehensive loss before reclassifications (67 ) (246 ) (313 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 12 — 12 Other comprehensive loss, net of tax (55 ) (246 ) (301 ) Accumulated other comprehensive loss, net of tax, at December 31, 2015 (119 ) (1,839 ) (1,958 ) Other comprehensive loss before reclassifications (74 ) (6,636 ) (6,710 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 26 — 26 Other comprehensive loss, net of tax (48 ) (6,636 ) (6,684 ) Accumulated other comprehensive loss, net of tax, at December 31, 2016 $ (167 ) $ (8,475 ) $ (8,642 ) Amounts reclassified from accumulated other comprehensive loss, net of tax, related to unrealized gains/losses on marketable securities were released to other income, net in our consolidated statements of income. The increase in foreign currency translation loss during the year ended December 31, 2016 is primarily due to the translation, since the acquisition date, of the net assets acquired in the Alphatec International acquisition for those entities whose functional currency and net assets are not denominated in U.S. dollars. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock-Based Compensation | STOCK-BASED COMPENSATION We have three stock plans: our Amended and Restated 2003 Stock Plan, our 2008 Stock Plan, and our 2012 Equity Incentive Plan (the “2012 Plan”). The 2012 Plan is the only remaining active stock plan. The purpose of these stock plans was, and the 2012 Plan is, to provide incentive to employees, directors, and consultants of Globus. The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options granted expire on a date specified by the Board, but generally not more than ten years from the grant date. Option grants to employees generally vest in varying installments over a four -year period. The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. Under the 2012 Plan, the aggregate number of shares of Class A Common stock that may be issued subject to options and other awards is equal to the sum of (i) 3,076,923 shares, (ii) any shares available for issuance under the 2008 Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to 3% of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that may be issued or transferred pursuant to incentive stock options under the 2012 Plan is limited to 10,769,230 shares. The shares of Class A Common stock covered by the 2012 Plan include authorized but unissued shares, treasury shares or shares of common stock purchased on the open market. As of December 31, 2016 , pursuant to the 2012 Plan, there were 12,009,496 shares of Class A Common stock reserved and 4,721,737 shares of Class A Common stock available for future grants. The weighted average grant date per share fair values of the options awarded to employees were as follows: Year Ended December 31, December 31, December 31, Weighted average grant date per share fair value $ 7.62 $ 8.63 $ 9.63 The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions: Year Ended December 31, December 31, December 31, Risk-free interest rate 1.03 % - 2.01 % 1.39 % - 2.11 % 1.51 % - 1.95 % Expected term (years) 5.8 - 6.5 5.1 - 9.9 5.3 - 6.4 Expected volatility 28.0 % - 29.0 % 29.0 % - 38.0 % 35.0 % - 41.0 % Expected dividend yield —% —% —% Stock option activity during the years ended December 31, 2016 , 2015 and 2014 is summarized as follows: Option Shares (thousands) Weighted average exercise price Weighted average remaining contractual life (years) Aggregate intrinsic value (thousands) Outstanding at December 31, 2013 4,886 $ 10.04 Granted 1,495 23.45 Exercised (1,263 ) 7.71 Forfeited (264 ) 15.33 Outstanding at December 31, 2014 4,854 14.50 Granted 2,828 24.69 Exercised (614 ) 8.92 Forfeited (391 ) 17.84 Outstanding at December 31, 2015 6,677 19.14 Granted 2,309 24.22 Exercised (610 ) 9.63 Forfeited (635 ) 23.10 Outstanding at December 31, 2016 7,741 21.08 7.6 $ 30,608 Exercisable at December 31, 2016 3,512 17.38 6.2 26,533 Expected to vest at December 31, 2016 4,229 $ 24.15 8.7 $ 4,074 We use the Black Scholes pricing model to determine the fair value of our stock options (see “Note 1. Background and Summary of Significant Accounting Policies, (q) Stock-Based Compensation” above). Compensation expense related to stock options granted to employees and non-employees under the Plans and the intrinsic value of stock options exercised was as follows: Year Ended (In thousands) December 31, December 31, December 31, Intrinsic value of stock options exercised $ 8,824 $ 9,984 $ 20,216 Stock-based compensation expense $ 11,382 $ 9,639 $ 7,111 Net stock-based compensation capitalized into inventory 270 221 — Total stock-based compensation cost $ 11,652 $ 9,860 $ 7,111 As of December 31, 2016 , there was $28.4 million of unrecognized compensation expense related to unvested employee stock options that vest over a weighted average period of three years. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES The components of income before income taxes are as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Domestic $ 154,377 $ 171,278 $ 137,643 Foreign 2,902 1,527 999 Total $ 157,279 $ 172,805 $ 138,642 The components of the provision for income taxes are as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Current: Federal $ 51,785 $ 45,813 $ 43,561 State 4,533 7,193 6,097 Foreign 748 673 519 57,066 53,679 50,177 Deferred: Federal (4,527 ) 5,926 (3,630 ) State 204 480 (357 ) Foreign 195 (64 ) (33 ) (4,128 ) 6,342 (4,020 ) Total $ 52,938 $ 60,021 $ 46,157 A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows: Year ended December 31, 2016 December 31, 2015 December 31, 2014 Statutory U.S. federal tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 2.2 3.0 2.6 Domestic production activities deduction (2.7 ) (2.6 ) (2.7 ) Tax credits (1.3 ) (0.9 ) (1.2 ) Nondeductible expenses 0.5 0.3 0.7 Other — (0.1 ) (1.1 ) Effective tax rate 33.7 % 34.7 % 33.3 % Deferred income taxes reflect the tax effects of temporary differences between the basis of assets and liabilities recognized for financial reporting purposes and tax purposes. Significant components of our deferred income taxes are as follows: (In thousands) December 31, 2016 December 31, 2015 Deferred tax assets: Inventory reserve $ 31,202 $ 26,741 Accruals, reserves, and other currently not deductible 13,269 13,333 Stock-based compensation 10,595 8,014 Foreign net operating loss carryforwards 227 329 Total deferred tax assets 55,293 48,417 Valuation allowance (83 ) (43 ) Total deferred tax assets, net of valuation allowance 55,210 48,374 Deferred tax liabilities: Depreciation and amortization (32,448 ) (22,666 ) Total deferred tax liabilities (32,448 ) (22,666 ) Net deferred tax assets $ 22,762 $ 25,708 In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible, management believes it is more likely than not that we will realize the benefits of these deductible differences at December 31, 2016 . The amount of the deferred tax asset considered realizable, however, could be reduced in the near term if estimates of future taxable income during the carryforward period are reduced. Of the amounts presented above , $0.3 million of long-term deferred tax assets is included as a component of other assets on our consolidated balance sheet as of December 31, 2015 . A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Unrecognized tax benefits at the beginning of the year $ 1,575 $ 3,228 $ 3,978 Additions related to current year tax positions — 316 — Additions related to prior year tax positions 287 261 614 Reductions related to prior year tax positions — (2,230 ) (209 ) Lapse of statute of limitations — — (202 ) Settlements — — (953 ) Unrecognized tax benefits at the end of the year $ 1,862 $ 1,575 $ 3,228 The impact of our unrecognized tax benefits to the effective income tax rate is as follows: (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Portion of total unrecognized tax benefits that, if recognized, would affect the effective income tax rate $ 1,542 $ 1,335 $ 838 We have not recorded income taxes on the undistributed earnings of our foreign subsidiaries based upon our intention to indefinitely reinvest undistributed earnings to ensure sufficient working capital and further expansion of existing operations outside the United States. The undistributed earnings of our foreign subsidiaries as of December 31, 2016 are immaterial. In the event we are required to repatriate funds from outside of the United States, such repatriation may be subject to local laws, customs, and tax consequences. Interest and penalties are recorded in the statement of income as provision for income taxes. The total interest and penalties recorded in the statement of income was nominal for the years ended December 31, 2016 , 2015 and 2014 . Our uncertain tax benefits could increase in the next twelve months as we continue our current transfer pricing policies. We do not expect a significant change in our uncertain tax benefits in the next twelve months. In 2014, we settled the IRS audits of 2011 and 2012 tax years, resulting in no adjustments. We are subject to federal income tax as well as income tax of multiple state and foreign jurisdictions. With few exceptions, we are no longer subject to income tax examination by tax authorities in major jurisdictions for years prior to 2011 as of December 31, 2016 . On December 18, 2015 the Protecting Americans from Tax Hikes Act of 2015 (the “PATH”) was signed into law. One of the provisions of PATH was the permanent extension of Internal Revenue Code section 41 research and development tax credit. As of December 31, 2015 a benefit was recognized for this tax credit and is included in the 2015 tax provision. On December 19, 2014, the Tax Increase Prevention Act of 2014 (the “TIPA”) was signed into law. One of the provisions of the TIPA was the reinstatement of the research and experimentation tax credit from January 1, 2014 through December 31, 2014. As of December 31, 2014 a benefit was recognized for this tax credit and is included in the 2014 tax provision. |
LEASES
LEASES | 12 Months Ended |
Dec. 31, 2016 | |
Leases, Operating [Abstract] | |
Leases | LEASES The Company leases certain equipment and facilities under operating leases. As of December 31, 2016 , minimum future rental payments under operating leases for each of the next five years are as follows: (In thousands) Year ending December 31: 2017 $ 1,412 2018 795 2019 1,108 2020 74 2021 7 Thereafter — Total $ 3,396 Rent expense related to all operating leases recognized as a component of selling, general and administrative expenses was as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Rent expense $ 1,500 $ 1,113 $ 676 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows. N-Spine, Synthes and Depuy Synthes Litigation In April 2010, N-Spine, Inc. and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. N-Spine, the patent owner, and Synthes USA, a licensee of the subject patent, allege that we infringe one or more claims of the patent by making, using, offering for sale or selling our TRANSITION ® stabilization system product. N-Spine and Synthes USA sought injunctive relief and an unspecified amount in damages. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million . In a related matter, on January 8, 2014, Depuy Synthes Products, LLC (“Depuy Synthes”) filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Depuy Synthes alleges that we infringe one or more claims of the asserted patent by making, using, offering for sale or selling our TRANSITION ® stabilization system product. Depuy Synthes seeks injunctive relief and an unspecified amount in damages. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million . Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC Litigation In July 2011, Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Synthes USA LLC, the patent owner, Synthes USA Products, LLC, a licensee to manufacture products of the subject patents, and Synthes USA Sales LLC, a licensee to sell products of the subject patents, allege that we infringe one or more claims of three patents by making, using, offering for sale or selling our COALITION ® , INDEPENDENCE ® and INTERCONTINENTAL ® products. This matter was one of the four patent infringement lawsuits concerning spinal implant technologies between Globus Medical, Inc. and DePuy Synthes settled on January 13, 2016 for $7.9 million . L5 Litigation In December 2009, we filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania against our former exclusive independent distributor L5 Surgical, LLC and its principals, seeking an injunction and declaratory judgment concerning certain restrictive covenants made to L5 by its sales representatives. L5 brought counterclaims against us alleging tortious interference, unfair competition and conspiracy. The injunction phase was resolved in September 2010, and this matter is now in the discovery phase of litigation on the underlying damages claims. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. Bianco Litigation On March 21, 2012, Sabatino Bianco filed suit against us in the Federal District Court for the Eastern District of Texas claiming that we misappropriated his trade secret and confidential information and improperly utilized it in developing our CALIBER ® product. Bianco alleges that we engaged in misappropriation of trade secrets, breach of contract, unfair competition, fraud and theft and seeks correction of inventorship, injunctive relief and exemplary damages. On April 20, 2012, Bianco filed a motion for a preliminary injunction, seeking to enjoin us from making, using, selling, importing or offering for sale our CALIBER ® product. On November 15, 2012, the court denied Bianco’s motion for preliminary injunction. On October 1, 2013, Bianco amended his complaint to claim that his trade secrets and confidential information were also used improperly in developing our RISE ® and CALIBER-L ® products. On January 17, 2014, the jury in this case returned a verdict in favor of Bianco on a claim of misappropriation of trade secret. We accrued the verdict amount of $4.3 million as of December 31, 2013. The jury found against Bianco on the claims of breach of contract and disgorgement of profits. The court granted our motion for judgment as a matter of law and dismissed Bianco’s claims for unfair competition, fraud, and exemplary damages, and Bianco abandoned the claim of misappropriation of confidential information. Bianco’s claims of correction of inventorship, unjust enrichment, and permanent injunctive relief were not submitted to the jury. On March 7, 2014, the court denied Bianco’s claim for correction of inventorship and ruled he is not entitled to be named as a co-inventor on any of the patents at issue, and also denied his claim for unjust enrichment. On March 17, 2014, the court denied Bianco’s claim for permanent injunctive relief. On July 2, 2014, the court awarded Bianco an ongoing royalty of 5% of the net sales of the CALIBER ® , CALIBER ® -L, and RISE ® products, or products that are not colorably different from those products, for a fifteen year period on sales starting on January 18, 2014. The court entered final judgment on the jury verdict on July 17, 2014. On October 19, 2015, the United States Federal Circuit Court of Appeals affirmed the judgment without opinion. On March 22, 2016, we filed a Petition for a Writ of Certiorari with the United States Supreme Court and on June 20, 2016 the Writ was denied. We do not expect the judgment to impact our ability to conduct our business or to have any material impact on our future revenues. Bonutti Skeletal Innovations, LLC Litigation On November 19, 2014, Bonutti Skeletal Innovations, LLC (“Bonutti Skeletal”) filed suit against us in the U.S. District Court for the Eastern District of Pennsylvania for patent infringement. Bonutti Skeletal, a non-practicing entity, alleges that Globus willfully infringes one or more claims of six patents by making, using, offering for sale or selling the CALIBER ® , CALIBER ® -L, COALITION ® , CONTINENTAL ® , FORGE ® , FORTIFY ® , INDEPENDENCE ® , INTERCONTINENTAL ® , MONUMENT ® , NIKO ® , RISE ® , SIGNATURE ® , SUSTAIN ® , and TRANSCONTINENTAL ® products. Bonutti Skeletal sought an unspecified amount in damages and injunctive relief. This matter was stayed on June 26, 2015 pending the resolution of inter partes reviews on the asserted patents by the USPTO. Globus Medical, Inc. and Bonutti Skeletal settled this matter on June 9, 2016. Flexuspine, Inc. Litigation On March 11, 2015, Flexuspine, Inc. filed suit against us in the U.S. District Court for the Eastern District of Texas for patent infringement. Flexuspine, Inc. alleged that Globus willfully infringed one or more claims of five patents by making, using, offering for sale or selling the CALIBER ® , CALIBER ® -L, and ALTERA ® products. Flexuspine sought an unspecified amount in damages and injunctive relief. On August 19, 2016, the jury returned a verdict in our favor finding no infringement of the asserted patents by the CALIBER ® , CALIBER ® -L, and ALTERA ® products. On November 1, 2016, plaintiff filed a notice of appeal to the United States Court of Appeals for the Federal Circuit. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. Stern Litigation On February 17, 2016, Joseph D. Stern filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Stern alleges that Globus willfully infringes one or more claims of three patents by making, using, offering for sale or selling the XTEND ® products. On October 10, 2016, Stern amended the accused products to further include our PROVIDENCE ® , VIP ® , UNIFY ® , and ASSURE ® products. Stern seeks an unspecified amount in damages and injunctive relief. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation. Silverstein Litigation On September 28, 2015, a putative securities class action lawsuit was filed against us and certain of our officers in the U.S. District Court for the Eastern District of Pennsylvania. Plaintiff in the lawsuit purported to represent a class of our stockholders who purchased shares between February 26, 2014 and August 5, 2014. The complaint purported to assert claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and sought damages in an unspecified amount, attorney’s fees and other relief. This matter was dismissed with prejudice on August 26, 2016. On September 9, 2016, plaintiff’s motion for reconsideration was denied, and on September 13, 2016 plaintiff filed an appeal in the United States Court of Appeals for the Third Circuit. In addition, we are subject to legal proceedings arising in the ordinary course of business. |
RETIREMENT BENEFIT PLANS
RETIREMENT BENEFIT PLANS | 12 Months Ended |
Dec. 31, 2016 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |
Retirement Benefit Plans | RETIREMENT BENEFIT PLANS We sponsor a 401(k) Plan covering all eligible U.S. employees. Under the 401(k) Plan, we make nondiscretionary matching contributions at the rate of 100% of employee’s contributions up to a maximum annual contribution of $6,000 per eligible employee, limited to 3% of the employee’s compensation for the period. Additionally, we contribute to various foreign retirement benefit plans required by local law or coordinated with government sponsored plans which cover many of our international employees. The benefits offered under these plans are reflective of local customs and practices in the countries concerned. Company contributions to these retirement plans were as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 401(k) and other retirement plan contributions $ 2,772 $ 2,303 $ 2,185 |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2016 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | RELATED-PARTY TRANSACTIONS Prior to March 11, 2015, we had contracted with BMG, which at the time was a third-party manufacturer in which certain of our senior management and significant stockholders had ownership interests and leadership positions. On March 11, 2015, BMG was acquired by Globus, and therefore, as of the acquisition date, there were no further purchases from nor amounts due to BMG. For the periods ended March 11, 2015 and December 31, 2014, we purchased $5.3 million and $21.9 million , respectively, from the related-party supplier. The amount payable to BMG on the date of acquisition of $5.2 million was settled in connection with the acquisition. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Segment And Geographic Information | SEGMENT AND GEOGRAPHIC INFORMATION Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We globally manage the business within one reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Products are sold principally in the United States. The following table represents total sales by geographic area, based on the location of the customer: Year Ended (In thousands) December 31, December 31, December 31, United States $ 500,226 $ 498,191 $ 427,091 International 63,768 46,562 47,280 Total sales $ 563,994 $ 544,753 $ 474,371 We classify our products into two categories: Innovative Fusion products and Disruptive Technology products. The following table represents total sales by product category: Year Ended (In thousands) December 31, December 31, December 31, Innovative Fusion $ 287,594 $ 288,062 $ 270,852 Disruptive Technology 276,400 256,691 203,519 Total sales $ 563,994 $ 544,753 $ 474,371 |
QUARTERLY FINANCIAL DATA (unaud
QUARTERLY FINANCIAL DATA (unaudited) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Financial Data (unaudited) | QUARTERLY FINANCIAL DATA (unaudited) Reclassifications have been made to prior period reported gross profit amounts to conform to the current period presentation. (unaudited) (In thousands, except per share amounts) March 31, June 30, September 30, December 31, Sales $ 139,264 $ 137,489 $ 135,651 $ 151,590 Gross profit 107,745 104,758 104,198 112,588 Net income 28,010 25,806 26,227 24,298 Net earnings per common share - basic 0.29 0.27 0.27 0.25 Net earnings per common share - diluted 0.29 0.27 0.27 0.25 (unaudited) (In thousands, except per share amounts) March 31, June 30, September 30, December 31, Sales $ 131,604 $ 133,570 $ 136,992 $ 142,587 Gross profit 99,592 101,116 104,065 107,647 Net income 24,648 24,054 26,481 37,601 Net earnings per common share - basic 0.26 0.25 0.28 0.39 Net earnings per common share - diluted 0.26 0.25 0.28 0.39 |
VALUATION ACCOUNTS AND QUALIFYI
VALUATION ACCOUNTS AND QUALIFYING ACCOUNTS | 12 Months Ended |
Dec. 31, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
Valuation Accounts and Qualifying Accounts | VALUATION ACCOUNTS AND QUALIFYING ACCOUNTS Allowance for doubtful accounts: (In thousands) Beginning of period Additions Write-offs End of period Year ended December 31, 2014 $ 1,581 $ 318 $ (252 ) $ 1,647 Year ended December 31, 2015 1,647 1,465 (599 ) 2,513 Year ended December 31, 2016 $ 2,513 $ 865 $ (607 ) $ 2,771 Deferred tax valuation allowance: (In thousands) Beginning of period Additions Write-offs End of period Year ended December 31, 2014 $ 327 $ — $ (282 ) $ 45 Year ended December 31, 2015 45 — (2 ) 43 Year ended December 31, 2016 $ 43 $ 40 $ — $ 83 |
BACKGROUND AND SUMMARY OF SIG28
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | |
Principles of Consolidation | Principles of Consolidation The accompanying consolidated financial statements include the accounts of Globus and its wholly owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary. Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, write-down for excess and obsolete inventory, useful lives of assets, the outcome of litigation, recoverability of intangible assets and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results. |
Foreign Currency Translation | Foreign Currency Translation The functional currency of our foreign subsidiaries is generally their local currency. Assets and liabilities of the foreign subsidiaries are translated at the period end currency exchange rate and revenues and expenses are translated at an average currency exchange rate for the period. The resulting foreign currency translation gains and losses are included as a component of accumulated other comprehensive income. Gains and losses arising from intercompany foreign transactions are included in other income, net on the consolidated statement of income. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand and all highly liquid investments with a maturity of three months or less when purchased. |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts The majority of our accounts receivable is composed of amounts due from hospitals. We carry our accounts receivable at cost less an allowance for doubtful accounts. On a regular basis, we evaluate our accounts receivable and estimate an allowance for doubtful accounts, as needed, based on various factors such as our customers’ current credit conditions, length of time past due, and the general economy as a whole. Receivables are written off against the allowance when they are deemed uncollectible and have historically been immaterial. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, are primarily cash and cash equivalents and accounts receivable. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising our customer base. We perform ongoing credit evaluations of our customers and generally do not require collateral. There was no customer that accounted for 10% or more of sales for the years ended December 31, 2016 , 2015 , and 2014 , respectively. |
Marketable Securities | Marketable Securities Our marketable securities include municipal bonds, corporate debt securities, commercial paper, securities of U.S. government-sponsored agencies and asset-backed securities, and are classified as available-for-sale as of December 31, 2016 . Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive income on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets. We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made. |
Inventories | Inventories I nventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a write-down for such excess inventories. |
Property and Equipment | Property and Equipment Property and equipment are recorded at cost less accumulated depreciation. Additions or improvements are capitalized, while repairs and maintenance are expensed as incurred. Depreciation and amortization are provided using the straight-line method over the related useful lives of the assets. When assets are sold or otherwise disposed of, the related property, equipment, and accumulated depreciation amounts are relieved from the accounts, and any gain or loss is recorded in the consolidated statements of income. |
Goodwill and Intangible Assets | Goodwill and Intangible Assets Goodwill represents the excess purchase price over the fair values of the identifiable assets acquired less the liabilities assumed. Goodwill is tested for impairment at a minimum on an annual basis. Goodwill is tested for impairment at the reporting unit level by comparing the reporting unit’s carrying amount, to the fair value of the reporting unit. The fair values are estimated using an income and discounted cash flow approach. We annually perform a qualitative test for impairment as permitted under Financial Accounting Standards Board (“FASB”) authoritative guidance. During the years ended December 31, 2016 , 2015 and 2014 , we did not record any impairment charges related to goodwill. Intangible assets consist of purchased in-process research and development (“IPR&D”), supplier network, patents, customer relationships and non-compete agreements. Intangible assets with finite useful lives are amortized over the period of estimated benefit using the straight-line method and estimated useful lives ranging from one to seventeen years. Intangible assets are tested for impairment annually or whenever events or circumstances indicate that a carrying amount of an asset (asset group) may not be recoverable. If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset. Fair value is generally determined using a discounted future cash flow analysis. During the years ended December 31, 2016 , 2015 and 2014 , we did not record any impairment charges related to our finite-lived intangible assets. IPR&D has an indefinite life and is not amortized until completion of the project at which time the IPR&D becomes an amortizable asset. If the related project is not completed in a timely manner, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value. |
Impairment of Long-Lived Assets | Impairment of Long-Lived Assets We periodically evaluate the recoverability of the carrying amount of long-lived assets, which include property and equipment, as well as whenever events or changes in circumstances indicate that the carrying amount of an asset group may not be fully recoverable. An impairment is assessed when the undiscounted future cash flows from the use and eventual disposition of an asset group are less than its carrying value. If impairment is indicated, we measure the amount of the impairment loss as the amount by which the carrying amount exceeds the fair value of the asset group. Our fair value methodology is based on quoted market prices, if available. If quoted market prices are not available, an estimate of fair value is made based on prices of similar assets or other valuation techniques including present value techniques. |
Revenue Recognition | Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold. |
Research and Development | Research and Development Research and development costs are expensed as incurred. Research and development costs include salaries, employee benefits, supplies, consulting services, clinical services and clinical trial costs, and facilities costs. Costs incurred in obtaining technology licenses and patents are charged immediately to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future use. |
Stock-Based Compensation | Stock-Based Compensation The cost for employee and non-employee director awards is measured at the grant date based on the fair value of the award. The fair value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service period (generally the vesting period of the equity award). Awards issued to non-employees are recorded at their fair value as determined in accordance with authoritative guidance, and are periodically revalued as the awards vest and are recognized as expense over the requisite service period. The determination of the fair value of stock options is made utilizing the Black-Scholes option-pricing model which is affected by our stock price and a number of assumptions, including expected volatility, expected term, risk-free interest rate and expected dividends. As we became a publicly traded entity in 2012, historic volatility for our common stock is insufficient to estimate expected volatility. As a result, we estimate volatility based on a consistently defined peer group of public companies that we believe collectively provides a reasonable basis for estimating volatility. We intend to continue to use the consistently defined group of publicly traded peer companies to determine volatility in the future until sufficient information regarding volatility of the price of our shares of Class A common stock becomes available or the selected companies are no longer suitable for this purpose. The expected term of the stock options is determined utilizing the simplified method given the limited extent of our historical data. The risk-free interest rate assumption is based on observed interest rates of U.S. Treasury securities appropriate for the expected terms of the stock options. The dividend yield assumption is based on the history and expectation of no dividend payouts. |
Income Taxes | Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which such items are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. A valuation allowance is established to offset any deferred tax assets if, based upon available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. Significant judgment is required in determining income tax provisions and in evaluating tax positions. We will establish additional provisions for income taxes when, despite the belief that tax positions are fully supportable, there remain certain positions that do not meet the minimum probability threshold that a tax position is more likely than not to be sustained upon examination by the taxing authority. In the normal course of business, we and our subsidiaries are examined by various federal, state, and foreign tax authorities. We regularly assess the potential outcomes of these examinations and any future examinations for the current or prior years in determining the adequacy of the provision for income taxes. We periodically assess the likelihood and amount of potential adjustments and adjust the income tax provision, the current tax liability, and deferred taxes in the period in which the facts that give rise to a revision become known. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments As of December 31, 2016 , the carrying values of cash and cash equivalents, short-term investments, accounts receivable, accounts payable and accrued expenses approximate their respective fair values based on their short-term nature. We classify our financial assets and liabilities that are measured at fair value into one of the three categories based upon inputs used to determine fair value. |
Advertising Expense | Advertising Expense We expense advertising costs as they are incurred. |
Legal costs | Legal Costs We expense legal costs related to loss contingencies as incurred. |
Acquisition Related Costs | Acquisition Related Costs Acquisition related costs represents the change in fair value of business acquisition related contingent consideration; costs related to integrating recently acquired businesses including but not limited to costs to exit or convert contractual obligations, severance, and information system conversion; and specific costs related to the consummation of the acquisition process such as banker fees, legal fees, and other acquisition related professional fees. |
Medical Device Excise Tax | Medical Device Excise Tax Effective as of January 1, 2013, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act (collectively “PPACA”) imposed a medical device excise tax (“MDET”) of 2.3% on any entity that manufactures or imports certain medical devices offered for sale in the United States. We account for the MDET as a component of our cost of goods sold. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) . ASU 2014-09 amends the guidance in former Topic 605, Revenue Recognition , and most other existing revenue guidances in US GAAP. Under the new standard, an entity will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the entity expects to be entitled in exchange for those goods or services and provide additional disclosures. As amended, the effective date for public entities is annual reporting periods beginning after December 15, 2017 and interim periods therein. Early adoption is not permitted prior to the first quarter of 2017. We will adopt ASU 2014-09 effective January 1, 2018 using the modified retrospective method (retrospective application with the cumulative effect of initially applying the guidance recognized at the date of initial application). This update will not have a material impact on our financial position, results of operations, and disclosures. In July 2015, the FASB released ASU 2015-11, Simplifying the Measurement of Inventory (Topic 330) (“ASU 2015-11”) as part of the FASB’s Simplification Initiative. This update is intended to more closely align the measurement of inventory under GAAP with the measurement of inventory under International Financial Reporting Standards. Within the scope of the update, an entity is required to measure inventory at the lower of cost or net realizable value. Net realizable value is defined as the estimated selling price in the ordinary course of business, less reasonable and predictable costs of completion, disposal and transportation. ASU 2015-11 is effective for all public entities for fiscal years beginning after December 15, 2016, including interim reporting periods within that period, and is required to be applied prospectively, with early adoption permitted. We adopted ASU 2015-11 on January 1, 2017. This update will not have a material impact on our financial position, results of operations, and disclosures. In September 2015, the FASB released ASU 2015-16, Business Combinations (Topic 805): Simplifying the Accounting for Measurement-Period Adjustments (“ASU 2015-16”). ASU 2015-16 requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. Prior to the issuance of the standard, entities were required to retrospectively apply adjustments made to provisional amounts recognized in a business combination. The amendments in ASU 2015-16 require an entity to present separately on the face of the income statement, or disclose in the notes, the portion of the amount recorded in current-period earnings by line item that would have been recorded in previous reporting periods if the adjustment to the provisional amounts had been recognized as of the acquisition date. ASU 2015-16 is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015. We adopted ASU 2015-16 on January 1, 2016. This update did not have a material impact on our financial position, results of operations, and disclosures. In November 2015, the FASB released ASU 2015-17, Income Taxes (Topic 740): Balance Sheet Classification of Deferred Taxes (“ASU 2015-17”). ASU 2015-17 simplifies the presentation of deferred income taxes by requiring that all deferred income taxes are classified as noncurrent in a classified statement of financial position. The amendments in ASU 2015-17 also aligns the presentation of deferred taxes with that of International Financial Reporting Standards. This update is effective for financial statements issued for annual periods beginning after December 15, 2016, and interim periods within those annual periods, with earlier application permitted for all entities as of the beginning of an interim or annual reporting period. We adopted ASU 2015-17 prospectively effective March 31, 2016, therefore prior periods were not adjusted. In February 2016, the FASB released ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). Under ASU 2016-02, a right-of-use asset and lease obligation will be recorded for all leases with terms greater than 12 months, whether operating or financing, while the income statement will reflect lease expense for operating leases and amortization/interest expense for financing leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018, with early adoption permitted, and requires the use of the modified retrospective method, which will require adjustment to all comparative periods presented in the consolidated financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures. In March 2016, the FASB released ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which will simplify the income tax consequences, accounting for forfeitures, and classification on the statements of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016, with early adoption permitted, and will be applied either prospectively, retrospectively or using a modified retrospective transition method, depending on the area covered in this update. We believe that the impact of this update will not have a material impact on our financial position, results of operations, and disclosures. We adopted ASU 2016-09 on January 1, 2017. In August 2016, the FASB released ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”), which addresses whether to present certain specific cash flow items as operating, investing or financing activities. ASU 2016-15 is effective for public entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted, including adoption in an interim period. We will adopt ASU 2016-15 on January 1, 2018. We believe that the impact of this update will not have a material impact on our consolidated statements of cash flows. In October 2016, the FASB released ASU 2016-16, Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory (“ASU 2016-16”). ASU 2016-16 removes the current exception in US GAAP prohibiting entities from recognizing current and deferred income tax expenses or benefits related to transfer of assets, other than inventory, within the consolidated entity. The current exception to defer the recognition of any tax impact on the transfer of inventory within the consolidated entity until it is sold to a third party remains unaffected. This update is effective for public entities for annual reporting periods beginning after December 15, 2017. Early adoption is permitted and should be in the first interim period if an entity issues interim financial statements. We are currently evaluating the impact of this new accounting standard on our financial position, results of operations, and disclosures. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Acquisition 2,016 | |
Business Acquisition | |
Schedule of Assets Acquired and Liabilities Assumed | As of December 31, 2016 , we recorded the following preliminary purchase price allocation for the identifiable tangible and intangible assets and liabilities of Alphatec International: (In thousands) Consideration: Cash paid at closing $ 80,000 Net working capital adjustment due (2,217 ) Fair value of consideration $ 77,783 Identifiable assets acquired and liabilities assumed: Cash acquired $ 4,010 Accounts receivable 12,402 Inventory 10,579 Customer relationships 38,800 Property and equipment 4,800 Deferred tax assets 1,436 Other assets 8,092 Accounts payable and accrued expenses (8,119 ) Deferred tax liabilities (9,002 ) Total identifiable net assets 62,998 Goodwill 14,785 Total allocated purchase price $ 77,783 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma information is based on our historical data and our assumptions for consolidated results of operations, and gives effect to our acquisition of Alphatec International as if the acquisition had occurred on January 1, 2015. These unaudited pro forma results include adjustments having a continuing impact on our consolidated statements of income. These adjustments primarily consist of: adjustments to the fair value of inventory, adjustments to depreciation for the fair value and depreciable lives of property and equipment, amortization of intangibles, interest income and adjustments to tax expense based on consolidated pro forma results. These results have been prepared using assumptions our management believes are reasonable, are not necessarily indicative of the actual results that would have occurred if the acquisition had occurred on January 1, 2015, and are not necessarily indicative of the results that may be achieved in the future, including but not limited to operating synergies that we may realize as a result of the acquisition. Year Ended (pro forma, unaudited, in thousands, except per share amounts) December 31, December 31, Net sales $ 595,698 $ 598,386 Net income 110,611 115,181 Earnings per share: Basic $ 1.16 $ 1.21 Diluted $ 1.15 $ 1.20 |
Acquisition 2,015 | |
Business Acquisition | |
Schedule of Assets Acquired and Liabilities Assumed | The table below represents the final purchase price allocation for the identifiable tangible and intangible assets and liabilities of BMG: (In thousands) Consideration: Cash paid at closing $ 57,042 Deferred consideration 5,290 Closing adjustments payable 944 Fair value of consideration $ 63,276 Identifiable assets acquired and liabilities assumed: Cash acquired $ 9,026 Accounts receivable 88 Inventory 4,753 Other assets 444 Property and equipment 14,862 Accounts payable and accrued expenses (1,585 ) Deferred tax liability, net (3,280 ) Total identifiable net assets 24,308 Goodwill 38,968 Total allocated purchase price $ 63,276 |
Business Acquisition, Pro Forma Information | These results have been prepared using assumptions our management believes are reasonable, but not necessarily indicative of the actual results that would have occurred if the acquisition had occurred on January 1, 2014, and are not necessarily indicative of the results that may be achieved in the future, including but not limited to operating synergies that we may realize as a result of the acquisition. Year Ended (pro forma, unaudited, in thousands, except per share amounts) December 31, December 31, Net sales $ 544,578 $ 474,544 Net income 115,915 92,945 Earnings per share: Basic $ 1.22 $ 0.99 Diluted $ 1.21 $ 0.97 |
Acquisition 2,014 | |
Business Acquisition | |
Schedule of Assets Acquired and Liabilities Assumed | The table below represents the final purchase price allocation for the identifiable tangible and intangible assets of TTOT: (In thousands) Consideration: Cash paid at closing $ 36,128 Contingent consideration 11,300 (1) Fair value of consideration $ 47,428 Identifiable assets acquired and liabilities assumed: Inventory $ 9,599 Supplier network 4,000 Customer relationships 1,600 Accounts receivable 1,529 Equipment 518 Trade names 300 Other assets 292 Accounts payable and accrued expenses (5,034 ) Total identifiable net assets 12,804 Goodwill 34,624 Total allocated purchase price $ 47,428 (1) The contingent consideration relates to the achievement of certain sales milestones. As of December 31, 2014, the aggregate, undiscounted amount of contingent consideration that we could pay related to the acquisitions ranges from zero to $15.0 million (see “Note 6. Fair Value Measurements” below). |
INTANGIBLE ASSETS (Tables)
INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets Disclosure [Abstract] | |
Intangible Assets Acquired as Part of Business Combination | A summary of intangible assets is presented below: December 31, 2016 (In thousands) Weighted- Gross Accumulated Amortization Intangible In-process research & development — $ 20,460 $ — $ 20,460 Supplier network 10.0 4,000 (867 ) 3,133 Customer relationships & other intangibles 6.8 40,936 (5,201 ) 35,735 Patents 16.1 3,035 (657 ) 2,378 Total intangible assets $ 68,431 $ (6,725 ) $ 61,706 December 31, 2015 (In thousands) Weighted- Gross Accumulated Amortization Intangible In-process research & development — $ 24,560 $ — $ 24,560 Supplier network 10.0 4,000 (467 ) 3,533 Customer relationships & other intangibles 7.3 5,525 (2,384 ) 3,141 Patents 17.0 2,495 (487 ) 2,008 Total intangible assets $ 36,580 $ (3,338 ) $ 33,242 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | For intangible assets subject to amortization as of December 31, 2016 , the following is the expected future amortization: (In thousands) Annual Amortization Year ending December 31: 2017 $ 6,889 2018 6,338 2019 6,200 2020 5,934 2021 5,698 Thereafter 10,187 Total $ 41,246 |
MARKETABLE SECURITIES (Tables)
MARKETABLE SECURITIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Marketable Securities [Abstract] | |
Marketable Securities | The composition of our short-term and long-term marketable securities is as follows: December 31, 2016 (In thousands) Contractual Maturity (in years) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds Less than 1 $ 114,826 $ 2 $ (88 ) $ 114,740 Corporate debt securities Less than 1 36,020 21 (4 ) 36,037 Commercial paper Less than 1 6,898 — (2 ) 6,896 Total short-term marketable securities $ 157,744 $ 23 $ (94 ) $ 157,673 Long-term: Municipal bonds 1-2 $ 30,207 $ — $ (137 ) $ 30,070 Corporate debt securities 1-2 15,278 9 (40 ) 15,247 Asset backed securities 1-2 10,146 6 (1 ) 10,151 Securities of U.S. government-sponsored agencies 1-2 5,002 — (26 ) 4,976 Total long-term marketable securities $ 60,633 $ 15 $ (204 ) $ 60,444 December 31, 2015 (In thousands) Contractual Maturity (in years) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Short-term: Municipal bonds Less than 1 $ 108,402 $ 15 $ (81 ) $ 108,336 Corporate debt securities Less than 1 53,759 2 (57 ) 53,704 Commercial paper Less than 1 42,149 3 (1 ) 42,151 Securities of U.S. government-sponsored agencies Less than 1 14,511 4 (4 ) 14,511 Asset backed securities Less than 1 2,175 — — 2,175 Total short-term marketable securities $ 220,996 $ 24 $ (143 ) $ 220,877 Long-term: Municipal bonds 1-2 $ 18,508 $ — $ (25 ) $ 18,483 Corporate debt securities 1-2 12,033 — (25 ) 12,008 Asset backed securities 1-2 18,294 — (23 ) 18,271 Total long-term marketable securities $ 48,835 $ — $ (73 ) $ 48,762 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows: Balance at (In thousands) December 31, Level 1 Level 2 Level 3 Assets Cash equivalents $ 76,157 $ 957 $ 75,200 $ — Municipal bonds 144,810 — 144,810 — Corporate debt securities 51,284 — 51,284 — Commercial paper 6,896 — 6,896 — Asset-backed securities 10,151 — 10,151 — Securities of U.S. government-sponsored agencies 4,976 — 4,976 — Liabilities Contingent consideration 19,849 — — 19,849 Balance at (In thousands) December 31, Level 1 Level 2 Level 3 Assets Cash equivalents $ 12,700 $ 1,701 $ 10,999 $ — Municipal bonds 126,819 — 126,819 — Corporate debt securities 65,712 — 65,712 — Commercial paper 42,151 — 42,151 — Asset-backed securities 20,446 — 20,446 — Securities of U.S. government-sponsored agencies 14,511 — 14,511 — Liabilities Contingent consideration 26,617 — — 26,617 |
Significant unobservable inputs | The recurring Level 3 fair value measurements of our contingent consideration liabilities include the following significant unobservable inputs: Fair Value at (In thousands) December 31, Valuation technique Unobservable input Range Discount rate 3.1 % - 8.5 % Revenue-based payments $ 15,218 Discounted cash flow Probability of payment 87.0 % - 97.5 % Projected year of payment 2017 - 2029 Discount rate 5.3 % - 13.5 % Milestone-based payments $ 4,631 Discounted cash flow Probability of payment 80.0 % - 100.0 % Projected year of payment 2016 - 2020 |
Rollforward of contingent consideration | The following table provides a reconciliation of the beginning and ending balances of contingent payments associated with acquisitions during the years ended December 31, 2016 and December 31, 2015 : Year Ended (In thousands) December 31, December 31, Beginning balance $ 26,617 $ 24,335 Purchase price contingent consideration — — Contingent payments (5,002 ) (836 ) Non-cash settlement of certain contingent consideration (4,632 ) — Changes in fair value of contingent consideration 2,866 3,118 Ending balance $ 19,849 $ 26,617 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventory | (In thousands) December 31, 2016 December 31, 2015 Raw materials $ 13,257 $ 12,308 Work in process 10,747 7,091 Finished goods 88,688 85,861 Total $ 112,692 $ 105,260 |
PROPERTY & EQUIPMENT (Tables)
PROPERTY & EQUIPMENT (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property And Equipment | (In thousands) Useful Life December 31, 2016 December 31, 2015 Land — $ 8,271 $ 8,254 Buildings and improvements 30 22,225 19,809 Equipment 5-7 49,919 40,998 Instruments 3 173,668 147,961 Modules and cases 3 21,692 28,519 Other property and equipment 3-5 15,165 8,316 290,940 253,857 Less: accumulated depreciation (166,711 ) (139,114 ) Total $ 124,229 $ 114,743 |
Schedule Of Depreciation Of Property And Equipment | Depreciation expense related to property and equipment was as follows: Year Ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Depreciation $ 35,293 $ 22,522 $ 21,044 Included in the 2016 amount is $5.5 million related to amounts recognized in the current year related to the prior period adjustment. In addition, there was a $2.1 million impact to the current year activity due to the adjustment. For additional information regarding the prior period adjustment, please see “Note 1. Background and Summary of Significant Accounting Policies; (b) Basis of Presentation” above. |
ACCRUED EXPENSES (Tables)
ACCRUED EXPENSES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | (In thousands) December 31, December 31, Compensation and other employee-related costs $ 23,214 $ 21,151 Legal and other settlements and expenses 734 13,617 Accrued non-income taxes 6,946 6,808 Royalties 4,671 6,787 Other 10,836 5,406 Total accrued expenses $ 46,401 $ 53,769 |
EQUITY (Tables)
EQUITY (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Equity [Abstract] | |
Schedule of Issued and Outstanding Shares by Class | Our issued and outstanding common shares by Class were as follows: (Shares) Class A Common Class B Common Total December 31, 2016 72,052,360 23,877,556 95,929,916 December 31, 2015 71,442,166 23,877,556 95,319,722 |
Schedule of Accumulated Other Comprehensive Income/(Loss), Net of Tax | The tables below present the changes in each component of accumulated other comprehensive loss, including current period other comprehensive loss and reclassifications out of accumulated other comprehensive loss: (In thousands) Unrealized loss on marketable securities, net of tax Foreign currency translation adjustments Accumulated other comprehensive loss Accumulated other comprehensive loss, net of tax, at December 31, 2014 $ (64 ) $ (1,593 ) $ (1,657 ) Other comprehensive loss before reclassifications (67 ) (246 ) (313 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 12 — 12 Other comprehensive loss, net of tax (55 ) (246 ) (301 ) Accumulated other comprehensive loss, net of tax, at December 31, 2015 (119 ) (1,839 ) (1,958 ) Other comprehensive loss before reclassifications (74 ) (6,636 ) (6,710 ) Amounts reclassified from accumulated other comprehensive loss, net of tax 26 — 26 Other comprehensive loss, net of tax (48 ) (6,636 ) (6,684 ) Accumulated other comprehensive loss, net of tax, at December 31, 2016 $ (167 ) $ (8,475 ) $ (8,642 ) |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Grants in Period, Weighted Average Grant Date Fair Value | The weighted average grant date per share fair values of the options awarded to employees were as follows: Year Ended December 31, December 31, December 31, Weighted average grant date per share fair value $ 7.62 $ 8.63 $ 9.63 |
Fair Value of Options, Assumptions Schedule | The fair value of the options was estimated on the date of the grant using a Black-Scholes option pricing model with the following assumptions: Year Ended December 31, December 31, December 31, Risk-free interest rate 1.03 % - 2.01 % 1.39 % - 2.11 % 1.51 % - 1.95 % Expected term (years) 5.8 - 6.5 5.1 - 9.9 5.3 - 6.4 Expected volatility 28.0 % - 29.0 % 29.0 % - 38.0 % 35.0 % - 41.0 % Expected dividend yield —% —% —% |
Summary of Stock Option Activity | Stock option activity during the years ended December 31, 2016 , 2015 and 2014 is summarized as follows: Option Shares (thousands) Weighted average exercise price Weighted average remaining contractual life (years) Aggregate intrinsic value (thousands) Outstanding at December 31, 2013 4,886 $ 10.04 Granted 1,495 23.45 Exercised (1,263 ) 7.71 Forfeited (264 ) 15.33 Outstanding at December 31, 2014 4,854 14.50 Granted 2,828 24.69 Exercised (614 ) 8.92 Forfeited (391 ) 17.84 Outstanding at December 31, 2015 6,677 19.14 Granted 2,309 24.22 Exercised (610 ) 9.63 Forfeited (635 ) 23.10 Outstanding at December 31, 2016 7,741 21.08 7.6 $ 30,608 Exercisable at December 31, 2016 3,512 17.38 6.2 26,533 Expected to vest at December 31, 2016 4,229 $ 24.15 8.7 $ 4,074 |
Stock Option Compensation Expense and Intrinsic Value Schedule | Compensation expense related to stock options granted to employees and non-employees under the Plans and the intrinsic value of stock options exercised was as follows: Year Ended (In thousands) December 31, December 31, December 31, Intrinsic value of stock options exercised $ 8,824 $ 9,984 $ 20,216 Stock-based compensation expense $ 11,382 $ 9,639 $ 7,111 Net stock-based compensation capitalized into inventory 270 221 — Total stock-based compensation cost $ 11,652 $ 9,860 $ 7,111 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The components of income before income taxes are as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Domestic $ 154,377 $ 171,278 $ 137,643 Foreign 2,902 1,527 999 Total $ 157,279 $ 172,805 $ 138,642 |
Schedule of Components Provision/(Benefit) for Income Taxes | The components of the provision for income taxes are as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Current: Federal $ 51,785 $ 45,813 $ 43,561 State 4,533 7,193 6,097 Foreign 748 673 519 57,066 53,679 50,177 Deferred: Federal (4,527 ) 5,926 (3,630 ) State 204 480 (357 ) Foreign 195 (64 ) (33 ) (4,128 ) 6,342 (4,020 ) Total $ 52,938 $ 60,021 $ 46,157 |
U.S. Federal Tax Rate To Effective Rate Reconciliation | A reconciliation of the statutory U.S. federal tax rate to our effective rate is as follows: Year ended December 31, 2016 December 31, 2015 December 31, 2014 Statutory U.S. federal tax rate 35.0 % 35.0 % 35.0 % State income taxes, net of federal benefit 2.2 3.0 2.6 Domestic production activities deduction (2.7 ) (2.6 ) (2.7 ) Tax credits (1.3 ) (0.9 ) (1.2 ) Nondeductible expenses 0.5 0.3 0.7 Other — (0.1 ) (1.1 ) Effective tax rate 33.7 % 34.7 % 33.3 % |
Schedule of Components of Deferred Income Taxes | Significant components of our deferred income taxes are as follows: (In thousands) December 31, 2016 December 31, 2015 Deferred tax assets: Inventory reserve $ 31,202 $ 26,741 Accruals, reserves, and other currently not deductible 13,269 13,333 Stock-based compensation 10,595 8,014 Foreign net operating loss carryforwards 227 329 Total deferred tax assets 55,293 48,417 Valuation allowance (83 ) (43 ) Total deferred tax assets, net of valuation allowance 55,210 48,374 Deferred tax liabilities: Depreciation and amortization (32,448 ) (22,666 ) Total deferred tax liabilities (32,448 ) (22,666 ) Net deferred tax assets $ 22,762 $ 25,708 |
Reconciliation of Beginning and Ending Amount of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Unrecognized tax benefits at the beginning of the year $ 1,575 $ 3,228 $ 3,978 Additions related to current year tax positions — 316 — Additions related to prior year tax positions 287 261 614 Reductions related to prior year tax positions — (2,230 ) (209 ) Lapse of statute of limitations — — (202 ) Settlements — — (953 ) Unrecognized tax benefits at the end of the year $ 1,862 $ 1,575 $ 3,228 |
Impact of Unrecognized Tax Benefits to Effective Income Tax Rate | The impact of our unrecognized tax benefits to the effective income tax rate is as follows: (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Portion of total unrecognized tax benefits that, if recognized, would affect the effective income tax rate $ 1,542 $ 1,335 $ 838 |
LEASES (Tables)
LEASES (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Leases, Operating [Abstract] | |
Schedule of Minimum Future Rental Payments Under Operating Leases | As of December 31, 2016 , minimum future rental payments under operating leases for each of the next five years are as follows: (In thousands) Year ending December 31: 2017 $ 1,412 2018 795 2019 1,108 2020 74 2021 7 Thereafter — Total $ 3,396 |
Schedule of Rent Expense for Operating Leases | Rent expense related to all operating leases recognized as a component of selling, general and administrative expenses was as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 Rent expense $ 1,500 $ 1,113 $ 676 |
RETIREMENT BENEFIT PLANS (Table
RETIREMENT BENEFIT PLANS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |
Company Contributions To Retirement Benefit Plans | Company contributions to these retirement plans were as follows: Year ended (In thousands) December 31, 2016 December 31, 2015 December 31, 2014 401(k) and other retirement plan contributions $ 2,772 $ 2,303 $ 2,185 |
SEGMENT AND GEOGRAPHIC INFORM41
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Segment Reporting [Abstract] | |
Schedule of Revenue from External Customers By Geographical Area International and Domestic | The following table represents total sales by geographic area, based on the location of the customer: Year Ended (In thousands) December 31, December 31, December 31, United States $ 500,226 $ 498,191 $ 427,091 International 63,768 46,562 47,280 Total sales $ 563,994 $ 544,753 $ 474,371 |
Revenue from External Customers by Products and Services | The following table represents total sales by product category: Year Ended (In thousands) December 31, December 31, December 31, Innovative Fusion $ 287,594 $ 288,062 $ 270,852 Disruptive Technology 276,400 256,691 203,519 Total sales $ 563,994 $ 544,753 $ 474,371 |
QUARTERLY FINANCIAL DATA (una42
QUARTERLY FINANCIAL DATA (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Quarterly Financial Information | (unaudited) (In thousands, except per share amounts) March 31, June 30, September 30, December 31, Sales $ 139,264 $ 137,489 $ 135,651 $ 151,590 Gross profit 107,745 104,758 104,198 112,588 Net income 28,010 25,806 26,227 24,298 Net earnings per common share - basic 0.29 0.27 0.27 0.25 Net earnings per common share - diluted 0.29 0.27 0.27 0.25 (unaudited) (In thousands, except per share amounts) March 31, June 30, September 30, December 31, Sales $ 131,604 $ 133,570 $ 136,992 $ 142,587 Gross profit 99,592 101,116 104,065 107,647 Net income 24,648 24,054 26,481 37,601 Net earnings per common share - basic 0.26 0.25 0.28 0.39 Net earnings per common share - diluted 0.26 0.25 0.28 0.39 |
VALUATION ACCOUNTS AND QUALIF43
VALUATION ACCOUNTS AND QUALIFYING ACCOUNTS (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Valuation and Qualifying Accounts Disclosure | |
Summary of Valuation Allowances | Allowance for doubtful accounts: (In thousands) Beginning of period Additions Write-offs End of period Year ended December 31, 2014 $ 1,581 $ 318 $ (252 ) $ 1,647 Year ended December 31, 2015 1,647 1,465 (599 ) 2,513 Year ended December 31, 2016 $ 2,513 $ 865 $ (607 ) $ 2,771 Deferred tax valuation allowance: (In thousands) Beginning of period Additions Write-offs End of period Year ended December 31, 2014 $ 327 $ — $ (282 ) $ 45 Year ended December 31, 2015 45 — (2 ) 43 Year ended December 31, 2016 $ 43 $ 40 $ — $ 83 |
BACKGROUND AND SUMMARY OF SIG44
BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Summary of Significant Accounting Policies | |||
Cost of goods sold | $ 134,705 | $ 132,333 | $ 110,769 |
Increase in Depreciation | 35,293 | 22,522 | 21,044 |
Decrease in Restricted Cash | 25,641 | (2,749) | (23,370) |
Advertising expense | 900 | 400 | 500 |
Restricted cash | 477 | $ 26,119 | |
Medical Device Excise Tax Percentage | 2.30% | ||
Impairment of intangible assets | $ 3,472 | $ 0 | 0 |
Minimum | |||
Summary of Significant Accounting Policies | |||
Number of Products Launched Since Inception | 170 | ||
Estimated useful life of finite-lived intangible assets | 1 year | ||
Maximum | |||
Summary of Significant Accounting Policies | |||
Estimated useful life of finite-lived intangible assets | 17 years | ||
Synthes related Litigations | |||
Summary of Significant Accounting Policies | |||
Payments for Legal Settlements | $ 7,900 | ||
Decrease in Restricted Cash | $ 8,400 | ||
In-process Research and Development | Maximum | |||
Summary of Significant Accounting Policies | |||
Number of Projects | 1 | ||
Acquisition-related costs | In-process Research and Development | |||
Summary of Significant Accounting Policies | |||
Impairment of intangible assets | $ 3,500 | ||
Cost of Goods, Total | |||
Summary of Significant Accounting Policies | |||
Medical Device Excise Tax | $ 8,100 | $ 7,100 | |
Restatement Adjustment | Cost of Goods, Total | |||
Summary of Significant Accounting Policies | |||
Cost of goods sold | 1,800 | ||
Decrease in Scrap | $ 3,700 |
ACQUISITIONS (Textuals) (Detail
ACQUISITIONS (Textuals) (Details) - USD ($) $ in Thousands | 12 Months Ended | |||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 01, 2016 | Mar. 11, 2015 | Oct. 23, 2014 | |
Business Acquisition | ||||||
Goodwill | $ 105,926 | $ 91,964 | ||||
Acquisition 2,016 | ||||||
Business Acquisition | ||||||
Business Combination, Consideration Transferred | 77,783 | |||||
Cash paid at closing | 80,000 | |||||
Goodwill | $ 14,785 | |||||
Business Acquisition, Goodwill, Expected Tax Deductible Amount | $ 9,100 | |||||
Revenue of Acquiree since Acquisition Date | $ 18,600 | |||||
Acquisition 2,015 | ||||||
Business Acquisition | ||||||
Business Combination, Consideration Transferred | 63,276 | |||||
Cash paid at closing | 57,042 | |||||
Deferred consideration | 5,290 | |||||
Closing adjustment payable | $ 944 | |||||
Goodwill | $ 38,968 | |||||
Accounts payable to related-party | $ 5,200 | |||||
Related party ownership percentage | 49.00% | |||||
Acquisition 2,014 | ||||||
Business Acquisition | ||||||
Percentage of voting interests acquired | 100.00% | |||||
Business Combination, Consideration Transferred | $ 47,428 | |||||
Cash paid at closing | 36,128 | |||||
Range of aggregate undiscounted contingent consideration from acquisitions, maximum | $ 15,000 | $ 15,000 | ||||
Obligation Term At Inception | 3 years | |||||
Goodwill | $ 34,624 | |||||
Maximum | Acquisition 2016 | ||||||
Business Acquisition | ||||||
Supply agreement term at inception | 5 years | |||||
Acquisition-related costs | Acquisition 2016 | ||||||
Business Acquisition | ||||||
Earnings or Loss of Acquiree since Acquisition Date | $ 2,600 | |||||
Fair Value Adjustment to Inventory | Acquisition 2016 | ||||||
Business Acquisition | ||||||
Earnings or Loss of Acquiree since Acquisition Date | $ 1,100 |
ACQUISITIONS (Assets Acquired a
ACQUISITIONS (Assets Acquired and Liabilities) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Sep. 01, 2016 | Mar. 11, 2015 | Oct. 23, 2014 | ||
Business Acquisition | |||||||
Deferred Tax Assets, Net | $ 22,762 | $ 25,708 | |||||
Goodwill | 105,926 | 91,964 | |||||
Acquisition 2,016 | |||||||
Business Acquisition | |||||||
Cash paid at closing | 80,000 | ||||||
Net working capital adjustment due | (2,217) | ||||||
Business Combination, Consideration Transferred | $ 77,783 | ||||||
Cash acquired | $ 4,010 | ||||||
Accounts receivable | 12,402 | ||||||
Inventory | 10,579 | ||||||
Customer Relationships | 38,800 | ||||||
Property and equipment | 4,800 | ||||||
Deferred Tax Assets, Net | 1,436 | ||||||
Other assets | 8,092 | ||||||
Accounts payable and accrued expenses | (8,119) | ||||||
Deferred tax liability, net | (9,002) | ||||||
Total identifiable net assets | 62,998 | ||||||
Goodwill | 14,785 | ||||||
Total allocated purchase price | $ 77,783 | ||||||
Acquisition 2,015 | |||||||
Business Acquisition | |||||||
Cash paid at closing | 57,042 | ||||||
Deferred consideration | 5,290 | ||||||
Closing adjustment payable | 944 | ||||||
Business Combination, Consideration Transferred | $ 63,276 | ||||||
Cash acquired | $ 9,026 | ||||||
Accounts receivable | 88 | ||||||
Inventory | 4,753 | ||||||
Property and equipment | 14,862 | ||||||
Other assets | 444 | ||||||
Accounts payable and accrued expenses | (1,585) | ||||||
Deferred tax liability, net | (3,280) | ||||||
Total identifiable net assets | 24,308 | ||||||
Goodwill | 38,968 | ||||||
Total allocated purchase price | $ 63,276 | ||||||
Acquisition 2,014 | |||||||
Business Acquisition | |||||||
Cash paid at closing | $ 36,128 | ||||||
Business Combination, Consideration Transferred | $ 47,428 | ||||||
Accounts receivable | $ 1,529 | ||||||
Inventory | 9,599 | ||||||
Accounts payable and accrued expenses | (5,034) | ||||||
Equipment | 518 | ||||||
Trade Names | 300 | ||||||
Other assets | 292 | ||||||
Contingent consideration | [1] | 11,300 | |||||
Total identifiable net assets | 12,804 | ||||||
Goodwill | 34,624 | ||||||
Total allocated purchase price | 47,428 | ||||||
Customer Relationships | Acquisition 2014 | |||||||
Business Acquisition | |||||||
Identifiable intangible assets: | 1,600 | ||||||
Supplier Network | Acquisition 2014 | |||||||
Business Acquisition | |||||||
Identifiable intangible assets: | $ 4,000 | ||||||
[1] | The contingent consideration relates to the achievement of certain sales milestones. As of December 31, 2014, the aggregate, undiscounted amount of contingent consideration that we could pay related to the acquisitions ranges from zero to $15.0 million (see “Note 6. Fair Value Measurements” below). |
ACQUISITIONS Proforma (Details)
ACQUISITIONS Proforma (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Acquisition 2,016 | |||
Net sales | $ 595,698 | $ 598,386 | |
Net income | $ 110,611 | $ 115,181 | |
Basic | $ 1.16 | $ 1.21 | |
Diluted | $ 1.15 | $ 1.20 | |
Acquisition 2,015 | |||
Net sales | $ 544,578 | $ 474,544 | |
Net income | $ 115,915 | $ 92,945 | |
Basic | $ 1.22 | $ 0.99 | |
Diluted | $ 1.21 | $ 0.97 |
NOTE RECEIVABLE (Details)
NOTE RECEIVABLE (Details) - USD ($) $ in Thousands | 12 Months Ended | |||
Dec. 31, 2016 | Dec. 20, 2016 | Sep. 01, 2016 | Dec. 31, 2015 | |
Note Receivable | ||||
Note receivable, gross, noncurrent | $ 30,000 | $ 0 | ||
Note term at inception | 5 years | |||
Note receivable, variable rate basis | LIBOR | |||
Maximum | ||||
Note Receivable | ||||
Note receivable, gross, noncurrent | $ 30,000 | |||
Minimum | ||||
Note Receivable | ||||
Note receivable, basis spread on variable rate | 9.50% | |||
Initial Draw | ||||
Note Receivable | ||||
Note receivable, gross, noncurrent | $ 25,000 | |||
Final Draw | ||||
Note Receivable | ||||
Note receivable, gross, noncurrent | $ 5,000 | |||
First Two Years | ||||
Note Receivable | ||||
Note receivable, basis spread on variable rate | 8.00% | |||
Last Three Years | ||||
Note Receivable | ||||
Note receivable, basis spread on variable rate | 13.00% |
INTANGIBLE ASSETS (Details)
INTANGIBLE ASSETS (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Acquired Intangible Assets | |||
Intangible Assets, Gross Carrying Amount | $ 68,431 | $ 36,580 | |
Accumulated Amortization | (6,725) | (3,338) | |
Intangible assets, net | 61,706 | 33,242 | |
Finite-lived intangible assets, net | 41,246 | ||
Impairment of intangible assets | $ 3,472 | $ 0 | $ 0 |
Maximum | |||
Acquired Intangible Assets | |||
Weighted average amortization period | 17 years | ||
Supplier Network | |||
Acquired Intangible Assets | |||
Weighted average amortization period | 10 years | 10 years | |
Gross carrying amount | $ 4,000 | $ 4,000 | |
Accumulated Amortization | (867) | (467) | |
Finite-lived intangible assets, net | $ 3,133 | $ 3,533 | |
Customer Relationships & Other Intangibles | |||
Acquired Intangible Assets | |||
Weighted average amortization period | 6 years 9 months 18 days | 7 years 3 months | |
Gross carrying amount | $ 40,936 | $ 5,525 | |
Accumulated Amortization | (5,201) | (2,384) | |
Finite-lived intangible assets, net | $ 35,735 | $ 3,141 | |
Patents | |||
Acquired Intangible Assets | |||
Weighted average amortization period | 16 years 1 month 6 days | 17 years | |
Gross carrying amount | $ 3,035 | $ 2,495 | |
Accumulated Amortization | (657) | (487) | |
Finite-lived intangible assets, net | 2,378 | 2,008 | |
In-process Research and Development | |||
Acquired Intangible Assets | |||
Indefinite-lived intangible assets | $ 20,460 | $ 24,560 | |
In-process Research and Development | Maximum | |||
Acquired Intangible Assets | |||
Number of Projects | 1 | ||
In-process Research and Development | Acquisition-related costs | |||
Acquired Intangible Assets | |||
Impairment of intangible assets | $ 3,500 |
INTANGIBLE ASSETS Expected Futu
INTANGIBLE ASSETS Expected Future Amortization of Acquired Intangible Assets (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | |
Year ending December 31, 2017 | $ 6,889 |
Year ending December 31, 2018 | 6,338 |
Year ending December 31, 2019 | 6,200 |
Year ending December 30, 2020 | 5,934 |
Year ending December 31, 2021 | 5,698 |
Thereafter | 10,187 |
Finite-lived intangible assets, net | $ 41,246 |
MARKETABLE SECURITIES (Details)
MARKETABLE SECURITIES (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Short-term Marketable Securities | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 157,744 | $ 220,996 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 23 | 24 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (94) | (143) |
Fair Value | 157,673 | 220,877 |
Short-term Marketable Securities | Municipal Bonds | ||
Schedule of Marketable Securities | ||
Amortized Cost | 114,826 | 108,402 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 2 | 15 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (88) | (81) |
Fair Value | $ 114,740 | $ 108,336 |
Short-term Marketable Securities | Municipal Bonds | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | 1 year |
Short-term Marketable Securities | Corporate Debt Securities | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 36,020 | $ 53,759 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 21 | 2 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (4) | (57) |
Fair Value | $ 36,037 | $ 53,704 |
Short-term Marketable Securities | Corporate Debt Securities | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | 1 year |
Short-term Marketable Securities | Commercial Paper | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 6,898 | $ 42,149 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | 3 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (2) | (1) |
Fair Value | $ 6,896 | $ 42,151 |
Short-term Marketable Securities | Commercial Paper | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | 1 year |
Short-term Marketable Securities | Asset-backed Securities | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 2,175 | |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | 0 | |
Fair Value | $ 2,175 | |
Short-term Marketable Securities | Asset-backed Securities | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | |
Short-term Marketable Securities | Securities of U.S. government-sponsored agencies | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 14,511 | |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 4 | |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (4) | |
Fair Value | $ 14,511 | |
Short-term Marketable Securities | Securities of U.S. government-sponsored agencies | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | |
Long-term Marketable Securities | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 60,633 | $ 48,835 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 15 | 0 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (204) | (73) |
Fair Value | 60,444 | 48,762 |
Long-term Marketable Securities | Municipal Bonds | ||
Schedule of Marketable Securities | ||
Amortized Cost | 30,207 | 18,508 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | 0 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (137) | (25) |
Fair Value | $ 30,070 | $ 18,483 |
Long-term Marketable Securities | Municipal Bonds | Minimum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | 1 year |
Long-term Marketable Securities | Municipal Bonds | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 2 years | 2 years |
Long-term Marketable Securities | Corporate Debt Securities | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 15,278 | $ 12,033 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 9 | 0 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (40) | (25) |
Fair Value | $ 15,247 | $ 12,008 |
Long-term Marketable Securities | Corporate Debt Securities | Minimum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | 1 year |
Long-term Marketable Securities | Corporate Debt Securities | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 2 years | 2 years |
Long-term Marketable Securities | Asset-backed Securities | ||
Schedule of Marketable Securities | ||
Amortized Cost | $ 10,146 | $ 18,294 |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 6 | 0 |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (1) | (23) |
Fair Value | 10,151 | $ 18,271 |
Long-term Marketable Securities | Asset-backed Securities | Minimum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | |
Long-term Marketable Securities | Asset-backed Securities | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 2 years | |
Long-term Marketable Securities | Securities of U.S. government-sponsored agencies | ||
Schedule of Marketable Securities | ||
Amortized Cost | 5,002 | |
Available-for-sale Securities, Accumulated Gross Unrealized Gain, before Tax | 0 | |
Available-for-sale Securities, Accumulated Gross Unrealized Loss, before Tax | (26) | |
Fair Value | $ 4,976 | |
Long-term Marketable Securities | Securities of U.S. government-sponsored agencies | Minimum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 1 year | |
Long-term Marketable Securities | Securities of U.S. government-sponsored agencies | Maximum | ||
Schedule of Marketable Securities | ||
Available For Sale Securities Contractual Maturity | 2 years |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) $ in Thousands | 12 Months Ended | |
Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | |
Contingent Consideration Payment [Roll Forward] | ||
Contingent consideration, beginning balance | $ 26,617 | $ 24,335 |
Purchase price contingent consideration | 0 | 0 |
Contingent payments | (5,002) | (836) |
Non cash settlement of contingent consideration | (4,632) | 0 |
Changes in fair value of contingent consideration | 2,866 | 3,118 |
Contingent consideration, ending balance | $ 19,849 | 26,617 |
Number of Previous Acquisitions | 2 | |
Fair Value, Measurements, Recurring | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Cash equivalents | $ 76,157 | 12,700 |
Contingent consideration | 19,849 | 26,617 |
Fair Value, Measurements, Recurring | Municipal Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 144,810 | 126,819 |
Fair Value, Measurements, Recurring | Corporate Debt Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 51,284 | 65,712 |
Fair Value, Measurements, Recurring | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 6,896 | 42,151 |
Fair Value, Measurements, Recurring | Asset-backed Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 10,151 | 20,446 |
Fair Value, Measurements, Recurring | Securities of U.S. government-sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 4,976 | 14,511 |
Fair Value, Measurements, Recurring | Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Cash equivalents | 957 | 1,701 |
Contingent Consideration Payment [Roll Forward] | ||
Contingent consideration, beginning balance | 0 | |
Contingent consideration, ending balance | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Municipal Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Corporate Debt Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Asset-backed Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 1 | Securities of U.S. government-sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Cash equivalents | 75,200 | 10,999 |
Contingent Consideration Payment [Roll Forward] | ||
Contingent consideration, beginning balance | 0 | |
Contingent consideration, ending balance | 0 | 0 |
Fair Value, Measurements, Recurring | Level 2 | Municipal Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 144,810 | 126,819 |
Fair Value, Measurements, Recurring | Level 2 | Corporate Debt Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 51,284 | 65,712 |
Fair Value, Measurements, Recurring | Level 2 | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 6,896 | 42,151 |
Fair Value, Measurements, Recurring | Level 2 | Asset-backed Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 10,151 | 20,446 |
Fair Value, Measurements, Recurring | Level 2 | Securities of U.S. government-sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 4,976 | 14,511 |
Fair Value, Measurements, Recurring | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Cash equivalents | 0 | 0 |
Contingent Consideration Payment [Roll Forward] | ||
Contingent consideration, beginning balance | 26,617 | |
Contingent consideration, ending balance | 19,849 | 26,617 |
Fair Value, Measurements, Recurring | Level 3 | Municipal Bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Corporate Debt Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Commercial Paper | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Asset-backed Securities | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | 0 |
Fair Value, Measurements, Recurring | Level 3 | Securities of U.S. government-sponsored agencies | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Marketable Securities, Fair Value | 0 | $ 0 |
Revenue-based payments | Fair Value, Measurements, Recurring | Level 3 | ||
Contingent Consideration Payment [Roll Forward] | ||
Contingent consideration, ending balance | $ 15,218 | |
Revenue-based payments | Fair Value, Measurements, Recurring | Minimum | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Probability of Payment | 87.00% | |
Discount rate | 3.10% | |
Revenue-based payments | Fair Value, Measurements, Recurring | Maximum | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Probability of Payment | 97.50% | |
Discount rate | 8.50% | |
Milestone-based payments | Fair Value, Measurements, Recurring | Level 3 | ||
Contingent Consideration Payment [Roll Forward] | ||
Contingent consideration, ending balance | $ 4,631 | |
Milestone-based payments | Fair Value, Measurements, Recurring | Minimum | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Probability of Payment | 80.00% | |
Discount rate | 5.30% | |
Milestone-based payments | Fair Value, Measurements, Recurring | Maximum | Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring Basis | ||
Probability of Payment | 100.00% | |
Discount rate | 13.50% |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 13,257 | $ 12,308 |
Work in process | 10,747 | 7,091 |
Finished goods | 88,688 | 85,861 |
Total | $ 112,692 | $ 105,260 |
PROPERTY & EQUIPMENT (Details)
PROPERTY & EQUIPMENT (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Property and Equipment | |||
Depreciation | $ 35,293 | $ 22,522 | $ 21,044 |
Property and equipment, gross | 290,940 | 253,857 | |
Less: accumulated depreciation | (166,711) | (139,114) | |
Total | 124,229 | 114,743 | |
Land | |||
Property and Equipment | |||
Property and equipment, gross | $ 8,271 | 8,254 | |
Building and improvements | |||
Property and Equipment | |||
Useful Life | 30 years | ||
Property and equipment, gross | $ 22,225 | 19,809 | |
Equipment | |||
Property and Equipment | |||
Property and equipment, gross | $ 49,919 | 40,998 | |
Equipment | Minimum | |||
Property and Equipment | |||
Useful Life | 5 years | ||
Equipment | Maximum | |||
Property and Equipment | |||
Useful Life | 7 years | ||
Instruments | |||
Property and Equipment | |||
Useful Life | 3 years | ||
Property and equipment, gross | $ 173,668 | 147,961 | |
Modules and cases | |||
Property and Equipment | |||
Useful Life | 3 years | ||
Property and equipment, gross | $ 21,692 | 28,519 | |
Other property and equipment | |||
Property and Equipment | |||
Property and equipment, gross | $ 15,165 | $ 8,316 | |
Other property and equipment | Minimum | |||
Property and Equipment | |||
Useful Life | 3 years | ||
Other property and equipment | Maximum | |||
Property and Equipment | |||
Useful Life | 5 years | ||
Prior Years Impact | Restatement Adjustment | Cost of Goods, Total | |||
Property and Equipment | |||
Depreciation | $ 5,500 | ||
Current Year Impact | Restatement Adjustment | Cost of Goods, Total | |||
Property and Equipment | |||
Depreciation | $ 2,100 |
ACCRUED EXPENSES (Details)
ACCRUED EXPENSES (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Payables and Accruals [Abstract] | ||
Compensation and other employee-related costs | $ 23,214 | $ 21,151 |
Legal and other settlements and expenses | 734 | 13,617 |
Accrued non-income taxes | 6,946 | 6,808 |
Royalties | 4,671 | 6,787 |
Other | 10,836 | 5,406 |
Total accrued expenses | $ 46,401 | $ 53,769 |
DEBT (Details)
DEBT (Details) - Revolving Credit Facility $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Debt Instruments | |
Credit facility, current borrowing capacity | $ 50 |
Credit facility, maximum borrowing capacity | 75 |
Line of Credit Facility, Fair Value of Amount Outstanding | $ 0 |
Revolving credit facility, minimum termination notice period | 10 days |
Fluctuating Rate Per Annum | |
Debt Instruments | |
Credit facility, basis spread on variable rate | 0.75% |
Credit facility, variable rate | LIBOR |
Credit facility, period of variable rate | 1 month |
Fixed Rate | |
Debt Instruments | |
Credit facility, basis spread on variable rate | 0.75% |
Credit facility, variable rate | LIBOR |
Fixed Rate | Minimum | |
Debt Instruments | |
Credit facility, period of variable rate | 1 month |
Fixed Rate | Maximum | |
Debt Instruments | |
Credit facility, period of variable rate | 3 months |
Letter of Credit | |
Debt Instruments | |
Credit facility, maximum borrowing capacity | $ 25 |
EQUITY (Textuals) (Details)
EQUITY (Textuals) (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Class of Stock | ||
Common stock, shares outstanding | 95,929,916 | 95,319,722 |
Common stock, shares authorized (in shares) | 785,000,000 | |
Class A Common | ||
Class of Stock | ||
Common stock, shares outstanding | 72,052,360 | 71,442,166 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, votes per share | 1 | |
Class B Common | ||
Class of Stock | ||
Common stock, shares outstanding | 23,877,556 | 23,877,556 |
Common stock, shares authorized (in shares) | 275,000,000 | 275,000,000 |
Common stock, votes per share | 10 | |
Class C Common | ||
Class of Stock | ||
Common stock, shares authorized (in shares) | 10,000,000 |
EQUITY (Schedule of Issued and
EQUITY (Schedule of Issued and Outstanding Shares) (Details) - shares | Dec. 31, 2016 | Dec. 31, 2015 |
Class of Stock | ||
Common stock, shares outstanding | 95,929,916 | 95,319,722 |
Common stock, shares issued | 95,929,916 | 95,319,722 |
Class A Common | ||
Class of Stock | ||
Common stock, shares outstanding | 72,052,360 | 71,442,166 |
Common stock, shares issued | 72,052,360 | 71,442,166 |
Class B Common | ||
Class of Stock | ||
Common stock, shares outstanding | 23,877,556 | 23,877,556 |
Common stock, shares issued | 23,877,556 | 23,877,556 |
EQUITY Accumulated Other Compre
EQUITY Accumulated Other Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Accumulated other comprehensive income/(loss), net of tax | $ (8,642) | $ (1,958) | $ (1,657) |
Other comprehensive income/(loss) before reclassifications | (6,710) | (313) | |
Amounts reclassified from accumulated other comprehensive income, net of tax | 26 | 12 | |
Other comprehensive income/(loss), net of tax | (6,684) | (301) | (648) |
Foreign Currency Translation Adjustment | |||
Accumulated other comprehensive income/(loss), net of tax | (8,475) | (1,839) | (1,593) |
Other comprehensive income/(loss) before reclassifications | (6,636) | (246) | |
Amounts reclassified from accumulated other comprehensive income, net of tax | 0 | 0 | |
Other comprehensive income/(loss), net of tax | (6,636) | (246) | |
Unrealized Gain/(Loss) on Marketable Securities, Net of Tax | |||
Accumulated other comprehensive income/(loss), net of tax | (167) | (119) | $ (64) |
Other comprehensive income/(loss) before reclassifications | (74) | (67) | |
Amounts reclassified from accumulated other comprehensive income, net of tax | 26 | 12 | |
Other comprehensive income/(loss), net of tax | $ (48) | $ (55) |
STOCK-BASED COMPENSATION (Textu
STOCK-BASED COMPENSATION (Textuals) (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2016USD ($)shares | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Share-based Compensation, Number of Stock Plans | 3 |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Maximum contractual term | 10 years |
Unrecognized compensation expense, unvested stock options | $ | $ 28.4 |
Weighted average period of recognition, unvested stock options | 3 years |
Stock Options | Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Award vesting period (in years) | 4 years |
2012 Equity Incentive Plan | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Base number of shares that may be issuable under stock plan | 3,076,923 |
2012 Equity Incentive Plan | Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Number of shares available for grant | 10,769,230 |
Annual percentage limit for incremental shares that may be issued | 3.00% |
2012 Equity Incentive Plan | Class A Common | |
Share-based Compensation Arrangement by Share-based Payment Award | |
Shares reserved under the 2012 Equity Incentive Plan | 12,009,496 |
Number of shares available for grant | 4,721,737 |
STOCK-BASED COMPENSATION (Grant
STOCK-BASED COMPENSATION (Grant Date Fair Values of Options Awarded to Employees) (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Weighted average grant date per share fair value | $ 7.62 | $ 8.63 | $ 9.63 |
STOCK-BASED COMPENSATION (Fair
STOCK-BASED COMPENSATION (Fair Value of Options, Assumptions) (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Risk-free interest rate, minimum | 1.03% | 1.39% | 1.51% |
Risk-free interest rate, maximum | 2.01% | 2.11% | 1.95% |
Expected volatility, minimum | 28.00% | 29.00% | 35.00% |
Expected volatility, maximum | 29.00% | 38.00% | 41.00% |
Expected dividend yield | 0.00% | 0.00% | 0.00% |
Minimum | |||
Expected term | 5 years 9 months 22 days | 5 years 1 month 17 days | 5 years 3 months 22 days |
Maximum | |||
Expected term | 6 years 6 months | 9 years 11 months | 6 years 4 months 16 days |
STOCK-BASED COMPENSATION (Stock
STOCK-BASED COMPENSATION (Stock Option Activity) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | |||
Number of shares outstanding beginning balance | 6,677 | 4,854 | 4,886 |
Number of shares granted | 2,309 | 2,828 | 1,495 |
Number of shares exercised | (610) | (614) | (1,263) |
Number of shares forfeited | (635) | (391) | (264) |
Number of shares outstanding ending balance | 7,741 | 6,677 | 4,854 |
Number of shares exercisable | 3,512 | ||
Number of shares expected to vest | 4,229 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward] | |||
Weighted average exercise price per share outstanding beginning balance | $ 19.14 | $ 14.50 | $ 10.04 |
Weighted average exercise price per share granted | 24.22 | 24.69 | 23.45 |
Weighted average exercise price per share exercised | 9.63 | 8.92 | 7.71 |
Weighted average exercise price per share forfeited | 23.10 | 17.84 | 15.33 |
Weighted average exercise price per share outstanding ending balance | 21.08 | $ 19.14 | $ 14.50 |
Weighted average exercise price per share exercisable | 17.38 | ||
Weighted average exercise price per share expected to vest | $ 24.15 | ||
Weighted average remaining contractual life outstanding | 7 years 7 months 6 days | ||
Weighted average remaining contractual life exercisable | 6 years 2 months 12 days | ||
Weighted average remaining contractual life expected to vest | 8 years 8 months 12 days | ||
Aggregate intrinsic value outstanding | $ 30,608 | ||
Aggregate intrinsic value exercisable | 26,533 | ||
Aggregate intrinsic value expected to vest | $ 4,074 |
STOCK-BASED COMPENSATION (Compe
STOCK-BASED COMPENSATION (Compensation Expense Related to Stock Options and Their Intrinsic Values) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
Intrinsic value of stock options exercised | $ 8,824 | $ 9,984 | $ 20,216 |
Stock-based compensation expense | 11,382 | 9,639 | 7,111 |
Net stock-based compensation capitalized into inventory | 270 | 221 | 0 |
Total stock-based compensation cost | $ 11,652 | $ 9,860 | $ 7,111 |
INCOME TAXES (Components of Inc
INCOME TAXES (Components of Income (Loss) Before Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Income before taxes, domestic | $ 154,377 | $ 171,278 | $ 137,643 |
Income before taxes, foreign | 2,902 | 1,527 | 999 |
Income before income taxes | $ 157,279 | $ 172,805 | $ 138,642 |
INCOME TAXES (Components of Pro
INCOME TAXES (Components of Provision for Income Taxes) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Current Income Tax Expense | |||
Current income tax provision, federal | $ 51,785 | $ 45,813 | $ 43,561 |
Current income tax provision, state | 4,533 | 7,193 | 6,097 |
Current income tax provision, foreign | 748 | 673 | 519 |
Current income tax provision | 57,066 | 53,679 | 50,177 |
Deferred Income Tax Expense/(Benefit) | |||
Deferred income tax provision/(benefit), federal | (4,527) | 5,926 | (3,630) |
Deferred income tax (benefit), state | 204 | 480 | (357) |
Deferred income tax benefit, foreign | 195 | (64) | (33) |
Deferred income tax provision/(benefit) | (4,128) | 6,342 | (4,020) |
Income tax provision, total | $ 52,938 | $ 60,021 | $ 46,157 |
INCOME TAXES (Reconciliation of
INCOME TAXES (Reconciliation of Statutory U.S. Federal Tax Rate to Effective Rate) (Details) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Statutory U.S. federal tax rate | 35.00% | 35.00% | 35.00% |
State income taxes, net of federal benefit | 2.20% | 3.00% | 2.60% |
Domestic production activities deduction | (2.70%) | (2.60%) | (2.70%) |
Tax credits | (1.30%) | (0.90%) | (1.20%) |
Nondeductible expenses | 0.50% | 0.30% | 0.70% |
Other | 0.00% | (0.10%) | (1.10%) |
Effective tax rate | 33.70% | 34.70% | 33.30% |
INCOME TAXES (Components of Def
INCOME TAXES (Components of Deferred Income Taxes) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Deferred income taxes | $ 30,638 | $ 0 |
Components of Deferred Tax Assets [Abstract] | ||
Inventory reserve | 31,202 | 26,741 |
Accruals, reserves, and other currently not deductible | 13,269 | 13,333 |
Stock-based compensation | 10,595 | 8,014 |
Foreign net operating loss carryforwards | 227 | 329 |
Total deferred tax assets | 55,293 | 48,417 |
Valuation allowance | (83) | (43) |
Total deferred tax assets, net of valuation allowance | 55,210 | 48,374 |
Components of Deferred Tax Liabilities [Abstract] | ||
Depreciation and amortization | (32,448) | (22,666) |
Total deferred tax liabilities | (32,448) | (22,666) |
Net deferred tax assets | $ 22,762 | $ 25,708 |
INCOME TAXES (Reconciliation 69
INCOME TAXES (Reconciliation of Beginning and Ending Amounts of Unrecognized Tax Benefits) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Unrecognized tax benefits at the beginning of the year | $ 1,575 | $ 3,228 | $ 3,978 |
Additions related to current year tax positions | 0 | 316 | 0 |
Additions related to prior year tax positions | 287 | 261 | 614 |
Reductions related to prior year tax positions | 0 | (2,230) | (209) |
Lapse of statute of limitations | 0 | 0 | (202) |
Settlements | 0 | 0 | (953) |
Unrecognized tax benefit at the end of the year | 1,862 | 1,575 | 3,228 |
Portion of total unrecognized tax benefits that, if recognized, that would affect the effective income tax rate | $ 1,542 | $ 1,335 | $ 838 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) $ in Thousands | Dec. 31, 2016 | Dec. 31, 2015 |
Income Tax Examination | ||
Long term deferred tax asset | $ 30,638 | $ 0 |
Other Assets | ||
Income Tax Examination | ||
Long term deferred tax asset | $ 300 |
LEASES (Minimum Future Rental P
LEASES (Minimum Future Rental Payments Under Operating Leases) (Details) $ in Thousands | Dec. 31, 2016USD ($) |
Leases, Operating [Abstract] | |
Year ending December 31, 2017 | $ 1,412 |
Year ending December 31, 2018 | 795 |
Year ending December 31, 2019 | 1,108 |
Year ending December 31, 2020 | 74 |
Year ending December 31, 2021 | 7 |
Thereafter | 0 |
Total | $ 3,396 |
LEASES (Rent Expense Related to
LEASES (Rent Expense Related to Operating Leases) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Leases, Operating [Abstract] | |||
Rent expense | $ 1,500 | $ 1,113 | $ 676 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2013USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Feb. 17, 2016claim | Mar. 11, 2015claim | Nov. 19, 2014claim | Jul. 31, 2011claim | Apr. 30, 2010claim | |
Loss Contingencies | |||||||||
Provision for litigation | $ | $ 3,156 | $ (11,268) | $ 5,667 | ||||||
Flexuspine Inc. Litigation | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 5 | ||||||||
Synthes related Litigations | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 3 | ||||||||
Loss Contingency, Claims Settled, Number | 4 | ||||||||
Payments for Legal Settlements | $ | $ 7,900 | ||||||||
Bianco | |||||||||
Loss Contingencies | |||||||||
Combined litigation loss | $ | $ 4,300 | ||||||||
Royalty Rate | 5.00% | ||||||||
Royalty Period | 15 years | ||||||||
Bonutti Skeletal Innovations LLC Litigation | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 6 | ||||||||
Stern Litigation | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 3 | ||||||||
Minimum | Flexuspine Inc. Litigation | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 1 | ||||||||
Minimum | Synthes related Litigations | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 1 | ||||||||
Minimum | Bonutti Skeletal Innovations LLC Litigation | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 1 | ||||||||
Minimum | Stern Litigation | |||||||||
Loss Contingencies | |||||||||
Patent claims (number of claims) | 1 |
RETIREMENT BENEFIT PLANS (Detai
RETIREMENT BENEFIT PLANS (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Defined Contribution Pension and Other Postretirement Plans Disclosure [Abstract] | |||
Nondiscretionary employee contribution match rate | 100.00% | ||
Maximum annual contribution match, per employee | $ 6,000 | ||
Maximum annual contribution match, percent per employee | 3.00% | ||
401(k) and other retirement plan contributions | $ 2,772,000 | $ 2,303,000 | $ 2,185,000 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Millions | 2 Months Ended | 12 Months Ended |
Mar. 11, 2015 | Dec. 31, 2014 | |
Related Party Transaction | ||
Purchases from related-party supplier | $ 5.3 | $ 21.9 |
Acquisition 2,015 | ||
Related Party Transaction | ||
Accounts payable to related-party | $ 5.2 |
SEGMENT AND GEOGRAPHIC INFORM76
SEGMENT AND GEOGRAPHIC INFORMATION (Geographic Location) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)segments | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Revenues from External Customers | |||||||||||
Number of reportable segments | segments | 1 | ||||||||||
Total sales | $ 151,590 | $ 135,651 | $ 137,489 | $ 139,264 | $ 142,587 | $ 136,992 | $ 133,570 | $ 131,604 | $ 563,994 | $ 544,753 | $ 474,371 |
United States | |||||||||||
Revenues from External Customers | |||||||||||
Total sales | 500,226 | 498,191 | 427,091 | ||||||||
International | |||||||||||
Revenues from External Customers | |||||||||||
Total sales | $ 63,768 | $ 46,562 | $ 47,280 |
SEGMENT AND GEOGRAPHIC INFORM77
SEGMENT AND GEOGRAPHIC INFORMATION (Products) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 30, 2015USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2016USD ($)categoriessegments | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | |
Revenue from External Customer | |||||||||||
Total sales | $ 151,590 | $ 135,651 | $ 137,489 | $ 139,264 | $ 142,587 | $ 136,992 | $ 133,570 | $ 131,604 | $ 563,994 | $ 544,753 | $ 474,371 |
Textuals [Abstract] | |||||||||||
Number of reportable segments | segments | 1 | ||||||||||
Number of product categories | categories | 2 | ||||||||||
Innovative Fusion | |||||||||||
Revenue from External Customer | |||||||||||
Total sales | $ 287,594 | 288,062 | 270,852 | ||||||||
Disruptive Technology | |||||||||||
Revenue from External Customer | |||||||||||
Total sales | $ 276,400 | $ 256,691 | $ 203,519 |
QUARTERLY FINANCIAL DATA (una78
QUARTERLY FINANCIAL DATA (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Sales | $ 151,590 | $ 135,651 | $ 137,489 | $ 139,264 | $ 142,587 | $ 136,992 | $ 133,570 | $ 131,604 | $ 563,994 | $ 544,753 | $ 474,371 |
Gross Profit | 112,588 | 104,198 | 104,758 | 107,745 | 107,647 | 104,065 | 101,116 | 99,592 | 429,289 | 412,420 | 363,602 |
Net income | $ 24,298 | $ 26,227 | $ 25,806 | $ 28,010 | $ 37,601 | $ 26,481 | $ 24,054 | $ 24,648 | $ 104,341 | $ 112,784 | $ 92,485 |
Net earnings per common share - basic | $ 0.25 | $ 0.27 | $ 0.27 | $ 0.29 | $ 0.39 | $ 0.28 | $ 0.25 | $ 0.26 | $ 1.09 | $ 1.19 | $ 0.98 |
Net earnings per common share - dilutive | $ 0.25 | $ 0.27 | $ 0.27 | $ 0.29 | $ 0.39 | $ 0.28 | $ 0.25 | $ 0.26 | $ 1.08 | $ 1.17 | $ 0.97 |
VALUATION ACCOUNTS AND QUALIF79
VALUATION ACCOUNTS AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Allowance for doubtful accounts | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of period | $ 2,513 | $ 1,647 | $ 1,581 |
Additions | 865 | 1,465 | 318 |
Write-offs | (607) | (599) | (252) |
End of period | 2,771 | 2,513 | 1,647 |
Deferred tax valuation allowance | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Beginning of period | 43 | 45 | 327 |
Additions | 40 | 0 | 0 |
Write-offs | 0 | (2) | (282) |
End of period | $ 83 | $ 43 | $ 45 |