Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jul. 01, 2016 | Aug. 02, 2016 | |
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jul. 1, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Entity Registrant Name | DJO FINANCE LLC | |
Entity Central Index Key | 1,395,317 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 0 | |
Membership Interests Percentage | 100.00% | |
Membership Interests Description | As of August 2, 2016, 100% of the issuer’s membership interests were owned by DJO Holdings LLC. |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 41,699 | $ 48,943 |
Accounts receivable, net | 177,128 | 172,360 |
Inventories, net | 177,548 | 174,573 |
Prepaid expenses and other current assets | 22,309 | 21,179 |
Current assets of discontinued operations | 2,878 | |
Total current assets | 418,684 | 419,933 |
Property and equipment, net | 130,845 | 117,273 |
Goodwill | 1,019,186 | 1,018,104 |
Intangible assets, net | 710,549 | 749,045 |
Other assets | 6,599 | 5,174 |
Non-current assets of discontinued operations | 29 | |
Total assets | 2,285,863 | 2,309,558 |
Current liabilities: | ||
Accounts payable | 73,968 | 58,492 |
Accrued interest | 11,062 | 16,998 |
Current portion of debt obligations | 10,550 | 10,550 |
Other current liabilities | 92,168 | 102,173 |
Current liabilities of discontinued operations | 946 | 13,371 |
Total current liabilities | 188,694 | 201,584 |
Long-term debt obligations | 2,392,464 | 2,344,562 |
Deferred tax liabilities, net | 219,930 | 213,856 |
Other long-term liabilities | 21,319 | 15,092 |
Total liabilities | 2,822,407 | 2,775,094 |
Commitments and contingencies | ||
DJO Finance LLC membership deficit: | ||
Member capital | 842,627 | 841,510 |
Accumulated deficit | (1,354,934) | (1,293,339) |
Accumulated other comprehensive loss | (27,273) | (16,341) |
Total membership deficit | (539,580) | (468,170) |
Noncontrolling interests | 3,036 | 2,634 |
Total deficit | (536,544) | (465,536) |
Total liabilities and deficit | $ 2,285,863 | $ 2,309,558 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Income Statement [Abstract] | ||||
Net sales | $ 292,852 | $ 279,902 | $ 571,758 | $ 527,413 |
Operating expenses: | ||||
Cost of sales (exclusive of amortization of intangible assets of $7,080 and $14,487 for the three and six months ended July 1, 2016 and $7,535 and $15,070 for the three and six months ended June 27, 2015, respectively) | 120,474 | 117,770 | 238,557 | 219,654 |
Selling, general and administrative | 121,627 | 108,612 | 243,556 | 215,797 |
Research and development | 10,122 | 8,688 | 19,976 | 17,552 |
Amortization of intangible assets | 19,085 | 19,818 | 38,663 | 39,646 |
Costs and Expenses, Total | 271,308 | 254,888 | 540,752 | 492,649 |
Operating income | 21,544 | 25,014 | 31,006 | 34,764 |
Other (expense) income: | ||||
Interest expense, net | (42,396) | (44,564) | (84,666) | (87,430) |
Loss on extinguishment of debt | (67,967) | (67,967) | ||
Other income (expense), net | 468 | 743 | 752 | (3,413) |
Nonoperating Income (Expense), Total | (41,928) | (111,788) | (83,914) | (158,810) |
Loss before income taxes | (20,384) | (86,774) | (52,908) | (124,046) |
Income tax provision | (3,577) | (5,911) | (8,990) | (7,856) |
Net loss from continuing operations | (23,961) | (92,685) | (61,898) | (131,902) |
Net income from discontinued operations | 855 | 14,873 | 665 | 18,865 |
Net loss | (23,106) | (77,812) | (61,233) | (113,037) |
Net income attributable to noncontrolling interests | (169) | (165) | (362) | (466) |
Net loss attributable to DJO Finance LLC | $ (23,275) | $ (77,977) | $ (61,595) | $ (113,503) |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Income Statement [Abstract] | ||||
Cost of sales, amortization of intangible assets | $ 7,080 | $ 7,535 | $ 14,487 | $ 15,070 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Net loss | $ (23,106) | $ (77,812) | $ (61,233) | $ (113,037) |
Other comprehensive (loss) income, net of taxes: | ||||
Foreign currency translation adjustments, net of tax benefit (provision) of $111 and $(166) for the three and six months ended July 1, 2016 and $(152) and $340 for the three and six months ended June 27, 2015, respectively | (8,458) | 4,137 | (2,850) | (5,305) |
Unrealized loss on cash flow hedges, net of tax provision of zero for the three and six months ended July 1, 2016 | (2,651) | (8,042) | ||
Other comprehensive (loss) income | (11,109) | 4,137 | (10,892) | (5,305) |
Comprehensive loss | (34,215) | (73,675) | (72,125) | (118,342) |
Comprehensive income attributable to noncontrolling interests | (101) | (243) | (402) | (260) |
Comprehensive loss attributable to DJO Finance LLC | $ (34,316) | $ (73,918) | $ (72,527) | $ (118,602) |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Loss (Parenthetical) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustment, tax benefit (provision) | $ 111,000 | $ (152,000) | $ (166,000) | $ 340,000 |
Unrealized loss on cash flow hedges, tax provision | $ 0 | $ 0 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Deficit - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jul. 01, 2016 | Jul. 01, 2016 | |
Balance at December 31, 2015 | $ (465,536) | |
Net (loss) income | $ (23,106) | (61,233) |
Other comprehensive (loss) income, net of taxes | (11,109) | (10,892) |
Stock-based compensation | 1,521 | |
Exercise of stock options | (404) | |
Balance at July 1, 2016 | (536,544) | (536,544) |
Member capital | ||
Balance at December 31, 2015 | 841,510 | |
Stock-based compensation | 1,521 | |
Exercise of stock options | (404) | |
Balance at July 1, 2016 | 842,627 | 842,627 |
Accumulated deficit | ||
Balance at December 31, 2015 | (1,293,339) | |
Net (loss) income | (61,595) | |
Balance at July 1, 2016 | (1,354,934) | (1,354,934) |
Accumulated other comprehensive loss | ||
Balance at December 31, 2015 | (16,341) | |
Other comprehensive (loss) income, net of taxes | (10,932) | |
Balance at July 1, 2016 | (27,273) | (27,273) |
Total membership deficit | ||
Balance at December 31, 2015 | (468,170) | |
Net (loss) income | (61,595) | |
Other comprehensive (loss) income, net of taxes | (10,932) | |
Stock-based compensation | 1,521 | |
Exercise of stock options | (404) | |
Balance at July 1, 2016 | (539,580) | (539,580) |
Noncontrolling interests | ||
Balance at December 31, 2015 | 2,634 | |
Net (loss) income | 362 | |
Other comprehensive (loss) income, net of taxes | 40 | |
Balance at July 1, 2016 | $ 3,036 | $ 3,036 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2016 | Jun. 27, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (61,233) | $ (113,037) |
Net income from discontinued operations | (665) | (18,865) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation | 20,513 | 16,837 |
Amortization of intangible assets | 38,663 | 39,646 |
Amortization of debt issuance costs and non-cash interest expense | 3,815 | 4,235 |
Stock-based compensation expense | 1,521 | 1,152 |
Loss on disposal of assets, net | 530 | 258 |
Deferred income tax expense | 3,812 | 3,735 |
Loss on modification and extinguishment of debt | 67,967 | |
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||
Accounts receivable | (4,209) | (5,949) |
Inventories | (5,650) | (8,751) |
Prepaid expenses and other assets | (637) | (2,032) |
Accrued interest | (5,937) | (5,420) |
Accounts payable and other current liabilities | (2,589) | (1,945) |
Net cash used in continuing operating activities | (12,066) | (22,169) |
Net cash (used in) provided by discontinued operations | (8,853) | 29,397 |
Net cash (used in) provided by operating activities | (20,919) | 7,228 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (31,500) | (16,608) |
Proceeds from disposition of assets | 700 | |
Net cash used in investing activities from continuing operations | (30,800) | (16,608) |
Net cash used in investing activities from discontinued operations | (451) | |
Net cash used in investing activities | (30,800) | (17,059) |
Cash flows from financing activities: | ||
Proceeds from issuance of debt | 63,000 | 2,445,826 |
Repayments of debt obligations | (18,913) | (2,356,121) |
Payment of debt issuance, modification and extinguishment costs | (61,662) | |
Net cash provided by financing activities | 44,087 | 28,043 |
Effect of exchange rate changes on cash and cash equivalents | 388 | (971) |
Net (decrease) increase in cash and cash equivalents | (7,244) | 17,241 |
Cash and cash equivalents at the beginning of the period | 48,943 | 31,144 |
Cash and cash equivalents at the end of the period | 41,699 | 48,385 |
Supplemental disclosures of cash flow information: | ||
Cash paid for interest | 86,793 | 88,506 |
Cash paid for taxes, net | 2,684 | 3,753 |
Non-cash investing activities: | ||
Purchases of surgical instruments included in accounts payable | $ 4,234 | $ 2,383 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jul. 01, 2016 | |
Accounting Policies [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION Organization and Business We are a global developer, manufacturer and distributor of medical devices that provide solutions for musculoskeletal health, vascular health and pain management. Our products address the continuum of patient care from injury prevention to rehabilitation after surgery, injury or from degenerative disease, enabling people to regain or maintain their natural motion. Our products are used by orthopedic specialists, spine surgeons, primary care physicians, pain management specialists, physical therapists, podiatrists, chiropractors, athletic trainers and other healthcare professionals. Our product lines include rigid and soft orthopedic bracing, hot and cold therapy, bone growth stimulators, vascular therapy systems and compression garments, therapeutic shoes and inserts, electrical stimulators used for pain management and physical therapy products. Our surgical implant business offers a comprehensive suite of reconstructive joint products for the hip, knee and shoulder. DJO Finance LLC (DJOFL) is a wholly owned indirect subsidiary of DJO Global, Inc. (DJO). Substantially all business activities of DJO are conducted by DJOFL and its wholly owned subsidiaries. Except as otherwise indicated, references to “us,” “we,” “DJOFL,” “our,” or “the Company,” refers to DJOFL and its consolidated subsidiaries. Segment Reporting We market and distribute our products through four operating segments: Bracing and Vascular; Recovery Sciences; Surgical Implant; and International. Our Bracing and Vascular, Recovery Sciences, and Surgical Implant segments generate their revenues within the United States. Our Bracing and Vascular segment offers rigid knee braces, orthopedic soft goods, cold therapy products, vascular systems, compression therapy products and therapeutic footwear for the diabetes care market. Our Recovery Sciences segment offers home electrotherapy, iontophoresis, home traction products, bone growth stimulation products and clinical physical therapy equipment. Our Surgical Implant segment offers a comprehensive suite of reconstructive joint products for the knee, hip and shoulder. Our International segment offers all of our products to customers outside the United States. See Note 15 for additional information about our reportable segments. During the fourth quarter of 2015, we ceased manufacturing, selling and distributing products of our Empi business and the related insurance billing operations domestically. The Empi business primarily manufactured and sold transcutaneous electrical nerve stimulation (TENS) devices for pain relief, other electrotherapy and orthopedic products and the related supplies. Empi was facing a challenging regulatory and compliance environment, decreasing reimbursement rates and remained below the level needed to reach adequate profitability within an economically justified period of time. Empi was part of our Recovery Sciences operating segment. For financial statement purposes, the results of the Empi business are reported within discontinued operations. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, contractual allowances, rebates, product returns, warranty obligations, allowances for doubtful accounts, valuation of inventories, self-insurance reserves, income taxes, loss contingencies, fair values of derivative instruments, fair values of long-lived assets and any related impairments, capitalization of costs associated with internally developed software and stock-based compensation. Actual results could differ from those estimates. Basis of Presentation We consolidate the results of operations of our 50% owned subsidiary, Medireha GmbH (Medireha), and reflect the 50% share of results not owned by us as non-controlling interests in our Consolidated Statements of Operations. We maintain control of Medireha through certain rights that enable us to prohibit certain business activities that are not consistent with our plans for the business and provide us with exclusive distribution rights for products manufactured by Medireha. Interim Reporting The accompanying Unaudited Condensed Consolidated Financial Statements include our accounts and all voting interest entities where we exercise a controlling financial interest through the ownership of a direct or indirect majority voting interest. All significant intercompany accounts and transactions have been eliminated in consolidation. Our Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and with the instructions to Form 10–Q and Article 10 of Regulation S–X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission (SEC) rules and regulations for complete annual financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. The Company operates on a manufacturing calendar. Each quarter consists of thirteen weeks, two four week and one five week period. Our first quarters may have more or fewer shipping days from year to year based on the days of week holidays fall. The first half of 2016 had more shipping days than in the first half of 2015. Recent Accounting Standards In May 2014, the FASB issued an accounting standards update related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers. The accounting standards update also requires expanded disclosures about revenue recognition. On July 9, 2015, the FASB decided to defer the effective date of the standard. The guidance is now effective for fiscal years beginning after December 15, 2017 and interim periods within that reporting period. Early adoption is permitted as early as the original effective date of December 15, 2016. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In April 2015, the FASB issued an accounting standards update related to the presentation of debt issuance costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The guidance is effective for annual and interim periods beginning after December 15, 2015. Early application is permitted. The Company has early adopted this update and the impact is reflected in the current and prior periods presented. In April 2015, the FASB issued an accounting standards update related to internal-use software. The standard provides guidance to clarify the customer’s accounting for fees paid in a cloud computing arrangement. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company adopted this ASU with prospective application in the first quarter of 2016. Adoption of this new guidance did not have a material effect on the Company’s financial statements. In July 2015, the FASB issued an accounting standards update which requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance does not apply to inventory that is measured using last-in, first-out (LIFO). The guidance is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. Adoption of this new guidance is not expected to have a material effect on the Company’s financial statements. In September 2015, the FASB issued an accounting standards update which eliminates the requirement for an acquirer in a business combination to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new guidance also sets forth new disclosure requirements related to the adjustments. The guidance is effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. Adoption of this new guidance did not have a material effect on the Company’s financial statements. In November 2015, the FASB issued an accounting standards update which requires all deferred income taxes be presented on the balance sheet as noncurrent. The new guidance is intended to simplify financial reporting by eliminating the requirement to classify deferred taxes between current and noncurrent. The guidance is effective for annual and interim periods beginning after December 15, 2016. The Company has early adopted this update and the impact is reflected prospectively in the Company’s financial statements. In January 2016, the FASB issued an accounting standards update which affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient permitted by the guidance to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted. Adoption of this new guidance is not expected to have a material effect on the Company’s financial statements. In February 2016, the FASB issued an accounting standards update which affects the accounting for leases. The guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The amendment also will require qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are still assessing the impact of adoption on our consolidated financial statements. In March 2016, the FASB issued an accounting standards update which affects the accounting for interim and annual reporting periods beginning after Adoption of this new guidance is not expected to have a material effect on the Company’s financial statements. |
DIVESTITURES
DIVESTITURES | 6 Months Ended |
Jul. 01, 2016 | |
Business Combinations [Abstract] | |
DIVESTITURES | 2. DIVESTITURES Discontinued Operations For disposal transactions that occur on or after January 1, 2015, a component of an entity is reported in discontinued operations after meeting the criteria for held-for-sale classification, is disposed of by sale or is disposed of other than by sale (e.g. abandonment) if the disposition represents a strategic shift that has (or will have) a major effect on the entity's operations and financial results. The Company has evaluated the and concluded . For financial statement purposes, the Empi business financial results are reported within discontinued operations in the Consolidated Financial Statements. Income (loss) from discontinued operations, net of taxes, is comprised of the following (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Net sales $ — $ 30,941 $ — $ 63,531 Costs and operating expenses: Cost of sales — 7,766 — 15,124 Selling, general and administrative — 10,412 — 22,999 Research and development — 51 — 87 Amortization of intangible assets — 2,281 — 4,563 Impairment of intangible assets 4,500 4,500 Other income 855 24 665 74 Income from discontinued operations before income taxes $ 855 $ 5,955 $ 665 $ 16,332 Income tax benefit — 8,918 — 2,533 Net income from discontinued operations $ 855 $ 14,873 $ 665 $ 18,865 Net liabilities for discontinued operations are as follows (in thousands): July 1, December 31, 2016 2015 Accounts receivable, net $ — $ 2,743 Other current assets — 135 Property and equipment, net — 22 Intangible and other non-current assets — 7 Total assets — 2,907 Accounts payable and other liabilities 946 13,371 Net liabilities $ (946 ) $ (10,464 ) |
ACCOUNTS RECEIVABLE RESERVES
ACCOUNTS RECEIVABLE RESERVES | 6 Months Ended |
Jul. 01, 2016 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE RESERVES | 3. ACCOUNTS RECEIVABLE RESERVES A summary of activity in our accounts receivable reserves for doubtful accounts is presented below (in thousands): Six Months Ended July 1, 2016 June 27, 2015 Balance, beginning of period $ 32,893 $ 23,585 Provision for doubtful accounts 11,861 12,014 Write-offs, net of recoveries (11,495 ) (6,714 ) Balance, end of period $ 33,259 $ 28,885 Our allowance for sales returns balance was $3.1 million and $3.7 million as of July 1, 2016 and June 27, 2015, respectively. |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jul. 01, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | 4 . INVENTORIES Inventories consist of the following (in thousands): July 1, 2016 December 31, 2015 Components and raw materials $ 61,949 $ 57,372 Work in process 9,908 10,330 Finished goods 94,810 99,167 Inventory held on consignment 33,721 29,746 200,388 196,615 Inventory reserves (22,840 ) (22,042 ) $ 177,548 $ 174,573 A summary of the activity in our reserves for estimated slow moving, excess, obsolete and otherwise impaired inventory is presented below (in thousands): Six Months Ended July 1, 2016 June 27, 2015 Balance, beginning of period $ 22,042 $ 22,094 Provision charged to costs of sales 4,922 2,714 Write-offs, net of recoveries (4,124 ) (1,288 ) Balance, end of period $ 22,840 $ 23,520 The write-offs to the reserve were principally related to the disposition of fully reserved inventory. |
LONG-LIVED ASSETS
LONG-LIVED ASSETS | 6 Months Ended |
Jul. 01, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
LONG-LIVED ASSETS | 5. LONG-LIVED ASSETS Goodwill Changes in the carrying amount of goodwill for the six months ended July 1, 2016 are presented in the table below (in thousands): Bracing & Vascular Recovery Sciences Surgical Implant International Total Balance, beginning of period Goodwill $ 483,258 $ 249,601 $ 49,229 $ 333,022 $ 1,115,110 Accumulated impairment losses — (49,600 ) (47,406 ) — (97,006 ) Goodwill, net of accumulated impairment losses at December 31, 2015 483,258 200,001 1,823 333,022 1,018,104 Current Year Activity: Foreign currency translation — — — 1,082 1,082 Balance, end of period Goodwill 483,258 249,601 49,229 334,104 1,116,192 Accumulated impairment losses — (49,600 ) (47,406 ) — (97,006 ) Goodwill, net of accumulated impairment losses at July 1, 2016 $ 483,258 $ 200,001 $ 1,823 $ 334,104 $ 1,019,186 Intangible Assets Identifiable intangible assets consisted of the following (in thousands): July 1, 2016 Gross Amount Accumulated Amortization Intangible Assets, Net Definite-lived intangible assets: Customer relationships $ 476,460 $ (343,667 ) $ 132,793 Patents and technology 446,840 (260,982 ) 185,858 Trademarks and trade names 29,756 (14,155 ) 15,601 Distributor contracts and relationships 4,772 (4,230 ) 542 Non-compete agreements 6,655 (6,085 ) 570 $ 964,483 $ (629,119 ) 335,364 Indefinite-lived intangible assets: Trademarks and trade names 375,185 Net identifiable intangible assets $ 710,549 December 31, 2015 Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Definite-lived intangible assets: Customer relationships $ 475,776 $ (320,991 ) $ 154,785 Patents and technology 446,854 (246,509 ) 200,345 Trademarks and trade names 29,737 (12,695 ) 17,042 Distributor contracts and relationships 4,693 (3,875 ) 818 Non-compete agreements 6,607 (5,714 ) 893 $ 963,667 $ (589,784 ) $ 373,883 Indefinite-lived intangible assets: Trademarks and trade names 375,162 Net identifiable intangible assets $ 749,045 Our definite lived intangible assets are being amortized using the straight line method over their remaining weighted average useful lives of 4.3 years for customer relationships, 7.4 years for patents and technology, 1.4 years for distributor contracts and relationships, 6.3 years for trademarks and trade names, and 1.5 years for non-compete agreements. Based on our amortizable intangible asset balance as of April 1, 2016, we estimate that amortization expense will be as follows for the next five years and thereafter (in thousands): 2016 $ 37,857 2017 66,124 2018 57,905 2019 53,041 2020 37,070 Thereafter 83,367 $ 335,364 |
OTHER CURRENT LIABILITIES
OTHER CURRENT LIABILITIES | 6 Months Ended |
Jul. 01, 2016 | |
Other Liabilities Disclosure [Abstract] | |
OTHER CURRENT LIABILITIES | 6. OTHER CURRENT LIABILITIES Other current liabilities consist of the following (in thousands): July 1, 2016 December 31, 2015 Accrued wages and related expenses $ 26,690 $ 29,031 Accrued commissions 16,069 20,479 Accrued rebates 10,106 13,433 Accrued other taxes 3,485 4,196 Accrued professional expenses 5,577 3,164 Income taxes payable 988 1,612 Deferred tax liability 165 163 Other accrued liabilities 29,088 30,095 $ 92,168 $ 102,173 |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 6 Months Ended |
Jul. 01, 2016 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | 7. DERIVATIVE INSTRUMENTS From time to time, we use derivative financial instruments to manage interest rate risk related to our variable rate credit facilities and risk related to foreign currency exchange rates. Our objective is to reduce the risk to earnings and cash flows associated with changes in interest rates and changes in foreign currency exchange rates. Before acquiring a derivative instrument to hedge a specific risk, we evaluate potential natural hedges. Factors considered in the decision to hedge an underlying market exposure include the materiality of the risk, the volatility of the market, the duration of the hedge, and the availability, effectiveness and cost of derivative instruments. We do not use derivative instruments for speculative or trading purposes. All derivatives, whether designated as hedging relationships or not, are recorded on the balance sheet at fair value. The fair value of our derivatives is determined through the use of models that consider various assumptions, including time value, yield curves and other relevant economic measures which are inputs that are classified as Level 2 in the fair value hierarchy. The classification of gains and losses resulting from changes in the fair values of derivatives is dependent on the intended use of the derivative and its resulting designation. Our interest rate cap agreements were designated as cash flow hedges, and accordingly, effective portions of changes in the fair value of the derivatives were recorded in accumulated other comprehensive income (loss) and subsequently reclassified into our Consolidated Statement of Operations when the hedged forecasted transaction affects income (loss). Ineffective portions of changes in the fair value of cash flow hedges are recognized in income (loss). Our foreign exchange contracts have not been designated as hedges, and accordingly, changes in the fair value of the derivatives are recorded in income (loss). Interest Rate Cap Agreements . We utilize interest rate caps to manage the risk of unfavorable movements in interest rates on a portion of our outstanding floating rate loan balances. Our interest rate cap agreements were designated as cash flow hedges for accounting purposes, and the hedges were considered effective. As such, the effective portion of the gain or loss on the derivative instrument was reported as a component of accumulated other comprehensive income (loss) and reclassified into interest expense in our Consolidated Statement of Operations in the period in which it affected income (loss). Foreign Exchange Rate Contracts . We utilize Mexican Peso (MXN) foreign exchange forward contracts to hedge a portion of our exposure to fluctuations in foreign exchange rates, as our Mexico-based manufacturing operations incur costs that are largely denominated in MXN. As of July 1, 2016 we did not have any outstanding foreign currency exchange forward contracts. While our foreign exchange forward contracts act as economic hedges, we have not designated such instruments as hedges for accounting purposes. Therefore, gains and losses resulting from changes in the fair values of these derivative instruments are recorded in Other income (expense), net, in our accompanying Consolidated Statements of Operations. The following table summarizes the fair value of derivative instruments in our Unaudited Condensed Consolidated Balance Sheets (in thousands): Balance Sheet Location July 1, 2016 December 31, 2015 Derivative Assets: Interest rate cap agreements designated as cash flow hedges Other long-term assets $ — $ 1,313 Derivative Liabilities: Interest rate cap agreements designated as cash flow hedges Other current liabilities $ 1,074 $ 282 Interest rate cap agreements designated as cash flow hedges Other long-term liabilities 5,879 — The following table summarizes the effect our derivative instruments have on our Unaudited Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Six Months Ended Location July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Interest rate cap agreements designated as cash flow hedges Interest expense, net $ 65 $ — $ 75 $ — Foreign exchange forward contracts not designated as hedges Other income, net $ — $ (4 ) $ — $ (4 ) The pre-tax loss on derivative instruments designated as cash flow hedges recognized in other comprehensive income (loss) is presented below (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Interest rate cap agreements designated as cash flow hedges $ (2,651 ) $ — $ (8,042 ) $ — |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jul. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | 8. FAIR VALUE MEASUREMENTS Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurements. Our assessment of the significance of a particular input to the fair value measurements requires judgment and may affect the valuation of the assets and liabilities being measured and their placement within the fair value hierarchy. The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis (in thousands): As of July 1, 2016 Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recorded Balance Liabilities: Interest rate cap agreements designated as cash flow hedges $ — $ 6,953 $ — $ 6,953 As of December 31, 2015 Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recorded Balance Assets: Interest rate cap agreements designated as cash flow hedges $ — $ 1,313 $ — $ 1,313 Liabilities: Interest rate cap agreements designated as cash flow hedges $ — $ 282 $ — $ 282 |
DEBT
DEBT | 6 Months Ended |
Jul. 01, 2016 | |
Debt Disclosure [Abstract] | |
DEBT | 9. DEBT Debt obligations consist of the following (in thousands): July 1, 2016 December 31, 2015 Credit facilities: Revolving credit facility, net of unamortized debt issuance costs of $1.9 million and $2.1 million as of July 1, 2016 and December 31, 2015, respectively $ 80,125 $ 27,886 Term loan: $1,044.5 million Term Loan, net of unamortized debt issuance costs and original issuance discount of $13.6 million and $15.3 million as of July 1, 2016 and December 31, 2015, respectively 1,030,815 1,037,117 Notes: $1,015.0 million 8.125% Second Lien notes, net of unamortized debt issuance costs and original issuance discount of $15.6 million and $16.9 million as of July 1, 2016 and December 31, 2015, respectively 999,367 998,137 $298.5 million 10.75% Third Lien notes, net of unamortized debt issuance costs and original issuance discount of $7.3 million and $8.1 million as of July 1, 2016 and December 31, 2015, respectively 291,178 290,443 9.75% Senior subordinated notes 1,529 1,529 Total debt 2,403,014 2,355,112 Current maturities (10,550 ) (10,550 ) Long-term debt $ 2,392,464 $ 2,344,562 Credit Facilities On May 7, 2015, we entered into (i) a $1,055.0 million new term loan facility (the “Term Loan”) and (ii) a $150.0 million new asset-based revolving credit facility (the “ABL Facility” and together with the Term Loan, the “Credit Facilities”). The Term Loan provides for a $150.0 million incremental facility, subject to customary borrowing conditions and the ABL Facility provides for a $50.0 million facility increase, subject to customary borrowing conditions. A portion of the proceeds from the Credit Facilities was used to repay in full all amounts due and owing under the revolving credit facility and Tranche B term loans, originally entered into on November 20, 2007. As of July 1, 2016, the market values of our Term Loan and drawings under the ABL Facility were $1,000.1 million and $82.0 million, respectively. We determine market value using trading prices for the senior secured credit facilities on or near that date. This fair value measurement is categorized within Level 2 of the fair value hierarchy. Term Loan Interest Rates. Borrowings under the Term Loan bear interest at a rate equal to, at our option, either (a) 2.25% plus a base rate equal to the highest of (1) the prime rate as reported by the Wall Street Journal, (2) the federal funds effective rate plus 0.50% and (3) the Eurodollar rate for a one-month interest period plus 1.00% or (b) 3.25% plus the Eurodollar rate determined by reference to the ICE Benchmark Administration London Interbank Offered Rate for U.S. dollar deposits, subject to a minimum Eurodollar rate of 1.00%. As of July 1, 2016 our weighted average interest rate for all borrowings under the Credit Facilities was 4.10%. Principal Payments. We are required to make principal repayments under the Term Loan in quarterly installments equal to 0.25% of the original principal amount, with the remaining amount payable at maturity in June 2020. Prepayments. The Term Loan requires us to prepay principal amounts outstanding, subject to certain exceptions, with: · 50% (which percentage will be reduced to 25% and 0% upon attaining certain total net leverage ratios) of annual excess cash flow, as defined in the Term Loan agreement; · 100% of the net cash proceeds above (i) $30.0 million in any single transaction or series of related transactions or (ii) an annual amount of $100.0 million of all non-ordinary course asset sales or other dispositions, if we do not reinvest the net cash proceeds in assets to be used in our business, generally within 12 months of the receipt of such net cash proceeds; and · 100% of the net cash proceeds from issuances of debt by us and our restricted subsidiaries, other than proceeds from debt permitted to be incurred under the Credit Facilities. We may voluntarily repay outstanding loans under the Credit Facilities at any time without premium or penalty, subject to payment of (i) customary breakage costs applicable to prepayments of Eurodollar loans made on a date other than the last day of an interest period applicable thereto and (ii) a prepayment premium of 1% applicable to prepayments made within 6 months from the date of the closing of the Term Loan. Guarantee and Security. All obligations under the Credit Facilities are unconditionally guaranteed by DJO Holdings LLC and each of our existing and future direct and indirect wholly-owned domestic subsidiaries, subject to certain exceptions (collectively, the “Credit Facility Guarantors”). In addition, the Term Loan is secured by (i) a first priority security interest in certain of our tangible and intangible assets and those of each of the Credit Facility Guarantors and all the capital stock of, or other equity interests in, DJO Holdings and each of our material direct or indirect wholly-owned domestic subsidiaries and direct wholly-owned first-tier foreign subsidiaries, (subject to certain exceptions and qualifications) (collectively, “Term Loan Collateral”) and (ii) a second priority security interest in the ABL Collateral (as defined below). Certain Covenants and Events of Default. The Term Loan contains a number of covenants that restrict, subject to certain exceptions, our ability to: · incur additional indebtedness and make guarantees; · create liens on assets; · enter into sale and leaseback transactions; · engage in mergers or consolidations; · sell assets; · pay dividends and other restricted payments; · make investments, loans or advances, including acquisitions; · repay subordinated indebtedness or amend material agreements governing our subordinated indebtedness; · engage in certain transactions with affiliates; and · change our lines of business. In addition, the Term Loan requires us to maintain a maximum first lien net leverage ratio, as defined, of Credit Facilities debt, net of cash, to Adjusted EBITDA of no greater than 5.35:1 for a trailing twelve month period commencing with the period ending September 30, 2015. As of July 1, 2016, our actual first lien net leverage ratio was 4.33:1, and we were in compliance with all other applicable covenants. Asset-Based Revolving Credit Facility Interest Rate. Borrowings under our ABL Facility bear interest at a rate equal to, at our option, a margin over, either (a) a base rate determined by reference to the highest of (1) the administrative agent’s prime lending rate, (2) the federal funds effective rate plus 0.50% and (3) the Eurodollar rate for a one-month interest period plus 1.00% or (b) a Eurodollar rate determined by reference to the Reuters LIBOR rate for the interest period relevant to such borrowing. The margin for the ABL Facility is 1.25% with respect to base rate borrowings and 2.25% with respect to Eurodollar borrowings, each subject to step-downs based upon the amount of the available, unused facility. Fees. In addition to paying interest on outstanding principal, we are required to pay a commitment fee to the lenders based on the daily amount of the ABL Facility that is unutilized. The commitment fee is an annual rate of 0.25% if the average facility utilization in the previous fiscal quarter is equal to or greater than 50%, and 0.375% if the average facility utilization in the previous fiscal quarter was less than 50%. Guarantee and Security. The ABL Facility is secured by a first priority security interest in personal property of DJOFL and each of the Credit Facility Guarantors consisting generally of accounts receivable, cash, deposit accounts and securities accounts, inventory, intercompany notes and intangible assets (other than intellectual property and investment property), subject to certain exceptions and qualifications (collectively, the “ABL Collateral”, and together with the Term Loan Collateral, the “Collateral”) and a fourth priority security interest in the Term Loan Collateral. Certain Covenants and Events of Default. The ABL Facility contains a number of covenants that, among other things, restrict, subject to certain exceptions, our and our subsidiaries’ ability to undertake certain transactions or otherwise make changes to our assets and business. These are substantially similar to the Term Loan covenants described above. In addition, we are required to maintain a minimum fixed charge coverage ratio, as defined in the agreement, of 1.0 to 1.0 if the unutilized facility is less than the greater of $9.0 million or 10% of the lesser of (1) $150.0 million and (2) the aggregate borrowing base. This coverage ratio requirement remains in place until the 30 th Notes: 8.125% Second Lien Notes On May 7, 2015 we issued $1,015.0 million aggregate principal amount of 8.125% Second Lien Notes (8.125% Notes), which mature on June 15, 2021. The 8.125% Notes are fully and unconditionally guaranteed on a senior secured basis by each of DJOFL’s existing and future direct and indirect wholly-owned domestic subsidiaries that guarantees any of DJOFL’s indebtedness or any indebtedness of DJOFL’s domestic subsidiaries. The net proceeds from the issuance of the 8.125% Notes were used, together with borrowings under the Credit Facilities and cash on hand, to repay our prior notes (see below), repay prior credit facilities and pay all related fees and expenses. The 8.125% Notes and related guarantees are secured by second-priority liens on the Term Loan Collateral and third-priority liens on the ABL Collateral, in each case subject to permitted liens. As of July 1, 2016, the market value of the 8.125% Notes was $872.9 million. We determined market value using trading prices for the 8.125% Notes on or near that date. This fair value measurement is categorized within Level 2 of the fair value hierarchy. Optional Redemption. Prior to June 15, 2018, we have the option to redeem some or all of the 8.125% Notes at a redemption price equal to 100% of the principal amount of the 8.125% Notes redeemed, plus accrued and unpaid interest plus the “make-whole” premium set forth in the indenture governing the 8.125% Notes. On and after June 15, 2018, we have the option to redeem some or all of the 8.125% Notes at the redemption prices set forth in the indenture, plus accrued and unpaid interest. In addition, we may redeem, using net proceeds from certain equity offerings, (i) up to 15% of the principal amount prior to June 15, 2019 at a price equal to 103% of the principal amount being redeemed, and/or (ii) up to 35% of the principal amount prior to June 15, 2018, at a price equal to 108.125% of the principal amount being redeemed, plus accrued and unpaid interest, in each case using an amount not to exceed the net proceeds from certain equity offerings. 10.75% Third Lien Notes On May 7, 2015, we issued $298.5 million aggregate principal amount of 10.75% Third Lien Notes (10.75% Notes) which mature on April 15, 2020. The 10.75% Notes are fully and unconditionally guaranteed on a secured basis by each of DJOFL’s existing and future direct and indirect wholly-owned domestic subsidiaries that guarantees any of DJOFL’s indebtedness or any indebtedness of DJOFL’s domestic subsidiaries. The 10.75% Notes were issued in connection with our (i) offer (Exchange Offer) to exchange our 9.75% Senior Subordinated Notes due 2017 (9.75% Notes) for the 10.75% Notes and cash and (ii) solicitation of consents from registered holders of the 9.75% Notes to certain proposed amendments to the indenture for the 9.75% Notes. The 10.75% Notes and related guarantees are secured by third-priority liens on the Term Loan Collateral and fourth-priority liens on the ABL Collateral, in each case subject to permitted liens. As of July 1, 2016, the market value of the 10.75% Notes was $241.8 million. We determined market value using trading prices for the 10.75% Notes on or near that date. This fair value measurement is categorized within Level 2 of the fair value hierarchy. Optional Redemption. We have the option to redeem the 10.75% Notes, in whole or in part, after May 7, 2015, at the redemption prices set forth in the indenture governing the 10.75% Notes, plus accrued and unpaid interest. 9.75% Senior Subordinated Notes On October 18, 2010, we issued $300.0 million aggregate principal amount of 9.75% Senior Subordinated Notes (9.75% Notes and, collectively with the 10.75% Notes and the 8.125% Notes, the “Notes”) maturing on October 15, 2017. The 9.75% Notes are guaranteed fully and unconditionally on an unsecured senior basis by each of DJOFL’s existing and future direct and indirect wholly-owned domestic subsidiaries that guarantee any of DJOFL’s indebtedness, or any indebtedness of DJOFL’s domestic subsidiaries. On May 13, 2015, a total of $298.5 million aggregate principal of outstanding 9.75% Notes were validly tendered as part of the Exchange Offer. As of July 1, 2016, $1.5 million aggregate principal of the 9.75% Notes remains outstanding. Optional Redemption. Under the indenture governing the 9.75% Notes, we have the option to redeem some or all of the 9.75% Notes at a redemption price of 102.438% and 100% of the then outstanding principal balance at October 15, 2015 and 2016, respectively, plus accrued and unpaid interest. Amendments. On May 7, 2015, the indenture for the 9.75% Notes was amended to eliminate or waive substantially all of the restrictive covenants contained therein, eliminate certain events of default, modify covenants regarding mergers and consolidations, and modify or eliminate certain other provisions, including certain conditions to defeasance, contained therein. Change of Control Upon the occurrence of a change of control, DJOFL must give holders of the Notes an opportunity to sell to DJOFL some or all of their 8.125% Notes and 10.75% Notes at a price equal to 101% of their principal amount, plus accrued and unpaid interest to the repurchase date. Covenants The indentures for the 8.125% Notes and the 10.75% Notes each contain covenants limiting, among other things, our ability to (i) incur additional indebtedness or issue certain preferred and convertible shares, pay dividends on, redeem, repurchase or make distributions in respect of the capital stock of DJO or make other restricted payments, (ii) make certain investments, (iii) sell certain assets, (iv) create liens on certain assets to secure debt, (v) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets, (vi) enter into certain transactions with affiliates, and (vii) designate our subsidiaries as unrestricted subsidiaries. As of July 1, 2016, we were in compliance with all applicable covenants. Our ability to continue to meet the covenants related to our indebtedness specified above in future periods will depend, in part, on events beyond our control, and we may not continue to meet those covenants. A breach of any of these covenants in the future could result in a default under the credit facilities or the Notes, at which time the lenders could elect to declare all amounts outstanding under the senior secured credit facilities to be immediately due and payable. Any such acceleration would also result in a default under the Indentures. Loss on Modification and Extinguishment of Debt During the six months ended June 27, 2015, we recognized loss on modification and extinguishment of debt of $68.0 million. The loss consists of $47.8 million in premiums related to the redemption of our 8.75% Notes, 9.875% Notes, and 7.75% Notes, $11.9 million related to the non-cash write off of unamortized debt issuance costs and original issue discount associated with the portion of our debt that was extinguished and $8.3 million of arrangement and amendment fees and other fees and expenses incurred in connection with the refinancing. Debt Issuance Costs As of July 1, 2016 and December 31, 2015, we had $13.1 million and $14.5 million, respectively, of unamortized debt issuance costs, which are reflected as a direct deduction from the debt liability included in Long-term debt obligations in our Consolidated Balance Sheets. For the three and six months ended July 1, 2016, amortization of debt issuance costs was $0.7 million and $1.4 million, respectively. For the three and six months ended June 27, 2015, amortization of debt issuance costs was $1.2 million and $3.3 million, respectively. Amortization of debt issuance costs was included in Interest expense in our Consolidated Statements of Operations for each of the periods presented. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jul. 01, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | 10. INCOME TAXES Income taxes for the interim periods presented have been included in our Unaudited Condensed Consolidated Financial Statements on the basis of an estimated annual effective tax rate, adjusted for discrete items. The income tax expense for these periods differed from the amounts which would have been recorded using the U.S. statutory rate due primarily to certain valuation allowances provided against deferred tax assets, the impact of nondeductible expenses, foreign taxes, deferred taxes on the assumed repatriation of foreign earnings and tax amortization of goodwill and indefinite-lived intangibles. For the three and six months ended July 1, 2016, we recorded income tax provision of $3.6 million and $9.0 million on pre-tax losses of $20.4 million and $52.9 million, resulting in negative effective tax rates of 17.5% and 17.0%, respectively. For the three and six months ended June 27, 2015, we recorded income tax provision of approximately $5.9 million and $7.9 million on pre-tax losses of $86.8 million and $124.0 million, resulting in negative effective tax rates of 6.8% and 6.3%, respectively. Our tax rates are at times negative because our U.S. federal tax losses, and certain state tax losses, are unavailable to offset income taxes arising in other states and in the foreign jurisdictions where we are subject to tax. We record net deferred tax assets to the extent we conclude that it is more likely than not that the related deferred tax assets will be realized. In making such determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies and recent financial operations. At this time, we cannot conclude that it is more likely than not that the benefit from certain U.S. federal and state net operating loss carryforwards will be available to offset future taxable income. Accordingly, we have provided a valuation allowance of $11.4 million and $26.1 million on the deferred tax assets related to the net operating loss carry forwards generated in the three and six months ended July 1, 2016. If our assumptions change and we determine that it is more likely than not that we will be able to realize the deferred tax assets related to these net operating losses, reversal of the valuation allowances we have recorded against those deferred tax assets will be recognized as a reduction of income tax expense. The establishment of valuation allowances does not preclude us from utilizing our loss carryforwards or other deferred tax assets in the future and does not impact our cash resources. We and our subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. With few exceptions, we are no longer subject to U.S. federal, state and local, or foreign income tax examinations by tax authorities for years before 2011. However, to the extent allowed by law, the tax authorities may have the right to examine prior periods where net operating losses or tax credits were generated and carried forward and make adjustments up to the amount of the net operating loss or credit carryforward amount. At July 1, 2016, our gross unrecognized tax benefits were $16.0 million reflecting an increase of $1.1 million from the unrecognized amount of $14.9 million at December 31, 2015. As of July 1, 2016, we have $3.1 million accrued for interest and penalties related to these unrecognized tax benefits. To the extent all or a portion of our gross unrecognized tax benefits are recognized in the future, no U.S. federal tax benefit for related state income tax deductions would result due to the existence of the U.S. federal valuation allowance. We anticipate that approximately $0.9 million aggregate of unrecognized tax benefits, each of which are individually immaterial, will decrease in the next twelve months due to the expiration of statutes of limitation. As of July 1, 2016, we have unrecognized various foreign and U.S. state tax benefits of approximately $6.1 million, which, if recognized, would impact our effective tax rate in future periods. |
STOCK OPTION PLANS AND STOCK-BA
STOCK OPTION PLANS AND STOCK-BASED COMPENSATION | 6 Months Ended |
Jul. 01, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
STOCK OPTION PLANS AND STOCK-BASED COMPENSATION | 11. STOCK OPTION PLANS AND STOCK-BASED COMPENSATION Stock Option Plan We have one active equity compensation plan, the DJO 2007 Incentive Stock Plan (2007 Plan) under which we are authorized to grant awards of restricted and unrestricted stock, options, and other stock-based awards based on the shares of common stock of our indirect parent, DJO, subject to adjustment in certain events. The total number of shares available to grant under the 2007 Plan is 10,575,529. Options issued under the 2007 Plan can be either incentive stock options or non-qualified stock options. The exercise price of stock options granted will not be less than 100% of the fair market value of the underlying shares on the date of grant and the options will expire no more than ten years from the date of grant. In September 2015, all outstanding options granted to employees between 2008 and 2011 were amended to modify the vesting terms of the portion of the options which vest on achievement of a minimum multiple of invested capital (MOIC) from a MOIC of 2.25 for one-third of the options and a MOIC of 2.5 for an additional one-third of the options to a single MOIC vesting component covering two-thirds of the options with the terms described below. As amended, the options granted between 2008 and 2011 vest as follows: (i) one-third of each stock option grant vests over a specified period of time contingent solely upon the option holder’s continued employment or service with us (Time-Based Options); and, (ii) two-thirds of each stock option grant will vest upon achieving MOIC with respect to Blackstone’s aggregate investment in DJO’s capital stock, to be achieved by Blackstone following a liquidation of all or a portion of its investment in DJO’s capital stock (Market Return Options). The Market Return Options provide for vesting within a range of achievement of a MOIC multiple between 1.5 and 2.25. If Blackstone sells all or a portion of its equity interests in DJO while the options are outstanding, then the unvested Market Return Options will vest and become exercisable as follows: 1) 25% of the options will vest and become exercisable if Blackstone realizes a MOIC of 1.5 times its equity investment in DJO; 2) 100% of the options will vest and become exercisable if Blackstone realizes a MOIC of at least 2.25 times its equity investment in DJO; and 3) if Blackstone realizes a MOIC of greater than 1.5 times its equity investment but less than 2.25 times its equity investment, then 25% of the options will vest and become exercisable and a percentage of the remaining unvested options will vest and become exercisable with such percentage equal to a fraction, the numerator of which is the actual MOIC realized by Blackstone, less 1.5 and the denominator of which is 0.75. In July 2015, all outstanding options granted to employees in 2012 and later years were amended to modify the MOIC vesting provision as described below. These options vest in four equal installments beginning with the year of grant and for each of the three calendar years following the year of grant, with each such installment vesting only if the final reported financial results for such year show that the Adjusted EBITDA for such year equaled or exceeded the Adjusted EBITDA amount in the financial plan approved by DJO’s Board of Directors for such year (Performance Options). In the event that the Adjusted EBITDA in any of such four years falls short of the amount of Adjusted EBITDA in the financial plan for that year, the installment that did not therefore vest at the end of such year shall be eligible for subsequent vesting at the end of the four year vesting period if the cumulative Adjusted EBITDA for such four years equals or exceeds the cumulative Adjusted EBITDA in the financial plans for such four years and the Adjusted EBITDA in the fourth vesting year equals or exceeds the Adjusted EBITDA in the financial plan for such year. In addition, as amended in July 2015, such options also provide that in the event Blackstone achieves the same MOIC requirement described above for the Market Return Options, any unvested installments from prior years and all installments for future years shall thereupon vest. In February 2013, 310,000 options previously granted to new employees in 2012 were amended to convert one-third of such options into Time-Based Options, with the remaining two-thirds continuing to be Performance Options. Additionally, all 2012 Performance Options were amended to allow for vesting of the 2012 Adjusted EBITDA tranche if the 2013 Adjusted EBITDA results equal or exceed an enhanced amount of Adjusted EBITDA over the amount reflected in the 2013 financial plan. The 2013 Adjusted EBITDA results were not met. In February 2014, all 2012 and 2013 Performance Options were amended to allow for vesting of the 2012 and 2013 Adjusted EBITDA tranches if the 2014 Adjusted EBITDA results equaled or exceeded an enhanced amount of Adjusted EBITDA reflected in the 2014 financial plan. Because the required 2014 Adjusted EBITDA results were not achieved, those tranches did not vest. Options granted in 2013 and 2014 to existing employees had the same terms as the Performance Options described above and options granted to new employees in 2013 and 2014 had the same terms as the options amended in February 2013. In 2013, 2014, 2015 and 2016, options were granted to employees following the net exercise of the options they received in 2007 in exchange for options that had previously been granted in DJO’s predecessor company (Rollover Options), which were scheduled to expire in 2013, 2014, 2015 and 2016, respectively. These new options were fully vested on the date of grant and have a term of ten years (Vested Options). Except for options granted to the Chairman of the Board and two other board members as described below, options are typically granted annually to members of our Board of Directors who are not affiliates of Blackstone (referred to as Director Service Options). The Director Service Options vest in increments of 33 1/3% per year on each of the first through third anniversary dates of the grant date, contingent upon the optionee’s continued service as a director. The options granted to the Chairman of the Board and the two other board members vest as follows: one-third of the stock option grant vests in increments of 33 1/3% per year on each of the first through third anniversary dates from the grant date contingent upon the optionee’s continued service as a director; and, as amended in July 2015, two-thirds of the stock option grant will vest in the same manner as the Market Return Options. Stock-Based Compensation During the six months ended July 1, 2016, the compensation committee granted 667,818 options to employees, of which 426,998 were Market Return Options, 66,002 were Time-Based Options and 174,818 were Vested Options. Additionally, the compensation committee granted 13,800 Director Service Options to members of the Board of Directors. The weighted average grant date fair value of the Time-Based Options, Director Service Options and Vested Options granted during the six months ended July 1, 2016 was $5.99, $5.99, and $5.25 respectively. During the six months ended June 27, 2015, the compensation committee granted 593,621 options to employees, of which 444,169 were Performance Options, 128,331 were Time-Based Options and 21,121 were Vested Options. Additionally, the compensation committee granted 23,000 Director Service Options to members of the Board of Directors. The weighted average grant date fair values of the Time-Based Options, the Vested Options, and the Director Service Options, granted during the six months ended June 27, 2015 were $6.07, $5.27, and $6.92, respectively. The fair value of each option award is estimated on the date of grant, or modification, using the Black-Scholes option pricing model for service based awards, and a binomial model for market based awards. In estimating fair value for options issued under the 2007 Plan, expected volatility was based on historical volatility of comparable publicly-traded companies. As our historical share option exercise experience does not provide a reasonable basis upon which to estimate the expected term, we used the simplified method. Expected life is calculated in two tranches based on the employment level defined as executive or employee. The risk-free rate used in calculating fair value of stock options for periods within the expected term of the option is based on the U.S. Treasury yield bond curve in effect on the date of grant. The following table summarizes certain assumptions we used to estimate the fair value of the Time-Based Options, the Vested Options and the Director Service Options granted: Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Expected volatility 33.3 % 33.3 % 33.3 % 33.3 % Risk-free interest rate 1.2%-1.5% 1.8 % 1.2%-1.6% 1.5%-2.0% Expected years until exercise 5.2-6.6 6.5 5.2-6.6 5.1-8.3 Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 % We recorded non-cash stock-based compensation expense during the periods presented as follows (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Cost of sales $ 31 $ 31 $ 61 $ 61 Operating expenses: Selling, general and administrative 1,146 506 1,318 1,085 Research and development 139 2 142 6 $ 1,316 $ 539 $ 1,521 $ 1,152 We have determined that it is not probable that we will meet the Adjusted EBITDA targets related to the Performance Options granted. As such, we did not recognize expense for any of the options which had the potential to vest in 2016. Additionally, we have not recognized expense for any of the options which have the potential to vest based on Adjusted EBITDA for 2017, and 2018 as some of these targets have not yet been established and we are unable to assess the probability of achieving such targets. Accordingly, during each of the periods presented above we recognized stock-based compensation expense only for the Time-Based Options, the Vested Options and the Director Service Options. In each of the periods presented above, we recognized stock-based compensation expense only for Time-Based Options granted to employees, as the performance components of the Market Return Options are not deemed probable at this time. Stock based compensation expense for options granted to non-employees was not significant to the Company for all periods presented, and was included in Selling, general and administrative expense in our Unaudited Condensed Consolidated Statements of Operations. |
MEMBERSHIP DEFICIT
MEMBERSHIP DEFICIT | 6 Months Ended |
Jul. 01, 2016 | |
Equity [Abstract] | |
MEMBERSHIP DEFICIT | 12. MEMBERSHIP DEFICIT During the six months ended July 1, 2016, DJO issued 43,086 shares of its common stock upon the net exercise of vested stock options that had been granted to current and former employees in 2006 in exchange for options that had previously been granted in the predecessor company to DJO (“Rollover Options”). Our stock incentive plan permits participants to exercise stock options using a net exercise method. In a net exercise, we withhold from the total number of shares that otherwise would be issued to a participant upon exercise of the stock option such number of shares having a fair market value at the time of exercise equal to the aggregate option exercise price and applicable income tax withholdings, and remit the remaining shares to the participant. The current and former employees exercised these Rollover Options for a total of 312,925 shares of DJO’s common stock, from which we withheld 269,839 shares to cover $4.4 million of aggregate option exercise price and income tax withholdings and issued the remaining 43,086 shares. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jul. 01, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | 13. RELATED PARTY TRANSACTIONS Blackstone Management Partners LLC (BMP) has agreed to provide certain monitoring, advisory and consulting services to us for an annual monitoring fee equal to the greater of $7.0 million or 2% of consolidated EBITDA as defined in the Transaction and Monitoring Fee Agreement, payable in the first quarter of each year. The monitoring fee agreement will continue until the earlier of November 2019, or such date as DJO and BMP may mutually determine. DJO has agreed to indemnify BMP and its affiliates, directors, officers, employees, agents and representatives from and against all liabilities relating to the services contemplated by the Transaction and Monitoring Fee Agreement and the engagement of BMP pursuant to, and the performance of BMP and its affiliates of the services contemplated by, the Transaction and Monitoring Fee Agreement. At any time in connection with or in anticipation of a change of control of DJO, a sale of all or substantially all of DJO’s assets or an initial public offering of common stock of DJO, BMP may elect to receive, in lieu of remaining annual monitoring fee payments, a single lump sum cash payment equal to the then-present value of all then-current and future annual monitoring fees payable under the Transaction and Monitoring Fee Agreement, assuming a hypothetical termination date of the agreement to be November 2019. For each of the three and six month periods presented, we expensed $1.75 million and $3.5 million, respectively, related to the annual monitoring fee, which is recorded as a component of Selling, general and administrative expense in the Consolidated Statements of Operations. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jul. 01, 2016 | |
Commitments And Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | 14. COMMITMENTS AND CONTINGENCIES California Qui Tam Action On October 11, 2013, we were served with a summons and complaint related to a qui tam action filed in U.S. District Court in Los Angeles, California in August 2012 and amended in December 2012 that names us as a defendant along with each of the other companies that manufactures and sells external bone growth stimulators for spinal applications. The case is captioned United States of America, et al.ex re. Doris Modglin and Russ Milko, v. DJO Global, Inc., DJO, LLC, DJO Finance LLC, Orthofix, Inc., Biomet, Inc., and EBI, LP., Case No. CV12-7152-MMM (JCGx) (C.D. Cal.). The plaintiffs, or relators, allege that the defendants have violated federal and state false claim acts by seeking reimbursement for bone growth stimulators for uses outside of the FDA approved indications for use for such products. The plaintiffs are seeking treble damages alleged to have been sustained by the United States and the states, penalties and attorney’s fees and costs. The federal government and all of the named states have declined to intervene in this case. We filed a motion to dismiss the second amended complaint, which motion was granted with leave to amend. Relators then filed a third amended complaint and we filed a motion to dismiss the third amended complaint and that motion has been granted without leave to amend as to the federal false claim act allegations. The Court declined jurisdiction over the remaining state claims. Relators have appealed the decision to the US Court of Appeals for the Ninth Circuit. Empi Investigation Our subsidiary, Empi, Inc., was served with a federal administrative subpoena dated May 11, 2015, issued by the Office of Inspector General for the U.S. Department of Defense (“OIG”) seeking a variety of documents primarily relating to the supply of home electrotherapy units and supplies by Empi to beneficiaries covered under medical insurance programs sponsored or administered by TRICARE, the Defense Health Agency and the Department of Defense. The subpoena sought discovery of documents for the period January 2010 through May 2015. The Company is cooperating with the U.S. Attorney’s Office in Minnesota (USAO), which is handling the investigation of issues related to the subpoena. We have produced responsive documents to the USAO and are fully cooperating in the investigation. We may need to devote significant time and resources to this inquiry and can give no assurances as to its final outcome, nor can the Company estimate a range of potential loss or whether the outcome will have a material adverse effect on our reputation, business, prospects, financial condition and results of operations. New Jersey Orthotics Investigation In July 2013 we were served with a subpoena under the Health Insurance Portability and Accountability Act seeking documents relating to the fitting of custom-fabricated or custom-fitted orthoses in the states of New Jersey, Washington and Texas. The subpoena was issued by the United States Attorney’s Office for the District of New Jersey in connection with an investigation of compliance with professional licensing statutes in those states relating to the practice of orthotics. We have supplied the documents requested under the subpoena. We cannot provide any assurance as to the outcome of the investigation or that any consequences will not have a material adverse effect on our reputation, business, prospects, financial condition and results of operations. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 6 Months Ended |
Jul. 01, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | 15. SEGMENT AND GEOGRAPHIC INFORMATION For the periods ended July 1, 2016 and June 27, 2015, we reported our business in four operating segments: Bracing and Vascular; Recovery Sciences; Surgical Implant and International. Bracing and Vascular Segment Our Bracing and Vascular segment, which generates its revenues in the United States, offers our rigid knee bracing products, orthopedic soft goods, cold therapy products, vascular systems, therapeutic shoes and inserts and compression therapy products, primarily under the DonJoy, ProCare, Aircast, Dr. Comfort, Bell-Horn and Exos brands. This segment also includes our OfficeCare channel, through which we maintain an inventory of soft goods and other products at healthcare facilities, primarily orthopedic practices, for immediate distribution to patients. The Bracing and Vascular segment primarily sells its products to orthopedic and sports medicine professionals, hospitals, podiatry practices, orthotic and prosthetic centers, home medical equipment providers and independent pharmacies. In 2014 we expanded our consumer channel to focus on marketing, selling and distributing our products, including bracing and vascular products, to professional and consumer retail customers and online. The bracing and vascular products sold through this channel are principally sold under the DonJoy Performance, Bell-Horn and Dr. Comfort brands. Recovery Sciences Segment Our Recovery Sciences segment, which generates its revenues in the United States, is divided into three main channels: · CMF . Our CMF channel sells our bone growth stimulation products. We sell these products either directly to patients or to independent distributors. For products sold to patients, we arrange billing to the patients and their third party payors. · Chattanooga . Our Chattanooga channel offers products in the clinical rehabilitation market in the category of clinical electrotherapy devices, clinical traction devices, and other clinical products and supplies such as treatment tables, continuous passive motion (CPM) devices and dry heat therapy. · Consumer . Our consumer channel offers professional and consumer retail customers our Compex electrostimulation device, which is used in training programs to aid muscle development and to accelerate muscle recovery after training sessions. Surgical Implant Segment Our Surgical Implant segment, which generates its revenues in the United States, develops, manufactures and markets a wide variety of knee, hip and shoulder implant products that serve the orthopedic reconstructive joint implant market. International Segment Our International segment, which generates most of its revenues in Europe, sells all of our products and certain third-party products through a combination of direct sales representatives and independent distributors. Information regarding our reportable business segments is presented below (in thousands). Segment results exclude the impact of amortization and impairment of goodwill and intangible assets, certain general corporate expenses, and charges related to various integration activities, as defined by management. The accounting policies of the reportable segments are the same as the accounting policies of the Company. We allocate resources and evaluate the performance of segments based on net sales, gross profit, operating income and other non-GAAP measures, as defined in our Credit Facilities. We do not allocate assets to reportable segments because a significant portion of our assets are shared by the segments. Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Net sales: Bracing and Vascular $ 131,751 $ 136,179 $ 255,967 $ 250,083 Recovery Sciences 38,449 40,102 75,024 74,627 Surgical Implant 42,575 28,071 85,625 54,997 International 80,077 75,550 155,142 147,706 $ 292,852 $ 279,902 $ 571,758 $ 527,413 Operating income: Bracing and Vascular $ 29,072 $ 31,497 $ 49,606 $ 52,393 Recovery Sciences 8,056 7,472 14,501 11,402 Surgical Implant 6,053 4,392 13,282 8,712 International 14,653 13,312 23,642 25,697 Expenses not allocated to segments and eliminations (36,290 ) (31,659 ) (70,025 ) (63,440 ) $ 21,544 $ 25,014 $ 31,006 $ 34,764 Geographic Area Following are our net sales by geographic area (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Net sales: United States $ 212,775 $ 204,352 $ 416,616 $ 379,707 Other Europe, Middle East and Africa 38,057 35,863 74,516 69,557 Germany 21,960 20,838 42,963 41,872 Australia and Asia Pacific 11,400 10,500 21,402 20,391 Canada 6,697 6,381 12,434 11,733 Latin America 1,963 1,968 3,827 4,153 $ 292,852 $ 279,902 $ 571,758 $ 527,413 |
SUPPLEMENTAL GUARANTOR CONDENSE
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | 6 Months Ended |
Jul. 01, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS | 16. SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS DJOFL and its direct wholly-owned subsidiary, DJO Finance Corp. (DJO Finco), jointly issued the 8.125% Notes, 10.75% Notes and 9.75% Notes. DJO Finco was formed solely to act as a co-issuer of the notes, has only nominal assets and does not conduct any operations. The indentures generally prohibit DJO Finco from holding any assets, becoming liable for any obligations or engaging in any business activity. The 8.125% Notes are jointly and severally, fully and unconditionally guaranteed, on a senior secured basis by all of DJOFL’s domestic subsidiaries (other than the co-issuer) that are 100% owned, directly or indirectly, by DJOFL (the Guarantors). The 10.75% Notes are jointly and severally, fully and unconditionally guaranteed, on a secured basis by the Guarantors. The 9.75% Notes are jointly and severally, fully and unconditionally guaranteed, on an unsecured senior subordinated basis by the Guarantors. Our foreign subsidiaries (the Non-Guarantors) do not guarantee the notes. The following tables present the financial position, results of operations and cash flows of DJOFL, the Guarantors, the Non-Guarantors and certain eliminations for the periods presented. DJO Finance LLC Unaudited Condensed Consolidating Balance Sheets As of July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 17,436 $ 1,370 $ 22,893 $ — $ 41,699 Accounts receivable, net — 128,643 48,485 — 177,128 Inventories, net — 143,880 46,402 (12,734 ) 177,548 Prepaid expenses and other current assets 103 15,210 6,996 — 22,309 Total current assets 17,539 289,103 124,776 (12,734 ) 418,684 Property and equipment, net — 117,527 13,381 (63 ) 130,845 Goodwill — 951,005 99,277 (31,096 ) 1,019,186 Intangible assets, net — 700,017 10,532 — 710,549 Investment in subsidiaries 1,297,699 1,679,465 51,573 (3,028,737 ) — Intercompany receivables 566,198 — — (566,198 ) — Other non-current assets — 2,568 4,031 — 6,599 Total assets $ 1,881,436 $ 3,739,685 $ 303,570 $ (3,638,828 ) $ 2,285,863 Liabilities and (Deficit) Equity Current liabilities: Accounts payable $ — $ 64,547 $ 9,421 $ — $ 73,968 Current portion of debt obligations 10,550 — — — 10,550 Other current liabilities 12,123 64,057 27,050 — 103,230 Current liabilities of discontinued operations 946 946 Total current liabilities 22,673 129,550 36,471 — 188,694 Long-term debt obligations 2,392,464 — — — 2,392,464 Deferred tax liabilities, net — 214,178 5,752 — 219,930 Intercompany payables, net — 362,861 137,313 (500,174 ) — Other long-term liabilities 5,879 14,811 629 — 21,319 Total liabilities 2,421,016 721,400 180,165 (500,174 ) 2,822,407 Noncontrolling interests — — 3,036 — 3,036 Total membership (deficit) equity (539,580 ) 3,018,285 120,369 (3,138,654 ) (539,580 ) Total liabilities and (deficit) equity $ 1,881,436 $ 3,739,685 $ 303,570 $ (3,638,828 ) $ 2,285,863 DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Three Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net sales $ — $ 252,212 $ 83,178 $ (42,538 ) $ 292,852 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $7,080) — 94,465 74,317 (48,308 ) 120,474 Selling, general and administrative — 97,827 23,800 — 121,627 Research and development — 9,228 894 — 10,122 Amortization of intangible assets — 18,699 386 — 19,085 — 220,219 99,397 (48,308 ) 271,308 Operating income (loss) — 31,993 (16,219 ) 5,770 21,544 Other (expense) income: Interest (expense) income, net (42,448 ) 51 1 — (42,396 ) Other (expense) income, net (8 ) (8,553 ) 9,029 — 468 Intercompany (expense) income, net — (15,147 ) 14,634 513 — Equity in income (loss) of subsidiaries, net 19,181 — — (19,181 ) — (23,275 ) (23,649 ) 23,664 (18,668 ) (41,928 ) (Loss) income before income taxes (23,275 ) 8,344 7,445 (12,898 ) (20,384 ) Income tax provision — (1,671 ) (1,906 ) — (3,577 ) Net (loss) income from continuing operations (23,275 ) 6,673 5,539 (12,898 ) (23,961 ) Net income from discontinued operations — 855 — — 855 Net (loss) income (23,275 ) 7,528 5,539 (12,898 ) (23,106 ) Net income attributable to noncontrolling interests — — (169 ) — (169 ) Net (loss) income attributable to DJOFL $ (23,275 ) $ 7,528 $ 5,370 $ (12,898 ) $ (23,275 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Six Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net sales $ — $ 495,872 $ 158,673 $ (82,787 ) $ 571,758 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $14,487) — 189,306 138,711 (89,460 ) 238,557 Selling, general and administrative — 195,637 47,919 — 243,556 Research and development — 18,109 1,867 — 19,976 Amortization of intangible assets — 37,846 817 — 38,663 — 440,898 189,314 (89,460 ) 540,752 Operating income (loss) — 54,974 (30,641 ) 6,673 31,006 Other (expense) income: Interest (expense) income, net (84,731 ) 71 (6 ) — (84,666 ) Other (expense) income, net (8 ) (16,573 ) 17,333 — 752 Intercompany (expense) income , net — (14,784 ) 14,752 32 — Equity in income (loss) of subsidiaries, net 23,143 — — (23,143 ) — (61,596 ) (31,286 ) 32,079 (23,111 ) (83,914 ) (Loss) income before income taxes (61,596 ) 23,688 1,438 (16,438 ) (52,908 ) Income tax provision — (6,078 ) (2,912 ) — (8,990 ) Net (loss) income from continuing operations (61,596 ) 17,610 (1,474 ) (16,438 ) (61,898 ) Net income from discontinued operations — 665 — — 665 Net (loss) income (61,596 ) 18,275 (1,474 ) (16,438 ) (61,233 ) Net income attributable to noncontrolling interests — — (362 ) — (362 ) Net (loss) income attributable to DJOFL $ (61,596 ) $ 18,275 $ (1,836 ) $ (16,438 ) $ (61,595 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Three Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net (loss) income $ (23,275 ) $ 7,528 $ 5,539 $ (12,898 ) $ (23,106 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax benefit of $111 — — (8,458 ) — (8,458 ) Unrealized loss on cash flow hedges, net of tax provision of zero (2,651 ) (2,651 ) Other comprehensive loss (2,651 ) — (8,458 ) — (11,109 ) Comprehensive (loss) income (25,926 ) 10,747 (1,513 ) (3,540 ) (34,215 ) Comprehensive income attributable to noncontrolling interests — — (101 ) — (101 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (25,926 ) $ 10,747 $ (1,614 ) $ (3,540 ) $ (34,316 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Six Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net (loss) income $ (61,596 ) $ 18,275 $ (1,474 ) $ (16,438 ) $ (61,233 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax provision of $166 — — (2,850 ) — (2,850 ) Unrealized loss on cash flow hedges, net of tax provision of zero (8,042 ) — — — (8,042 ) Other comprehensive loss (8,042 ) — (2,850 ) — (10,892 ) Comprehensive (loss) income (69,638 ) 18,275 (4,324 ) (16,438 ) (72,125 ) Comprehensive income attributable to noncontrolling interests — — (402 ) — (402 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (69,638 ) $ 18,275 $ (4,726 ) $ (16,438 ) $ (72,527 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Cash Flows For the Six months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Cash Flows From Operating Activities: Net (loss) income $ (61,596 ) $ 18,275 $ (1,474 ) $ (16,438 ) $ (61,233 ) Net loss from discontinued operations (665 ) $ (665 ) Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation — 18,055 2,486 (28 ) 20,513 Amortization of intangible assets — 37,846 817 — 38,663 Amortization of debt issuance costs and non-cash interest expense 3,815 — — — 3,815 Stock-based compensation expense — 1,521 — — 1,521 Gain on disposal of assets, net — 471 55 4 530 Deferred income tax expense (benefit) — 4,133 (321 ) — 3,812 Equity in (loss) income of subsidiaries, net (23,143 ) — — 23,143 — Changes in operating assets and liabilities, net of acquired assets and liabilities: Accounts receivable — (559 ) (3,650 ) — (4,209 ) Inventories — (1,244 ) 2,793 (7,199 ) (5,650 ) Prepaid expenses and other assets 1,251 (2,763 ) (252 ) 1,127 (637 ) Accounts payable and other current liabilities (7,721 ) 2,522 (69 ) (3,258 ) (8,526 ) Net cash (used in) provided by continuing operating activities (87,394 ) 77,592 385 (2,649 ) (12,066 ) Net cash (used in) discontinued operations - (8,853 ) — - (8,853 ) Net cash (used in) provided by operating activities (87,394 ) 68,739 385 (2,649 ) (20,919 ) Cash Flows From Investing Activities: Purchases of property and equipment — (29,238 ) (2,261 ) (1 ) (31,500 ) Proceeds from disposition of assets — 700 — — 700 Net cash used in investing activities from continuing operations — (28,538 ) (2,261 ) (1 ) (30,800 ) Cash Flows From Financing Activities: Intercompany 31,070 (38,991 ) 5,271 2,650 — Proceeds from issuance of debt 63,000 — — — 63,000 Repayments of debt obligations (18,913 ) — — — (18,913 ) Net cash provided by (used in) financing activities 75,157 (38,991 ) 5,271 2,650 44,087 Effect of exchange rate changes on cash and cash equivalents — — 388 — 388 Net (decrease) increase in cash and cash equivalents (12,237 ) 1,210 3,783 - (7,244 ) Cash and cash equivalents, beginning of year 29,673 160 19,110 — 48,943 Cash and cash equivalents, end of year $ 17,436 $ 1,370 $ 22,893 $ - $ 41,699 DJO Finance LLC Condensed Consolidating Balance Sheets As of December 31, 2015 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 29,673 $ 160 $ 19,110 $ — $ 48,943 Accounts receivable, net — 128,085 44,275 — 172,360 Inventories, net — 142,033 31,803 737 174,573 Prepaid expenses and other current assets 42 13,301 7,836 — 21,179 Current assets of discontinued operations 2,878 - — 2,878 Total current assets 29,715 286,457 103,024 737 419,933 Property and equipment, net — 103,637 13,721 (85 ) 117,273 Goodwill — 951,005 98,309 (31,210 ) 1,018,104 Intangible assets, net — 737,798 11,247 — 749,045 Investment in subsidiaries 1,297,699 1,687,724 50,741 (3,036,164 ) — Intercompany receivables 575,483 — — (575,483 ) — Other non-current assets 1,313 1,193 2,668 — 5,174 Non current assets of discontinued operations — 29 - — 29 Total assets $ 1,904,210 $ 3,767,843 $ 279,710 $ (3,642,205 ) $ 2,309,558 Liabilities and (Deficit) Equity Current liabilities: Accounts payable $ — $ 49,394 $ 9,098 $ — $ 58,492 Current portion of debt obligations 10,550 — - — 10,550 Other current liabilities 17,268 73,260 28,643 — 119,171 Current liabilities of discontinued operations - 13,371 - — 13,371 Total current liabilities 27,818 136,025 37,741 — 201,584 Long-term debt obligations 2,344,562 — — — 2,344,562 Deferred tax liabilities, net — 209,179 4,677 — 213,856 Intercompany payables, net — 400,216 131,138 (531,354 ) — Other long-term liabilities — 14,441 651 — 15,092 Total liabilities 2,372,380 759,861 174,207 (531,354 ) 2,775,094 Noncontrolling interests — — 2,634 — 2,634 Total membership (deficit) equity (468,170 ) 3,007,982 102,869 (3,110,851 ) (468,170 ) Total liabilities and (deficit) equity $ 1,904,210 $ 3,767,843 $ 279,710 $ (3,642,205 ) $ 2,309,558 DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Three Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net sales $ — $ 243,371 $ 75,498 $ (38,967 ) $ 279,902 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $7,535) — 102,629 57,651 (42,510 ) 117,770 Selling, general and administrative — 86,789 21,823 — 108,612 Research and development — 8,102 586 — 8,688 Amortization of intangible assets — 19,197 621 — 19,818 — 216,717 80,681 (42,510 ) 254,888 Operating income (loss) — 26,654 (5,183 ) 3,543 25,014 Other (expense) income: Interest (expense) income, net (44,567 ) 11 (8 ) — (44,564 ) Loss on modification and extinguishment of debt (67,967 ) — — — (67,967 ) Other expense, net — (84 ) 827 - 743 Intercompany (expense) income, net - (8,573 ) 8,267 306 - Equity in income of subsidiaries, net 34,558 - — (34,558 ) - (77,976 ) (8,646 ) 9,086 (34,252 ) (111,788 ) (Loss) income before income taxes (77,976 ) 18,008 3,903 (30,709 ) (86,774 ) Income tax provision — (4,889 ) (1,022 ) — (5,911 ) Net (loss) income from continuing operations (77,976 ) 13,119 2,881 (30,709 ) (92,685 ) Net income from discontinued operations — 14,873 — — 14,873 Net (loss) income (77,976 ) 27,992 2,881 (30,709 ) (77,812 ) Net income attributable to noncontrolling interests — — (165 ) — (165 ) Net (loss) income attributable to DJOFL $ (77,976 ) $ 27,992 $ 2,716 $ (30,709 ) $ (77,977 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Six Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net sales $ — $ 461,763 $ 146,034 $ (80,384 ) $ 527,413 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $15,070) — 193,550 110,985 (84,881 ) 219,654 Selling, general and administrative — 171,127 44,670 — 215,797 Research and development — 15,984 1,568 — 17,552 Amortization of intangible assets — 38,395 1,251 — 39,646 — 419,056 158,474 (84,881 ) 492,649 Operating income (loss) — 42,707 (12,440 ) 4,497 34,764 Other (expense) income: Interest (expense) income, net (87,438 ) 23 (15 ) — (87,430 ) Loss on modification and extinguishment of debt (67,967 ) — — — (67,967 ) Other expense, net — (609 ) (2,804 ) - (3,413 ) Intercompany income (expense), net - (8,254 ) 8,292 (38 ) - Equity in income of subsidiaries, net 41,902 - — (41,902 ) - (113,503 ) (8,840 ) 5,473 (41,940 ) (158,810 ) (Loss) income before income taxes (113,503 ) 33,867 (6,967 ) (37,443 ) (124,046 ) Income tax provision — (6,492 ) (1,364 ) — (7,856 ) Net (loss) income from continuing operations (113,503 ) 27,375 (8,331 ) (37,443 ) (131,902 ) Net income from discontinued operations — 18,865 — — 18,865 Net (loss) income (113,503 ) 46,240 (8,331 ) (37,443 ) (113,037 ) Net income attributable to noncontrolling interests — — (466 ) — (466 ) Net (loss) income attributable to DJOFL $ (113,503 ) $ 46,240 $ (8,797 ) $ (37,443 ) $ (113,503 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Three Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net (loss) income $ (77,976 ) $ 27,992 $ 2,881 $ (30,709 ) $ (77,812 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax provision of $152 — — 4,137 — 4,137 Other comprehensive loss — — 4,137 — 4,137 Comprehensive (loss) income (77,976 ) 27,992 7,018 (30,709 ) (73,675 ) Comprehensive income attributable to noncontrolling interests — — (243 ) — (243 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (77,976 ) $ 27,992 $ 6,775 $ (30,709 ) $ (73,918 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Six Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net (loss) income $ (113,503 ) $ 46,240 $ (8,331 ) $ (37,443 ) $ (113,037 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax benefit of $340 — — (5,305 ) — (5,305 ) Other comprehensive loss — — (5,305 ) — (5,305 ) Comprehensive (loss) income (113,503 ) 46,240 (13,636 ) (37,443 ) (118,342 ) Comprehensive loss attributable to noncontrolling interests — — (260 ) — (260 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (113,503 ) $ 46,240 $ (13,896 ) $ (37,443 ) $ (118,602 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Cash Flows For the Six months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Cash Flows from Operating Activities: Net (loss) income $ (113,503 ) $ 46,240 $ (8,331 ) $ (37,443 ) $ (113,037 ) Net income from discontinued operations — (18,865 ) — — (18,865 ) Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation — 14,509 2,377 (49 ) 16,837 Amortization of intangible assets — 38,395 1,251 — 39,646 Amortization of debt issuance costs and non-cash interest expense 4,235 — — — 4,235 Stock-based compensation expense — 1,152 — — 1,152 Loss on modification and extinguishment of debt 67,967 67,967 Gain on disposal of assets, net — 139 127 (8 ) 258 Deferred income tax expense (benefit) — 3,351 384 - 3,735 Equity in (loss) income of subsidiaries, net (41,902 ) — — 41,902 — Changes in operating assets and liabilities: Accounts receivable — (3,545 ) (2,404 ) — (5,949 ) Inventories — 11 (1,603 ) (7,159 ) (8,751 ) Prepaid expenses and other assets (17 ) (1,196 ) (892 ) 73 (2,032 ) Accounts payable and other current liabilities (5,422 ) (3,042 ) (3,322 ) 4,421 (7,365 ) Net cash (used in) provided by continuing operating activities (88,642 ) 77,149 (12,413 ) 1,737 (22,169 ) Net cash provided by discontinued operations — 29,397 — — 29,397 Net cash (used in) provided by operating activities (88,642 ) 106,546 (12,413 ) 1,737 7,228 Cash Flows from Investing Activities: Purchases of property and equipment — (13,677 ) (2,942 ) 11 (16,608 ) Net cash (used in) provided by investing activities from continuing operations — (13,677 ) (2,942 ) 11 (16,608 ) Net cash provided by investing activities from discontinued operations — (451 ) — — (451 ) Net cash (used in) provided by investing activities — (14,128 ) (2,942 ) 11 (17,059 ) Cash Flows from Financing Activities: Intercompany 73,474 (89,888 ) 18,162 (1,748 ) — Proceeds from issuance of debt 2,445,826 — — — 2,445,826 Repayments of debt (2,356,073 ) — (48 ) — (2,356,121 ) Payment of debt issuance, modification and extinguishment costs (61,662 ) — — — (61,662 ) Net cash provided by (used in) financing activities 101,565 (89,888 ) 18,114 (1,748 ) 28,043 Effect of exchange rate changes on cash and cash equivalents — — (971 ) — (971 ) Net increase (decrease) in cash and cash equivalents 12,923 2,530 1,788 — 17,241 Cash and cash equivalents at beginning of period 12,958 3 18,183 — 31,144 Cash and cash equivalents at end of period $ 25,881 $ 2,533 $ 19,971 $ — $ 48,385 |
ORGANIZATION AND BASIS OF PRE25
ORGANIZATION AND BASIS OF PRESENTATION (Policies) | 6 Months Ended |
Jul. 01, 2016 | |
Accounting Policies [Abstract] | |
Segment Reporting | Segment Reporting We market and distribute our products through four operating segments: Bracing and Vascular; Recovery Sciences; Surgical Implant; and International. Our Bracing and Vascular, Recovery Sciences, and Surgical Implant segments generate their revenues within the United States. Our Bracing and Vascular segment offers rigid knee braces, orthopedic soft goods, cold therapy products, vascular systems, compression therapy products and therapeutic footwear for the diabetes care market. Our Recovery Sciences segment offers home electrotherapy, iontophoresis, home traction products, bone growth stimulation products and clinical physical therapy equipment. Our Surgical Implant segment offers a comprehensive suite of reconstructive joint products for the knee, hip and shoulder. Our International segment offers all of our products to customers outside the United States. See Note 15 for additional information about our reportable segments. During the fourth quarter of 2015, we ceased manufacturing, selling and distributing products of our Empi business and the related insurance billing operations domestically. The Empi business primarily manufactured and sold transcutaneous electrical nerve stimulation (TENS) devices for pain relief, other electrotherapy and orthopedic products and the related supplies. Empi was facing a challenging regulatory and compliance environment, decreasing reimbursement rates and remained below the level needed to reach adequate profitability within an economically justified period of time. Empi was part of our Recovery Sciences operating segment. For financial statement purposes, the results of the Empi business are reported within discontinued operations. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Estimates and assumptions are used in accounting for, among other things, contractual allowances, rebates, product returns, warranty obligations, allowances for doubtful accounts, valuation of inventories, self-insurance reserves, income taxes, loss contingencies, fair values of derivative instruments, fair values of long-lived assets and any related impairments, capitalization of costs associated with internally developed software and stock-based compensation. Actual results could differ from those estimates. |
Basis of Presentation | Basis of Presentation We consolidate the results of operations of our 50% owned subsidiary, Medireha GmbH (Medireha), and reflect the 50% share of results not owned by us as non-controlling interests in our Consolidated Statements of Operations. We maintain control of Medireha through certain rights that enable us to prohibit certain business activities that are not consistent with our plans for the business and provide us with exclusive distribution rights for products manufactured by Medireha. |
Interim Reporting | Interim Reporting The accompanying Unaudited Condensed Consolidated Financial Statements include our accounts and all voting interest entities where we exercise a controlling financial interest through the ownership of a direct or indirect majority voting interest. All significant intercompany accounts and transactions have been eliminated in consolidation. Our Unaudited Condensed Consolidated Financial Statements have been prepared in accordance with GAAP and with the instructions to Form 10–Q and Article 10 of Regulation S–X for interim financial information. Accordingly, these financial statements do not include all of the information required by GAAP or Securities and Exchange Commission (SEC) rules and regulations for complete annual financial statements. In the opinion of management, these financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the results of operations for the interim periods presented. The results of operations for any interim period are not necessarily indicative of results for the full year. These Unaudited Condensed Consolidated Financial Statements should be read in conjunction with our consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2015. The Company operates on a manufacturing calendar. Each quarter consists of thirteen weeks, two four week and one five week period. Our first quarters may have more or fewer shipping days from year to year based on the days of week holidays fall. The first half of 2016 had more shipping days than in the first half of 2015. |
Recent Accounting Standards | Recent Accounting Standards In May 2014, the FASB issued an accounting standards update related to revenue from contracts with customers. The new standard provides a five-step approach to be applied to all contracts with customers. The accounting standards update also requires expanded disclosures about revenue recognition. On July 9, 2015, the FASB decided to defer the effective date of the standard. The guidance is now effective for fiscal years beginning after December 15, 2017 and interim periods within that reporting period. Early adoption is permitted as early as the original effective date of December 15, 2016. The Company is currently evaluating the new guidance to determine the impact it may have on its consolidated financial statements. In April 2015, the FASB issued an accounting standards update related to the presentation of debt issuance costs. The standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of the debt liability, consistent with debt discounts. The guidance is effective for annual and interim periods beginning after December 15, 2015. Early application is permitted. The Company has early adopted this update and the impact is reflected in the current and prior periods presented. In April 2015, the FASB issued an accounting standards update related to internal-use software. The standard provides guidance to clarify the customer’s accounting for fees paid in a cloud computing arrangement. The guidance is effective for annual periods and interim periods within those annual periods beginning after December 15, 2015. The Company adopted this ASU with prospective application in the first quarter of 2016. Adoption of this new guidance did not have a material effect on the Company’s financial statements. In July 2015, the FASB issued an accounting standards update which requires an entity to measure inventory at the lower of cost and net realizable value. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. This guidance does not apply to inventory that is measured using last-in, first-out (LIFO). The guidance is effective for annual and interim periods beginning after December 15, 2016. Early adoption is permitted. Adoption of this new guidance is not expected to have a material effect on the Company’s financial statements. In September 2015, the FASB issued an accounting standards update which eliminates the requirement for an acquirer in a business combination to restate prior period financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment (including the impact on prior periods) be recognized in the reporting period in which the adjustment is identified. The new guidance also sets forth new disclosure requirements related to the adjustments. The guidance is effective for annual and interim periods beginning after December 15, 2015. Early adoption is permitted. Adoption of this new guidance did not have a material effect on the Company’s financial statements. In November 2015, the FASB issued an accounting standards update which requires all deferred income taxes be presented on the balance sheet as noncurrent. The new guidance is intended to simplify financial reporting by eliminating the requirement to classify deferred taxes between current and noncurrent. The guidance is effective for annual and interim periods beginning after December 15, 2016. The Company has early adopted this update and the impact is reflected prospectively in the Company’s financial statements. In January 2016, the FASB issued an accounting standards update which affects the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. This guidance retains the current accounting for classifying and measuring investments in debt securities and loans but requires equity investments to be measured at fair value with subsequent changes recognized in net income, except for those accounted for under the equity method or requiring consolidation. The guidance also changes the accounting for investments without a readily determinable fair value and that do not qualify for the practical expedient permitted by the guidance to estimate fair value. A policy election can be made for these investments whereby estimated fair value may be measured at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments. The guidance is effective for annual periods beginning after December 15, 2017. Early adoption is permitted. Adoption of this new guidance is not expected to have a material effect on the Company’s financial statements. In February 2016, the FASB issued an accounting standards update which affects the accounting for leases. The guidance requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The amendment also will require qualitative and quantitative disclosures designed to give financial statement users information on the amount, timing, and uncertainty of cash flows arising from leases. The guidance is effective for interim and annual reporting periods beginning after December 15, 2018. Early adoption is permitted. We are still assessing the impact of adoption on our consolidated financial statements. In March 2016, the FASB issued an accounting standards update which affects the accounting for interim and annual reporting periods beginning after Adoption of this new guidance is not expected to have a material effect on the Company’s financial statements. |
DIVESTITURES (Tables)
DIVESTITURES (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Business Combinations [Abstract] | |
Schedule of Discontinued Operations | Income (loss) from discontinued operations, net of taxes, is comprised of the following (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Net sales $ — $ 30,941 $ — $ 63,531 Costs and operating expenses: Cost of sales — 7,766 — 15,124 Selling, general and administrative — 10,412 — 22,999 Research and development — 51 — 87 Amortization of intangible assets — 2,281 — 4,563 Impairment of intangible assets 4,500 4,500 Other income 855 24 665 74 Income from discontinued operations before income taxes $ 855 $ 5,955 $ 665 $ 16,332 Income tax benefit — 8,918 — 2,533 Net income from discontinued operations $ 855 $ 14,873 $ 665 $ 18,865 Net liabilities for discontinued operations are as follows (in thousands): July 1, December 31, 2016 2015 Accounts receivable, net $ — $ 2,743 Other current assets — 135 Property and equipment, net — 22 Intangible and other non-current assets — 7 Total assets — 2,907 Accounts payable and other liabilities 946 13,371 Net liabilities $ (946 ) $ (10,464 ) |
ACCOUNTS RECEIVABLE RESERVES (T
ACCOUNTS RECEIVABLE RESERVES (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Receivables [Abstract] | |
Summary of Activity in Accounts Receivable Reserves for Doubtful Accounts and Sales Returns | A summary of activity in our accounts receivable reserves for doubtful accounts is presented below (in thousands): Six Months Ended July 1, 2016 June 27, 2015 Balance, beginning of period $ 32,893 $ 23,585 Provision for doubtful accounts 11,861 12,014 Write-offs, net of recoveries (11,495 ) (6,714 ) Balance, end of period $ 33,259 $ 28,885 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Inventory Disclosure [Abstract] | |
Summary of Inventories | Inventories consist of the following (in thousands): July 1, 2016 December 31, 2015 Components and raw materials $ 61,949 $ 57,372 Work in process 9,908 10,330 Finished goods 94,810 99,167 Inventory held on consignment 33,721 29,746 200,388 196,615 Inventory reserves (22,840 ) (22,042 ) $ 177,548 $ 174,573 |
Summary of Activity in Inventory Reserves | A summary of the activity in our reserves for estimated slow moving, excess, obsolete and otherwise impaired inventory is presented below (in thousands): Six Months Ended July 1, 2016 June 27, 2015 Balance, beginning of period $ 22,042 $ 22,094 Provision charged to costs of sales 4,922 2,714 Write-offs, net of recoveries (4,124 ) (1,288 ) Balance, end of period $ 22,840 $ 23,520 |
LONG-LIVED ASSETS (Tables)
LONG-LIVED ASSETS (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | Changes in the carrying amount of goodwill for the six months ended July 1, 2016 are presented in the table below (in thousands): Bracing & Vascular Recovery Sciences Surgical Implant International Total Balance, beginning of period Goodwill $ 483,258 $ 249,601 $ 49,229 $ 333,022 $ 1,115,110 Accumulated impairment losses — (49,600 ) (47,406 ) — (97,006 ) Goodwill, net of accumulated impairment losses at December 31, 2015 483,258 200,001 1,823 333,022 1,018,104 Current Year Activity: Foreign currency translation — — — 1,082 1,082 Balance, end of period Goodwill 483,258 249,601 49,229 334,104 1,116,192 Accumulated impairment losses — (49,600 ) (47,406 ) — (97,006 ) Goodwill, net of accumulated impairment losses at July 1, 2016 $ 483,258 $ 200,001 $ 1,823 $ 334,104 $ 1,019,186 |
Summary of Identifiable Intangible Assets | Identifiable intangible assets consisted of the following (in thousands): July 1, 2016 Gross Amount Accumulated Amortization Intangible Assets, Net Definite-lived intangible assets: Customer relationships $ 476,460 $ (343,667 ) $ 132,793 Patents and technology 446,840 (260,982 ) 185,858 Trademarks and trade names 29,756 (14,155 ) 15,601 Distributor contracts and relationships 4,772 (4,230 ) 542 Non-compete agreements 6,655 (6,085 ) 570 $ 964,483 $ (629,119 ) 335,364 Indefinite-lived intangible assets: Trademarks and trade names 375,185 Net identifiable intangible assets $ 710,549 December 31, 2015 Gross Carrying Amount Accumulated Amortization Intangible Assets, Net Definite-lived intangible assets: Customer relationships $ 475,776 $ (320,991 ) $ 154,785 Patents and technology 446,854 (246,509 ) 200,345 Trademarks and trade names 29,737 (12,695 ) 17,042 Distributor contracts and relationships 4,693 (3,875 ) 818 Non-compete agreements 6,607 (5,714 ) 893 $ 963,667 $ (589,784 ) $ 373,883 Indefinite-lived intangible assets: Trademarks and trade names 375,162 Net identifiable intangible assets $ 749,045 |
Schedule of Estimated Amortization Expense | Based on our amortizable intangible asset balance as of April 1, 2016, we estimate that amortization expense will be as follows for the next five years and thereafter (in thousands): 2016 $ 37,857 2017 66,124 2018 57,905 2019 53,041 2020 37,070 Thereafter 83,367 $ 335,364 |
OTHER CURRENT LIABILITIES (Tabl
OTHER CURRENT LIABILITIES (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Other Liabilities Disclosure [Abstract] | |
Schedule of Other Current Liabilities | Other current liabilities consist of the following (in thousands): July 1, 2016 December 31, 2015 Accrued wages and related expenses $ 26,690 $ 29,031 Accrued commissions 16,069 20,479 Accrued rebates 10,106 13,433 Accrued other taxes 3,485 4,196 Accrued professional expenses 5,577 3,164 Income taxes payable 988 1,612 Deferred tax liability 165 163 Other accrued liabilities 29,088 30,095 $ 92,168 $ 102,173 |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Summary of Location and Fair Value of Derivative Instruments in Condensed Consolidated Balance Sheets | The following table summarizes the fair value of derivative instruments in our Unaudited Condensed Consolidated Balance Sheets (in thousands): Balance Sheet Location July 1, 2016 December 31, 2015 Derivative Assets: Interest rate cap agreements designated as cash flow hedges Other long-term assets $ — $ 1,313 Derivative Liabilities: Interest rate cap agreements designated as cash flow hedges Other current liabilities $ 1,074 $ 282 Interest rate cap agreements designated as cash flow hedges Other long-term liabilities 5,879 — |
Summary of Effect of Derivative Instruments on Condensed Consolidated Statements of Operations | The following table summarizes the effect our derivative instruments have on our Unaudited Condensed Consolidated Statements of Operations (in thousands): Three Months Ended Six Months Ended Location July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Interest rate cap agreements designated as cash flow hedges Interest expense, net $ 65 $ — $ 75 $ — Foreign exchange forward contracts not designated as hedges Other income, net $ — $ (4 ) $ — $ (4 ) |
Summary of Pre-tax Loss on Derivative Instruments Designated as Cash Flow Hedges Recognized in Other Comprehensive Income (Loss) | The pre-tax loss on derivative instruments designated as cash flow hedges recognized in other comprehensive income (loss) is presented below (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Interest rate cap agreements designated as cash flow hedges $ (2,651 ) $ — $ (8,042 ) $ — |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following table presents the balances of financial assets and liabilities measured at fair value on a recurring basis (in thousands): As of July 1, 2016 Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recorded Balance Liabilities: Interest rate cap agreements designated as cash flow hedges $ — $ 6,953 $ — $ 6,953 As of December 31, 2015 Quoted Prices in Active Markets for Identical (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Recorded Balance Assets: Interest rate cap agreements designated as cash flow hedges $ — $ 1,313 $ — $ 1,313 Liabilities: Interest rate cap agreements designated as cash flow hedges $ — $ 282 $ — $ 282 |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Debt Obligations | Debt obligations consist of the following (in thousands): July 1, 2016 December 31, 2015 Credit facilities: Revolving credit facility, net of unamortized debt issuance costs of $1.9 million and $2.1 million as of July 1, 2016 and December 31, 2015, respectively $ 80,125 $ 27,886 Term loan: $1,044.5 million Term Loan, net of unamortized debt issuance costs and original issuance discount of $13.6 million and $15.3 million as of July 1, 2016 and December 31, 2015, respectively 1,030,815 1,037,117 Notes: $1,015.0 million 8.125% Second Lien notes, net of unamortized debt issuance costs and original issuance discount of $15.6 million and $16.9 million as of July 1, 2016 and December 31, 2015, respectively 999,367 998,137 $298.5 million 10.75% Third Lien notes, net of unamortized debt issuance costs and original issuance discount of $7.3 million and $8.1 million as of July 1, 2016 and December 31, 2015, respectively 291,178 290,443 9.75% Senior subordinated notes 1,529 1,529 Total debt 2,403,014 2,355,112 Current maturities (10,550 ) (10,550 ) Long-term debt $ 2,392,464 $ 2,344,562 |
STOCK OPTION PLANS AND STOCK-34
STOCK OPTION PLANS AND STOCK-BASED COMPENSATION (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Summary of Assumptions Used to Estimate Fair Value of Time-Based Options, Vested Options and Director Service Options of Stock Options Granted | The following table summarizes certain assumptions we used to estimate the fair value of the Time-Based Options, the Vested Options and the Director Service Options granted: Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Expected volatility 33.3 % 33.3 % 33.3 % 33.3 % Risk-free interest rate 1.2%-1.5% 1.8 % 1.2%-1.6% 1.5%-2.0% Expected years until exercise 5.2-6.6 6.5 5.2-6.6 5.1-8.3 Expected dividend yield 0.0 % 0.0 % 0.0 % 0.0 % |
Schedule of Recorded Non-cash Stock-based Compensation Expense | We recorded non-cash stock-based compensation expense during the periods presented as follows (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Cost of sales $ 31 $ 31 $ 61 $ 61 Operating expenses: Selling, general and administrative 1,146 506 1,318 1,085 Research and development 139 2 142 6 $ 1,316 $ 539 $ 1,521 $ 1,152 |
SEGMENT AND GEOGRAPHIC INFORM35
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Segment Reporting [Abstract] | |
Information Regarding Reportable Business Segments | Information regarding our reportable business segments is presented below (in thousands). Segment results exclude the impact of amortization and impairment of goodwill and intangible assets, certain general corporate expenses, and charges related to various integration activities, as defined by management. The accounting policies of the reportable segments are the same as the accounting policies of the Company. We allocate resources and evaluate the performance of segments based on net sales, gross profit, operating income and other non-GAAP measures, as defined in our Credit Facilities. We do not allocate assets to reportable segments because a significant portion of our assets are shared by the segments. Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Net sales: Bracing and Vascular $ 131,751 $ 136,179 $ 255,967 $ 250,083 Recovery Sciences 38,449 40,102 75,024 74,627 Surgical Implant 42,575 28,071 85,625 54,997 International 80,077 75,550 155,142 147,706 $ 292,852 $ 279,902 $ 571,758 $ 527,413 Operating income: Bracing and Vascular $ 29,072 $ 31,497 $ 49,606 $ 52,393 Recovery Sciences 8,056 7,472 14,501 11,402 Surgical Implant 6,053 4,392 13,282 8,712 International 14,653 13,312 23,642 25,697 Expenses not allocated to segments and eliminations (36,290 ) (31,659 ) (70,025 ) (63,440 ) $ 21,544 $ 25,014 $ 31,006 $ 34,764 |
Net Sales by Geographic Area | Following are our net sales by geographic area (in thousands): Three Months Ended Six Months Ended July 1, 2016 June 27, 2015 July 1, 2016 June 27, 2015 Net sales: United States $ 212,775 $ 204,352 $ 416,616 $ 379,707 Other Europe, Middle East and Africa 38,057 35,863 74,516 69,557 Germany 21,960 20,838 42,963 41,872 Australia and Asia Pacific 11,400 10,500 21,402 20,391 Canada 6,697 6,381 12,434 11,733 Latin America 1,963 1,968 3,827 4,153 $ 292,852 $ 279,902 $ 571,758 $ 527,413 |
SUPPLEMENTAL GUARANTOR CONDEN36
SUPPLEMENTAL GUARANTOR CONDENSED CONSOLIDATING FINANCIAL STATEMENTS (Tables) | 6 Months Ended |
Jul. 01, 2016 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Schedule of Condensed Consolidating Balance Sheets | The following tables present the financial position, results of operations and cash flows of DJOFL, the Guarantors, the Non-Guarantors and certain eliminations for the periods presented. DJO Finance LLC Unaudited Condensed Consolidating Balance Sheets As of July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 17,436 $ 1,370 $ 22,893 $ — $ 41,699 Accounts receivable, net — 128,643 48,485 — 177,128 Inventories, net — 143,880 46,402 (12,734 ) 177,548 Prepaid expenses and other current assets 103 15,210 6,996 — 22,309 Total current assets 17,539 289,103 124,776 (12,734 ) 418,684 Property and equipment, net — 117,527 13,381 (63 ) 130,845 Goodwill — 951,005 99,277 (31,096 ) 1,019,186 Intangible assets, net — 700,017 10,532 — 710,549 Investment in subsidiaries 1,297,699 1,679,465 51,573 (3,028,737 ) — Intercompany receivables 566,198 — — (566,198 ) — Other non-current assets — 2,568 4,031 — 6,599 Total assets $ 1,881,436 $ 3,739,685 $ 303,570 $ (3,638,828 ) $ 2,285,863 Liabilities and (Deficit) Equity Current liabilities: Accounts payable $ — $ 64,547 $ 9,421 $ — $ 73,968 Current portion of debt obligations 10,550 — — — 10,550 Other current liabilities 12,123 64,057 27,050 — 103,230 Current liabilities of discontinued operations 946 946 Total current liabilities 22,673 129,550 36,471 — 188,694 Long-term debt obligations 2,392,464 — — — 2,392,464 Deferred tax liabilities, net — 214,178 5,752 — 219,930 Intercompany payables, net — 362,861 137,313 (500,174 ) — Other long-term liabilities 5,879 14,811 629 — 21,319 Total liabilities 2,421,016 721,400 180,165 (500,174 ) 2,822,407 Noncontrolling interests — — 3,036 — 3,036 Total membership (deficit) equity (539,580 ) 3,018,285 120,369 (3,138,654 ) (539,580 ) Total liabilities and (deficit) equity $ 1,881,436 $ 3,739,685 $ 303,570 $ (3,638,828 ) $ 2,285,863 DJO Finance LLC Condensed Consolidating Balance Sheets As of December 31, 2015 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Assets Current assets: Cash and cash equivalents $ 29,673 $ 160 $ 19,110 $ — $ 48,943 Accounts receivable, net — 128,085 44,275 — 172,360 Inventories, net — 142,033 31,803 737 174,573 Prepaid expenses and other current assets 42 13,301 7,836 — 21,179 Current assets of discontinued operations 2,878 - — 2,878 Total current assets 29,715 286,457 103,024 737 419,933 Property and equipment, net — 103,637 13,721 (85 ) 117,273 Goodwill — 951,005 98,309 (31,210 ) 1,018,104 Intangible assets, net — 737,798 11,247 — 749,045 Investment in subsidiaries 1,297,699 1,687,724 50,741 (3,036,164 ) — Intercompany receivables 575,483 — — (575,483 ) — Other non-current assets 1,313 1,193 2,668 — 5,174 Non current assets of discontinued operations — 29 - — 29 Total assets $ 1,904,210 $ 3,767,843 $ 279,710 $ (3,642,205 ) $ 2,309,558 Liabilities and (Deficit) Equity Current liabilities: Accounts payable $ — $ 49,394 $ 9,098 $ — $ 58,492 Current portion of debt obligations 10,550 — - — 10,550 Other current liabilities 17,268 73,260 28,643 — 119,171 Current liabilities of discontinued operations - 13,371 - — 13,371 Total current liabilities 27,818 136,025 37,741 — 201,584 Long-term debt obligations 2,344,562 — — — 2,344,562 Deferred tax liabilities, net — 209,179 4,677 — 213,856 Intercompany payables, net — 400,216 131,138 (531,354 ) — Other long-term liabilities — 14,441 651 — 15,092 Total liabilities 2,372,380 759,861 174,207 (531,354 ) 2,775,094 Noncontrolling interests — — 2,634 — 2,634 Total membership (deficit) equity (468,170 ) 3,007,982 102,869 (3,110,851 ) (468,170 ) Total liabilities and (deficit) equity $ 1,904,210 $ 3,767,843 $ 279,710 $ (3,642,205 ) $ 2,309,558 |
Schedule of Condensed Consolidating Statements of Operations | DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Three Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net sales $ — $ 252,212 $ 83,178 $ (42,538 ) $ 292,852 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $7,080) — 94,465 74,317 (48,308 ) 120,474 Selling, general and administrative — 97,827 23,800 — 121,627 Research and development — 9,228 894 — 10,122 Amortization of intangible assets — 18,699 386 — 19,085 — 220,219 99,397 (48,308 ) 271,308 Operating income (loss) — 31,993 (16,219 ) 5,770 21,544 Other (expense) income: Interest (expense) income, net (42,448 ) 51 1 — (42,396 ) Other (expense) income, net (8 ) (8,553 ) 9,029 — 468 Intercompany (expense) income, net — (15,147 ) 14,634 513 — Equity in income (loss) of subsidiaries, net 19,181 — — (19,181 ) — (23,275 ) (23,649 ) 23,664 (18,668 ) (41,928 ) (Loss) income before income taxes (23,275 ) 8,344 7,445 (12,898 ) (20,384 ) Income tax provision — (1,671 ) (1,906 ) — (3,577 ) Net (loss) income from continuing operations (23,275 ) 6,673 5,539 (12,898 ) (23,961 ) Net income from discontinued operations — 855 — — 855 Net (loss) income (23,275 ) 7,528 5,539 (12,898 ) (23,106 ) Net income attributable to noncontrolling interests — — (169 ) — (169 ) Net (loss) income attributable to DJOFL $ (23,275 ) $ 7,528 $ 5,370 $ (12,898 ) $ (23,275 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Six Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net sales $ — $ 495,872 $ 158,673 $ (82,787 ) $ 571,758 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $14,487) — 189,306 138,711 (89,460 ) 238,557 Selling, general and administrative — 195,637 47,919 — 243,556 Research and development — 18,109 1,867 — 19,976 Amortization of intangible assets — 37,846 817 — 38,663 — 440,898 189,314 (89,460 ) 540,752 Operating income (loss) — 54,974 (30,641 ) 6,673 31,006 Other (expense) income: Interest (expense) income, net (84,731 ) 71 (6 ) — (84,666 ) Other (expense) income, net (8 ) (16,573 ) 17,333 — 752 Intercompany (expense) income , net — (14,784 ) 14,752 32 — Equity in income (loss) of subsidiaries, net 23,143 — — (23,143 ) — (61,596 ) (31,286 ) 32,079 (23,111 ) (83,914 ) (Loss) income before income taxes (61,596 ) 23,688 1,438 (16,438 ) (52,908 ) Income tax provision — (6,078 ) (2,912 ) — (8,990 ) Net (loss) income from continuing operations (61,596 ) 17,610 (1,474 ) (16,438 ) (61,898 ) Net income from discontinued operations — 665 — — 665 Net (loss) income (61,596 ) 18,275 (1,474 ) (16,438 ) (61,233 ) Net income attributable to noncontrolling interests — — (362 ) — (362 ) Net (loss) income attributable to DJOFL $ (61,596 ) $ 18,275 $ (1,836 ) $ (16,438 ) $ (61,595 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Three Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net sales $ — $ 243,371 $ 75,498 $ (38,967 ) $ 279,902 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $7,535) — 102,629 57,651 (42,510 ) 117,770 Selling, general and administrative — 86,789 21,823 — 108,612 Research and development — 8,102 586 — 8,688 Amortization of intangible assets — 19,197 621 — 19,818 — 216,717 80,681 (42,510 ) 254,888 Operating income (loss) — 26,654 (5,183 ) 3,543 25,014 Other (expense) income: Interest (expense) income, net (44,567 ) 11 (8 ) — (44,564 ) Loss on modification and extinguishment of debt (67,967 ) — — — (67,967 ) Other expense, net — (84 ) 827 - 743 Intercompany (expense) income, net - (8,573 ) 8,267 306 - Equity in income of subsidiaries, net 34,558 - — (34,558 ) - (77,976 ) (8,646 ) 9,086 (34,252 ) (111,788 ) (Loss) income before income taxes (77,976 ) 18,008 3,903 (30,709 ) (86,774 ) Income tax provision — (4,889 ) (1,022 ) — (5,911 ) Net (loss) income from continuing operations (77,976 ) 13,119 2,881 (30,709 ) (92,685 ) Net income from discontinued operations — 14,873 — — 14,873 Net (loss) income (77,976 ) 27,992 2,881 (30,709 ) (77,812 ) Net income attributable to noncontrolling interests — — (165 ) — (165 ) Net (loss) income attributable to DJOFL $ (77,976 ) $ 27,992 $ 2,716 $ (30,709 ) $ (77,977 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Operations For the Six Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net sales $ — $ 461,763 $ 146,034 $ (80,384 ) $ 527,413 Costs and operating expenses: Cost of sales (exclusive of amortization of intangible assets of $15,070) — 193,550 110,985 (84,881 ) 219,654 Selling, general and administrative — 171,127 44,670 — 215,797 Research and development — 15,984 1,568 — 17,552 Amortization of intangible assets — 38,395 1,251 — 39,646 — 419,056 158,474 (84,881 ) 492,649 Operating income (loss) — 42,707 (12,440 ) 4,497 34,764 Other (expense) income: Interest (expense) income, net (87,438 ) 23 (15 ) — (87,430 ) Loss on modification and extinguishment of debt (67,967 ) — — — (67,967 ) Other expense, net — (609 ) (2,804 ) - (3,413 ) Intercompany income (expense), net - (8,254 ) 8,292 (38 ) - Equity in income of subsidiaries, net 41,902 - — (41,902 ) - (113,503 ) (8,840 ) 5,473 (41,940 ) (158,810 ) (Loss) income before income taxes (113,503 ) 33,867 (6,967 ) (37,443 ) (124,046 ) Income tax provision — (6,492 ) (1,364 ) — (7,856 ) Net (loss) income from continuing operations (113,503 ) 27,375 (8,331 ) (37,443 ) (131,902 ) Net income from discontinued operations — 18,865 — — 18,865 Net (loss) income (113,503 ) 46,240 (8,331 ) (37,443 ) (113,037 ) Net income attributable to noncontrolling interests — — (466 ) — (466 ) Net (loss) income attributable to DJOFL $ (113,503 ) $ 46,240 $ (8,797 ) $ (37,443 ) $ (113,503 ) |
Schedule of Condensed Consolidating Statements of Comprehensive Loss | DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Three Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net (loss) income $ (23,275 ) $ 7,528 $ 5,539 $ (12,898 ) $ (23,106 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax benefit of $111 — — (8,458 ) — (8,458 ) Unrealized loss on cash flow hedges, net of tax provision of zero (2,651 ) (2,651 ) Other comprehensive loss (2,651 ) — (8,458 ) — (11,109 ) Comprehensive (loss) income (25,926 ) 10,747 (1,513 ) (3,540 ) (34,215 ) Comprehensive income attributable to noncontrolling interests — — (101 ) — (101 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (25,926 ) $ 10,747 $ (1,614 ) $ (3,540 ) $ (34,316 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Six Months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Net (loss) income $ (61,596 ) $ 18,275 $ (1,474 ) $ (16,438 ) $ (61,233 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax provision of $166 — — (2,850 ) — (2,850 ) Unrealized loss on cash flow hedges, net of tax provision of zero (8,042 ) — — — (8,042 ) Other comprehensive loss (8,042 ) — (2,850 ) — (10,892 ) Comprehensive (loss) income (69,638 ) 18,275 (4,324 ) (16,438 ) (72,125 ) Comprehensive income attributable to noncontrolling interests — — (402 ) — (402 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (69,638 ) $ 18,275 $ (4,726 ) $ (16,438 ) $ (72,527 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Three Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net (loss) income $ (77,976 ) $ 27,992 $ 2,881 $ (30,709 ) $ (77,812 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax provision of $152 — — 4,137 — 4,137 Other comprehensive loss — — 4,137 — 4,137 Comprehensive (loss) income (77,976 ) 27,992 7,018 (30,709 ) (73,675 ) Comprehensive income attributable to noncontrolling interests — — (243 ) — (243 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (77,976 ) $ 27,992 $ 6,775 $ (30,709 ) $ (73,918 ) DJO Finance LLC Unaudited Condensed Consolidating Statements of Comprehensive Loss For the Six Months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Net (loss) income $ (113,503 ) $ 46,240 $ (8,331 ) $ (37,443 ) $ (113,037 ) Other comprehensive loss, net of taxes: Foreign currency translation adjustments, net of tax benefit of $340 — — (5,305 ) — (5,305 ) Other comprehensive loss — — (5,305 ) — (5,305 ) Comprehensive (loss) income (113,503 ) 46,240 (13,636 ) (37,443 ) (118,342 ) Comprehensive loss attributable to noncontrolling interests — — (260 ) — (260 ) Comprehensive (loss) income attributable to DJO Finance LLC $ (113,503 ) $ 46,240 $ (13,896 ) $ (37,443 ) $ (118,602 ) |
Schedule of Condensed Consolidating Statements of Cash Flows | DJO Finance LLC Unaudited Condensed Consolidating Statements of Cash Flows For the Six months Ended July 1, 2016 (in thousands) DJOFL Guarantors Non- Guarantors Eliminations Consolidated Cash Flows From Operating Activities: Net (loss) income $ (61,596 ) $ 18,275 $ (1,474 ) $ (16,438 ) $ (61,233 ) Net loss from discontinued operations (665 ) $ (665 ) Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation — 18,055 2,486 (28 ) 20,513 Amortization of intangible assets — 37,846 817 — 38,663 Amortization of debt issuance costs and non-cash interest expense 3,815 — — — 3,815 Stock-based compensation expense — 1,521 — — 1,521 Gain on disposal of assets, net — 471 55 4 530 Deferred income tax expense (benefit) — 4,133 (321 ) — 3,812 Equity in (loss) income of subsidiaries, net (23,143 ) — — 23,143 — Changes in operating assets and liabilities, net of acquired assets and liabilities: Accounts receivable — (559 ) (3,650 ) — (4,209 ) Inventories — (1,244 ) 2,793 (7,199 ) (5,650 ) Prepaid expenses and other assets 1,251 (2,763 ) (252 ) 1,127 (637 ) Accounts payable and other current liabilities (7,721 ) 2,522 (69 ) (3,258 ) (8,526 ) Net cash (used in) provided by continuing operating activities (87,394 ) 77,592 385 (2,649 ) (12,066 ) Net cash (used in) discontinued operations - (8,853 ) — - (8,853 ) Net cash (used in) provided by operating activities (87,394 ) 68,739 385 (2,649 ) (20,919 ) Cash Flows From Investing Activities: Purchases of property and equipment — (29,238 ) (2,261 ) (1 ) (31,500 ) Proceeds from disposition of assets — 700 — — 700 Net cash used in investing activities from continuing operations — (28,538 ) (2,261 ) (1 ) (30,800 ) Cash Flows From Financing Activities: Intercompany 31,070 (38,991 ) 5,271 2,650 — Proceeds from issuance of debt 63,000 — — — 63,000 Repayments of debt obligations (18,913 ) — — — (18,913 ) Net cash provided by (used in) financing activities 75,157 (38,991 ) 5,271 2,650 44,087 Effect of exchange rate changes on cash and cash equivalents — — 388 — 388 Net (decrease) increase in cash and cash equivalents (12,237 ) 1,210 3,783 - (7,244 ) Cash and cash equivalents, beginning of year 29,673 160 19,110 — 48,943 Cash and cash equivalents, end of year $ 17,436 $ 1,370 $ 22,893 $ - $ 41,699 DJO Finance LLC Unaudited Condensed Consolidating Statements of Cash Flows For the Six months Ended June 27, 2015 (in thousands) DJOFL Guarantors Non - Guarantors Eliminations Consolidated Cash Flows from Operating Activities: Net (loss) income $ (113,503 ) $ 46,240 $ (8,331 ) $ (37,443 ) $ (113,037 ) Net income from discontinued operations — (18,865 ) — — (18,865 ) Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: Depreciation — 14,509 2,377 (49 ) 16,837 Amortization of intangible assets — 38,395 1,251 — 39,646 Amortization of debt issuance costs and non-cash interest expense 4,235 — — — 4,235 Stock-based compensation expense — 1,152 — — 1,152 Loss on modification and extinguishment of debt 67,967 67,967 Gain on disposal of assets, net — 139 127 (8 ) 258 Deferred income tax expense (benefit) — 3,351 384 - 3,735 Equity in (loss) income of subsidiaries, net (41,902 ) — — 41,902 — Changes in operating assets and liabilities: Accounts receivable — (3,545 ) (2,404 ) — (5,949 ) Inventories — 11 (1,603 ) (7,159 ) (8,751 ) Prepaid expenses and other assets (17 ) (1,196 ) (892 ) 73 (2,032 ) Accounts payable and other current liabilities (5,422 ) (3,042 ) (3,322 ) 4,421 (7,365 ) Net cash (used in) provided by continuing operating activities (88,642 ) 77,149 (12,413 ) 1,737 (22,169 ) Net cash provided by discontinued operations — 29,397 — — 29,397 Net cash (used in) provided by operating activities (88,642 ) 106,546 (12,413 ) 1,737 7,228 Cash Flows from Investing Activities: Purchases of property and equipment — (13,677 ) (2,942 ) 11 (16,608 ) Net cash (used in) provided by investing activities from continuing operations — (13,677 ) (2,942 ) 11 (16,608 ) Net cash provided by investing activities from discontinued operations — (451 ) — — (451 ) Net cash (used in) provided by investing activities — (14,128 ) (2,942 ) 11 (17,059 ) Cash Flows from Financing Activities: Intercompany 73,474 (89,888 ) 18,162 (1,748 ) — Proceeds from issuance of debt 2,445,826 — — — 2,445,826 Repayments of debt (2,356,073 ) — (48 ) — (2,356,121 ) Payment of debt issuance, modification and extinguishment costs (61,662 ) — — — (61,662 ) Net cash provided by (used in) financing activities 101,565 (89,888 ) 18,114 (1,748 ) 28,043 Effect of exchange rate changes on cash and cash equivalents — — (971 ) — (971 ) Net increase (decrease) in cash and cash equivalents 12,923 2,530 1,788 — 17,241 Cash and cash equivalents at beginning of period 12,958 3 18,183 — 31,144 Cash and cash equivalents at end of period $ 25,881 $ 2,533 $ 19,971 $ — $ 48,385 |
Organization and Basis of Pre37
Organization and Basis of Presentation - Additional Information (Detail) - Segment | 6 Months Ended | |
Jul. 01, 2016 | Jun. 27, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Number of operating segments | 4 | 4 |
Percentage of ownership interest in subsidiary Medireha GmbH | 50.00% |
Divestitures - Schedule of Disc
Divestitures - Schedule of Discontinued Operations (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | Dec. 31, 2015 | |
Costs and operating expenses: | |||||
Net income from discontinued operations | $ 855 | $ 14,873 | $ 665 | $ 18,865 | |
Empi | |||||
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items] | |||||
Net sales | 30,941 | 63,531 | |||
Costs and operating expenses: | |||||
Cost of sales | 7,766 | 15,124 | |||
Selling, general and administrative | 10,412 | 22,999 | |||
Research and development | 51 | 87 | |||
Amortization of intangible assets | 2,281 | 4,563 | |||
Impairment of intangible assets | 4,500 | 4,500 | |||
Other income | 855 | 24 | 665 | 74 | |
Income from discontinued operations before income taxes | 855 | 5,955 | 665 | 16,332 | |
Income tax benefit | 8,918 | 2,533 | |||
Net income from discontinued operations | 855 | $ 14,873 | 665 | $ 18,865 | |
Accounts receivable, net | $ 2,743 | ||||
Other current assets | 135 | ||||
Property and equipment, net | 22 | ||||
Intangible and other non-current assets | 7 | ||||
Total assets | 2,907 | ||||
Accounts payable and other liabilities | 946 | 946 | 13,371 | ||
Net liabilities | $ (946) | $ (946) | $ (10,464) |
Summary of Activity in Accounts
Summary of Activity in Accounts Receivable Reserves for Doubtful Accounts and Sales Returns (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2016 | Jun. 27, 2015 | |
Receivables [Abstract] | ||
Balance, beginning of period | $ 32,893 | $ 23,585 |
Provision for doubtful accounts | 11,861 | 12,014 |
Write-offs, net of recoveries | (11,495) | (6,714) |
Balance, end of period | $ 33,259 | $ 28,885 |
Accounts Receivable Reserves -
Accounts Receivable Reserves - Additional Information (Detail) - USD ($) $ in Millions | Jul. 01, 2016 | Jun. 27, 2015 |
Receivables [Abstract] | ||
Provision for sales returns | $ 3.1 | $ 3.7 |
Summary of Inventories (Detail)
Summary of Inventories (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2015 | Jun. 27, 2015 | Dec. 31, 2014 |
Inventory Disclosure [Abstract] | ||||
Components and raw materials | $ 61,949 | $ 57,372 | ||
Work in process | 9,908 | 10,330 | ||
Finished goods | 94,810 | 99,167 | ||
Inventory held on consignment | 33,721 | 29,746 | ||
Inventory, Gross, Total | 200,388 | 196,615 | ||
Inventory reserves | (22,840) | (22,042) | $ (23,520) | $ (22,094) |
Inventories, net | $ 177,548 | $ 174,573 |
Summary of Activity in Inventor
Summary of Activity in Inventory Reserves (Detail) - USD ($) $ in Thousands | 6 Months Ended | |
Jul. 01, 2016 | Jun. 27, 2015 | |
Inventory Disclosure [Abstract] | ||
Balance, beginning of period | $ 22,042 | $ 22,094 |
Provision charged to costs of sales | 4,922 | 2,714 |
Write-offs, net of recoveries | (4,124) | (1,288) |
Balance, end of period | $ 22,840 | $ 23,520 |
Schedule of Changes in Carrying
Schedule of Changes in Carrying Amount of Goodwill (Detail) $ in Thousands | 6 Months Ended |
Jul. 01, 2016USD ($) | |
Goodwill [Line Items] | |
Goodwill, balance, beginning of period | $ 1,115,110 |
Accumulated impairment losses, balance, beginning of period | (97,006) |
Goodwill, net of accumulated impairment losses, beginning of period | 1,018,104 |
Foreign currency translation | 1,082 |
Goodwill, balance, end of period | 1,116,192 |
Accumulated impairment losses, balance, end of period | (97,006) |
Goodwill, net of accumulated impairment losses, end of period | 1,019,186 |
Bracing and Vascular | |
Goodwill [Line Items] | |
Goodwill, balance, beginning of period | 483,258 |
Goodwill, net of accumulated impairment losses, beginning of period | 483,258 |
Goodwill, balance, end of period | 483,258 |
Goodwill, net of accumulated impairment losses, end of period | 483,258 |
Recovery Sciences | |
Goodwill [Line Items] | |
Goodwill, balance, beginning of period | 249,601 |
Accumulated impairment losses, balance, beginning of period | (49,600) |
Goodwill, net of accumulated impairment losses, beginning of period | 200,001 |
Goodwill, balance, end of period | 249,601 |
Accumulated impairment losses, balance, end of period | (49,600) |
Goodwill, net of accumulated impairment losses, end of period | 200,001 |
Surgical Implant | |
Goodwill [Line Items] | |
Goodwill, balance, beginning of period | 49,229 |
Accumulated impairment losses, balance, beginning of period | (47,406) |
Goodwill, net of accumulated impairment losses, beginning of period | 1,823 |
Goodwill, balance, end of period | 49,229 |
Accumulated impairment losses, balance, end of period | (47,406) |
Goodwill, net of accumulated impairment losses, end of period | 1,823 |
International | |
Goodwill [Line Items] | |
Goodwill, balance, beginning of period | 333,022 |
Goodwill, net of accumulated impairment losses, beginning of period | 333,022 |
Foreign currency translation | 1,082 |
Goodwill, balance, end of period | 334,104 |
Goodwill, net of accumulated impairment losses, end of period | $ 334,104 |
Summary of Identifiable Intangi
Summary of Identifiable Intangible Assets (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Apr. 01, 2016 | Dec. 31, 2015 |
Finite Lived Intangible Assets [Line Items] | |||
Finite lived, gross carrying amount | $ 964,483 | $ 963,667 | |
Finite lived, accumulated amortization | (629,119) | (589,784) | |
Finite lived, intangible assets, net | 335,364 | $ 335,364 | 373,883 |
Intangible assets, net | 710,549 | 749,045 | |
Customer Relationships | |||
Finite Lived Intangible Assets [Line Items] | |||
Finite lived, gross carrying amount | 476,460 | 475,776 | |
Finite lived, accumulated amortization | (343,667) | (320,991) | |
Finite lived, intangible assets, net | 132,793 | 154,785 | |
Patents and Technology | |||
Finite Lived Intangible Assets [Line Items] | |||
Finite lived, gross carrying amount | 446,840 | 446,854 | |
Finite lived, accumulated amortization | (260,982) | (246,509) | |
Finite lived, intangible assets, net | 185,858 | 200,345 | |
Trademarks and Trade Names | |||
Finite Lived Intangible Assets [Line Items] | |||
Finite lived, gross carrying amount | 29,756 | 29,737 | |
Finite lived, accumulated amortization | (14,155) | (12,695) | |
Finite lived, intangible assets, net | 15,601 | 17,042 | |
Indefinite lived intangible assets | 375,185 | 375,162 | |
Distributor Contracts And Relationships | |||
Finite Lived Intangible Assets [Line Items] | |||
Finite lived, gross carrying amount | 4,772 | 4,693 | |
Finite lived, accumulated amortization | (4,230) | (3,875) | |
Finite lived, intangible assets, net | 542 | 818 | |
Non-compete | |||
Finite Lived Intangible Assets [Line Items] | |||
Finite lived, gross carrying amount | 6,655 | 6,607 | |
Finite lived, accumulated amortization | (6,085) | (5,714) | |
Finite lived, intangible assets, net | $ 570 | $ 893 |
Long Lived Assets - Additional
Long Lived Assets - Additional Information (Detail) | 6 Months Ended |
Jul. 01, 2016 | |
Customer Relationships | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average useful lives | 4 years 3 months 18 days |
Patents and Technology | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average useful lives | 7 years 4 months 24 days |
Distributor Contracts And Relationships | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average useful lives | 1 year 4 months 24 days |
Trademarks and Trade Names | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average useful lives | 6 years 3 months 18 days |
Non-compete | |
Acquired Finite Lived Intangible Assets [Line Items] | |
Definite-lived intangible assets, weighted average useful lives | 1 year 6 months |
Schedule of Estimated Amortizat
Schedule of Estimated Amortization Expense (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Apr. 01, 2016 | Dec. 31, 2015 |
Goodwill And Intangible Assets Disclosure [Abstract] | |||
2,016 | $ 37,857 | ||
2,017 | 66,124 | ||
2,018 | 57,905 | ||
2,019 | 53,041 | ||
2,020 | 37,070 | ||
Thereafter | 83,367 | ||
Finite lived, intangible assets, net | $ 335,364 | $ 335,364 | $ 373,883 |
Schedule of Other Current Liabi
Schedule of Other Current Liabilities (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2015 |
Other Liabilities Disclosure [Abstract] | ||
Accrued wages and related expenses | $ 26,690 | $ 29,031 |
Accrued commissions | 16,069 | 20,479 |
Accrued rebates | 10,106 | 13,433 |
Accrued other taxes | 3,485 | 4,196 |
Accrued professional expenses | 5,577 | 3,164 |
Income taxes payable | 988 | 1,612 |
Deferred tax liability | 165 | 163 |
Other accrued liabilities | 29,088 | 30,095 |
Other current liabilities | $ 92,168 | $ 102,173 |
Summary of Location and Fair Va
Summary of Location and Fair Value of Derivative Instruments in Condensed Consolidated Balance Sheets (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | $ 1,313 | |
Derivative Liabilities | $ 6,953 | 282 |
Designated as Hedging Instrument | Interest Rate Cap | Other Long Term Assets | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Assets | 1,313 | |
Designated as Hedging Instrument | Interest Rate Cap | Other Current Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | 1,074 | $ 282 |
Designated as Hedging Instrument | Interest Rate Cap | Other Long-Term Liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Derivative Liabilities | $ 5,879 |
Summary of Effect of Derivative
Summary of Effect of Derivative Instruments on Condensed Consolidated Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Interest Rate Cap | Interest Expense, net | Designated as Hedging Instrument | Cash Flow Hedge | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effect of derivative instruments | $ 65 | $ 75 | ||
Foreign Exchange Forward | Other income (expense), net | Not Designated as Hedging Instrument | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Effect of derivative instruments | $ (4) | $ (4) |
Summary of Pre-Tax Loss On Deri
Summary of Pre-Tax Loss On Derivative Instruments Designated As Cash Flow Hedges In Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jul. 01, 2016 | Jul. 01, 2016 | |
Designated as Hedging Instrument | Interest Rate Cap | Cash Flow Hedge | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Pre-tax loss on derivative instruments | $ (2,651) | $ (8,042) |
Schedule of Assets and Liabilit
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2015 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cap agreements designated as cash flow hedges, liabilities | $ 6,953 | $ 282 |
Interest rate cap agreements designated as cash flow hedges, assets | 1,313 | |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate cap agreements designated as cash flow hedges, liabilities | $ 6,953 | 282 |
Interest rate cap agreements designated as cash flow hedges, assets | $ 1,313 |
Schedule of Debt Obligations (D
Schedule of Debt Obligations (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Debt | $ 2,403,014 | $ 2,355,112 |
Current maturities | (10,550) | (10,550) |
Long-term debt | 2,392,464 | 2,344,562 |
Credit Facilities | Revolving Credit Facility | ||
Debt Instrument [Line Items] | ||
Debt | 80,125 | 27,886 |
Term Loan | ||
Debt Instrument [Line Items] | ||
Debt | 1,030,815 | 1,037,117 |
8.125% Second Lien Notes | ||
Debt Instrument [Line Items] | ||
Debt | 999,367 | 998,137 |
10.75% Third Lien Notes | ||
Debt Instrument [Line Items] | ||
Debt | 291,178 | 290,443 |
9.75% Senior Subordinated notes | ||
Debt Instrument [Line Items] | ||
Debt | $ 1,529 | $ 1,529 |
Schedule of Debt Obligations (P
Schedule of Debt Obligations (Parenthetical) (Detail) - USD ($) $ in Millions | Jul. 01, 2016 | Dec. 31, 2015 | May 13, 2015 | May 07, 2015 | Oct. 18, 2010 |
Debt Instrument [Line Items] | |||||
Unamortized debt issuance costs | $ 13.1 | $ 14.5 | |||
Credit Facilities | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Unamortized debt issuance costs | 1.9 | 2.1 | |||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | 1,044.5 | $ 1,055 | |||
Unamortized debt issuance costs and original issue discount | 13.6 | 15.3 | |||
8.125% Second Lien Notes | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | 1,015 | $ 1,015 | |||
Unamortized debt issuance costs and original issue discount | $ 15.6 | 16.9 | |||
Debt instrument, stated percentage rate | 8.125% | 8.125% | |||
10.75% Third Lien Notes | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 298.5 | $ 298.5 | |||
Unamortized debt issuance costs and original issue discount | $ 7.3 | $ 8.1 | |||
Debt instrument, stated percentage rate | 10.75% | 10.75% | |||
9.75% Senior Subordinated notes | |||||
Debt Instrument [Line Items] | |||||
Debt instrument, face amount | $ 298.5 | $ 300 | |||
Debt instrument, stated percentage rate | 9.75% |
Debt - Additional Information (
Debt - Additional Information (Detail) - USD ($) | 6 Months Ended | ||
Jul. 01, 2016 | Sep. 30, 2015 | May 07, 2015 | |
Debt Instrument [Line Items] | |||
Leverage ratio of consolidated senior secured first lien to adjusted EBITDA | 535.00% | ||
Debt instrument, minimum fixed charge coverage ratio | 100.00% | ||
Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Revolving credit percentage of maximum availability | 10.00% | ||
Cash collection, number of business days | 30 days | ||
Revolving Credit Facility | Greater Than 50% of Utilization Credit Facility | |||
Debt Instrument [Line Items] | |||
Commitment Fees Rate | 0.25% | ||
Revolving Credit Facility | Less Than 50% of Utilization Credit Facility | |||
Debt Instrument [Line Items] | |||
Commitment Fees Rate | 0.375% | ||
Minimum | |||
Debt Instrument [Line Items] | |||
Unutilized revolving credit facility | $ 9,000,000 | ||
Term Loan | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | 1,044,500,000 | $ 1,055,000,000 | |
Loan increment | 150,000,000 | ||
Debt instrument, market value | $ 1,000,100,000 | ||
Percentage of annual payments quarterly installments | 0.25% | ||
Percentage of prepay outstanding term loans of annual excess cash flow | 50.00% | ||
Percentage of prepay outstanding term loans of non-ordinary course asset sales | 100.00% | ||
Proceeds from single or series of transaction | $ 30,000,000 | ||
Annual amount from non-ordinary course asset sales | $ 100,000,000 | ||
Percentage of cash proceeds from issuance of debt | 100.00% | ||
Term loan prepayment premium | 1.00% | ||
Leverage ratio of consolidated senior secured first lien to adjusted EBITDA | 433.00% | ||
Term Loan | Minimum | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 1.00% | ||
Percentage of prepay outstanding term loans of annual excess cash flow | 25.00% | ||
Term Loan | Maximum | |||
Debt Instrument [Line Items] | |||
Percentage of prepay outstanding term loans of annual excess cash flow | 0.00% | ||
Term Loan | Base Rate Borrowings | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 2.25% | ||
Term Loan | Federal Funds Rate Plus | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 0.50% | ||
Term Loan | One Month Eurodollar Rate | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 1.00% | ||
Term Loan | Eurodollar Rate Plus | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 3.25% | ||
ABL Facility | |||
Debt Instrument [Line Items] | |||
Credit Facility, face amount | 150,000,000 | ||
Credit Facility, increment | $ 50,000,000 | ||
Debt instrument, market value | $ 82,000,000 | ||
ABL Facility | Base Rate Borrowings | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 1.25% | ||
ABL Facility | Federal Funds Rate Plus | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 0.50% | ||
ABL Facility | One Month Eurodollar Rate | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 1.00% | ||
ABL Facility | Eurodollar Rate Plus | |||
Debt Instrument [Line Items] | |||
Revolving Credit Facility, percentage points added to the reference rate | 2.25% | ||
Senior Secured Credit Facility | |||
Debt Instrument [Line Items] | |||
Weighted Average Interest Rate | 4.10% |
Debt (Senior Notes, Debt Issuan
Debt (Senior Notes, Debt Issuance Costs and Loss on Modification and Extinguishment of Debt) - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | Dec. 31, 2015 | May 13, 2015 | May 07, 2015 | Oct. 18, 2010 | |
Debt Instrument [Line Items] | ||||||||
Debt | $ 2,403,014 | $ 2,403,014 | $ 2,355,112 | |||||
Loss on extinguishment of debt | $ (67,967) | $ (67,967) | ||||||
Premium related to debt redemption | 47,800 | 47,800 | ||||||
Non-cash write off of unamortized debt issuance costs | 11,900 | |||||||
Arrangement, amendment and other fees of debt | 8,300 | |||||||
Unamortized debt issuance costs | 13,100 | 13,100 | 14,500 | |||||
Amortization of debt issuance costs | 700 | $ 1,200 | 1,400 | $ 3,300 | ||||
8.125% Second Lien Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 1,015,000 | $ 1,015,000 | $ 1,015,000 | |||||
Debt instrument, stated percentage rate | 8.125% | 8.125% | 8.125% | |||||
Debt instrument maturity date | Jun. 15, 2021 | |||||||
Debt | $ 999,367 | $ 999,367 | 998,137 | |||||
Repurchase price percentage | 101.00% | |||||||
8.125% Second Lien Notes | Prior to June 15, 2018 - Option One | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price | 100.00% | |||||||
8.125% Second Lien Notes | prior to June 15, 2019 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price | 103.00% | |||||||
Percentage of debt redeemed | 15.00% | |||||||
8.125% Second Lien Notes | Prior to June 15, 2018 - Option Two | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price | 108.125% | |||||||
Percentage of aggregate principal amount of notes to be outstanding | 35.00% | |||||||
8.125% Second Lien Notes | Significant Other Observable Inputs (Level 2) | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, stated percentage rate | 8.125% | 8.125% | ||||||
Debt instrument, market value | $ 872,900 | $ 872,900 | ||||||
8.125% Second Lien Notes | First Lien Credit Facilities | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, stated percentage rate | 8.125% | 8.125% | ||||||
10.75% Third Lien Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 298,500 | $ 298,500 | $ 298,500 | |||||
Debt instrument, stated percentage rate | 10.75% | 10.75% | 10.75% | |||||
Debt instrument maturity date | Apr. 15, 2020 | |||||||
Debt | $ 291,178 | $ 291,178 | 290,443 | |||||
Repurchase price percentage | 101.00% | |||||||
10.75% Third Lien Notes | Significant Other Observable Inputs (Level 2) | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, stated percentage rate | 10.75% | 10.75% | ||||||
Debt instrument, market value | $ 241,800 | $ 241,800 | ||||||
9.75% Senior Subordinated notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 298,500 | $ 300,000 | ||||||
Debt instrument, stated percentage rate | 9.75% | 9.75% | ||||||
Debt instrument maturity date | Oct. 15, 2017 | |||||||
Debt | $ 1,529 | $ 1,529 | $ 1,529 | |||||
9.75% Senior Subordinated notes | Optional Redemption On October 15, 2015 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price | 102.438% | |||||||
9.75% Senior Subordinated notes | Optional Redemption On October 15, 2016 | ||||||||
Debt Instrument [Line Items] | ||||||||
Redemption price | 100.00% | |||||||
8.75% Second Priority Senior Secured Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, stated percentage rate | 8.75% | 8.75% | ||||||
9.875% Senior Unsecured Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, stated percentage rate | 9.875% | 9.875% | ||||||
7.75% Senior Unsecured Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, stated percentage rate | 7.75% | 7.75% |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||||
Income tax provision | $ (3,577) | $ (5,911) | $ (8,990) | $ (7,856) | |
(Loss) income before income taxes | $ (20,384) | $ (86,774) | $ (52,908) | $ (124,046) | |
Effective tax rate | 17.50% | 6.80% | 17.00% | 6.30% | |
Valuation allowance, deferred tax assets | $ 11,400 | $ 26,100 | |||
Gross unrecognized tax benefits | 16,000 | 16,000 | $ 14,900 | ||
Change in unrecognized tax benefits | 1,100 | ||||
Accrued interest and penalties | 3,100 | 3,100 | |||
Expected decrease in unrecognized tax benefits | 900 | ||||
Unrecognized tax benefits resulting from foreign and U.S. state tax positions | $ 6,100 | $ 6,100 |
Stock Option Plans and Stock-57
Stock Option Plans and Stock-Based Compensation - Additional Information (Detail) - $ / shares | 1 Months Ended | 6 Months Ended | 12 Months Ended | |||||
Sep. 30, 2015 | Feb. 28, 2013 | Jul. 01, 2016 | Jun. 27, 2015 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Number of shares available to grant | 10,575,529 | |||||||
Share based compensation shares authorized under stock option plans description | If Blackstone sells all or a portion of its equity interests in DJO while the options are outstanding, then the unvested Market Return Options will vest and become exercisable as follows: 1) 25% of the options will vest and become exercisable if Blackstone realizes a MOIC of 1.5 times its equity investment in DJO; 2) 100% of the options will vest and become exercisable if Blackstone realizes a MOIC of at least 2.25 times its equity investment in DJO; and 3) if Blackstone realizes a MOIC of greater than 1.5 times its equity investment but less than 2.25 times its equity investment, then 25% of the options will vest and become exercisable and a percentage of the remaining unvested options will vest and become exercisable with such percentage equal to a fraction, the numerator of which is the actual MOIC realized by Blackstone, less 1.5 and the denominator of which is 0.75. | |||||||
Employee Stock Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted stock options modified | 310,000 | |||||||
Granted stock options | 667,818 | 593,621 | ||||||
2013 Vested Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted shares expiration period | 10 years | |||||||
2014 Vested Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted shares expiration period | 10 years | |||||||
Twenty Fifteen Vested Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted shares expiration period | 10 years | |||||||
Granted stock options | 21,121 | |||||||
Option granted, weighted average grant date fair value | $ 5.27 | |||||||
2016 Vested Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted shares expiration period | 10 years | |||||||
Granted stock options | 174,818 | |||||||
Option granted, weighted average grant date fair value | $ 5.25 | |||||||
Market Return Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted stock options | 426,998 | |||||||
Time-Based Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted stock options | 66,002 | 128,331 | ||||||
Option granted, weighted average grant date fair value | $ 5.99 | $ 6.07 | ||||||
Director Stock Option | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted stock options | 13,800 | 23,000 | ||||||
Option granted, weighted average grant date fair value | $ 5.99 | $ 6.92 | ||||||
Performance Options | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted stock options | 444,169 | |||||||
Share Based Compensation Award Tranche One | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock option vest | 33.33% | 33.33% | 33.33% | |||||
Share Based Compensation Award Tranche Two | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock option vest | 66.67% | 33.33% | 66.67% | |||||
Share Based Compensation Award Tranche Three | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Stock option vest | 33.33% | |||||||
Minimum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Exercise price as a percentage of the fair market value of underlying shares on the date of grant | 100.00% | |||||||
Money on invested capital multiple | 225.00% | 150.00% | ||||||
Maximum | ||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||
Granted shares expiration period | 10 years | |||||||
Money on invested capital multiple | 250.00% | 225.00% |
Summary of Assumptions Used to
Summary of Assumptions Used to Estimate Fair Value of Time-Based Options, Vested Options and Director Service Options of Stock Options Granted (Detail) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected volatility | 33.30% | 33.30% | 33.30% | 33.30% |
Risk-free interest rate | 1.80% | |||
Risk-free interest rate, minimum | 1.20% | 1.20% | 1.50% | |
Risk-free interest rate, maximum | 1.50% | 1.60% | 2.00% | |
Expected dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected years until exercise | 5 years 2 months 12 days | 5 years 2 months 12 days | 5 years 1 month 6 days | |
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected years until exercise | 6 years 7 months 6 days | 6 years 7 months 6 days | 8 years 3 months 18 days |
Schedule of Recorded Non-cash S
Schedule of Recorded Non-cash Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Non-cash stock-based compensation expense | $ 1,316 | $ 539 | $ 1,521 | $ 1,152 |
Cost of Sales | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Non-cash stock-based compensation expense | 31 | 31 | 61 | 61 |
Selling, General and Administrative Expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Non-cash stock-based compensation expense | 1,146 | 506 | 1,318 | 1,085 |
Research and Development Expense | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Non-cash stock-based compensation expense | $ 139 | $ 2 | $ 142 | $ 6 |
Membership Deficit - Additional
Membership Deficit - Additional Information (Detail) $ in Millions | 6 Months Ended |
Jul. 01, 2016USD ($)shares | |
Equity [Abstract] | |
Shares issued | 43,086 |
Options exercised | 312,925 |
Shares withheld | 269,839 |
Aggregate market value of shares withheld | $ | $ 4.4 |
Remaining common stock issued, shares | 43,086 |
Related Party Transactions - Ad
Related Party Transactions - Additional Information (Detail) - Blackstone Management Partners LLC - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended |
Jul. 01, 2016 | Jul. 01, 2016 | |
Related Party Transaction [Line Items] | ||
Maximum annual monitoring fee under advisory and consulting services | $ 7,000 | |
Annual monitoring fee maximum under advisory and consulting services, percentage | 2.00% | |
Annual monitoring fee recorded as component of selling, general and administrative expense | $ 1,750 | $ 3,500 |
Segment and Geographic Inform62
Segment and Geographic Information - Additional Information (Detail) - Segment | 6 Months Ended | |
Jul. 01, 2016 | Jun. 27, 2015 | |
Segment Reporting [Abstract] | ||
Number of operating segments | 4 | 4 |
Information Regarding Reportabl
Information Regarding Reportable Business Segments (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Net sales: | ||||
Net sales | $ 292,852 | $ 279,902 | $ 571,758 | $ 527,413 |
Operating income: | ||||
Operating income | 21,544 | 25,014 | 31,006 | 34,764 |
Operating Segments | Bracing and Vascular | ||||
Net sales: | ||||
Net sales | 131,751 | 136,179 | 255,967 | 250,083 |
Operating income: | ||||
Operating income | 29,072 | 31,497 | 49,606 | 52,393 |
Operating Segments | Recovery Sciences | ||||
Net sales: | ||||
Net sales | 38,449 | 40,102 | 75,024 | 74,627 |
Operating income: | ||||
Operating income | 8,056 | 7,472 | 14,501 | 11,402 |
Operating Segments | Surgical Implant | ||||
Net sales: | ||||
Net sales | 42,575 | 28,071 | 85,625 | 54,997 |
Operating income: | ||||
Operating income | 6,053 | 4,392 | 13,282 | 8,712 |
Operating Segments | International | ||||
Net sales: | ||||
Net sales | 80,077 | 75,550 | 155,142 | 147,706 |
Operating income: | ||||
Operating income | 14,653 | 13,312 | 23,642 | 25,697 |
Expenses not allocated to segments and eliminations | ||||
Operating income: | ||||
Operating income | $ (36,290) | $ (31,659) | $ (70,025) | $ (63,440) |
Net Sales by Geographic Area (D
Net Sales by Geographic Area (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Net sales: | ||||
Sales revenue goods net | $ 292,852 | $ 279,902 | $ 571,758 | $ 527,413 |
United States | ||||
Net sales: | ||||
Sales revenue goods net | 212,775 | 204,352 | 416,616 | 379,707 |
Other Europe, Middle East, and Africa | ||||
Net sales: | ||||
Sales revenue goods net | 38,057 | 35,863 | 74,516 | 69,557 |
Germany | ||||
Net sales: | ||||
Sales revenue goods net | 21,960 | 20,838 | 42,963 | 41,872 |
Australia And Asia Pacific | ||||
Net sales: | ||||
Sales revenue goods net | 11,400 | 10,500 | 21,402 | 20,391 |
Canada | ||||
Net sales: | ||||
Sales revenue goods net | 6,697 | 6,381 | 12,434 | 11,733 |
Latin America | ||||
Net sales: | ||||
Sales revenue goods net | $ 1,963 | $ 1,968 | $ 3,827 | $ 4,153 |
Supplemental Guarantor Conden65
Supplemental Guarantor Condensed Consolidating Financial Statements - Additional Information (Detail) - DJO Finco | Jul. 01, 2016 |
Debt Instrument [Line Items] | |
Subsidiaries owned | 100.00% |
8.125% Second Lien Notes | |
Debt Instrument [Line Items] | |
Debt instrument, stated percentage rate | 8.125% |
10.75% Third Lien Notes | |
Debt Instrument [Line Items] | |
Debt instrument, stated percentage rate | 10.75% |
9.75% Senior subordinated Notes | |
Debt Instrument [Line Items] | |
Debt instrument, stated percentage rate | 9.75% |
Schedule of Condensed Consolida
Schedule of Condensed Consolidating Balance Sheets (Detail) - USD ($) $ in Thousands | Jul. 01, 2016 | Apr. 01, 2016 | Dec. 31, 2015 | Jun. 27, 2015 | Mar. 28, 2015 | Dec. 31, 2014 |
Current assets: | ||||||
Cash and cash equivalents | $ 41,699 | $ 48,943 | $ 48,943 | $ 48,385 | $ 31,144 | $ 31,144 |
Accounts receivable, net | 177,128 | 172,360 | ||||
Inventories, net | 177,548 | 174,573 | ||||
Prepaid expenses and other current assets | 22,309 | 21,179 | ||||
Current assets of discontinued operations | 2,878 | |||||
Total current assets | 418,684 | 419,933 | ||||
Property and equipment, net | 130,845 | 117,273 | ||||
Goodwill | 1,019,186 | 1,018,104 | ||||
Intangible assets, net | 710,549 | 749,045 | ||||
Other non-current assets | 6,599 | 5,174 | ||||
Non-current assets of discontinued operations | 29 | |||||
Total assets | 2,285,863 | 2,309,558 | ||||
Current liabilities: | ||||||
Accounts payable | 73,968 | 58,492 | ||||
Current portion of debt obligations | 10,550 | 10,550 | ||||
Other current liabilities | 103,230 | 119,171 | ||||
Current liabilities of discontinued operations | 946 | 13,371 | ||||
Total current liabilities | 188,694 | 201,584 | ||||
Long-term debt obligations | 2,392,464 | 2,344,562 | ||||
Deferred tax liabilities, net | 219,930 | 213,856 | ||||
Other long-term liabilities | 21,319 | 15,092 | ||||
Total liabilities | 2,822,407 | 2,775,094 | ||||
Noncontrolling interests | 3,036 | 2,634 | ||||
Total membership (deficit) equity | (539,580) | (468,170) | ||||
Total liabilities and deficit | 2,285,863 | 2,309,558 | ||||
Reportable Legal Entities | DJOFL | ||||||
Current assets: | ||||||
Cash and cash equivalents | 17,436 | 29,673 | 25,881 | 12,958 | ||
Prepaid expenses and other current assets | 103 | 42 | ||||
Total current assets | 17,539 | 29,715 | ||||
Investment in subsidiaries | 1,297,699 | 1,297,699 | ||||
Intercompany receivables | 566,198 | 575,483 | ||||
Other non-current assets | 1,313 | |||||
Total assets | 1,881,436 | 1,904,210 | ||||
Current liabilities: | ||||||
Current portion of debt obligations | 10,550 | 10,550 | ||||
Other current liabilities | 12,123 | 17,268 | ||||
Total current liabilities | 22,673 | 27,818 | ||||
Long-term debt obligations | 2,392,464 | 2,344,562 | ||||
Other long-term liabilities | 5,879 | |||||
Total liabilities | 2,421,016 | 2,372,380 | ||||
Total membership (deficit) equity | (539,580) | (468,170) | ||||
Total liabilities and deficit | 1,881,436 | 1,904,210 | ||||
Reportable Legal Entities | Guarantors | ||||||
Current assets: | ||||||
Cash and cash equivalents | 1,370 | 160 | 2,533 | 3 | ||
Accounts receivable, net | 128,643 | 128,085 | ||||
Inventories, net | 143,880 | 142,033 | ||||
Prepaid expenses and other current assets | 15,210 | 13,301 | ||||
Current assets of discontinued operations | 2,878 | |||||
Total current assets | 289,103 | 286,457 | ||||
Property and equipment, net | 117,527 | 103,637 | ||||
Goodwill | 951,005 | 951,005 | ||||
Intangible assets, net | 700,017 | 737,798 | ||||
Investment in subsidiaries | 1,679,465 | 1,687,724 | ||||
Other non-current assets | 2,568 | 1,193 | ||||
Non-current assets of discontinued operations | 29 | |||||
Total assets | 3,739,685 | 3,767,843 | ||||
Current liabilities: | ||||||
Accounts payable | 64,547 | 49,394 | ||||
Other current liabilities | 64,057 | 73,260 | ||||
Current liabilities of discontinued operations | 946 | 13,371 | ||||
Total current liabilities | 129,550 | 136,025 | ||||
Deferred tax liabilities, net | 214,178 | 209,179 | ||||
Intercompany payables, net | 362,861 | 400,216 | ||||
Other long-term liabilities | 14,811 | 14,441 | ||||
Total liabilities | 721,400 | 759,861 | ||||
Total membership (deficit) equity | 3,018,285 | 3,007,982 | ||||
Total liabilities and deficit | 3,739,685 | 3,767,843 | ||||
Reportable Legal Entities | Non-Guarantors | ||||||
Current assets: | ||||||
Cash and cash equivalents | 22,893 | 19,110 | $ 19,971 | $ 18,183 | ||
Accounts receivable, net | 48,485 | 44,275 | ||||
Inventories, net | 46,402 | 31,803 | ||||
Prepaid expenses and other current assets | 6,996 | 7,836 | ||||
Total current assets | 124,776 | 103,024 | ||||
Property and equipment, net | 13,381 | 13,721 | ||||
Goodwill | 99,277 | 98,309 | ||||
Intangible assets, net | 10,532 | 11,247 | ||||
Investment in subsidiaries | 51,573 | 50,741 | ||||
Other non-current assets | 4,031 | 2,668 | ||||
Total assets | 303,570 | 279,710 | ||||
Current liabilities: | ||||||
Accounts payable | 9,421 | 9,098 | ||||
Other current liabilities | 27,050 | 28,643 | ||||
Total current liabilities | 36,471 | 37,741 | ||||
Deferred tax liabilities, net | 5,752 | 4,677 | ||||
Intercompany payables, net | 137,313 | 131,138 | ||||
Other long-term liabilities | 629 | 651 | ||||
Total liabilities | 180,165 | 174,207 | ||||
Noncontrolling interests | 3,036 | 2,634 | ||||
Total membership (deficit) equity | 120,369 | 102,869 | ||||
Total liabilities and deficit | 303,570 | 279,710 | ||||
Eliminations | ||||||
Current assets: | ||||||
Inventories, net | (12,734) | 737 | ||||
Total current assets | (12,734) | 737 | ||||
Property and equipment, net | (63) | (85) | ||||
Goodwill | (31,096) | (31,210) | ||||
Investment in subsidiaries | (3,028,737) | (3,036,164) | ||||
Intercompany receivables | (566,198) | (575,483) | ||||
Total assets | (3,638,828) | (3,642,205) | ||||
Current liabilities: | ||||||
Intercompany payables, net | (500,174) | (531,354) | ||||
Total liabilities | (500,174) | (531,354) | ||||
Total membership (deficit) equity | (3,138,654) | (3,110,851) | ||||
Total liabilities and deficit | $ (3,638,828) | $ (3,642,205) |
Schedule of Condensed Consoli67
Schedule of Condensed Consolidating Statements of Operations (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Net sales | $ 292,852 | $ 279,902 | $ 571,758 | $ 527,413 |
Costs and operating expenses: | ||||
Cost of sales (exclusive of amortization of intangible assets of $7,080 and $14,187 for the three and six months ended July 1, 2016 and $7,535 and $15,070 for the three and six months ended June 27, 2015, respectively) | 120,474 | 117,770 | 238,557 | 219,654 |
Selling, general and administrative | 121,627 | 108,612 | 243,556 | 215,797 |
Research and development | 10,122 | 8,688 | 19,976 | 17,552 |
Amortization of intangible assets | 19,085 | 19,818 | 38,663 | 39,646 |
Costs and Expenses, Total | 271,308 | 254,888 | 540,752 | 492,649 |
Operating income | 21,544 | 25,014 | 31,006 | 34,764 |
Other (expense) income: | ||||
Interest (expense) income, net | (42,396) | (44,564) | (84,666) | (87,430) |
Loss on extinguishment of debt | (67,967) | (67,967) | ||
Other (expense) income, net | 468 | 743 | 752 | (3,413) |
Nonoperating Income (Expense), Total | (41,928) | (111,788) | (83,914) | (158,810) |
Loss before income taxes | (20,384) | (86,774) | (52,908) | (124,046) |
Income tax provision | (3,577) | (5,911) | (8,990) | (7,856) |
Net loss from continuing operations | (23,961) | (92,685) | (61,898) | (131,902) |
Net income from discontinued operations | 855 | 14,873 | 665 | 18,865 |
Net loss | (23,106) | (77,812) | (61,233) | (113,037) |
Net income attributable to noncontrolling interests | (169) | (165) | (362) | (466) |
Net loss attributable to DJO Finance LLC | (23,275) | (77,977) | (61,595) | (113,503) |
Reportable Legal Entities | DJOFL | ||||
Other (expense) income: | ||||
Interest (expense) income, net | (42,448) | (44,567) | (84,731) | (87,438) |
Loss on extinguishment of debt | (67,967) | (67,967) | ||
Other (expense) income, net | (8) | (8) | ||
Equity in (loss) income of subsidiaries, net | 19,181 | 34,558 | 23,143 | 41,902 |
Nonoperating Income (Expense), Total | (23,275) | (77,976) | (61,596) | (113,503) |
Loss before income taxes | (23,275) | (77,976) | (61,596) | (113,503) |
Net loss from continuing operations | (23,275) | (77,976) | (61,596) | (113,503) |
Net loss | (23,275) | (77,976) | (61,596) | (113,503) |
Net loss attributable to DJO Finance LLC | (23,275) | (77,976) | (61,596) | (113,503) |
Reportable Legal Entities | Guarantors | ||||
Net sales | 252,212 | 243,371 | 495,872 | 461,763 |
Costs and operating expenses: | ||||
Cost of sales (exclusive of amortization of intangible assets of $7,080 and $14,187 for the three and six months ended July 1, 2016 and $7,535 and $15,070 for the three and six months ended June 27, 2015, respectively) | 94,465 | 102,629 | 189,306 | 193,550 |
Selling, general and administrative | 97,827 | 86,789 | 195,637 | 171,127 |
Research and development | 9,228 | 8,102 | 18,109 | 15,984 |
Amortization of intangible assets | 18,699 | 19,197 | 37,846 | 38,395 |
Costs and Expenses, Total | 220,219 | 216,717 | 440,898 | 419,056 |
Operating income | 31,993 | 26,654 | 54,974 | 42,707 |
Other (expense) income: | ||||
Interest (expense) income, net | 51 | 11 | 71 | 23 |
Other (expense) income, net | (8,553) | (84) | (16,573) | (609) |
Intercompany (expense) income, net | (15,147) | (8,573) | (14,784) | (8,254) |
Nonoperating Income (Expense), Total | (23,649) | (8,646) | (31,286) | (8,840) |
Loss before income taxes | 8,344 | 18,008 | 23,688 | 33,867 |
Income tax provision | (1,671) | (4,889) | (6,078) | (6,492) |
Net loss from continuing operations | 6,673 | 13,119 | 17,610 | 27,375 |
Net income from discontinued operations | 855 | 14,873 | 665 | 18,865 |
Net loss | 7,528 | 27,992 | 18,275 | 46,240 |
Net loss attributable to DJO Finance LLC | 7,528 | 27,992 | 18,275 | 46,240 |
Reportable Legal Entities | Non-Guarantors | ||||
Net sales | 83,178 | 75,498 | 158,673 | 146,034 |
Costs and operating expenses: | ||||
Cost of sales (exclusive of amortization of intangible assets of $7,080 and $14,187 for the three and six months ended July 1, 2016 and $7,535 and $15,070 for the three and six months ended June 27, 2015, respectively) | 74,317 | 57,651 | 138,711 | 110,985 |
Selling, general and administrative | 23,800 | 21,823 | 47,919 | 44,670 |
Research and development | 894 | 586 | 1,867 | 1,568 |
Amortization of intangible assets | 386 | 621 | 817 | 1,251 |
Costs and Expenses, Total | 99,397 | 80,681 | 189,314 | 158,474 |
Operating income | (16,219) | (5,183) | (30,641) | (12,440) |
Other (expense) income: | ||||
Interest (expense) income, net | 1 | (8) | (6) | (15) |
Other (expense) income, net | 9,029 | 827 | 17,333 | (2,804) |
Intercompany (expense) income, net | 14,634 | 8,267 | 14,752 | 8,292 |
Nonoperating Income (Expense), Total | 23,664 | 9,086 | 32,079 | 5,473 |
Loss before income taxes | 7,445 | 3,903 | 1,438 | (6,967) |
Income tax provision | (1,906) | (1,022) | (2,912) | (1,364) |
Net loss from continuing operations | 5,539 | 2,881 | (1,474) | (8,331) |
Net loss | 5,539 | 2,881 | (1,474) | (8,331) |
Net income attributable to noncontrolling interests | (169) | (165) | (362) | (466) |
Net loss attributable to DJO Finance LLC | 5,370 | 2,716 | (1,836) | (8,797) |
Eliminations | ||||
Net sales | (42,538) | (38,967) | (82,787) | (80,384) |
Costs and operating expenses: | ||||
Cost of sales (exclusive of amortization of intangible assets of $7,080 and $14,187 for the three and six months ended July 1, 2016 and $7,535 and $15,070 for the three and six months ended June 27, 2015, respectively) | (48,308) | (42,510) | (89,460) | (84,881) |
Costs and Expenses, Total | (48,308) | (42,510) | (89,460) | (84,881) |
Operating income | 5,770 | 3,543 | 6,673 | 4,497 |
Other (expense) income: | ||||
Intercompany (expense) income, net | 513 | 306 | 32 | (38) |
Equity in (loss) income of subsidiaries, net | (19,181) | (34,558) | (23,143) | (41,902) |
Nonoperating Income (Expense), Total | (18,668) | (34,252) | (23,111) | (41,940) |
Loss before income taxes | (12,898) | (30,709) | (16,438) | (37,443) |
Net loss from continuing operations | (12,898) | (30,709) | (16,438) | (37,443) |
Net loss | (12,898) | (30,709) | (16,438) | (37,443) |
Net loss attributable to DJO Finance LLC | $ (12,898) | $ (30,709) | $ (16,438) | $ (37,443) |
Schedule of Condensed Consoli68
Schedule of Condensed Consolidating Statements of Operations (Parenthetical) (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Income Statement [Abstract] | ||||
Cost of sales, amortization of intangible assets | $ 7,080 | $ 7,535 | $ 14,487 | $ 15,070 |
Schedule of Condensed Consoli69
Schedule of Condensed Consolidating Statements of Comprehensive Loss (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Net loss | $ (23,106) | $ (77,812) | $ (61,233) | $ (113,037) |
Other comprehensive loss, net of taxes: | ||||
Foreign currency translation adjustments, net of tax benefit (provision) of $111 and $(166) for the three and six months ended July 1, 2016 and $(152) and $340 for the three and six months ended June 27, 2015, respectively | (8,458) | 4,137 | (2,850) | (5,305) |
Unrealized loss on cash flow hedges, net of tax provision of zero | (2,651) | (8,042) | ||
Other comprehensive (loss) income | (11,109) | 4,137 | (10,892) | (5,305) |
Comprehensive loss | (34,215) | (73,675) | (72,125) | (118,342) |
Comprehensive income attributable to noncontrolling interests | (101) | (243) | (402) | (260) |
Comprehensive loss attributable to DJO Finance LLC | (34,316) | (73,918) | (72,527) | (118,602) |
Reportable Legal Entities | DJOFL | ||||
Net loss | (23,275) | (77,976) | (61,596) | (113,503) |
Other comprehensive loss, net of taxes: | ||||
Unrealized loss on cash flow hedges, net of tax provision of zero | (2,651) | (8,042) | ||
Other comprehensive (loss) income | (2,651) | (8,042) | ||
Comprehensive loss | (25,926) | (77,976) | (69,638) | (113,503) |
Comprehensive loss attributable to DJO Finance LLC | (25,926) | (77,976) | (69,638) | (113,503) |
Reportable Legal Entities | Guarantors | ||||
Net loss | 7,528 | 27,992 | 18,275 | 46,240 |
Other comprehensive loss, net of taxes: | ||||
Comprehensive loss | 10,747 | 27,992 | 18,275 | 46,240 |
Comprehensive loss attributable to DJO Finance LLC | 10,747 | 27,992 | 18,275 | 46,240 |
Reportable Legal Entities | Non-Guarantors | ||||
Net loss | 5,539 | 2,881 | (1,474) | (8,331) |
Other comprehensive loss, net of taxes: | ||||
Foreign currency translation adjustments, net of tax benefit (provision) of $111 and $(166) for the three and six months ended July 1, 2016 and $(152) and $340 for the three and six months ended June 27, 2015, respectively | (8,458) | 4,137 | (2,850) | (5,305) |
Other comprehensive (loss) income | (8,458) | 4,137 | (2,850) | (5,305) |
Comprehensive loss | (1,513) | 7,018 | (4,324) | (13,636) |
Comprehensive income attributable to noncontrolling interests | (101) | (243) | (402) | (260) |
Comprehensive loss attributable to DJO Finance LLC | (1,614) | 6,775 | (4,726) | (13,896) |
Eliminations | ||||
Net loss | (12,898) | (30,709) | (16,438) | (37,443) |
Other comprehensive loss, net of taxes: | ||||
Comprehensive loss | (3,540) | (30,709) | (16,438) | (37,443) |
Comprehensive loss attributable to DJO Finance LLC | $ (3,540) | $ (30,709) | $ (16,438) | $ (37,443) |
Schedule of Condensed Consoli70
Schedule of Condensed Consolidating Statements of Comprehensive Loss (Parenthetical) (Detail) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Statement Of Income And Comprehensive Income [Abstract] | ||||
Foreign currency translation adjustment, tax benefit (provision) | $ 111,000 | $ (152,000) | $ (166,000) | $ 340,000 |
Unrealized loss on cash flow hedges, tax provision | $ 0 | $ 0 |
Schedule of Condensed Consoli71
Schedule of Condensed Consolidating Statements of Cash Flows (Detail) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jul. 01, 2016 | Jun. 27, 2015 | Jul. 01, 2016 | Jun. 27, 2015 | |
Cash Flows From Operating Activities: | ||||
Net (loss) income | $ (23,106) | $ (77,812) | $ (61,233) | $ (113,037) |
Net income from discontinued operations | (855) | (14,873) | (665) | (18,865) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Depreciation | 20,513 | 16,837 | ||
Amortization of intangible assets | 19,085 | 19,818 | 38,663 | 39,646 |
Amortization of debt issuance costs and non-cash interest expense | 3,815 | 4,235 | ||
Stock-based compensation expense | 1,316 | 539 | 1,521 | 1,152 |
Loss on modification and extinguishment of debt | 67,967 | 67,967 | ||
Gain on disposal of assets, net | 530 | 258 | ||
Deferred income tax expense (benefit) | 3,812 | 3,735 | ||
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||||
Accounts receivable | (4,209) | (5,949) | ||
Inventories | (5,650) | (8,751) | ||
Prepaid expenses and other assets | (637) | (2,032) | ||
Accounts payable and other current liabilities | (8,526) | (7,365) | ||
Net cash used in continuing operating activities | (12,066) | (22,169) | ||
Net cash (used in) provided by discontinued operations | (8,853) | 29,397 | ||
Net cash (used in) provided by operating activities | (20,919) | 7,228 | ||
Cash flows from investing activities: | ||||
Purchases of property and equipment | (31,500) | (16,608) | ||
Proceeds from disposition of assets | 700 | |||
Net cash used in investing activities from continuing operations | (30,800) | (16,608) | ||
Net cash provided by investing activities from discontinued operations | (451) | |||
Net cash used in investing activities | (30,800) | (17,059) | ||
Cash flows from financing activities: | ||||
Proceeds from issuance of debt | 63,000 | 2,445,826 | ||
Repayments of debt obligations | (18,913) | (2,356,121) | ||
Payment of debt issuance, modification and extinguishment costs | (61,662) | |||
Net cash provided by financing activities | 44,087 | 28,043 | ||
Effect of exchange rate changes on cash and cash equivalents | 388 | (971) | ||
Net (decrease) increase in cash and cash equivalents | (7,244) | 17,241 | ||
Cash and cash equivalents at the beginning of the period | 48,943 | 31,144 | 48,943 | 31,144 |
Cash and cash equivalents at the end of the period | 41,699 | 48,385 | 41,699 | 48,385 |
Reportable Legal Entities | DJOFL | ||||
Cash Flows From Operating Activities: | ||||
Net (loss) income | (23,275) | (77,976) | (61,596) | (113,503) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Amortization of debt issuance costs and non-cash interest expense | 3,815 | 4,235 | ||
Loss on modification and extinguishment of debt | 67,967 | 67,967 | ||
Equity in (loss) income of subsidiaries, net | (19,181) | (34,558) | (23,143) | (41,902) |
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||||
Prepaid expenses and other assets | 1,251 | (17) | ||
Accounts payable and other current liabilities | (7,721) | (5,422) | ||
Net cash used in continuing operating activities | (87,394) | (88,642) | ||
Net cash (used in) provided by operating activities | (87,394) | (88,642) | ||
Cash flows from financing activities: | ||||
Intercompany | 31,070 | 73,474 | ||
Proceeds from issuance of debt | 63,000 | 2,445,826 | ||
Repayments of debt obligations | (18,913) | (2,356,073) | ||
Payment of debt issuance, modification and extinguishment costs | (61,662) | |||
Net cash provided by financing activities | 75,157 | 101,565 | ||
Net (decrease) increase in cash and cash equivalents | (12,237) | 12,923 | ||
Cash and cash equivalents at the beginning of the period | 29,673 | 12,958 | ||
Cash and cash equivalents at the end of the period | 17,436 | 25,881 | 17,436 | 25,881 |
Reportable Legal Entities | Guarantors | ||||
Cash Flows From Operating Activities: | ||||
Net (loss) income | 7,528 | 27,992 | 18,275 | 46,240 |
Net income from discontinued operations | (855) | (14,873) | (665) | (18,865) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Depreciation | 18,055 | 14,509 | ||
Amortization of intangible assets | 18,699 | 19,197 | 37,846 | 38,395 |
Stock-based compensation expense | 1,521 | 1,152 | ||
Gain on disposal of assets, net | 471 | 139 | ||
Deferred income tax expense (benefit) | 4,133 | 3,351 | ||
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||||
Accounts receivable | (559) | (3,545) | ||
Inventories | (1,244) | 11 | ||
Prepaid expenses and other assets | (2,763) | (1,196) | ||
Accounts payable and other current liabilities | 2,522 | (3,042) | ||
Net cash used in continuing operating activities | 77,592 | 77,149 | ||
Net cash (used in) provided by discontinued operations | (8,853) | 29,397 | ||
Net cash (used in) provided by operating activities | 68,739 | 106,546 | ||
Cash flows from investing activities: | ||||
Purchases of property and equipment | (29,238) | (13,677) | ||
Proceeds from disposition of assets | 700 | |||
Net cash used in investing activities from continuing operations | (28,538) | (13,677) | ||
Net cash provided by investing activities from discontinued operations | (451) | |||
Net cash used in investing activities | (14,128) | |||
Cash flows from financing activities: | ||||
Intercompany | (38,991) | (89,888) | ||
Net cash provided by financing activities | (38,991) | (89,888) | ||
Net (decrease) increase in cash and cash equivalents | 1,210 | 2,530 | ||
Cash and cash equivalents at the beginning of the period | 160 | 3 | ||
Cash and cash equivalents at the end of the period | 1,370 | 2,533 | 1,370 | 2,533 |
Reportable Legal Entities | Non-Guarantors | ||||
Cash Flows From Operating Activities: | ||||
Net (loss) income | 5,539 | 2,881 | (1,474) | (8,331) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Depreciation | 2,486 | 2,377 | ||
Amortization of intangible assets | 386 | 621 | 817 | 1,251 |
Gain on disposal of assets, net | 55 | 127 | ||
Deferred income tax expense (benefit) | (321) | 384 | ||
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||||
Accounts receivable | (3,650) | (2,404) | ||
Inventories | 2,793 | (1,603) | ||
Prepaid expenses and other assets | (252) | (892) | ||
Accounts payable and other current liabilities | (69) | (3,322) | ||
Net cash used in continuing operating activities | 385 | (12,413) | ||
Net cash (used in) provided by operating activities | 385 | (12,413) | ||
Cash flows from investing activities: | ||||
Purchases of property and equipment | (2,261) | (2,942) | ||
Net cash used in investing activities from continuing operations | (2,261) | (2,942) | ||
Net cash used in investing activities | (2,942) | |||
Cash flows from financing activities: | ||||
Intercompany | 5,271 | 18,162 | ||
Repayments of debt obligations | (48) | |||
Net cash provided by financing activities | 5,271 | 18,114 | ||
Effect of exchange rate changes on cash and cash equivalents | 388 | (971) | ||
Net (decrease) increase in cash and cash equivalents | 3,783 | 1,788 | ||
Cash and cash equivalents at the beginning of the period | 19,110 | 18,183 | ||
Cash and cash equivalents at the end of the period | 22,893 | 19,971 | 22,893 | 19,971 |
Eliminations | ||||
Cash Flows From Operating Activities: | ||||
Net (loss) income | (12,898) | (30,709) | (16,438) | (37,443) |
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||
Depreciation | (28) | (49) | ||
Gain on disposal of assets, net | 4 | (8) | ||
Equity in (loss) income of subsidiaries, net | $ 19,181 | $ 34,558 | 23,143 | 41,902 |
Changes in operating assets and liabilities, net of acquired assets and liabilities: | ||||
Inventories | (7,199) | (7,159) | ||
Prepaid expenses and other assets | 1,127 | 73 | ||
Accounts payable and other current liabilities | (3,258) | 4,421 | ||
Net cash used in continuing operating activities | (2,649) | 1,737 | ||
Net cash (used in) provided by operating activities | (2,649) | 1,737 | ||
Cash flows from investing activities: | ||||
Purchases of property and equipment | (1) | 11 | ||
Net cash used in investing activities from continuing operations | (1) | 11 | ||
Net cash used in investing activities | 11 | |||
Cash flows from financing activities: | ||||
Intercompany | 2,650 | (1,748) | ||
Net cash provided by financing activities | $ 2,650 | $ (1,748) |