Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Mar. 28, 2014 | Jun. 28, 2013 | |
Document and Entity Information | ' | ' | ' |
Entity Registrant Name | 'HANGER, INC. | ' | ' |
Entity Central Index Key | '0000722723 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Entity Well-known Seasoned Issuer | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Filer Category | 'Large Accelerated Filer | ' | ' |
Entity Public Float | ' | ' | $1,139,661,827 |
Entity Common Stock, Shares Outstanding | ' | 35,136,602 | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $9,860 | $19,211 |
Restricted cash | ' | 3,120 |
Net accounts receivable, less allowance for doubtful accounts of $10,022 and $7,526 in 2013 and 2012, respectively | 185,769 | 165,668 |
Inventories | 141,518 | 127,295 |
Prepaid expenses, other current assets and income taxes receivable | 15,519 | 15,673 |
Deferred income taxes | 30,298 | 27,685 |
Total current assets | 382,964 | 358,652 |
PROPERTY, PLANT AND EQUIPMENT | ' | ' |
Land | 794 | 794 |
Buildings | 15,397 | 8,896 |
Furniture and fixtures | 15,855 | 19,582 |
Machinery and equipment | 61,707 | 60,364 |
Equipment leased to third parties under operating leases | 34,142 | 34,827 |
Leasehold improvements | 85,176 | 74,615 |
Computer and software | 88,950 | 98,186 |
Total property, plant and equipment, gross | 302,021 | 297,264 |
Less accumulated depreciation and amortization | 175,223 | 182,803 |
Total property, plant and equipment, net | 126,798 | 114,461 |
INTANGIBLE ASSETS | ' | ' |
Goodwill | 681,547 | 674,774 |
Patents and other intangible assets, less accumulated amortization of $27,375 and $20,643 in 2013 and 2012, respectively | 58,021 | 64,281 |
Total intangible assets, net | 739,568 | 739,055 |
OTHER ASSETS | ' | ' |
Debt issuance costs, net | 8,564 | 14,033 |
Other assets | 13,766 | 11,126 |
Total other assets | 22,330 | 25,159 |
TOTAL ASSETS | 1,271,660 | 1,237,327 |
CURRENT LIABILITIES | ' | ' |
Current portion of long-term debt | 15,998 | 11,082 |
Accounts payable | 36,729 | 28,923 |
Accrued expenses and other current liabilities | 24,923 | 22,357 |
Accrued interest payable | 1,898 | 3,041 |
Accrued compensation related costs | 36,331 | 41,784 |
Total current liabilities | 115,879 | 107,187 |
LONG-TERM LIABILITIES | ' | ' |
Long-term debt, less current portion | 452,261 | 509,564 |
Deferred income taxes | 76,545 | 77,730 |
Other liabilities | 46,755 | 39,752 |
Total liabilities | 691,440 | 734,233 |
COMMITMENTS AND CONTINGENCIES (Note H) | ' | ' |
SHAREHOLDERS' EQUITY | ' | ' |
Common stock, $.01 par value; 60,000,000 shares authorized, 36,113,202 shares and 35,617,884 shares issued and outstanding in 2013 and 2012, respectively | 361 | 356 |
Additional paid-in capital | 292,722 | 280,084 |
Accumulated other comprehensive loss | -1,020 | -1,919 |
Retained earnings | 288,813 | 225,229 |
Shareholders' equity, excluding treasury stock | 580,876 | 503,750 |
Treasury stock at cost (141,154 shares) | -656 | -656 |
Total shareholders' equity | 580,220 | 503,094 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $1,271,660 | $1,237,327 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, except Share data, unless otherwise specified | ||
CONSOLIDATED BALANCE SHEETS | ' | ' |
Accounts receivable, allowance for doubtful accounts (in dollars) | $10,022 | $7,526 |
Patents and other intangible assets, accumulated amortization (in dollars) | $27,375 | $20,643 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 60,000,000 | 60,000,000 |
Common stock, shares issued | 36,113,202 | 35,617,884 |
Common stock, shares outstanding | 36,113,202 | 35,617,884 |
Treasury stock, shares | 141,154 | 141,154 |
CONSOLIDATED_STATEMENTS_OF_INC
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ' | ' | ' |
Net sales | $1,046,438 | $974,429 | $907,794 |
Material costs | 319,046 | 296,193 | 270,210 |
Personnel costs | 369,738 | 335,328 | 321,529 |
Other operating expenses | 186,304 | 178,918 | 169,131 |
Depreciation and amortization | 37,486 | 34,652 | 30,969 |
Income from operations | 133,864 | 129,338 | 115,955 |
Interest expense, net | 26,475 | 31,169 | 31,821 |
Extinguishment of debt | 6,645 | ' | ' |
Income before taxes | 100,744 | 98,169 | 84,134 |
Provision for income taxes | 37,160 | 34,477 | 29,657 |
Net income | 63,584 | 63,692 | 54,477 |
Other comprehensive income (loss): | ' | ' | ' |
Unrealized gain/(loss) on SERP net of taxes of $531, $439, and $546 for 2013, 2012 and 2011, respectively | 899 | -734 | -906 |
Total other comprehensive income (loss) | 899 | -734 | -906 |
Comprehensive income | $64,483 | $62,958 | $53,571 |
Basic Per Common Share Data | ' | ' | ' |
Net income (in dollars per share) | $1.83 | $1.86 | $1.62 |
Shares used to compute basic per common share amounts (in shares) | 34,818,214 | 34,282,591 | 33,544,813 |
Diluted Per Common Share Data | ' | ' | ' |
Net income (in dollars per share) | $1.80 | $1.83 | $1.59 |
Shares used to compute diluted per common share amounts (in shares) | 35,394,721 | 34,832,830 | 34,220,256 |
CONSOLIDATED_STATEMENTS_OF_INC1
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME | ' | ' | ' |
Tax effect on unrealized gain/(loss) on Retirement Plan | $531 | ($439) | ($546) |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (USD $) | Total | Common Stock | Additional Paid in Capital | Accumulated Other Comprehensive Loss | Retained Earnings | Treasury Stock |
In Thousands, except Share data, unless otherwise specified | ||||||
Balance at Dec. 31, 2010 | $363,888 | $344 | $257,419 | ($279) | $107,060 | ($656) |
Balance (in shares) at Dec. 31, 2010 | ' | 34,352,000 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' |
Net income | 54,477 | ' | ' | ' | 54,477 | ' |
Other comprehensive income (loss) (net of taxes) | -906 | ' | ' | -906 | ' | ' |
Issuance of Common Stock in connection with the exercise of stock options | 2,680 | 4 | 2,676 | ' | ' | ' |
Issuance of Common Stock in connection with the exercise of stock options (in shares) | ' | 417,000 | ' | ' | ' | ' |
Forfeiture of restricted stock units | ' | -1 | 1 | ' | ' | ' |
Forfeiture of restricted stock units (in shares) | ' | -63,000 | ' | ' | ' | ' |
Issuance of restricted stock units | ' | 5 | -5 | ' | ' | ' |
Issuance of restricted stock units (in shares) | ' | 548,000 | ' | ' | ' | ' |
Purchase and retirement of common stock | -2,107 | -1 | -2,106 | ' | ' | ' |
Purchase and retirement of common stock (in shares) | ' | -127,000 | ' | ' | ' | ' |
Stock-based compensation expense | 8,088 | ' | 8,088 | ' | ' | ' |
Tax benefit associated with vesting of restricted stock units | 2,462 | ' | 2,462 | ' | ' | ' |
Balance at Dec. 31, 2011 | 428,582 | 351 | 268,535 | -1,185 | 161,537 | -656 |
Balance (in shares) at Dec. 31, 2011 | ' | 35,127,000 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' |
Net income | 63,692 | ' | ' | ' | 63,692 | ' |
Other comprehensive income (loss) (net of taxes) | -734 | ' | ' | -734 | ' | ' |
Issuance of Common Stock in connection with the exercise of stock options | 3,560 | 3 | 3,557 | ' | ' | ' |
Issuance of Common Stock in connection with the exercise of stock options (in shares) | ' | 239,000 | ' | ' | ' | ' |
Forfeiture of restricted stock units | ' | -2 | 2 | ' | ' | ' |
Forfeiture of restricted stock units (in shares) | ' | -231,000 | ' | ' | ' | ' |
Issuance of restricted stock units | ' | 5 | -5 | ' | ' | ' |
Issuance of restricted stock units (in shares) | ' | 532,000 | ' | ' | ' | ' |
Purchase and retirement of common stock | -1,350 | -1 | -1,349 | ' | ' | ' |
Purchase and retirement of common stock (in shares) | ' | -49,000 | ' | ' | ' | ' |
Stock-based compensation expense | 8,061 | ' | 8,061 | ' | ' | ' |
Tax benefit associated with vesting of restricted stock units | 1,283 | ' | 1,283 | ' | ' | ' |
Balance at Dec. 31, 2012 | 503,094 | 356 | 280,084 | -1,919 | 225,229 | -656 |
Balance (in shares) at Dec. 31, 2012 | ' | 35,618,000 | ' | ' | ' | ' |
Increase (Decrease) in Shareholders' Equity | ' | ' | ' | ' | ' | ' |
Net income | 63,584 | ' | ' | ' | 63,584 | ' |
Other comprehensive income (loss) (net of taxes) | 899 | ' | ' | 899 | ' | ' |
Issuance of Common Stock in connection with the exercise of stock options | 2,437 | 2 | 2,435 | ' | ' | ' |
Issuance of Common Stock in connection with the exercise of stock options (in shares) | ' | 205,000 | ' | ' | ' | ' |
Forfeiture of restricted stock units | ' | -1 | 1 | ' | ' | ' |
Forfeiture of restricted stock units (in shares) | ' | -69,000 | ' | ' | ' | ' |
Issuance of restricted stock units | ' | 5 | -5 | ' | ' | ' |
Issuance of restricted stock units (in shares) | ' | 421,000 | ' | ' | ' | ' |
Purchase and retirement of common stock | -2,374 | -1 | -2,373 | ' | ' | ' |
Purchase and retirement of common stock (in shares) | ' | -54,000 | ' | ' | ' | ' |
Stock-based compensation expense | 9,080 | ' | 9,080 | ' | ' | ' |
Tax benefit associated with vesting of restricted stock units | 3,500 | ' | 3,500 | ' | ' | ' |
Balance at Dec. 31, 2013 | $580,220 | $361 | $292,722 | ($1,020) | $288,813 | ($656) |
Balance (in shares) at Dec. 31, 2013 | ' | 36,121,000 | ' | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash flows from operating activities: | ' | ' | ' |
Net income | $63,584 | $63,692 | $54,477 |
Adjustments to reconcile net income to net cash provided by operating activities: | ' | ' | ' |
Loss/(gain) on disposals of assets | -5,914 | 64 | 7 |
Reduction of seller notes and earnouts | -1,032 | -993 | -541 |
Provision for doubtful accounts | 14,330 | 9,589 | 9,396 |
Provision (benefit) for deferred income taxes | -1,602 | -4,303 | 8,439 |
Depreciation and amortization | 37,486 | 34,652 | 30,969 |
Amortization of debt issuance costs | 2,488 | 3,452 | 3,334 |
Loss on extinguishment of debt | 6,645 | ' | ' |
Compensation expense restricted stock units | 9,080 | 8,061 | 8,088 |
Changes in operating assets and liabilities, net of effects of acquired companies: | ' | ' | ' |
Accounts receivable | -32,060 | -30,259 | -26,583 |
Inventories | -11,329 | -12,827 | -14,072 |
Prepaid expenses, other current assets, and income taxes | 4,689 | 3,867 | 796 |
Accounts payable | 6,235 | -2,114 | -5,902 |
Accrued expenses, accrued interest payable | -223 | 3,501 | -1,424 |
Accrued compensation related costs | -7,379 | 4,348 | -7,404 |
Other | 1,262 | 589 | 2,224 |
Net cash provided by operating activities | 86,260 | 81,319 | 61,804 |
Cash flows from investing activities: | ' | ' | ' |
Purchase of property, plant and equipment (net of acquisitions) | -34,236 | -29,492 | -25,300 |
Purchase of equipment leased to third parties under operating leases | -4,210 | -3,671 | -3,374 |
Acquisitions and contingent considerations (net of cash acquired) | -9,296 | -62,500 | -14,842 |
Restricted cash | 3,120 | -3,120 | ' |
Purchase of company-owned life insurance investment | ' | -2,000 | -4,000 |
Proceeds from sale of property, plant and equipment | 8,684 | 1,732 | 646 |
Net cash used in investing activities | -35,938 | -99,051 | -46,870 |
Cash flows from financing activities: | ' | ' | ' |
Borrowings under revolving credit agreement | 249,000 | ' | 10,000 |
Repayments under revolving credit agreement | -224,000 | ' | -10,000 |
Borrowings under term loan | 225,000 | ' | ' |
Repayment of term loan | -296,113 | -3,700 | -3,000 |
Scheduled repayment of seller's notes | -12,410 | -5,255 | -4,151 |
Repayment of capital lease obligations | -1,047 | -713 | ' |
Deferred financing costs | -3,667 | ' | -4,230 |
Excess tax benefit from stock based compensation | 3,501 | 1,505 | 2,462 |
Proceeds from issuance of common stock | 2,437 | 3,560 | 2,680 |
Purchase and retirement of treasury stock | -2,374 | -1,350 | -2,107 |
Net cash used in financing activities | -59,673 | -5,953 | -8,346 |
Increase (decrease) in cash and cash equivalents | -9,351 | -23,685 | 6,588 |
Cash and cash equivalents, at beginning of year | 19,211 | 42,896 | 36,308 |
Cash and cash equivalents, at end of year | $9,860 | $19,211 | $42,896 |
THE_COMPANY
THE COMPANY | 12 Months Ended |
Dec. 31, 2013 | |
THE COMPANY | ' |
THE COMPANY | ' |
NOTE A—THE COMPANY | |
The goal of Hanger, Inc. ("Hanger" or the "Company") is to be the world's premier provider of services and products that enhance human physical capabilities. Built on the legacy of James Edward Hanger, the first amputee of the American Civil War, Hanger is steeped in 150 years of clinical excellence and innovation. The Company provides orthotic and prosthetic ("O&P") patient care services, distributes O&P devices and components, manages O&P networks, and provides rehabilitative solutions to the broader post-acute market. We have two segments—Patient Care and Products & Services, which are summarized below. For further description of our segments, see the Business Description section of Item 1 of this Form 10-K. | |
Our Patient Care segment is comprised of our patient care clinics, Cares, Dosteon, other related O&P businesses and our contracting network management business. Through this segment, we (i) are the largest owner and operator of orthotic and prosthetic patient care clinics in the United States and (ii) manage an O&P provider network of over 1,150 clinics that coordinates all aspects of O&P patient care for insurance companies. We operate in excess of 740 O&P patient care clinics located in 45 states and the District of Columbia. | |
Our Products & Services segment is comprised of our distribution business, one of the largest distributors of O&P products in the United States, and our rehabilitative solutions business. Our distribution business facilities in California, Florida, Georgia, Illinois, Pennsylvania and Texas allow us to deliver products to the vast majority of our distribution customers in the United States within two business days. Our rehabilitative solutions business develops specialized rehabilitation technologies and is a leading provider of evidence-based clinical programs for post-acute rehabilitation, serving more than 4,200 long-term care facilities and other sub-acute rehabilitation providers throughout the U.S. This segment also develops neuromuscular technologies through independent research. | |
SIGNIFICANT_ACCOUNTING_POLICIE
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
NOTE B—SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying financial statements. | |||||||||||||||||
Revision of Previously Reported Consolidated Financial Information | |||||||||||||||||
During the third quarter 2013, the Company corrected an error in the classification of certain components of bad debt expense (the "2013 Revision"). Hanger previously classified the reserves related to the write-off of older accounts receivable balances due from commercial and government payors as bad debt expense, which was reported as Other Operating Expense in its financial statements, instead of as a reduction of sales. Management has assessed the materiality of the errors on previously reported periods and concluded the impact was not material to any of the prior annual or quarterly consolidated financial statements. The errors had no impact on previously reported net income, balance sheet totals or the operating cash flows for any of the periods. The impact of the adjustment lowers sales and reduces Other Operating Expenses by equal and offsetting amounts in the Consolidated Statements of Income and Comprehensive Income and the Provision for doubtful accounts and Change in accounts receivable by equal and offsetting amounts in the Consolidated Statements of Cash Flows. Further, the Company has historically included the reserve for contra revenue in its presentation of the Allowance for doubtful accounts on the Consolidated Balance Sheets and the net change in the reserve for contra revenue in the Provision for doubtful accounts on the Consolidated Statements of Cash Flows and the Schedule II Valuation and Qualifying Accounts included in the Company's Annual Report on Form 10-K. The Company has revised that presentation to only include the reserve for doubtful accounts and the related activity in the reserve for doubtful accounts in those respective balances. The impacts of the revisions on Net sales are included in the results of the Patient Care segment in Note O. | |||||||||||||||||
The impact of the 2013 Revision on the Consolidated Statements of Income and Comprehensive Income and the Consolidated Statements of Cash Flows for the annual periods ended 2011 and 2012, and Schedule II Valuation and Qualifying Accounts for the annual periods 2011 and 2012 are shown below. | |||||||||||||||||
Impact of 2013 Revision to previously reported consolidated annual results | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
December 31, 2012 | December 31, 2011 | ||||||||||||||||
As | As | As | As | ||||||||||||||
Previously | Revised | Previously | Revised | ||||||||||||||
Reported | Reported | ||||||||||||||||
Consolidated Statements of Income and Comprehensive Income | |||||||||||||||||
Net Sales | $ | 985,550 | $ | 974,429 | $ | 918,539 | $ | 907,794 | |||||||||
Other operating expenses* | $ | 188,868 | $ | 178,918 | $ | 177,910 | $ | 169,131 | |||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||
Provision for doubtful accounts | $ | 19,773 | $ | 9,589 | $ | 24,837 | $ | 9,396 | |||||||||
Change in accounts receivable | $ | (40,443 | ) | $ | (30,259 | ) | $ | (42,024 | ) | $ | (26,583 | ) | |||||
* | |||||||||||||||||
The Other operating expenses balance includes $1.2 million of acquisition expense for the year ended December 31, 2012 and $1.2 million of relocation expense and $0.8 million of acquisition expense for the year ended December 31, 2011 previously reported as a separate caption in the presentation of the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Impact of 2013 Revision to previously reported Schedule II Allowance for doubtful accounts table | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year | Classification | Balance at | Additions | Write-offs | Balance at | ||||||||||||
beginning of | Charged to | end of year | |||||||||||||||
year | Costs and | ||||||||||||||||
Expenses | |||||||||||||||||
2012 | Allowance for doubtful accounts | ||||||||||||||||
Previously reported | $ | 22,028 | $ | 19,773 | $ | 20,422 | $ | 21,379 | |||||||||
Revised | $ | 7,236 | $ | 9,589 | $ | 9,299 | $ | 7,526 | |||||||||
2011 | Allowance for doubtful accounts | ||||||||||||||||
Previously reported | $ | 16,686 | $ | 22,101 | $ | 16,759 | $ | 22,028 | |||||||||
Revised | $ | 5,153 | $ | 9,396 | $ | 7,313 | $ | 7,236 | |||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains cash balances in excess of Federal Deposit Insurance Corporation limits at certain financial institutions. | |||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash has statutory or contractual restrictions that prevent it from being used in the Company's operations. As of December 31, 2013, the Company had no restricted cash. At December 31, 2012, the Company had agreed to restrict $3.1 million of cash to serve as collateral for its Workers' Compensation program. In August of 2013, the Company substituted a letter of credit for the restricted cash to serve as collateral for its Worker's Compensation program, and the cash balances used as collateral were transferred to the Company's operating accounts. | |||||||||||||||||
Credit Risk | |||||||||||||||||
The Company primarily provides O&P (orthotics and prosthetics) devices and services and products throughout the United States of America and is reimbursed by the patients, third-party insurers, governmentally funded health insurance programs, and for those products distributed through the Products & Services business, by independent O&P providers. The Company also provides advanced rehabilitation technology and clinical programs to skilled nursing facilities in the United States primarily through operating leases. The Company performs ongoing credit evaluations of its Products & Services segment customers. Accounts receivable are not collateralized. The ability of the Company's debtors to meet their obligations is dependent upon their financial stability which could be affected by future legislation and regulatory actions. Additionally, the Company maintains reserves for potential losses from these receivables that historically have been within management's expectations. | |||||||||||||||||
Inventories | |||||||||||||||||
Patient Care—Inventories at Hanger Clinics, Dosteon and Cares, which consists of raw materials, work-in-process and finished goods, amounted to $109.2 million and $98.3 million as of December 31, 2013 and 2012, respectively. Inventories in Hanger's Clinics, which amounted to $99.0 million and $86.9 million at December 31, 2013 and 2012, respectively, consist principally of raw materials and work-in-process inventory valued based on the gross profit method, which approximates lower of cost or market using the first-in first-out method. Inventories in the Dosteon business amounted to $8.9 million and $9.7 million at December 31, 2013 and 2012, respectively, consists principally of raw materials. As of December 31, 2013, the Dosteon inventories were valued at the lower of cost or market using the first-in first-out method based on a physical count as of December 31, 2013. As of December, 31, 2012, the Dosteon inventories were valued based on the gross profit method, which approximated lower of cost or market using the first-in first-out method. Inventories in the Cares business amounted to $1.3 million and $1.7 million as of December 31, 2013 and 2012 respectively, consists principally of finished goods and are valued at the lower of cost or market using the first-in first-out method based on perpetual records. | |||||||||||||||||
Hanger Clinic and Dosteon do not maintain a perpetual inventory system. On October 31st of each year the company performs an annual physical inventory of all inventories in Hanger Clinic. Dosteon counted its inventories on December 31, 2013 and October 31, 2012. The Company values the raw materials and work-in-process inventory counted at October 31 at lower of cost or market using the first-in first-out method. Hanger Clinic work-in-process inventory consists of materials, labor and overhead which is valued based on established standards for the stage of completion of each custom order. Material, labor and overhead costs are determined at the individual clinic or groups of clinics level. Adjustments to reconcile the Hanger Clinic and Dosteon physical inventory are treated as changes in accounting estimates and are recorded in the fourth quarter. The Company recorded fourth quarter adjustments of a decrease to inventory of $2.3 million, a decrease to inventory of $0.5 million and an increase to inventory of $2.3 million in 2013, 2012, and 2011, respectively. | |||||||||||||||||
For Hanger Clinics, the October 31st inventory is subsequently adjusted at each quarterly and annual reporting period end by applying the gross profit method. As it relates to materials, the Company generally applies the gross profit method to individual clinics or groups of clinics for material costs. Labor and overhead and other aspects of the gross profit method are completed on a Hanger clinic-wide basis. A similar approach is applied to Dosteon inventory, as applicable. | |||||||||||||||||
Products & Services—Inventories consist principally of finished goods which are stated at the lower of cost or market using the first-in, first-out method for all reporting periods and are valued based on perpetual records. | |||||||||||||||||
Fair Value Measurements | |||||||||||||||||
The Company follows the authoritative guidance for financial assets and liabilities, which establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The authoritative guidance requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy by which these assets and liabilities must be categorized, based on significant levels of inputs as follows: | |||||||||||||||||
Level 1 | unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company | ||||||||||||||||
Level 2 | inputs that are observable in the marketplace other than those inputs classified as Level 1 | ||||||||||||||||
Level 3 | inputs that are unobservable in the marketplace and significant to the valuation | ||||||||||||||||
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | |||||||||||||||||
Financial Instruments | |||||||||||||||||
Assets measured at fair value on a recurring basis as of December 31, 2013 and 2012, are $7.7 million and $11.0 million, respectively, and are comprised of cash equivalent money market investments. The money market investments are based on Level 1 observable market prices and are equivalent to one dollar. The carrying value of the Company's short-term financial instruments, such as receivables and payables, approximate their fair values based on the short-term maturities of these instruments. During the second quarter of 2013, the Company refinanced its credit facilities by replacing its $300.0 million Term Loan and $100.0 million Revolving Credit Facility with a $225.0 million Term Loan Facility and a $200.0 million Revolving Credit Facility. See Note G for further information regarding our outstanding debt. | |||||||||||||||||
• | |||||||||||||||||
The carrying values of the Company's outstanding Term Loans as of December 31, 2013 and December 31, 2012, were $222.2 million and $293.3 million, respectively. The Company has determined the carrying value on these loans approximates fair value for debt with similar terms and remaining maturities based on interest rates currently available and has therefore concluded these are Level 2 measurements. | |||||||||||||||||
• | |||||||||||||||||
The carrying values of the Company's outstanding Revolving Credit Facilities as of December 31, 2013 and December 31, 2012, were $25.0 million and $0 million, respectively. The Company has determined the carrying value on these loans approximates fair value for debt with similar terms and remaining maturities based on interest rates currently available and has therefore concluded these are Level 2 measurements. | |||||||||||||||||
• | |||||||||||||||||
The carrying value of the Senior Notes was $200.0 million as of December 31, 2013 and December 31, 2012. The fair value of the Senior Notes was $213.3 million and $211.5 million as of December 31, 2013 and December 31, 2012. The Company has determined the fair value of the Senior Notes based on market observable inputs and has therefore concluded these are Level 2 measurements. | |||||||||||||||||
• | |||||||||||||||||
Seller Notes are recorded at contractual carrying values of $21.1 million and $27.3 million as of December 31, 2013 and December 31, 2012, respectively, and carrying value approximates fair value for similar debt in all material respects. The Company estimates fair value of the seller notes with a discounted cash flow model using unobservable rates and has determined these represent Level 3 measurements. | |||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenues in the Company's Patient Care segment are derived from the sale of O&P devices and the maintenance and repair of existing devices. Revenues from maintenance and repairs are recognized when the service is provided. Revenues from the sale of devices are recorded when the patient has accepted and received the device and recorded net of known and estimated future contractual adjustments and discounts. Contractual adjustments and discounts are recorded as contra-revenue within net sales on the Consolidated Statement of Income and Comprehensive Income. Medicare and Medicaid regulations and the various agreements we have with other third-party payors under which these contractual adjustments and discounts are calculated are complex and are subject to interpretation. Therefore, the devices and related services authorized and provided, and the related reimbursement, are subject to interpretation and adjustment that could result in payments that differ from our estimates. Additionally, updated regulations and pay schedules, and contract renegotiations, occur frequently, necessitating regular review and assessment of the estimation process by management. | |||||||||||||||||
Reserves for future contractual adjustments are estimated utilizing historical trends for such adjustments and are monitored monthly. As of December 31, 2013 and 2012, the Company estimated the reserve for future contractual adjustments and discounts to be $20.6 million and $13.9 million, respectively. The increase in the estimate is primarily related to both revenue growth resulting from both same clinic sales growth and clinic acquisitions, and from changes in collection trends. Individual patients are generally responsible for deductible and/or co-payments. The reserve for future contractual adjustments and discounts is reflected as a reduction of accounts receivable on the Company's Consolidated Balance Sheet. | |||||||||||||||||
Revenues in the Company's Products & Services segment are derived from the distribution of O&P devices and leasing rehabilitation technology combined with clinical therapy programs, education and training. Distribution revenues are recorded upon the shipment of products, in accordance with the terms of the invoice, net of estimated returns. Discounted sales are recorded at net realizable value. Leasing revenues are recognized based upon the contractual terms of the agreements, which contain negotiated pricing and service levels with terms ranging from one to five years, and are generally billed to the Company's customers monthly. | |||||||||||||||||
Net Accounts Receivable | |||||||||||||||||
The Company reports accounts receivable at estimated net realizable amounts generated for products delivered and services rendered from federal, state, managed care health plans, commercial insurance companies and patients. Collections of these accounts receivable are the Company's primary source of cash and are critical to the Company's operating performance. The Company estimates uncollectible patient accounts primarily based upon its experience in historical collections from individual patients. Bad debt expense is reported within Other operating expenses within the Consolidated Statement of Income and Comprehensive Income. At December 31, 2013 and 2012, net accounts receivable reflected allowance for doubtful accounts of $10.0 million and $7.5 million, respectively. | |||||||||||||||||
The following represents the composition of our gross accounts receivable balance by payor: | |||||||||||||||||
December 31, 2013 | |||||||||||||||||
(In thousands) | 0 - 60 days | 61 - 120 days | Over 120 days | Total | |||||||||||||
Patient Care | |||||||||||||||||
Commercial insurance | $ | 52,899 | $ | 12,092 | $ | 14,507 | $ | 79,498 | |||||||||
Private pay | 3,991 | 3,413 | 5,751 | 13,155 | |||||||||||||
Medicaid | 11,876 | 4,122 | 5,282 | 21,280 | |||||||||||||
Medicare | 30,587 | 7,097 | 20,918 | 58,602 | |||||||||||||
VA | 2,589 | 565 | 463 | 3,617 | |||||||||||||
Products & Services | |||||||||||||||||
Trade accounts receivable | 11,541 | 3,370 | 4,728 | 19,639 | |||||||||||||
| | | | | | | | | | | | | | ||||
$ | 113,483 | $ | 30,659 | $ | 51,649 | $ | 195,791 | ||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
December 31, 2012 | |||||||||||||||||
(In thousands) | 0 - 60 days | 61 - 120 days | Over 120 days | Total | |||||||||||||
Patient Care | |||||||||||||||||
Commercial insurance | $ | 51,658 | $ | 10,468 | $ | 12,249 | $ | 74,375 | |||||||||
Private pay | 5,437 | 4,545 | 5,783 | 15,765 | |||||||||||||
Medicaid | 11,812 | 3,181 | 3,228 | 18,221 | |||||||||||||
Medicare | 27,433 | 5,611 | 9,029 | 42,073 | |||||||||||||
VA | 2,082 | 558 | 324 | 2,964 | |||||||||||||
Products & Services | |||||||||||||||||
Trade accounts receivable | 12,556 | 3,149 | 4,091 | 19,796 | |||||||||||||
| | | | | | | | | | | | | | ||||
$ | 110,978 | $ | 27,512 | $ | 34,704 | $ | 173,194 | ||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Property, Plant and Equipment | |||||||||||||||||
Property, plant and equipment are recorded at cost less accumulated depreciation and amortization, with the exception of assets acquired through acquisitions, which are initially recorded at fair value. Equipment acquired under capital leases is recorded at the lower of fair market value or the present value of the future minimum lease payments. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective accounts, and any resulting gains or losses are included in the Consolidated Statements of Income and Comprehensive Income. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the related assets, which generally follows: | |||||||||||||||||
Asset class | Estimated life | ||||||||||||||||
(in years) | |||||||||||||||||
Furniture and fixtures | 5 | ||||||||||||||||
Machinery and equipment | 5 | ||||||||||||||||
Computers and software | 5 | ||||||||||||||||
Buildings | 10 - 40 | ||||||||||||||||
Assets under capital leases | Shorter of 10 or lease term | ||||||||||||||||
Leasehold improvements | Shorter of 10 or lease term | ||||||||||||||||
Equipment leased to third parties under operating leases | Up to 10 | ||||||||||||||||
The following table outlines the investment in equipment leased to third parties under operating leases: | |||||||||||||||||
(In thousands) | |||||||||||||||||
Program equipment | $ | 34,142 | |||||||||||||||
Less: Accumulated depreciation | (14,184 | ) | |||||||||||||||
| | | | | |||||||||||||
Net book value at December 31, 2013 | 19,958 | ||||||||||||||||
| | | | | |||||||||||||
| | | | | |||||||||||||
Depreciation expense related to property, plant and equipment was approximately $30.8 million, $29.2 million and $26.2 million for the years ended December 31, 2013, 2012 and 2011, respectively, which is included in Depreciation and amortization on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Included within Buildings were $10.9 million and $4.4 million of buildings recorded under a capital lease, as of December 31, 2013 and 2012, respectively. Accumulated depreciation on these capital leases were $0.9 million and $0.4 million, as of December 31, 2013 and 2012, respectively. The annual future minimum lease payments as of December 31, 2013 under the lease agreements are $1.6 million, $1.6 million, $1.6 million, $1.7 million, $1.7 million, $6.2 million for the years ending December 31, 2014, 2015, 2016, 2017, 2018 and thereafter. These future minimum lease payments include $4.3 million of interest. | |||||||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||||||
Goodwill represents the excess of purchase price over the fair value of net identifiable assets of purchased businesses. The Company assesses goodwill for impairment annually during the fourth quarter, or when events or circumstances indicate that the carrying value of the reporting units may not be recoverable. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the Company determines that a two-step goodwill impairment test is necessary or more efficient than a qualitative approach, it will measure the fair value of the Company's reporting units using a combination of income, market and cost approaches. Any impairment would be recognized by a charge to operating results and a reduction in the carrying value of the intangible asset. There were no impairment indicators since the last annual impairment test as of October 1, 2013. | |||||||||||||||||
Non-compete agreements are recorded based on agreements entered into by the Company and are amortized, using the straight-line method, over their estimated term ranging from two to seven years. Trade names are primarily comprised of an indefinite-lived intangible asset in the Company's Products & Services segment, which is annually assessed for impairment in the Company's fourth quarter using a relief-from-royalty method valuation model to estimate its fair value. Trade names not identified as an indefinite-lived intangible asset are amortized over their estimated period of benefit of approximately one to three years. Other definite-lived intangible assets are recorded at cost and are amortized, using the straight-line method, over their estimated useful lives of up to 20 years. The Company periodically evaluates the recoverability of intangible assets and takes into account events or circumstances that may warrant revised estimates of useful lives or that indicate that impairment had occurred. Refer to Note D for further discussion. | |||||||||||||||||
Debt Issuance Costs | |||||||||||||||||
Debt issuance costs incurred in connection with the Company's long-term debt are amortized, on a straight-line basis, which is not materially different from the effective interest method, through the maturity of the related debt instrument. Amortization of these costs is included in Interest Expense in the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Long-Lived Asset Impairment | |||||||||||||||||
The Company evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. The carrying value of a long-lived asset group is not recoverable and is considered impaired if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The Company measures impairment as the amount by which the carrying value exceeds the fair market value. Fair market value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose. There were no long-lived asset impairments or indicators of impairment for the years ended December 31, 2013 or 2012. | |||||||||||||||||
Supplemental Executive Retirement Plan (SERP) | |||||||||||||||||
Effective January 2004, the Company implemented an unfunded noncontributory defined benefit plan (the "Plan") for certain senior executives. Benefit costs and liabilities balances are calculated based on certain assumptions including benefits earned, discount rates, interest costs, mortality rates and other factors. The Company engages an actuary to calculate the benefit obligation and net benefit costs. The Plan, which is administered by the Company, calls for annual payments upon retirement based on years of service and final average salary. The Company believes the assumptions used are appropriate; however, changes in assumptions or differences in actual experience may affect our benefit obligation and future expenses. Actual results that differ from the assumptions are accumulated and amortized over future periods, affecting the recorded obligation and expense in future periods. For further information, including the significant assumptions used in the estimate, see Note K of the accompanying financial statements. | |||||||||||||||||
Marketing | |||||||||||||||||
Marketing costs, including advertising, are expensed as incurred. The Company incurred $4.5 million, $4.2 million, and $3.9 million in marketing costs during the years ended December 31, 2013, 2012 and 2011, respectively, which is reported in Other operating expenses on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Income Taxes | |||||||||||||||||
The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income tax liabilities and assets are determined based on the difference between the financial statements and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company recognizes a valuation allowance on the deferred tax assets if it is more likely than not that the assets will not be realized in future years. Significant accounting judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities. The Company believes that its tax positions are consistent with applicable tax law, but certain positions may be challenged by taxing authorities. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. In addition, the Company is subject to periodic audits and examinations by the Internal Revenue Service and other state and local taxing authorities. Although the Company believes that its estimates are reasonable, actual results could differ from these estimates. | |||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The Company issues restricted stock units of common stock under one active stock-based compensation plan. At December 31, 2013, 1.1 million shares of common stock were available for issuance under the Company's stock-based compensation plan. Shares of common stock issued under the stock-based compensation plan are issued from the Company's authorized and unissued shares. Restricted stock units are granted at the fair market value of the Company's common stock on the grant date. Restricted stock units vest over a period of time determined by the compensation plan, ranging from one to four years. | |||||||||||||||||
The Company applies the fair value recognition provisions of the authoritative guidance for stock compensation, which require companies to measure and recognize compensation expense for all stock-based payments at fair value. | |||||||||||||||||
Stock compensation expense relates to restricted stock units, as all stock options are fully vested and all associated compensation expense has been recognized in prior years. The total value of the restricted stock units is expensed ratably over the requisite service period of the employees receiving the awards and is included within Other operating expenses on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Segment Information | |||||||||||||||||
The Company applies a "management" approach to disclosure of segment information. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of the Company's reportable segments. The description of the Company's reportable segments and the disclosure of segment information are presented in Note O. | |||||||||||||||||
Recently Adopted Accounting Guidance | |||||||||||||||||
In July 2012, the FASB issued ASU 2012-02, "Testing Indefinite-Lived Intangibles for Impairment". This ASU amended guidance that simplifies how entities test indefinite-lived intangible assets other than goodwill for impairment. After assessment of certain qualitative factors, if it is determined to be more likely than not that an indefinite-lived asset is impaired, entities must perform the quantitative impairment test. Otherwise, the quantitative test becomes optional. The amended guidance was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company adopted this new guidance in the first quarter of 2013, and the adoption did not have a material impact on the Company's condensed consolidated financial statements. | |||||||||||||||||
In February 2013, the FASB issued ASU 2013-2, "Other Comprehensive Income." This ASU amends ASC 220, "Comprehensive Income," and supersedes ASU 2011-05 "Presentation of Comprehensive Income" and ASU 2011-12 "Comprehensive Income," to require reclassification adjustments from other comprehensive income to be presented either in the financial statements or in the notes to the financial statements. The standard does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the guidance requires an entity to provide enhanced disclosures to present separately by component reclassifications out of accumulated other comprehensive income. The amendments in this ASU were effective prospectively for reporting periods beginning after December 15, 2012. The Company has adopted this guidance and its implementation did not have a material impact on its consolidated financial statements. | |||||||||||||||||
In July 2013, the FASB issued ASU 2013-11, "Income Taxes" that requires unrecognized tax benefits be classified as an offset to deferred tax assets to the extent of any net operating loss carryforwards, similar tax loss carryforwards, or tax credit carryforwards available at the reporting date in the applicable tax jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position. An exception would apply if the tax law of the tax jurisdiction does not require the Company to use, and it does not intend to use, the deferred tax asset for such purpose. This guidance is effective for reporting periods beginning after December 15, 2013. The Company does not expect the adoption of these provisions to have a material effect on the consolidated financial statements. | |||||||||||||||||
SUPPLEMENTAL_CASH_FLOW_FINANCI
SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION | ' | ||||||||||
SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION | ' | ||||||||||
NOTE C—SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION | |||||||||||
The supplemental disclosure requirements for the statements of cash flows are as follows: | |||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 25,230 | $ | 27,362 | $ | 27,799 | |||||
Income taxes | 34,409 | 34,468 | 17,152 | ||||||||
Non-cash financing and investing activities: | |||||||||||
Issuance of notes in connection with acquisitions | $ | 2,650 | $ | 21,895 | $ | 6,700 | |||||
Issuance of restricted stock units | 11,698 | 5,996 | 12,754 |
GOODWILL_AND_OTHER_INTANGIBLE_
GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | |||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | |||||||||||||||||||
NOTE D—GOODWILL AND OTHER INTANGIBLE ASSETS | ||||||||||||||||||||
The Company completes its annual goodwill and indefinite lived intangible impairment analysis in the fourth quarter of each year. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step quantitative goodwill impairment test. If the Company determines that a two-step goodwill impairment test is necessary or more efficient than a qualitative approach, it will measure the fair value of the Company's reporting units using a combination of income, market and cost approaches. No triggering events have transpired since the Company's fourth quarter assessment. Goodwill allocated to the Company's operating segments for the two years ended December 31, 2013 and 2012 is as follows: | ||||||||||||||||||||
(In thousands) | Patient Care | Products & | Total | |||||||||||||||||
Services | ||||||||||||||||||||
Balance at December 31, 2012 | $ | 538,492 | $ | 136,282 | $ | 674,774 | ||||||||||||||
Additions due to acquisitions | 7,317 | — | 7,317 | |||||||||||||||||
Adjustments | (544 | ) | — | (544 | ) | |||||||||||||||
| | | | | | | | | | | ||||||||||
Balance at December 31, 2013 | $ | 545,265 | $ | 136,282 | $ | 681,547 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Patient Care | Products & | Total | ||||||||||||||||||
Services | ||||||||||||||||||||
Balance at December 31, 2011 | $ | 474,166 | $ | 135,318 | $ | 609,484 | ||||||||||||||
Additions due to acquisitions | 63,849 | 964 | 64,813 | |||||||||||||||||
Contingent considerations(1) | 477 | — | 477 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Balance at December 31, 2012 | $ | 538,492 | $ | 136,282 | $ | 674,774 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
-1 | ||||||||||||||||||||
Contingent considerations relates to acquisitions completed prior to the adoption of ASC 805. | ||||||||||||||||||||
The activity related to intangible assets for the two years ended December 31, 2013 and 2012 is as follows: | ||||||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||||||
(In thousands) | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||
Carrying | Amortization | Carrying | Carrying | Amortization | Carrying | |||||||||||||||
Amount | Amount | Amount | Amount | |||||||||||||||||
Customer Lists | $ | 46,932 | $ | (11,627 | ) | $ | 35,305 | $ | 48,044 | $ | (7,846 | ) | $ | 40,198 | ||||||
Trade Name | 10,023 | (264 | ) | 9,759 | 9,070 | — | 9,070 | |||||||||||||
Patents and Other Intangibles | 28,441 | (15,484 | ) | 12,957 | 27,810 | (12,797 | ) | 15,013 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
$ | 85,396 | $ | (27,375 | ) | $ | 58,021 | $ | 84,924 | $ | (20,643 | ) | $ | 64,281 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Customer lists are amortized over their estimated period of benefit, generally 10 to 14 years. The majority of the value associated with trade names is identified as an indefinite-lived intangible asset. Trade names not identified as an indefinite- lived intangible asset are amortized over their estimated period of benefit of approximately one to three years. Patents are amortized using the straight-line method over five years. Total intangible amortization expenses were $6.7 million and $5.5 million for the years ended December 31, 2013 and December 31, 2012, respectively, which were included in Depreciation and amortization on the Company's Consolidated Statements of Income and Comprehensive Income. The weighted average life of the additions to customer lists, patents and other intangibles is 7.8 years. | ||||||||||||||||||||
Estimated aggregate amortization expense for definite-lived intangible assets for each of the five years ending December 31 and thereafter is as follows: | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
2014 | $ | 6,752 | ||||||||||||||||||
2015 | 6,505 | |||||||||||||||||||
2016 | 5,813 | |||||||||||||||||||
2017 | 5,401 | |||||||||||||||||||
2018 | 4,932 | |||||||||||||||||||
Thereafter | 19,549 | |||||||||||||||||||
| | | | | ||||||||||||||||
$ | 48,952 | |||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
INVENTORIES
INVENTORIES | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
INVENTORIES | ' | |||||||
INVENTORIES | ' | |||||||
NOTE E—INVENTORIES | ||||||||
Inventories recorded using the gross profit method primarily consists of raw materials and work-in-process held by the Patient Care segment. Inventories using the perpetual method primarily consists of finished goods held by the Products & Services segment. A description of the Company's inventory valuation methodologies are presented in Note B. | ||||||||
(In thousands) | December 31, | December 31, | ||||||
2013 | 2012 | |||||||
Raw materials | $ | 40,970 | $ | 41,372 | ||||
Work in process | 66,832 | 56,931 | ||||||
Finished goods | 33,716 | 28,992 | ||||||
| | | | | | | | |
$ | 141,518 | $ | 127,295 | |||||
| | | | | | | | |
| | | | | | | | |
Finished goods includes products that are available for both sale to third party customers and transfer to the Patient Care segment into work-in-process to be customized and ultimately sold to a patient. During the twelve months ended December 31, 2013, approximately 72% of inventory purchased as finished goods was transferred to the Patient Care segment and the remaining 28% was sold to third party customers of the Products & Services segment. | ||||||||
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Dec. 31, 2013 | |
ACQUISITIONS | ' |
ACQUISITIONS | ' |
NOTE F—ACQUISITIONS | |
In 2013, the Company acquired nine O&P companies, operating a total of 18 patient care clinics. The aggregate purchase price for these O&P businesses was $14.1 million, which consisted of $9.1 million of cash on hand, $2.7 million of promissory notes and $2.3 million of contingent consideration payable within the next two years. The Company preliminarily allocated the purchase price for 2013 acquisitions to the individual assets acquired and liabilities assumed. The Company's valuations are subject to adjustment as additional information is obtained; however, these adjustments are not expected to be material. The excess of purchase price over the aggregate fair value was recorded as goodwill. Contingent consideration is reported as Accounts payable and Other liabilities on the Company's Consolidated Balance Sheet. The Company recorded (i) approximately $7.3 million of goodwill; (ii) $1.8 million of customer lists; (iii) $3.1 million in accounts receivable; and (iv) $1.9 million of other assets and liabilities related to these acquisitions. The value of the goodwill from these acquisitions can be attributed to a number of business factors including, but not limited to, expected revenue and cash flow growth in future years. The Company incurred $0.9 million in acquisition expenses, which were included in Other operating expenses on the Company's Consolidated Statements of Income and Comprehensive Income. The results of operations for these acquisitions are included in the Company's results of operations from the date of acquisition. Pro forma results would not be materially different. Of the $7.3 million of goodwill recorded for the 2013 acquisitions, the Company intends to make an election to treat certain of these acquisitions as an asset acquisition for tax purposes resulting in $5.2 million of this amount being amortizable for tax purposes. | |
In 2012, the Company acquired eighteen O&P companies, operating a total of 59 patient care clinics. The aggregate purchase price for these O&P businesses was $83.1 million, which consisted of $60.1 million of cash on hand, $21.4 million of promissory notes and $1.6 million of contingent consideration payable within five years of the acquisition date. The Company allocated the purchase price for 2012 acquisitions to the individual assets acquired and liabilities assumed. The excess of purchase price over the aggregate fair value was recorded as goodwill. Contingent consideration is reported as Accounts payable and Other liabilities on the Company's Consolidated Balance Sheet. The Company recorded (i) approximately $63.8 million of goodwill; (ii) $12.1 million of customer lists; (iii) $6.0 million in accounts receivable; and (iv) $1.2 million of other assets and liabilities related to these acquisitions. The value of the goodwill from these acquisitions can be attributed to a number of business factors including, but not limited to, expected revenue and cash flow growth in future years. The Company incurred $1.2 million in acquisition expenses, which were included in Other operating expenses. The results of operations for these acquisitions are included in the Company's results of operations from the date of acquisition. Pro forma results would not be materially different. Of the $63.8 million of goodwill recorded for the 2012 acquisitions, the Company elected to treat certain of these acquisitions as an asset acquisition for tax purposes resulting in $13.0 million of this amount being amortizable for tax purposes. | |
In 2011 the Company acquired eight O&P companies, operating a total of 21 patient care clinics. The aggregate purchase price for these O&P businesses was $24.9 million, which consisted of $14.1 cash on hand, $6.7 million of promissory notes and $4.1 million of contingent consideration payable within four years of the acquisition date. The Company incurred $0.8 million in acquisition expenses, which were included in Other operating expenses on the Company's Consolidated Statement of Income and Comprehensive Income. The results of operations for these acquisitions were included in the Company's results of operations from the date of acquisition. Pro forma results would not be materially different. Of the $17.2 million of goodwill recorded for the 2011 acquisitions, the Company elected to treat certain of these acquisitions as an asset acquisition for tax purposes resulting in $14.0 million of this amount being amortizable for tax purposes. | |
In connection with contingent consideration agreements with acquisitions completed prior to adoption of the revised authoritative guidance for business combinations becoming effective, the Company made no payments in 2013. For the years ended December 31, 2012 and 2011, the company made payments of $0.5 million and $0.7, respectively. The Company has accounted for changes in the estimates of these amounts as additional purchase price, resulting in an increase in goodwill. In connection with contingent consideration agreements with acquisitions completed subsequent to adoption of the revised authoritative guidance, the Company made payments of $2.6 million in 2013, $2.5 million in 2012, and $1.5 million in 2011. As of December 31, 2013, the Company accrued $2.6 million related to contingent consideration. | |
Subsequent to December 31, 2013, the Company acquired 7 O&P companies for approximately $29 million. | |
LONGTERM_DEBT
LONG-TERM DEBT | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
LONG-TERM DEBT | ' | |||||||
LONG-TERM DEBT | ' | |||||||
NOTE G—LONG-TERM DEBT | ||||||||
Long-term debt as of December 31 was as follows: | ||||||||
(In thousands) | 2013 | 2012 | ||||||
Revolving credit facility | $ | 25,000 | $ | — | ||||
Term loan | 222,188 | 293,300 | ||||||
71/8% Senior notes due 2018 | 200,000 | 200,000 | ||||||
Subordinated seller notes, non-collateralized, net of unamortized discount with principal and interest payable in either monthly, quarterly or annual installments at effective interest rates ranging from 2.00% to 4.0%, maturing through November 2018 | 21,071 | 27,346 | ||||||
| | | | | | | | |
Total debt | 468,259 | 520,646 | ||||||
Less current portion | (15,998 | ) | (11,082 | ) | ||||
| | | | | | | | |
Total long term debt | $ | 452,261 | $ | 509,564 | ||||
| | | | | | | | |
| | | | | | | | |
Refinancing and Amendment | ||||||||
During the second quarter of 2013 the Company refinanced its bank credit facilities through a new 5 year credit agreement that increased its senior secured facilities to an aggregate principal amount of up to $425.0 million from $400.0 million previously. The new credit agreement includes a $200.0 million revolving credit facility and a $225.0 million term loan facility. Each new facility matures on June 17, 2018 and is subject to a leveraged-based pricing grid, with initial pricing of LIBOR plus 1.75%. In conjunction with the refinancing, the Company incurred a pre-tax non-cash charge of approximately $6.6 million during the second quarter of 2013 related to the write-off of existing debt issuance costs associated with its previous credit agreement. No prepayment penalties were incurred. | ||||||||
Revolving Credit Facility | ||||||||
The $200.0 million Revolving Credit Facility matures on June 17, 2018 and bears interest at LIBOR plus 1.75%, or the applicable rate (as defined in the Credit Agreement). As of December 31, 2013, the Company had $171.4 million available under this facility. The amounts outstanding under the Revolving Credit Facility as of December 31, 2013 were $25.0 million of borrowings and standby letters of credit of approximately $3.6 million. The obligations under the Revolving Credit Facility are senior obligations, are guaranteed by the Company's subsidiaries, and are secured by a first priority perfected security interest in all of the Company's assets, all the assets of the Company's subsidiaries and the equity interests of the Company's subsidiaries. | ||||||||
Term Loan Facility | ||||||||
The Term Loan Facility, of which $222.2 million is outstanding, matures on June 17, 2018 and bears interest at LIBOR plus 1.75%, or the applicable rate (as defined in the Credit Agreement). Quarterly principal payments ranging from 0.625% to 3.750% of the initial amount borrowed are required throughout the life of the Term Loan. From time to time, mandatory prepayments may be required as a result of certain additional debt incurrences, certain asset sales, or other events as defined in the Credit Agreement. No such mandatory prepayments were required during 2013. The obligations under the Term Loan Facility are senior obligations, are guaranteed by the Company's subsidiaries, and are secured by a first priority perfected security interest in all of the Company's assets, all the assets of the Company's subsidiaries and the equity interests of the Company's subsidiaries. | ||||||||
71/8% Senior Notes | ||||||||
The 71/8% Senior Notes mature November 15, 2018 and are senior indebtedness, which is guaranteed on a senior unsecured basis by all of the Company's subsidiaries. Interest is payable semi-annually on May 15 and November 15 of each year. | ||||||||
Prior to November 15, 2014, the Company may redeem all or some of the notes at a redemption price of 103.6% of outstanding principal plus the payment of interest that would have become due from the redemption date through November 15, 2014 and remains unpaid through the date of any such redemption. On or after November 15, 2014, the Company may redeem all or a part of the notes with a premium of 1.036% of outstanding principal. On or after November 15, 2015, the premium reduces to 1.018% of outstanding principal and after November 15th 2016, the Notes are callable at par. | ||||||||
Subsidiary Guarantees | ||||||||
The Revolving Credit Facility, Term Loan Facilities and the 71/8% Senior Notes are guaranteed by all of the Company's subsidiaries. Separate condensed consolidating information is not included as the parent company does not have independent assets or operations, and the guarantees are full and unconditional and joint and several. There are no restrictions on the ability of the Company's subsidiaries to transfer cash to the Company or to co-guarantors. | ||||||||
Debt Covenants | ||||||||
The terms of the Senior Notes, the Revolving Credit Facility, and the Term Loan Facility limit the Company's ability to, among other things, purchase capital assets, incur additional indebtedness, create liens, pay dividends on or redeem capital stock, make certain investments, make restricted payments, make certain dispositions of assets, engage in transactions with affiliates, engage in certain business activities, and engage in mergers, consolidations and certain sales of assets. The credit agreement requires compliance with various covenants including but not limited to (i) minimum consolidated interest coverage ratio of 3.50:1.00 and (ii) maximum total leverage ratio of 4.00:1.00. As of December 31, 2013, the Company was in compliance with all covenants under these debt agreements. | ||||||||
Maturities of long-term debt at December 31, 2013 and the years thereafter are as follows: | ||||||||
(In thousands) | ||||||||
2014 | $ | 15,998 | ||||||
2015 | 22,200 | |||||||
2016 | 23,488 | |||||||
2017 | 29,171 | |||||||
2018 | 377,226 | |||||||
Thereafter | 176 | |||||||
| | | | | ||||
$ | 468,259 | |||||||
| | | | | ||||
| | | | | ||||
COMMITMENTS_AND_CONTINGENT_LIA
COMMITMENTS AND CONTINGENT LIABILITIES | 12 Months Ended |
Dec. 31, 2013 | |
COMMITMENTS AND CONTINGENT LIABILITIES | ' |
COMMITMENTS AND CONTINGENT LIABILITIES | ' |
NOTE H—COMMITMENTS AND CONTINGENT LIABILITIES | |
Commitments | |
The Company's wholly-owned subsidiary, Innovative Neurotronics, Inc. ("IN, Inc."), is party to a non-binding purchase agreement under which it agreed to purchase assembled WalkAide system kits. As of December 31, 2013, IN, Inc. had outstanding purchase commitments of approximately $0.4 million that the Company expects to be fulfilled over the next three months. | |
Contingencies | |
The Company is subject to legal proceedings and claims which arise from time to time in the ordinary course of its business, including additional payments under business purchase agreements. In the opinion of management, the amount of ultimate liability, if any, with respect to these actions will not have a materially adverse effect on the financial position, liquidity or results of operations of the Company. | |
The Company is in a highly regulated industry and receives regulatory agency inquiries from time to time in the ordinary course of its business, including inquiries relating to the Company's billing activities. To date these inquiries have not resulted in material liabilities, but no assurance can be given that future regulatory agencies' inquiries will be consistent with the results to date or that any discrepancies identified during a regulatory review will not have a material adverse effect on the Company's consolidated financial statements. | |
Guarantees and Indemnifications | |
In the ordinary course of its business, the Company may enter into service agreements with service providers in which it agrees to indemnify or limit the service provider against certain losses and liabilities arising from the service provider's performance of the agreement. The Company has reviewed its existing contracts containing indemnification or clauses of guarantees and does not believe that its liability under such agreements is material to the Company's operations. | |
NET_INCOME_PER_COMMON_SHARE
NET INCOME PER COMMON SHARE | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NET INCOME PER COMMON SHARE | ' | ||||||||||
NET INCOME PER COMMON SHARE | ' | ||||||||||
NOTE I—NET INCOME PER COMMON SHARE | |||||||||||
Basic per common share amounts are computed using the weighted average number of common shares outstanding during the year. Diluted per common share amounts are computed using the weighted average number of common shares outstanding during the year and dilutive potential common shares. Dilutive potential common shares consist of stock options and restricted stock units and are calculated using the treasury stock method. | |||||||||||
(In thousands, except share and per share data) | 2013 | 2012 | 2011 | ||||||||
Net income applicable to common stock | $ | 63,584 | $ | 63,692 | $ | 54,477 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Shares of common stock outstanding used to compute basic per common share amounts | 34,818,214 | 34,282,591 | 33,544,813 | ||||||||
Effect of dilutive restricted stock units and options | 576,507 | 550,239 | 675,443 | ||||||||
| | | | | | | | | | | |
Shares used to compute diluted per common share amounts | 35,394,721 | 34,832,830 | 34,220,256 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic income per share applicable to common stock | $ | 1.83 | $ | 1.86 | $ | 1.62 | |||||
Diluted income per share applicable to common stock | $ | 1.8 | $ | 1.83 | $ | 1.59 |
INCOME_TAXES
INCOME TAXES | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
INCOME TAXES | ' | ||||||||||
NOTE J—INCOME TAXES | |||||||||||
Components of income tax expense attributable to continuing operations are as follows: | |||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||
Current: | |||||||||||
Federal | $ | 32,521 | $ | 32,394 | $ | 18,976 | |||||
State | 6,241 | 6,386 | 2,242 | ||||||||
| | | | | | | | | | | |
Total Current | 38,762 | 38,780 | 21,218 | ||||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
Federal | (1,510 | ) | (3,273 | ) | 6,242 | ||||||
State | (92 | ) | (1,030 | ) | 2,197 | ||||||
| | | | | | | | | | | |
Total Deferred | (1,602 | ) | (4,303 | ) | 8,439 | ||||||
| | | | | | | | | | | |
Provision for income taxes | $ | 37,160 | $ | 34,477 | $ | 29,657 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
A reconciliation of the federal statutory tax rate to the Company's effective tax rate is as follows: | |||||||||||
2013 | 2012 | 2011 | |||||||||
Federal statutory tax rate | 35 | % | 35 | % | 35 | % | |||||
Increase (decrease) in taxes resulting from: | |||||||||||
State income taxes (net of federal effect) | 4 | 4.3 | 4.3 | ||||||||
Domestic manufacturing deduction | (2.1 | ) | (2.4 | ) | (2.0 | ) | |||||
Other | — | (1.8 | ) | (2.1 | ) | ||||||
| | | | | | | | | | | |
Provision for income taxes | 36.9 | % | 35.1 | % | 35.2 | % | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
The significant components of the net deferred income tax liability (asset) were as follows at December 31: | |||||||||||
(In thousands) | 2013 | 2012 | |||||||||
Deferred tax liabilities: | |||||||||||
Goodwill amortization | $ | 68,735 | $ | 63,405 | |||||||
Property, plant and equipment | 4,239 | 3,339 | |||||||||
Acquired intangibles | 16,980 | 18,062 | |||||||||
Debt issuance costs | — | 1,600 | |||||||||
Tax accounting method changes | — | 1,278 | |||||||||
Other | 6,830 | 4,511 | |||||||||
| | | | | | | | ||||
96,784 | 92,195 | ||||||||||
| | | | | | | | ||||
Deferred tax assets: | |||||||||||
Net operating loss carryforwards | 5,599 | 4,415 | |||||||||
Accrued expenses | 13,553 | 15,573 | |||||||||
Deferred benefit plan compensation | 8,103 | 8,363 | |||||||||
Provision for doubtful accounts | 12,313 | 7,911 | |||||||||
Inventory capitalization and reserves | 2,642 | 2,408 | |||||||||
Restricted stock | 2,752 | 2,182 | |||||||||
Deferred rent | 1,855 | 1,432 | |||||||||
Other | 4,711 | 557 | |||||||||
| | | | | | | | ||||
51,528 | 42,841 | ||||||||||
Valuation allowance | (991 | ) | (691 | ) | |||||||
| | | | | | | | ||||
50,537 | 42,150 | ||||||||||
| | | | | | | | ||||
Net deferred tax liabilities | $ | 46,247 | $ | 50,045 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
At December 31, 2013 and 2012, the Company had accumulated federal net operating loss carryforwards of $9.9 million, and $7.0 million, respectively, and state net operating loss carryforwards of $45.0 million and $39.8 million, respectively. The federal net operating loss carryforwards expire from 2025 through 2030, and the state net operating loss carryforwards for significant taxing jurisdictions expire from 2023 through 2028. Utilization of the acquired carryforwards is subject to limitations due to ownership changes that may delay or prevent the utilization of a portion of the acquired carryforwards. | |||||||||||
The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. As of December 31, 2013 and 2012, the Company recorded a valuation allowance of $1.0 million and $0.7 million, respectively, related to state loss carryforwards, which are expected to expire before utilization. | |||||||||||
A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows: | |||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||
Unrecognized tax benefits, at beginning of the year | $ | 377 | $ | 230 | $ | 420 | |||||
Additions for tax positions related to the current year | — | 107 | — | ||||||||
Additions for tax positions of prior years | 207 | 79 | — | ||||||||
Decrease related to prior year positions | (107 | ) | — | (190 | ) | ||||||
Decrease for lapse of applicable statute of limitations | — | (39 | ) | — | |||||||
| | | | | | | | | | | |
Unrecognized tax benefits, at end of the year | $ | 477 | $ | 377 | $ | 230 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
As of December 31, 2013, the total amount of unrecognized tax benefits, if recognized, that would affect the effective tax rate is $0.0 million. At December 31, 2013, there were no unrecognized tax benefits that the Company expects would change significantly over the next 12 months. | |||||||||||
The Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of income tax expense. As of December 31, 2013, 2012 and 2011, the amount of accrued interest and penalties was immaterial. The amount of interest and penalties recognized in all periods presented was immaterial. | |||||||||||
The Company is subject to income tax in U.S. federal, state and local jurisdictions. The Company is no longer subject to U.S. Federal income tax examinations for years before 2010, and with few exceptions, is no longer subject to state and local income tax examinations by tax authorities for years before 2009. However, due to acquired net operating losses, tax authorities have the ability to adjust those net operating losses related to closed years. | |||||||||||
EMPLOYEE_BENEFITS
EMPLOYEE BENEFITS | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
EMPLOYEE BENEFITS | ' | ||||||||||
EMPLOYEE BENEFITS | ' | ||||||||||
NOTE K—EMPLOYEE BENEFITS | |||||||||||
Savings Plan | |||||||||||
The Company maintains a 401(k) Savings and Retirement plan that covers all of the employees of the Company. Under this 401(k) plan, employees may defer such amounts of their compensation up to the levels permitted by the Internal Revenue Service. The Company recorded matching contributions of $6.0 million, $4.2 million and $3.9 million under this plan during 2013, 2012 and 2011, respectively, which were included in Personnel costs on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||
Supplemental Executive Retirement Plan (SERP) | |||||||||||
Effective January 2004, the Company implemented an unfunded noncontributory defined benefit plan (the "Plan") for certain senior executives. The Plan, which is administered by the Company, calls for fifteen annual payments upon retirement with the payment amount based on years of service and final average salary. The Company has engaged an actuary to calculate the benefit obligation and net benefits cost at December 31, 2013 and has utilized such to establish the benefit obligation liability. Net periodic benefit expense is also actuarially determined. As of December 31, 2013, the average remaining service period of plan participants is 7.6 years. | |||||||||||
The Plan's net benefit cost is as follows: | |||||||||||
(In thousands) | |||||||||||
Change in Benefit Obligation | |||||||||||
Benefit obligation at December 31, 2010 | $ | 17,510 | |||||||||
Service cost | 986 | ||||||||||
Interest cost | 807 | ||||||||||
Payments | (526 | ) | |||||||||
Actuarial loss | 1,453 | ||||||||||
| | | | | |||||||
Benefit obligation at December 31, 2011 | $ | 20,230 | |||||||||
| | | | | |||||||
| | | | | |||||||
Service cost | 878 | ||||||||||
Interest cost | 761 | ||||||||||
Amortization of loss | 40 | ||||||||||
Payments | (706 | ) | |||||||||
Actuarial loss | 1,174 | ||||||||||
| | | | | |||||||
Benefit obligation at December 31, 2012 | $ | 22,377 | |||||||||
| | | | | |||||||
| | | | | |||||||
Service cost | 556 | ||||||||||
Interest cost | 696 | ||||||||||
Amortization of loss | 121 | ||||||||||
Payments | (1,247 | ) | |||||||||
Actuarial gain | (1,551 | ) | |||||||||
| | | | | |||||||
Benefit obligation at December 31, 2013 | $ | 20,952 | |||||||||
| | | | | |||||||
| | | | | |||||||
Unfunded status | $ | 20,952 | |||||||||
Unamortized net (gain) loss | — | ||||||||||
| | | | | |||||||
Net amount recognized | $ | 20,952 | |||||||||
| | | | | |||||||
| | | | | |||||||
Amounts Recognized in the Consolidated Balance Sheet | |||||||||||
Current accrued expenses and other current liabilities | 1,247 | ||||||||||
Non-Current other liabilities | 19,705 | ||||||||||
| | | | | |||||||
Total Accrued liabilities | $ | 20,952 | |||||||||
| | | | | |||||||
| | | | | |||||||
The Company recorded a comprehensive gain of $1.6 million, a comprehensive loss of $(1.2) million and a comprehensive loss of $(1.4) million for the years 2013, 2012 and 2011, respectively. The Company recorded a tax obligation of $0.5 million on the unrealized gain for the plan years 2013 and a tax benefit of $0.4 and $0.5 million on the unrealized loss for the plan years 2012 and 2011, respectively. The Company also amortized the loss of $0.1 million and $0.04 million for the plan years 2013 and 2012, respectively within Personnel costs on the Consolidated Statements of Income and Comprehensive Income. As of December 31, 2013, the Company does not expect to recognize amounts from Accumulated other comprehensive income as a component of net periodic benefit cost in 2014. There were no other components such as prior service costs or transition obligations relating to the Plan costs recorded within accumulated other comprehensive loss during 2013, 2012 or 2011. Accumulated other comprehensive loss was comprised of actuarial gain of $0.9 million, actuarial loss of $(0.7) million and actuarial loss of $(0.9) million, net of tax, for the years ended 2013, 2012 and 2011, respectively. | |||||||||||
The following weighted average assumptions were used to determine the benefit obligation and net benefit cost at December 31: | |||||||||||
2013 | 2012 | 2011 | |||||||||
Discount rate | 4.03 | % | 3.25 | % | 3.9 | % | |||||
Average rate of increase in compensation | 3 | % | 3 | % | 3 | % | |||||
At December 31, 2013, the estimated accumulated benefit obligation is $21.0 million. Future payments under the Plan are as follows: | |||||||||||
(In thousands) | |||||||||||
2014 | $ | 1,247 | |||||||||
2015 | 1,585 | ||||||||||
2016 | 1,585 | ||||||||||
2017 | 1,585 | ||||||||||
2018 | 1,928 | ||||||||||
Thereafter | 13,022 | ||||||||||
| | | | | |||||||
$ | 20,952 |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||
NOTE L—STOCK-BASED COMPENSATION | ||||||||||||||||||||
On May 13, 2010, the stockholders of the Company approved the 2010 Omnibus Incentive Plan (the "2010 Plan") and prohibited future awards under the Amended and Restated 2002 Stock Incentive and Bonus Plan (the "2002 Plan") and 2003 Non-Employee Directors' Stock Incentive Plan (the "2003 Plan"). In conjunction with this approval, it was determined that no new awards will be granted under the 2002 Plan or the 2003 Plan; however, awards granted under either the 2002 Plan or the 2003 Plan that were outstanding will remain outstanding and continue to be subject to all of the terms and conditions of the 2002 Plan or the 2003 Plan, as applicable. | ||||||||||||||||||||
The 2010 Plan provides that 2.5 million shares of Common Stock are reserved for issuance, subject to adjustment as set forth in the 2010 Plan; provided, however, that only 1.5 million shares may be issued pursuant to the exercise of incentive stock options. Of these 2.5 million shares, 2.0 million are shares that were newly authorized for issuance under the 2010 Plan and 0.5 million are unissued shares not subject to awards that had been carried over from the shares previously authorized for issuance under the terms of the 2002 Plan and the 2003 Plan. Unless earlier terminated by the Board of Directors, the 2010 Plan remains in effect until the earlier of (i) the date that is ten years from the date the plan is approved by the Company's stockholders, namely May 13, 2020, or (ii) the date all shares reserved for issuance have been issued. | ||||||||||||||||||||
As of December 31, 2013, of the 2.5 million shares of common stock authorized for issuance under the Company's 2010 Plan, awards relating to approximately 1.6 million shares have been issued of which awards relating to approximately 0.2 million shares have been subsequently canceled, leaving 1.1 million shares available for future issuance. In 2013, shares issued under equity plans are issued from authorized and unissued shares. Total unrecognized stock-based compensation cost related to unvested restricted stock unit awards is approximately $14.3 million as of December 31, 2013, and is expected to be expensed as compensation expense over approximately four years. | ||||||||||||||||||||
Restricted Stock Units | ||||||||||||||||||||
For the years ended December 31, 2013, 2012 and 2011, the Company has included approximately $9.0 million, $8.1 million and $8.1 million, respectively, of stock-based compensation expense in the accompanying Consolidated Statements of Income and Comprehensive Income for the 2002, 2003 and 2010 Plans. Compensation expense relates to restricted stock unit grants, as the amount of expense related to options is immaterial in all periods presented. The fair value of restricted stock unit awards is based on the closing price of the Company's common stock on the grant date. The total value of the restricted stock units is expensed ratably over the requisite service period of the awards. | ||||||||||||||||||||
The summary of restricted stock units and weighted average grant date fair values are as follows: | ||||||||||||||||||||
Employee Awards | Director Awards | |||||||||||||||||||
Shares | Weighted | Shares | Weighted | |||||||||||||||||
Average | Average | |||||||||||||||||||
Grant Date | Grant Date | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Nonvested at December 31, 2010 | 808,071 | $ | 16.33 | 133,754 | $ | 16.38 | ||||||||||||||
Granted | 487,620 | 25.25 | 59,698 | 25.72 | ||||||||||||||||
Vested | (374,067 | ) | 14.61 | (62,533 | ) | 15.46 | ||||||||||||||
Forfeited | (28,101 | ) | 19.17 | (15,001 | ) | 20.8 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Nonvested at December 31, 2011 | 893,523 | $ | 21.84 | 115,918 | $ | 21.12 | ||||||||||||||
Granted | 468,500 | 20.47 | 63,497 | 22.35 | ||||||||||||||||
Vested | (318,927 | ) | 20.17 | (58,059 | ) | 19.34 | ||||||||||||||
Forfeited | (231,537 | ) | 21.26 | — | — | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Nonvested at December 31, 2012 | 811,559 | $ | 21.76 | 121,356 | $ | 22.62 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Granted | 371,111 | 29.35 | 71,651 | 26.05 | ||||||||||||||||
Vested | (262,860 | ) | 21.58 | (107,146 | ) | 20.69 | ||||||||||||||
Forfeited | (53,174 | ) | 22.81 | (997 | ) | 25.72 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Nonvested at December 31, 2013 | 866,636 | $ | 25 | 84,864 | $ | 27.92 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
During the years ended December 31, 2013, 2012 and 2011, 370,006, 376,986 and 436,600 restricted stock units of common stock with an intrinsic value of $7.9 million, $7.6 million and $6.4 million, respectively, became fully vested. As of December 31, 2013, total unrecognized compensation expense related to non-vested restricted stock units of common stock was approximately $14.3 million and the related weighted-average period over which it is expected to be recognized is approximately two years. The aggregate granted units have vesting dates through March 2017. The 2013, 2012 and 2011 grants totaled $12.8 million, $11.0 million and $13.3 million, respectively, at the grant date, and are amortized to expense ratably over the vesting period of the granted units. | ||||||||||||||||||||
Options | ||||||||||||||||||||
The summary of option activity and weighted average exercise prices are as follows: | ||||||||||||||||||||
Employee Awards | Director Awards | Non-Qualified Awards | ||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted | |||||||||||||||
Average | Average | Average | ||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||
Price | Price | Price | ||||||||||||||||||
Outstanding at December 31, 2010 | 434,500 | $ | 13.45 | 80,091 | $ | 11.08 | 376,000 | $ | 5.95 | |||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||
Terminated | — | — | (10,373 | ) | 10.79 | — | — | |||||||||||||
Exercised | — | — | (41,459 | ) | 10.38 | (376,000 | ) | 5.98 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2011 | 434,500 | $ | 13.45 | 28,259 | $ | 11.99 | — | $ | — | |||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||
Terminated | (1,500 | ) | 15.6 | — | — | — | — | |||||||||||||
Exercised | (230,000 | ) | 14.82 | (9,404 | ) | 16.04 | — | — | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2012 | 203,000 | $ | 11.88 | 18,855 | $ | 10.02 | — | $ | — | |||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||
Terminated | (3,000 | ) | 12.1 | — | — | — | — | |||||||||||||
Exercised | (200,000 | ) | 11.88 | (5,535 | ) | 11.21 | — | — | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2013 | — | 13,320 | $ | 9.53 | — | $ | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Aggregate intrinsic value at December 31, 2013 | $ | — | $ | 126,956 | $ | — | ||||||||||||||
Weighted average remaining contractual term (years) | — | 1 | — | |||||||||||||||||
The intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was $2.4 million, $3.6 million and $2.7 million, respectively. Options exercisable under the Company's stock-based compensation plans at December 31, 2013, 2012 and 2011 were 13,320 shares, 221,855 shares and 462,759 shares, respectively, with a weighted average exercise price of $9.53, $11.72 and $13.36, respectively, an average remaining contractual term of 1.0 years, 1.0 years and 1.7 years, respectively, and an aggregate intrinsic value of $0.1 million, $2.6 million and $6.2 million, respectively. Cash received by the Company related to the exercise of options during the years ended December 31, 2013, 2012 and 2011 amounted to $2.4 million, $3.6 million and $2.7 million. As of December 31, 2013, 2012 and 2011, there is no unrecognized compensation cost related to stock option awards. | ||||||||||||||||||||
Information concerning outstanding and exercisable options as of December 31, 2013 is as follows: | ||||||||||||||||||||
Options Outstanding and | ||||||||||||||||||||
Exercisable | ||||||||||||||||||||
Weighted Average | ||||||||||||||||||||
Range of Exercise Prices | Number of | Remaining | Exercise | |||||||||||||||||
Options or | Life (Years) | Price | ||||||||||||||||||
Awards | ||||||||||||||||||||
$5.09 to $16.10 | 13,320 | 1 | $ | 9.53 |
LEASES
LEASES | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
LEASES | ' | ||||
LEASES | ' | ||||
NOTE M—LEASES | |||||
Operating Leases | |||||
The Company leases office space under non-cancellable operating leases, the majority of which contain escalation clauses. The Company recognizes rent expense on a straight-line basis for leases with escalation clauses. Certain of these leases also contain renewal options. Renewal periods vary according to lease agreements. Rent expense was approximately $48.8 million, $43.0 million, and $41.4 million, for the years ended December 31, 2013, 2012 and 2011, respectively, which were included in Other operating expenses on the Company's Consolidated Statements of Income and Comprehensive Income. Sublease rental income of $1.5 million, $1.3 million and $0.6 million, for the years ended December 31, 2013, 2012, and 2011, respectively, was netted against rent expense. The Company estimates it will receive approximately $1.2 million of sublease rent income over the next four years. | |||||
Future minimum rental payments, by year and in the aggregate, under operating leases with terms of one year or more at December 31, 2013 are as follows: | |||||
(In thousands) | |||||
2014 | $ | 47,100 | |||
2015 | 35,637 | ||||
2016 | 28,031 | ||||
2017 | 21,522 | ||||
2018 | 14,350 | ||||
Thereafter | 27,418 | ||||
| | | | | |
$ | 174,058 | ||||
| | | | | |
| | | | | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Dec. 31, 2013 | |
RELATED PARTY TRANSACTIONS | ' |
RELATED PARTY TRANSACTIONS | ' |
NOTE N—RELATED PARTY TRANSACTIONS | |
The firm of Foley & Lardner LLP serves as the Company's outside general counsel. The Company's former Chairman is the brother-in-law of the partner in charge of the relationship for the years ended 2012 and 2011. The Company's former Chairman retired from the board 2013. Total fees paid by the Company to Foley & Lardner LLP were $3.0 million, $2.4 million, and $2.6 million, for the years ended 2013, 2012 and 2011, respectively. | |
SEGMENT_AND_RELATED_INFORMATIO
SEGMENT AND RELATED INFORMATION | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SEGMENT AND RELATED INFORMATION | ' | ||||||||||||||||
SEGMENT AND RELATED INFORMATION | ' | ||||||||||||||||
NOTE O—SEGMENT AND RELATED INFORMATION | |||||||||||||||||
The Company has identified two operating segments and both performance evaluation and resource allocation decisions are determined based on each operating segment's income from operations. The operating segments are described further below: | |||||||||||||||||
Patient Care—This segment consists of (i) the Company's owned and operated patient care clinics and other O&P operations and (ii) its contracting and network management business. The patient care clinics provide services to design and fit O&P devices to patients. These clinics also instruct patients in the use, care and maintenance of the devices. The principal reimbursement sources for the Company's services are: | |||||||||||||||||
• | |||||||||||||||||
Commercial private payors and other, which consist of individuals, rehabilitation providers, commercial insurance companies, HMOs, PPOs, hospitals, vocational rehabilitation, workers' compensation programs and similar sources; | |||||||||||||||||
• | |||||||||||||||||
Medicare, a federally funded health insurance program providing health insurance coverage for persons aged 65 or older and certain disabled persons, which provides reimbursement for O&P products and services based on prices set forth in published fee schedules with 10 regional pricing areas for prosthetics and orthotics and by state for DME; | |||||||||||||||||
• | |||||||||||||||||
Medicaid, a health insurance program jointly funded by federal and state governments providing health insurance coverage for certain persons in financial need, regardless of age, which may supplement Medicare benefits for financially needy persons aged 65 or older; and | |||||||||||||||||
• | |||||||||||||||||
U.S. Department of Veterans Affairs. | |||||||||||||||||
The Company's contract and network management business, known as Linkia, is the only network management company dedicated solely to serving the O&P market and is focused on managing the O&P services of national and regional insurance companies. The Company partners with healthcare insurance companies by securing a national or regional contract either as a preferred provider or to manage their O&P network of providers. The Company's network now includes approximately 1,150 O&P provider locations, including over 400 independent providers. As of December 31, 2013, the Company had 57 contracts with national and regional providers. | |||||||||||||||||
Products & Services—This segment consists of the Company's distribution business, which distributes and fabricates O&P products and components for both the O&P industry and the Company's own patient care clinics, and the Company's rehabilitation solutions business. Rehabilitation solutions leases rehabilitation equipment and provides evidence-based clinical programs to post-acute rehabilitation service providers. This segment also develops emerging neuromuscular technologies for the O&P and rehabilitation markets. | |||||||||||||||||
Other—This consists of corporate overhead and includes unallocated expense such as personnel costs, professional fees and corporate offices expenses. | |||||||||||||||||
The accounting policies of the segments are the same as those described in the summary of "Significant Accounting Policies" in Note B to the consolidated financial statements. | |||||||||||||||||
Summarized financial information concerning the Company's operating segments is shown in the following table. In the schedule below, the segment information for earlier periods has been conformed to the change in the composition of the Company's reportable segments that occurred in first quarter of 2013. The impacts of the revision of previously reported consolidated financial information on Net sales, as discussed in Note B, are included in the results of the Patient Care segment. | |||||||||||||||||
Intersegment sales mainly include sales of O&P components from the Products & Services segment to the Patient Care segment and were made at prices which approximate market values. The Company's foreign and export sales and assets located outside of the United States of America are not significant. Additionally, no single customer accounted for more than 10% of revenues in 2013, 2012 or 2011. | |||||||||||||||||
(In thousands) | Patient | Products & | Other | Consolidating | Total | ||||||||||||
Care | Services | Adjustments | |||||||||||||||
2013 | |||||||||||||||||
Net sales | |||||||||||||||||
Customers | $ | 873,203 | $ | 173,235 | $ | — | $ | — | $ | 1,046,438 | |||||||
Intersegments | — | 226,025 | — | (226,025 | ) | — | |||||||||||
Depreciation and amortization | 16,509 | 12,539 | 8,438 | — | 37,486 | ||||||||||||
Income (loss) from operations | 141,461 | 50,658 | (57,147 | ) | (1,108 | ) | 133,864 | ||||||||||
Interest (income) expense | 30,815 | 14,760 | (19,100 | ) | — | 26,475 | |||||||||||
Extinguishment of debt | — | — | 6,645 | — | 6,645 | ||||||||||||
Income (loss) before taxes | 110,646 | 35,898 | (44,692 | ) | (1,108 | ) | 100,744 | ||||||||||
Total assets | 1,502,721 | 408,628 | — | (639,689 | ) | 1,271,660 | |||||||||||
Capital expenditures | 12,524 | 3,316 | 22,606 | 38,446 | |||||||||||||
2012 | |||||||||||||||||
Net sales | |||||||||||||||||
Customers | $ | 803,243 | $ | 171,186 | $ | — | $ | — | $ | 974,429 | |||||||
Intersegments | — | 212,725 | — | (212,725 | ) | — | |||||||||||
Depreciation and amortization | 14,193 | 12,515 | 7,944 | — | 34,652 | ||||||||||||
Income (loss) from operations | 142,467 | 40,215 | (52,278 | ) | (1,066 | ) | 129,338 | ||||||||||
Interest (income) expense | 30,353 | 9,037 | (8,221 | ) | — | 31,169 | |||||||||||
Income (loss) before taxes | 112,114 | 31,178 | (44,057 | ) | (1,066 | ) | 98,169 | ||||||||||
Total assets | 1,389,224 | 336,319 | — | (488,216 | ) | 1,237,327 | |||||||||||
Capital expenditures | $ | 15,335 | 4,386 | $ | 13,442 | $ | — | 33,163 | |||||||||
2011 | |||||||||||||||||
Net sales | |||||||||||||||||
Customers | $ | 743,324 | $ | 164,470 | $ | — | $ | — | $ | 907,794 | |||||||
Intersegments | — | 193,804 | — | (193,804 | ) | — | |||||||||||
Depreciation and amortization | 12,495 | 11,633 | 6,954 | (113 | ) | 30,969 | |||||||||||
Income (loss) from operations | 133,321 | 32,371 | (49,432 | ) | (305 | ) | 115,955 | ||||||||||
Interest (income) expense | 28,440 | 9,118 | (5,737 | ) | — | 31,821 | |||||||||||
Income (loss) before taxes | 104,881 | 23,253 | (43,695 | ) | (305 | ) | 84,134 | ||||||||||
Total assets | 1,249,382 | 307,139 | — | (429,802 | ) | 1,126,719 | |||||||||||
Capital expenditures | 11,897 | 5,535 | 11,242 | — | 28,674 |
SCHEDULE_II_VALUATION_AND_QUAL
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended | ||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ' | ||||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | ' | ||||||||||||||||||
HANGER, INC. | |||||||||||||||||||
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS | |||||||||||||||||||
Year | Classification | Balance at | Additions | Write-offs | Balance at end | ||||||||||||||
beginning of | Charged to | of year | |||||||||||||||||
year | Costs and | ||||||||||||||||||
Expenses | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
2013 | Allowance for doubtful accounts | $ | 7,526 | $ | 14,330 | $ | 11,834 | $ | 10,022 | ||||||||||
2012 | Allowance for doubtful accounts | $ | 7,236 | $ | 9,589 | $ | 9,299 | $ | 7,526 | ||||||||||
2011 | Allowance for doubtful accounts | $ | 5,153 | $ | 9,396 | $ | 7,313 | $ | 7,236 | ||||||||||
Year | Classification | Balance at | Acquistions | Generated | Utilized/ | Balance at | |||||||||||||
beginning of | Released | end of year | |||||||||||||||||
year | |||||||||||||||||||
(In thousands) | |||||||||||||||||||
2013 | Deferred tax asset valuation allowance | $ | 691 | $ | 249 | $ | 134 | $ | 83 | $ | 991 | ||||||||
2012 | Deferred tax asset valuation allowance | $ | 1,374 | $ | — | $ | 12 | $ | 695 | $ | 691 | ||||||||
2011 | Deferred tax asset valuation allowance | $ | 828 | $ | — | $ | 547 | $ | 1 | $ | 1,374 |
SIGNIFICANT_ACCOUNTING_POLICIE1
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
Principles of Consolidation | ' | ||||||||||||||||
Principles of Consolidation | |||||||||||||||||
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated in the accompanying financial statements. | |||||||||||||||||
Revision of Previously Reported Consolidated Financial Information | ' | ||||||||||||||||
Revision of Previously Reported Consolidated Financial Information | |||||||||||||||||
During the third quarter 2013, the Company corrected an error in the classification of certain components of bad debt expense (the "2013 Revision"). Hanger previously classified the reserves related to the write-off of older accounts receivable balances due from commercial and government payors as bad debt expense, which was reported as Other Operating Expense in its financial statements, instead of as a reduction of sales. Management has assessed the materiality of the errors on previously reported periods and concluded the impact was not material to any of the prior annual or quarterly consolidated financial statements. The errors had no impact on previously reported net income, balance sheet totals or the operating cash flows for any of the periods. The impact of the adjustment lowers sales and reduces Other Operating Expenses by equal and offsetting amounts in the Consolidated Statements of Income and Comprehensive Income and the Provision for doubtful accounts and Change in accounts receivable by equal and offsetting amounts in the Consolidated Statements of Cash Flows. Further, the Company has historically included the reserve for contra revenue in its presentation of the Allowance for doubtful accounts on the Consolidated Balance Sheets and the net change in the reserve for contra revenue in the Provision for doubtful accounts on the Consolidated Statements of Cash Flows and the Schedule II Valuation and Qualifying Accounts included in the Company's Annual Report on Form 10-K. The Company has revised that presentation to only include the reserve for doubtful accounts and the related activity in the reserve for doubtful accounts in those respective balances. The impacts of the revisions on Net sales are included in the results of the Patient Care segment in Note O. | |||||||||||||||||
The impact of the 2013 Revision on the Consolidated Statements of Income and Comprehensive Income and the Consolidated Statements of Cash Flows for the annual periods ended 2011 and 2012, and Schedule II Valuation and Qualifying Accounts for the annual periods 2011 and 2012 are shown below. | |||||||||||||||||
Impact of 2013 Revision to previously reported consolidated annual results | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
December 31, 2012 | December 31, 2011 | ||||||||||||||||
As | As | As | As | ||||||||||||||
Previously | Revised | Previously | Revised | ||||||||||||||
Reported | Reported | ||||||||||||||||
Consolidated Statements of Income and Comprehensive Income | |||||||||||||||||
Net Sales | $ | 985,550 | $ | 974,429 | $ | 918,539 | $ | 907,794 | |||||||||
Other operating expenses* | $ | 188,868 | $ | 178,918 | $ | 177,910 | $ | 169,131 | |||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||
Provision for doubtful accounts | $ | 19,773 | $ | 9,589 | $ | 24,837 | $ | 9,396 | |||||||||
Change in accounts receivable | $ | (40,443 | ) | $ | (30,259 | ) | $ | (42,024 | ) | $ | (26,583 | ) | |||||
* | |||||||||||||||||
The Other operating expenses balance includes $1.2 million of acquisition expense for the year ended December 31, 2012 and $1.2 million of relocation expense and $0.8 million of acquisition expense for the year ended December 31, 2011 previously reported as a separate caption in the presentation of the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Impact of 2013 Revision to previously reported Schedule II Allowance for doubtful accounts table | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year | Classification | Balance at | Additions | Write-offs | Balance at | ||||||||||||
beginning of | Charged to | end of year | |||||||||||||||
year | Costs and | ||||||||||||||||
Expenses | |||||||||||||||||
2012 | Allowance for doubtful accounts | ||||||||||||||||
Previously reported | $ | 22,028 | $ | 19,773 | $ | 20,422 | $ | 21,379 | |||||||||
Revised | $ | 7,236 | $ | 9,589 | $ | 9,299 | $ | 7,526 | |||||||||
2011 | Allowance for doubtful accounts | ||||||||||||||||
Previously reported | $ | 16,686 | $ | 22,101 | $ | 16,759 | $ | 22,028 | |||||||||
Revised | $ | 5,153 | $ | 9,396 | $ | 7,313 | $ | 7,236 | |||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
The Company considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. The Company maintains cash balances in excess of Federal Deposit Insurance Corporation limits at certain financial institutions. | |||||||||||||||||
Restricted Cash | ' | ||||||||||||||||
Restricted Cash | |||||||||||||||||
Restricted cash has statutory or contractual restrictions that prevent it from being used in the Company's operations. As of December 31, 2013, the Company had no restricted cash. At December 31, 2012, the Company had agreed to restrict $3.1 million of cash to serve as collateral for its Workers' Compensation program. In August of 2013, the Company substituted a letter of credit for the restricted cash to serve as collateral for its Worker's Compensation program, and the cash balances used as collateral were transferred to the Company's operating accounts. | |||||||||||||||||
Credit Risk | ' | ||||||||||||||||
Credit Risk | |||||||||||||||||
The Company primarily provides O&P (orthotics and prosthetics) devices and services and products throughout the United States of America and is reimbursed by the patients, third-party insurers, governmentally funded health insurance programs, and for those products distributed through the Products & Services business, by independent O&P providers. The Company also provides advanced rehabilitation technology and clinical programs to skilled nursing facilities in the United States primarily through operating leases. The Company performs ongoing credit evaluations of its Products & Services segment customers. Accounts receivable are not collateralized. The ability of the Company's debtors to meet their obligations is dependent upon their financial stability which could be affected by future legislation and regulatory actions. Additionally, the Company maintains reserves for potential losses from these receivables that historically have been within management's expectations. | |||||||||||||||||
Inventories | ' | ||||||||||||||||
Inventories | |||||||||||||||||
Patient Care—Inventories at Hanger Clinics, Dosteon and Cares, which consists of raw materials, work-in-process and finished goods, amounted to $109.2 million and $98.3 million as of December 31, 2013 and 2012, respectively. Inventories in Hanger's Clinics, which amounted to $99.0 million and $86.9 million at December 31, 2013 and 2012, respectively, consist principally of raw materials and work-in-process inventory valued based on the gross profit method, which approximates lower of cost or market using the first-in first-out method. Inventories in the Dosteon business amounted to $8.9 million and $9.7 million at December 31, 2013 and 2012, respectively, consists principally of raw materials. As of December 31, 2013, the Dosteon inventories were valued at the lower of cost or market using the first-in first-out method based on a physical count as of December 31, 2013. As of December, 31, 2012, the Dosteon inventories were valued based on the gross profit method, which approximated lower of cost or market using the first-in first-out method. Inventories in the Cares business amounted to $1.3 million and $1.7 million as of December 31, 2013 and 2012 respectively, consists principally of finished goods and are valued at the lower of cost or market using the first-in first-out method based on perpetual records. | |||||||||||||||||
Hanger Clinic and Dosteon do not maintain a perpetual inventory system. On October 31st of each year the company performs an annual physical inventory of all inventories in Hanger Clinic. Dosteon counted its inventories on December 31, 2013 and October 31, 2012. The Company values the raw materials and work-in-process inventory counted at October 31 at lower of cost or market using the first-in first-out method. Hanger Clinic work-in-process inventory consists of materials, labor and overhead which is valued based on established standards for the stage of completion of each custom order. Material, labor and overhead costs are determined at the individual clinic or groups of clinics level. Adjustments to reconcile the Hanger Clinic and Dosteon physical inventory are treated as changes in accounting estimates and are recorded in the fourth quarter. The Company recorded fourth quarter adjustments of a decrease to inventory of $2.3 million, a decrease to inventory of $0.5 million and an increase to inventory of $2.3 million in 2013, 2012, and 2011, respectively. | |||||||||||||||||
For Hanger Clinics, the October 31st inventory is subsequently adjusted at each quarterly and annual reporting period end by applying the gross profit method. As it relates to materials, the Company generally applies the gross profit method to individual clinics or groups of clinics for material costs. Labor and overhead and other aspects of the gross profit method are completed on a Hanger clinic-wide basis. A similar approach is applied to Dosteon inventory, as applicable. | |||||||||||||||||
Products & Services—Inventories consist principally of finished goods which are stated at the lower of cost or market using the first-in, first-out method for all reporting periods and are valued based on perpetual records. | |||||||||||||||||
Fair Value Measurements | ' | ||||||||||||||||
Fair Value Measurements | |||||||||||||||||
The Company follows the authoritative guidance for financial assets and liabilities, which establishes a framework for measuring fair value and requires enhanced disclosures about fair value measurements. The authoritative guidance requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy by which these assets and liabilities must be categorized, based on significant levels of inputs as follows: | |||||||||||||||||
Level 1 | unadjusted quoted prices for identical assets or liabilities in active markets accessible by the Company | ||||||||||||||||
Level 2 | inputs that are observable in the marketplace other than those inputs classified as Level 1 | ||||||||||||||||
Level 3 | inputs that are unobservable in the marketplace and significant to the valuation | ||||||||||||||||
The determination of where assets and liabilities fall within this hierarchy is based upon the lowest level of input that is significant to the fair value measurement. | |||||||||||||||||
Financial Instruments | ' | ||||||||||||||||
Financial Instruments | |||||||||||||||||
Assets measured at fair value on a recurring basis as of December 31, 2013 and 2012, are $7.7 million and $11.0 million, respectively, and are comprised of cash equivalent money market investments. The money market investments are based on Level 1 observable market prices and are equivalent to one dollar. The carrying value of the Company's short-term financial instruments, such as receivables and payables, approximate their fair values based on the short-term maturities of these instruments. During the second quarter of 2013, the Company refinanced its credit facilities by replacing its $300.0 million Term Loan and $100.0 million Revolving Credit Facility with a $225.0 million Term Loan Facility and a $200.0 million Revolving Credit Facility. See Note G for further information regarding our outstanding debt. | |||||||||||||||||
• | |||||||||||||||||
The carrying values of the Company's outstanding Term Loans as of December 31, 2013 and December 31, 2012, were $222.2 million and $293.3 million, respectively. The Company has determined the carrying value on these loans approximates fair value for debt with similar terms and remaining maturities based on interest rates currently available and has therefore concluded these are Level 2 measurements. | |||||||||||||||||
• | |||||||||||||||||
The carrying values of the Company's outstanding Revolving Credit Facilities as of December 31, 2013 and December 31, 2012, were $25.0 million and $0 million, respectively. The Company has determined the carrying value on these loans approximates fair value for debt with similar terms and remaining maturities based on interest rates currently available and has therefore concluded these are Level 2 measurements. | |||||||||||||||||
• | |||||||||||||||||
The carrying value of the Senior Notes was $200.0 million as of December 31, 2013 and December 31, 2012. The fair value of the Senior Notes was $213.3 million and $211.5 million as of December 31, 2013 and December 31, 2012. The Company has determined the fair value of the Senior Notes based on market observable inputs and has therefore concluded these are Level 2 measurements. | |||||||||||||||||
• | |||||||||||||||||
Seller Notes are recorded at contractual carrying values of $21.1 million and $27.3 million as of December 31, 2013 and December 31, 2012, respectively, and carrying value approximates fair value for similar debt in all material respects. The Company estimates fair value of the seller notes with a discounted cash flow model using unobservable rates and has determined these represent Level 3 measurements. | |||||||||||||||||
Revenue Recognition | ' | ||||||||||||||||
Revenue Recognition | |||||||||||||||||
Revenues in the Company's Patient Care segment are derived from the sale of O&P devices and the maintenance and repair of existing devices. Revenues from maintenance and repairs are recognized when the service is provided. Revenues from the sale of devices are recorded when the patient has accepted and received the device and recorded net of known and estimated future contractual adjustments and discounts. Contractual adjustments and discounts are recorded as contra-revenue within net sales on the Consolidated Statement of Income and Comprehensive Income. Medicare and Medicaid regulations and the various agreements we have with other third-party payors under which these contractual adjustments and discounts are calculated are complex and are subject to interpretation. Therefore, the devices and related services authorized and provided, and the related reimbursement, are subject to interpretation and adjustment that could result in payments that differ from our estimates. Additionally, updated regulations and pay schedules, and contract renegotiations, occur frequently, necessitating regular review and assessment of the estimation process by management. | |||||||||||||||||
Reserves for future contractual adjustments are estimated utilizing historical trends for such adjustments and are monitored monthly. As of December 31, 2013 and 2012, the Company estimated the reserve for future contractual adjustments and discounts to be $20.6 million and $13.9 million, respectively. The increase in the estimate is primarily related to both revenue growth resulting from both same clinic sales growth and clinic acquisitions, and from changes in collection trends. Individual patients are generally responsible for deductible and/or co-payments. The reserve for future contractual adjustments and discounts is reflected as a reduction of accounts receivable on the Company's Consolidated Balance Sheet. | |||||||||||||||||
Revenues in the Company's Products & Services segment are derived from the distribution of O&P devices and leasing rehabilitation technology combined with clinical therapy programs, education and training. Distribution revenues are recorded upon the shipment of products, in accordance with the terms of the invoice, net of estimated returns. Discounted sales are recorded at net realizable value. Leasing revenues are recognized based upon the contractual terms of the agreements, which contain negotiated pricing and service levels with terms ranging from one to five years, and are generally billed to the Company's customers monthly. | |||||||||||||||||
Net Accounts Receivable | ' | ||||||||||||||||
Net Accounts Receivable | |||||||||||||||||
The Company reports accounts receivable at estimated net realizable amounts generated for products delivered and services rendered from federal, state, managed care health plans, commercial insurance companies and patients. Collections of these accounts receivable are the Company's primary source of cash and are critical to the Company's operating performance. The Company estimates uncollectible patient accounts primarily based upon its experience in historical collections from individual patients. Bad debt expense is reported within Other operating expenses within the Consolidated Statement of Income and Comprehensive Income. At December 31, 2013 and 2012, net accounts receivable reflected allowance for doubtful accounts of $10.0 million and $7.5 million, respectively. | |||||||||||||||||
The following represents the composition of our gross accounts receivable balance by payor: | |||||||||||||||||
December 31, 2013 | |||||||||||||||||
(In thousands) | 0 - 60 days | 61 - 120 days | Over 120 days | Total | |||||||||||||
Patient Care | |||||||||||||||||
Commercial insurance | $ | 52,899 | $ | 12,092 | $ | 14,507 | $ | 79,498 | |||||||||
Private pay | 3,991 | 3,413 | 5,751 | 13,155 | |||||||||||||
Medicaid | 11,876 | 4,122 | 5,282 | 21,280 | |||||||||||||
Medicare | 30,587 | 7,097 | 20,918 | 58,602 | |||||||||||||
VA | 2,589 | 565 | 463 | 3,617 | |||||||||||||
Products & Services | |||||||||||||||||
Trade accounts receivable | 11,541 | 3,370 | 4,728 | 19,639 | |||||||||||||
| | | | | | | | | | | | | | ||||
$ | 113,483 | $ | 30,659 | $ | 51,649 | $ | 195,791 | ||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
December 31, 2012 | |||||||||||||||||
(In thousands) | 0 - 60 days | 61 - 120 days | Over 120 days | Total | |||||||||||||
Patient Care | |||||||||||||||||
Commercial insurance | $ | 51,658 | $ | 10,468 | $ | 12,249 | $ | 74,375 | |||||||||
Private pay | 5,437 | 4,545 | 5,783 | 15,765 | |||||||||||||
Medicaid | 11,812 | 3,181 | 3,228 | 18,221 | |||||||||||||
Medicare | 27,433 | 5,611 | 9,029 | 42,073 | |||||||||||||
VA | 2,082 | 558 | 324 | 2,964 | |||||||||||||
Products & Services | |||||||||||||||||
Trade accounts receivable | 12,556 | 3,149 | 4,091 | 19,796 | |||||||||||||
| | | | | | | | | | | | | | ||||
$ | 110,978 | $ | 27,512 | $ | 34,704 | $ | 173,194 | ||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Property, Plant and Equipment | ' | ||||||||||||||||
Property, Plant and Equipment | |||||||||||||||||
Property, plant and equipment are recorded at cost less accumulated depreciation and amortization, with the exception of assets acquired through acquisitions, which are initially recorded at fair value. Equipment acquired under capital leases is recorded at the lower of fair market value or the present value of the future minimum lease payments. The cost and related accumulated depreciation of assets sold, retired or otherwise disposed of are removed from the respective accounts, and any resulting gains or losses are included in the Consolidated Statements of Income and Comprehensive Income. Depreciation is computed for financial reporting purposes using the straight-line method over the estimated useful lives of the related assets, which generally follows: | |||||||||||||||||
Asset class | Estimated life | ||||||||||||||||
(in years) | |||||||||||||||||
Furniture and fixtures | 5 | ||||||||||||||||
Machinery and equipment | 5 | ||||||||||||||||
Computers and software | 5 | ||||||||||||||||
Buildings | 10 - 40 | ||||||||||||||||
Assets under capital leases | Shorter of 10 or lease term | ||||||||||||||||
Leasehold improvements | Shorter of 10 or lease term | ||||||||||||||||
Equipment leased to third parties under operating leases | Up to 10 | ||||||||||||||||
The following table outlines the investment in equipment leased to third parties under operating leases: | |||||||||||||||||
(In thousands) | |||||||||||||||||
Program equipment | $ | 34,142 | |||||||||||||||
Less: Accumulated depreciation | (14,184 | ) | |||||||||||||||
| | | | | |||||||||||||
Net book value at December 31, 2013 | 19,958 | ||||||||||||||||
| | | | | |||||||||||||
| | | | | |||||||||||||
Depreciation expense related to property, plant and equipment was approximately $30.8 million, $29.2 million and $26.2 million for the years ended December 31, 2013, 2012 and 2011, respectively, which is included in Depreciation and amortization on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Included within Buildings were $10.9 million and $4.4 million of buildings recorded under a capital lease, as of December 31, 2013 and 2012, respectively. Accumulated depreciation on these capital leases were $0.9 million and $0.4 million, as of December 31, 2013 and 2012, respectively. The annual future minimum lease payments as of December 31, 2013 under the lease agreements are $1.6 million, $1.6 million, $1.6 million, $1.7 million, $1.7 million, $6.2 million for the years ending December 31, 2014, 2015, 2016, 2017, 2018 and thereafter. These future minimum lease payments include $4.3 million of interest. | |||||||||||||||||
Goodwill and Other Intangible Assets | ' | ||||||||||||||||
Goodwill and Other Intangible Assets | |||||||||||||||||
Goodwill represents the excess of purchase price over the fair value of net identifiable assets of purchased businesses. The Company assesses goodwill for impairment annually during the fourth quarter, or when events or circumstances indicate that the carrying value of the reporting units may not be recoverable. The Company has the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the two-step goodwill impairment test. If the Company determines that a two-step goodwill impairment test is necessary or more efficient than a qualitative approach, it will measure the fair value of the Company's reporting units using a combination of income, market and cost approaches. Any impairment would be recognized by a charge to operating results and a reduction in the carrying value of the intangible asset. There were no impairment indicators since the last annual impairment test as of October 1, 2013. | |||||||||||||||||
Non-compete agreements are recorded based on agreements entered into by the Company and are amortized, using the straight-line method, over their estimated term ranging from two to seven years. Trade names are primarily comprised of an indefinite-lived intangible asset in the Company's Products & Services segment, which is annually assessed for impairment in the Company's fourth quarter using a relief-from-royalty method valuation model to estimate its fair value. Trade names not identified as an indefinite-lived intangible asset are amortized over their estimated period of benefit of approximately one to three years. Other definite-lived intangible assets are recorded at cost and are amortized, using the straight-line method, over their estimated useful lives of up to 20 years. The Company periodically evaluates the recoverability of intangible assets and takes into account events or circumstances that may warrant revised estimates of useful lives or that indicate that impairment had occurred. Refer to Note D for further discussion. | |||||||||||||||||
Debt Issuance Costs | ' | ||||||||||||||||
Debt Issuance Costs | |||||||||||||||||
Debt issuance costs incurred in connection with the Company's long-term debt are amortized, on a straight-line basis, which is not materially different from the effective interest method, through the maturity of the related debt instrument. Amortization of these costs is included in Interest Expense in the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Long-Lived Asset Impairment | ' | ||||||||||||||||
Long-Lived Asset Impairment | |||||||||||||||||
The Company evaluates the carrying value of long-lived assets to be held and used whenever events or changes in circumstance indicate that the carrying amount may not be recoverable. The carrying value of a long-lived asset group is not recoverable and is considered impaired if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. The Company measures impairment as the amount by which the carrying value exceeds the fair market value. Fair market value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved. Losses on long-lived assets to be disposed of are determined in a similar manner, except that fair market values are reduced for the cost to dispose. There were no long-lived asset impairments or indicators of impairment for the years ended December 31, 2013 or 2012. | |||||||||||||||||
Supplemental Executive Retirement Plan (SERP) | ' | ||||||||||||||||
Supplemental Executive Retirement Plan (SERP) | |||||||||||||||||
Effective January 2004, the Company implemented an unfunded noncontributory defined benefit plan (the "Plan") for certain senior executives. Benefit costs and liabilities balances are calculated based on certain assumptions including benefits earned, discount rates, interest costs, mortality rates and other factors. The Company engages an actuary to calculate the benefit obligation and net benefit costs. The Plan, which is administered by the Company, calls for annual payments upon retirement based on years of service and final average salary. The Company believes the assumptions used are appropriate; however, changes in assumptions or differences in actual experience may affect our benefit obligation and future expenses. Actual results that differ from the assumptions are accumulated and amortized over future periods, affecting the recorded obligation and expense in future periods. For further information, including the significant assumptions used in the estimate, see Note K of the accompanying financial statements. | |||||||||||||||||
Marketing | ' | ||||||||||||||||
Marketing | |||||||||||||||||
Marketing costs, including advertising, are expensed as incurred. The Company incurred $4.5 million, $4.2 million, and $3.9 million in marketing costs during the years ended December 31, 2013, 2012 and 2011, respectively, which is reported in Other operating expenses on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company recognizes deferred income tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statements or tax returns. Deferred income tax liabilities and assets are determined based on the difference between the financial statements and the tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company recognizes a valuation allowance on the deferred tax assets if it is more likely than not that the assets will not be realized in future years. Significant accounting judgment is required in determining the provision for income taxes and related accruals, deferred tax assets and liabilities. The Company believes that its tax positions are consistent with applicable tax law, but certain positions may be challenged by taxing authorities. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. In addition, the Company is subject to periodic audits and examinations by the Internal Revenue Service and other state and local taxing authorities. Although the Company believes that its estimates are reasonable, actual results could differ from these estimates. | |||||||||||||||||
Stock-Based Compensation | ' | ||||||||||||||||
Stock-Based Compensation | |||||||||||||||||
The Company issues restricted stock units of common stock under one active stock-based compensation plan. At December 31, 2013, 1.1 million shares of common stock were available for issuance under the Company's stock-based compensation plan. Shares of common stock issued under the stock-based compensation plan are issued from the Company's authorized and unissued shares. Restricted stock units are granted at the fair market value of the Company's common stock on the grant date. Restricted stock units vest over a period of time determined by the compensation plan, ranging from one to four years. | |||||||||||||||||
The Company applies the fair value recognition provisions of the authoritative guidance for stock compensation, which require companies to measure and recognize compensation expense for all stock-based payments at fair value. | |||||||||||||||||
Stock compensation expense relates to restricted stock units, as all stock options are fully vested and all associated compensation expense has been recognized in prior years. The total value of the restricted stock units is expensed ratably over the requisite service period of the employees receiving the awards and is included within Other operating expenses on the Company's Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Segment Information | ' | ||||||||||||||||
Segment Information | |||||||||||||||||
The Company applies a "management" approach to disclosure of segment information. The management approach designates the internal organization that is used by management for making operating decisions and assessing performance as the basis of the Company's reportable segments. The description of the Company's reportable segments and the disclosure of segment information are presented in Note O. | |||||||||||||||||
Recently Adopted Accounting Guidance | ' | ||||||||||||||||
Recently Adopted Accounting Guidance | |||||||||||||||||
In July 2012, the FASB issued ASU 2012-02, "Testing Indefinite-Lived Intangibles for Impairment". This ASU amended guidance that simplifies how entities test indefinite-lived intangible assets other than goodwill for impairment. After assessment of certain qualitative factors, if it is determined to be more likely than not that an indefinite-lived asset is impaired, entities must perform the quantitative impairment test. Otherwise, the quantitative test becomes optional. The amended guidance was effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The Company adopted this new guidance in the first quarter of 2013, and the adoption did not have a material impact on the Company's condensed consolidated financial statements. | |||||||||||||||||
In February 2013, the FASB issued ASU 2013-2, "Other Comprehensive Income." This ASU amends ASC 220, "Comprehensive Income," and supersedes ASU 2011-05 "Presentation of Comprehensive Income" and ASU 2011-12 "Comprehensive Income," to require reclassification adjustments from other comprehensive income to be presented either in the financial statements or in the notes to the financial statements. The standard does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the guidance requires an entity to provide enhanced disclosures to present separately by component reclassifications out of accumulated other comprehensive income. The amendments in this ASU were effective prospectively for reporting periods beginning after December 15, 2012. The Company has adopted this guidance and its implementation did not have a material impact on its consolidated financial statements. | |||||||||||||||||
In July 2013, the FASB issued ASU 2013-11, "Income Taxes" that requires unrecognized tax benefits be classified as an offset to deferred tax assets to the extent of any net operating loss carryforwards, similar tax loss carryforwards, or tax credit carryforwards available at the reporting date in the applicable tax jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position. An exception would apply if the tax law of the tax jurisdiction does not require the Company to use, and it does not intend to use, the deferred tax asset for such purpose. This guidance is effective for reporting periods beginning after December 15, 2013. The Company does not expect the adoption of these provisions to have a material effect on the consolidated financial statements. | |||||||||||||||||
SIGNIFICANT_ACCOUNTING_POLICIE2
SIGNIFICANT ACCOUNTING POLICIES (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
Schedule of impact of error on the Consolidated Statements of Income and Comprehensive Income and the Consolidated Statements of Cash Flows | ' | ||||||||||||||||
Impact of 2013 Revision to previously reported consolidated annual results | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year Ended | Year Ended | ||||||||||||||||
December 31, 2012 | December 31, 2011 | ||||||||||||||||
As | As | As | As | ||||||||||||||
Previously | Revised | Previously | Revised | ||||||||||||||
Reported | Reported | ||||||||||||||||
Consolidated Statements of Income and Comprehensive Income | |||||||||||||||||
Net Sales | $ | 985,550 | $ | 974,429 | $ | 918,539 | $ | 907,794 | |||||||||
Other operating expenses* | $ | 188,868 | $ | 178,918 | $ | 177,910 | $ | 169,131 | |||||||||
Consolidated Statements of Cash Flows | |||||||||||||||||
Provision for doubtful accounts | $ | 19,773 | $ | 9,589 | $ | 24,837 | $ | 9,396 | |||||||||
Change in accounts receivable | $ | (40,443 | ) | $ | (30,259 | ) | $ | (42,024 | ) | $ | (26,583 | ) | |||||
* | |||||||||||||||||
The Other operating expenses balance includes $1.2 million of acquisition expense for the year ended December 31, 2012 and $1.2 million of relocation expense and $0.8 million of acquisition expense for the year ended December 31, 2011 previously reported as a separate caption in the presentation of the Consolidated Statements of Income and Comprehensive Income. | |||||||||||||||||
Schedule of impact of 2013 Revision to previously reported Schedule II Allowance for doubtful accounts table | ' | ||||||||||||||||
Impact of 2013 Revision to previously reported Schedule II Allowance for doubtful accounts table | |||||||||||||||||
(In thousands) | |||||||||||||||||
Year | Classification | Balance at | Additions | Write-offs | Balance at | ||||||||||||
beginning of | Charged to | end of year | |||||||||||||||
year | Costs and | ||||||||||||||||
Expenses | |||||||||||||||||
2012 | Allowance for doubtful accounts | ||||||||||||||||
Previously reported | $ | 22,028 | $ | 19,773 | $ | 20,422 | $ | 21,379 | |||||||||
Revised | $ | 7,236 | $ | 9,589 | $ | 9,299 | $ | 7,526 | |||||||||
2011 | Allowance for doubtful accounts | ||||||||||||||||
Previously reported | $ | 16,686 | $ | 22,101 | $ | 16,759 | $ | 22,028 | |||||||||
Revised | $ | 5,153 | $ | 9,396 | $ | 7,313 | $ | 7,236 | |||||||||
Schedule of gross accounts receivable balance by payor | ' | ||||||||||||||||
December 31, 2013 | |||||||||||||||||
(In thousands) | 0 - 60 days | 61 - 120 days | Over 120 days | Total | |||||||||||||
Patient Care | |||||||||||||||||
Commercial insurance | $ | 52,899 | $ | 12,092 | $ | 14,507 | $ | 79,498 | |||||||||
Private pay | 3,991 | 3,413 | 5,751 | 13,155 | |||||||||||||
Medicaid | 11,876 | 4,122 | 5,282 | 21,280 | |||||||||||||
Medicare | 30,587 | 7,097 | 20,918 | 58,602 | |||||||||||||
VA | 2,589 | 565 | 463 | 3,617 | |||||||||||||
Products & Services | |||||||||||||||||
Trade accounts receivable | 11,541 | 3,370 | 4,728 | 19,639 | |||||||||||||
| | | | | | | | | | | | | | ||||
$ | 113,483 | $ | 30,659 | $ | 51,649 | $ | 195,791 | ||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
December 31, 2012 | |||||||||||||||||
(In thousands) | 0 - 60 days | 61 - 120 days | Over 120 days | Total | |||||||||||||
Patient Care | |||||||||||||||||
Commercial insurance | $ | 51,658 | $ | 10,468 | $ | 12,249 | $ | 74,375 | |||||||||
Private pay | 5,437 | 4,545 | 5,783 | 15,765 | |||||||||||||
Medicaid | 11,812 | 3,181 | 3,228 | 18,221 | |||||||||||||
Medicare | 27,433 | 5,611 | 9,029 | 42,073 | |||||||||||||
VA | 2,082 | 558 | 324 | 2,964 | |||||||||||||
Products & Services | |||||||||||||||||
Trade accounts receivable | 12,556 | 3,149 | 4,091 | 19,796 | |||||||||||||
| | | | | | | | | | | | | | ||||
$ | 110,978 | $ | 27,512 | $ | 34,704 | $ | 173,194 | ||||||||||
| | | | | | | | | | | | | | ||||
| | | | | | | | | | | | | | ||||
Schedule of estimated useful lives of related assets for computation of depreciation for reporting purposes | ' | ||||||||||||||||
Asset class | Estimated life | ||||||||||||||||
(in years) | |||||||||||||||||
Furniture and fixtures | 5 | ||||||||||||||||
Machinery and equipment | 5 | ||||||||||||||||
Computers and software | 5 | ||||||||||||||||
Buildings | 10 - 40 | ||||||||||||||||
Assets under capital leases | Shorter of 10 or lease term | ||||||||||||||||
Leasehold improvements | Shorter of 10 or lease term | ||||||||||||||||
Equipment leased to third parties under operating leases | Up to 10 | ||||||||||||||||
Schedule of investment in equipment leased to third parties under operating leases | ' | ||||||||||||||||
(In thousands) | |||||||||||||||||
Program equipment | $ | 34,142 | |||||||||||||||
Less: Accumulated depreciation | (14,184 | ) | |||||||||||||||
| | | | | |||||||||||||
Net book value at December 31, 2013 | 19,958 | ||||||||||||||||
| | | | | |||||||||||||
| | | | | |||||||||||||
SUPPLEMENTAL_CASH_FLOW_FINANCI1
SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION | ' | ||||||||||
Schedule of supplemental disclosure requirements for the statements of cash flows | ' | ||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 25,230 | $ | 27,362 | $ | 27,799 | |||||
Income taxes | 34,409 | 34,468 | 17,152 | ||||||||
Non-cash financing and investing activities: | |||||||||||
Issuance of notes in connection with acquisitions | $ | 2,650 | $ | 21,895 | $ | 6,700 | |||||
Issuance of restricted stock units | 11,698 | 5,996 | 12,754 |
GOODWILL_AND_OTHER_INTANGIBLE_1
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | ' | |||||||||||||||||||
Schedule of goodwill allocated to the Company's operating segments | ' | |||||||||||||||||||
(In thousands) | Patient Care | Products & | Total | |||||||||||||||||
Services | ||||||||||||||||||||
Balance at December 31, 2012 | $ | 538,492 | $ | 136,282 | $ | 674,774 | ||||||||||||||
Additions due to acquisitions | 7,317 | — | 7,317 | |||||||||||||||||
Adjustments | (544 | ) | — | (544 | ) | |||||||||||||||
| | | | | | | | | | | ||||||||||
Balance at December 31, 2013 | $ | 545,265 | $ | 136,282 | $ | 681,547 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
Patient Care | Products & | Total | ||||||||||||||||||
Services | ||||||||||||||||||||
Balance at December 31, 2011 | $ | 474,166 | $ | 135,318 | $ | 609,484 | ||||||||||||||
Additions due to acquisitions | 63,849 | 964 | 64,813 | |||||||||||||||||
Contingent considerations(1) | 477 | — | 477 | |||||||||||||||||
| | | | | | | | | | | ||||||||||
Balance at December 31, 2012 | $ | 538,492 | $ | 136,282 | $ | 674,774 | ||||||||||||||
| | | | | | | | | | | ||||||||||
| | | | | | | | | | | ||||||||||
-1 | ||||||||||||||||||||
Contingent considerations relates to acquisitions completed prior to the adoption of ASC 805. | ||||||||||||||||||||
Schedule of activity related to intangible assets | ' | |||||||||||||||||||
December 31, 2013 | December 31, 2012 | |||||||||||||||||||
(In thousands) | Gross | Accumulated | Net | Gross | Accumulated | Net | ||||||||||||||
Carrying | Amortization | Carrying | Carrying | Amortization | Carrying | |||||||||||||||
Amount | Amount | Amount | Amount | |||||||||||||||||
Customer Lists | $ | 46,932 | $ | (11,627 | ) | $ | 35,305 | $ | 48,044 | $ | (7,846 | ) | $ | 40,198 | ||||||
Trade Name | 10,023 | (264 | ) | 9,759 | 9,070 | — | 9,070 | |||||||||||||
Patents and Other Intangibles | 28,441 | (15,484 | ) | 12,957 | 27,810 | (12,797 | ) | 15,013 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
$ | 85,396 | $ | (27,375 | ) | $ | 58,021 | $ | 84,924 | $ | (20,643 | ) | $ | 64,281 | |||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Schedule of estimated aggregate amortization expense for definite-lived intangible assets | ' | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||
2014 | $ | 6,752 | ||||||||||||||||||
2015 | 6,505 | |||||||||||||||||||
2016 | 5,813 | |||||||||||||||||||
2017 | 5,401 | |||||||||||||||||||
2018 | 4,932 | |||||||||||||||||||
Thereafter | 19,549 | |||||||||||||||||||
| | | | | ||||||||||||||||
$ | 48,952 | |||||||||||||||||||
| | | | | ||||||||||||||||
| | | | | ||||||||||||||||
INVENTORIES_Tables
INVENTORIES (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
INVENTORIES | ' | |||||||
Schedule of inventory | ' | |||||||
(In thousands) | December 31, | December 31, | ||||||
2013 | 2012 | |||||||
Raw materials | $ | 40,970 | $ | 41,372 | ||||
Work in process | 66,832 | 56,931 | ||||||
Finished goods | 33,716 | 28,992 | ||||||
| | | | | | | | |
$ | 141,518 | $ | 127,295 | |||||
| | | | | | | | |
| | | | | | | | |
LONGTERM_DEBT_Tables
LONG-TERM DEBT (Tables) | 12 Months Ended | |||||||
Dec. 31, 2013 | ||||||||
LONG-TERM DEBT | ' | |||||||
Schedule of long-term debt | ' | |||||||
(In thousands) | 2013 | 2012 | ||||||
Revolving credit facility | $ | 25,000 | $ | — | ||||
Term loan | 222,188 | 293,300 | ||||||
71/8% Senior notes due 2018 | 200,000 | 200,000 | ||||||
Subordinated seller notes, non-collateralized, net of unamortized discount with principal and interest payable in either monthly, quarterly or annual installments at effective interest rates ranging from 2.00% to 4.0%, maturing through November 2018 | 21,071 | 27,346 | ||||||
| | | | | | | | |
Total debt | 468,259 | 520,646 | ||||||
Less current portion | (15,998 | ) | (11,082 | ) | ||||
| | | | | | | | |
Total long term debt | $ | 452,261 | $ | 509,564 | ||||
| | | | | | | | |
| | | | | | | | |
Schedule of maturities of long-term debt | ' | |||||||
(In thousands) | ||||||||
2014 | $ | 15,998 | ||||||
2015 | 22,200 | |||||||
2016 | 23,488 | |||||||
2017 | 29,171 | |||||||
2018 | 377,226 | |||||||
Thereafter | 176 | |||||||
| | | | | ||||
$ | 468,259 | |||||||
| | | | | ||||
| | | | | ||||
NET_INCOME_PER_COMMON_SHARE_Ta
NET INCOME PER COMMON SHARE (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
NET INCOME PER COMMON SHARE | ' | ||||||||||
Schedule of computation of basic and diluted earnings per share | ' | ||||||||||
(In thousands, except share and per share data) | 2013 | 2012 | 2011 | ||||||||
Net income applicable to common stock | $ | 63,584 | $ | 63,692 | $ | 54,477 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Shares of common stock outstanding used to compute basic per common share amounts | 34,818,214 | 34,282,591 | 33,544,813 | ||||||||
Effect of dilutive restricted stock units and options | 576,507 | 550,239 | 675,443 | ||||||||
| | | | | | | | | | | |
Shares used to compute diluted per common share amounts | 35,394,721 | 34,832,830 | 34,220,256 | ||||||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Basic income per share applicable to common stock | $ | 1.83 | $ | 1.86 | $ | 1.62 | |||||
Diluted income per share applicable to common stock | $ | 1.8 | $ | 1.83 | $ | 1.59 |
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
INCOME TAXES | ' | ||||||||||
Schedule of components of income tax expense attributable to continuing operations | ' | ||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||
Current: | |||||||||||
Federal | $ | 32,521 | $ | 32,394 | $ | 18,976 | |||||
State | 6,241 | 6,386 | 2,242 | ||||||||
| | | | | | | | | | | |
Total Current | 38,762 | 38,780 | 21,218 | ||||||||
| | | | | | | | | | | |
Deferred: | |||||||||||
Federal | (1,510 | ) | (3,273 | ) | 6,242 | ||||||
State | (92 | ) | (1,030 | ) | 2,197 | ||||||
| | | | | | | | | | | |
Total Deferred | (1,602 | ) | (4,303 | ) | 8,439 | ||||||
| | | | | | | | | | | |
Provision for income taxes | $ | 37,160 | $ | 34,477 | $ | 29,657 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of reconciliation of the federal statutory tax rate to the Company's effective tax rate | ' | ||||||||||
2013 | 2012 | 2011 | |||||||||
Federal statutory tax rate | 35 | % | 35 | % | 35 | % | |||||
Increase (decrease) in taxes resulting from: | |||||||||||
State income taxes (net of federal effect) | 4 | 4.3 | 4.3 | ||||||||
Domestic manufacturing deduction | (2.1 | ) | (2.4 | ) | (2.0 | ) | |||||
Other | — | (1.8 | ) | (2.1 | ) | ||||||
| | | | | | | | | | | |
Provision for income taxes | 36.9 | % | 35.1 | % | 35.2 | % | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
Schedule of components of net deferred income tax liability (asset) | ' | ||||||||||
(In thousands) | 2013 | 2012 | |||||||||
Deferred tax liabilities: | |||||||||||
Goodwill amortization | $ | 68,735 | $ | 63,405 | |||||||
Property, plant and equipment | 4,239 | 3,339 | |||||||||
Acquired intangibles | 16,980 | 18,062 | |||||||||
Debt issuance costs | — | 1,600 | |||||||||
Tax accounting method changes | — | 1,278 | |||||||||
Other | 6,830 | 4,511 | |||||||||
| | | | | | | | ||||
96,784 | 92,195 | ||||||||||
| | | | | | | | ||||
Deferred tax assets: | |||||||||||
Net operating loss carryforwards | 5,599 | 4,415 | |||||||||
Accrued expenses | 13,553 | 15,573 | |||||||||
Deferred benefit plan compensation | 8,103 | 8,363 | |||||||||
Provision for doubtful accounts | 12,313 | 7,911 | |||||||||
Inventory capitalization and reserves | 2,642 | 2,408 | |||||||||
Restricted stock | 2,752 | 2,182 | |||||||||
Deferred rent | 1,855 | 1,432 | |||||||||
Other | 4,711 | 557 | |||||||||
| | | | | | | | ||||
51,528 | 42,841 | ||||||||||
Valuation allowance | (991 | ) | (691 | ) | |||||||
| | | | | | | | ||||
50,537 | 42,150 | ||||||||||
| | | | | | | | ||||
Net deferred tax liabilities | $ | 46,247 | $ | 50,045 | |||||||
| | | | | | | | ||||
| | | | | | | | ||||
Summary of reconciliation of the beginning and ending balances of unrecognized tax benefits | ' | ||||||||||
(In thousands) | 2013 | 2012 | 2011 | ||||||||
Unrecognized tax benefits, at beginning of the year | $ | 377 | $ | 230 | $ | 420 | |||||
Additions for tax positions related to the current year | — | 107 | — | ||||||||
Additions for tax positions of prior years | 207 | 79 | — | ||||||||
Decrease related to prior year positions | (107 | ) | — | (190 | ) | ||||||
Decrease for lapse of applicable statute of limitations | — | (39 | ) | — | |||||||
| | | | | | | | | | | |
Unrecognized tax benefits, at end of the year | $ | 477 | $ | 377 | $ | 230 | |||||
| | | | | | | | | | | |
| | | | | | | | | | | |
EMPLOYEE_BENEFITS_Tables
EMPLOYEE BENEFITS (Tables) | 12 Months Ended | ||||||||||
Dec. 31, 2013 | |||||||||||
EMPLOYEE BENEFITS | ' | ||||||||||
Summary of change in benefit obligation | ' | ||||||||||
(In thousands) | |||||||||||
Change in Benefit Obligation | |||||||||||
Benefit obligation at December 31, 2010 | $ | 17,510 | |||||||||
Service cost | 986 | ||||||||||
Interest cost | 807 | ||||||||||
Payments | (526 | ) | |||||||||
Actuarial loss | 1,453 | ||||||||||
| | | | | |||||||
Benefit obligation at December 31, 2011 | $ | 20,230 | |||||||||
| | | | | |||||||
| | | | | |||||||
Service cost | 878 | ||||||||||
Interest cost | 761 | ||||||||||
Amortization of loss | 40 | ||||||||||
Payments | (706 | ) | |||||||||
Actuarial loss | 1,174 | ||||||||||
| | | | | |||||||
Benefit obligation at December 31, 2012 | $ | 22,377 | |||||||||
| | | | | |||||||
| | | | | |||||||
Service cost | 556 | ||||||||||
Interest cost | 696 | ||||||||||
Amortization of loss | 121 | ||||||||||
Payments | (1,247 | ) | |||||||||
Actuarial gain | (1,551 | ) | |||||||||
| | | | | |||||||
Benefit obligation at December 31, 2013 | $ | 20,952 | |||||||||
| | | | | |||||||
| | | | | |||||||
Unfunded status | $ | 20,952 | |||||||||
Unamortized net (gain) loss | — | ||||||||||
| | | | | |||||||
Net amount recognized | $ | 20,952 | |||||||||
| | | | | |||||||
| | | | | |||||||
Amounts Recognized in the Consolidated Balance Sheet | |||||||||||
Current accrued expenses and other current liabilities | 1,247 | ||||||||||
Non-Current other liabilities | 19,705 | ||||||||||
| | | | | |||||||
Total Accrued liabilities | $ | 20,952 | |||||||||
| | | | | |||||||
| | | | | |||||||
Schedule of weighted average assumptions used to determine benefit obligation and net benefit cost | ' | ||||||||||
2013 | 2012 | 2011 | |||||||||
Discount rate | 4.03 | % | 3.25 | % | 3.9 | % | |||||
Average rate of increase in compensation | 3 | % | 3 | % | 3 | % | |||||
Schedule of future payments under the plan | ' | ||||||||||
(In thousands) | |||||||||||
2014 | $ | 1,247 | |||||||||
2015 | 1,585 | ||||||||||
2016 | 1,585 | ||||||||||
2017 | 1,585 | ||||||||||
2018 | 1,928 | ||||||||||
Thereafter | 13,022 | ||||||||||
| | | | | |||||||
$ | 20,952 |
STOCKBASED_COMPENSATION_Tables
STOCK-BASED COMPENSATION (Tables) | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | ||||||||||||||||||||
STOCK-BASED COMPENSATION | ' | |||||||||||||||||||
Summary of restricted stock units and weighted average grant date fair values | ' | |||||||||||||||||||
Employee Awards | Director Awards | |||||||||||||||||||
Shares | Weighted | Shares | Weighted | |||||||||||||||||
Average | Average | |||||||||||||||||||
Grant Date | Grant Date | |||||||||||||||||||
Fair Value | Fair Value | |||||||||||||||||||
Nonvested at December 31, 2010 | 808,071 | $ | 16.33 | 133,754 | $ | 16.38 | ||||||||||||||
Granted | 487,620 | 25.25 | 59,698 | 25.72 | ||||||||||||||||
Vested | (374,067 | ) | 14.61 | (62,533 | ) | 15.46 | ||||||||||||||
Forfeited | (28,101 | ) | 19.17 | (15,001 | ) | 20.8 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Nonvested at December 31, 2011 | 893,523 | $ | 21.84 | 115,918 | $ | 21.12 | ||||||||||||||
Granted | 468,500 | 20.47 | 63,497 | 22.35 | ||||||||||||||||
Vested | (318,927 | ) | 20.17 | (58,059 | ) | 19.34 | ||||||||||||||
Forfeited | (231,537 | ) | 21.26 | — | — | |||||||||||||||
| | | | | | | | | | | | | | |||||||
Nonvested at December 31, 2012 | 811,559 | $ | 21.76 | 121,356 | $ | 22.62 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Granted | 371,111 | 29.35 | 71,651 | 26.05 | ||||||||||||||||
Vested | (262,860 | ) | 21.58 | (107,146 | ) | 20.69 | ||||||||||||||
Forfeited | (53,174 | ) | 22.81 | (997 | ) | 25.72 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
Nonvested at December 31, 2013 | 866,636 | $ | 25 | 84,864 | $ | 27.92 | ||||||||||||||
| | | | | | | | | | | | | | |||||||
| | | | | | | | | | | | | | |||||||
Summary of option activity and weighted average exercise prices | ' | |||||||||||||||||||
Employee Awards | Director Awards | Non-Qualified Awards | ||||||||||||||||||
Shares | Weighted | Shares | Weighted | Shares | Weighted | |||||||||||||||
Average | Average | Average | ||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||
Price | Price | Price | ||||||||||||||||||
Outstanding at December 31, 2010 | 434,500 | $ | 13.45 | 80,091 | $ | 11.08 | 376,000 | $ | 5.95 | |||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||
Terminated | — | — | (10,373 | ) | 10.79 | — | — | |||||||||||||
Exercised | — | — | (41,459 | ) | 10.38 | (376,000 | ) | 5.98 | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2011 | 434,500 | $ | 13.45 | 28,259 | $ | 11.99 | — | $ | — | |||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||
Terminated | (1,500 | ) | 15.6 | — | — | — | — | |||||||||||||
Exercised | (230,000 | ) | 14.82 | (9,404 | ) | 16.04 | — | — | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2012 | 203,000 | $ | 11.88 | 18,855 | $ | 10.02 | — | $ | — | |||||||||||
Granted | — | — | — | — | — | — | ||||||||||||||
Terminated | (3,000 | ) | 12.1 | — | — | — | — | |||||||||||||
Exercised | (200,000 | ) | 11.88 | (5,535 | ) | 11.21 | — | — | ||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Outstanding at December 31, 2013 | — | 13,320 | $ | 9.53 | — | $ | — | |||||||||||||
| | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
Aggregate intrinsic value at December 31, 2013 | $ | — | $ | 126,956 | $ | — | ||||||||||||||
Weighted average remaining contractual term (years) | — | 1 | — | |||||||||||||||||
Summary of information concerning outstanding and exercisable options | ' | |||||||||||||||||||
Information concerning outstanding and exercisable options as of December 31, 2013 is as follows: | ||||||||||||||||||||
Options Outstanding and | ||||||||||||||||||||
Exercisable | ||||||||||||||||||||
Weighted Average | ||||||||||||||||||||
Range of Exercise Prices | Number of | Remaining | Exercise | |||||||||||||||||
Options or | Life (Years) | Price | ||||||||||||||||||
Awards | ||||||||||||||||||||
$5.09 to $16.10 | 13,320 | 1 | $ | 9.53 |
LEASES_Tables
LEASES (Tables) | 12 Months Ended | ||||
Dec. 31, 2013 | |||||
LEASES | ' | ||||
Schedule of future minimum rental payments, by year and in the aggregate, under operating leases | ' | ||||
(In thousands) | |||||
2014 | $ | 47,100 | |||
2015 | 35,637 | ||||
2016 | 28,031 | ||||
2017 | 21,522 | ||||
2018 | 14,350 | ||||
Thereafter | 27,418 | ||||
| | | | | |
$ | 174,058 | ||||
| | | | | |
| | | | | |
SEGMENT_AND_RELATED_INFORMATIO1
SEGMENT AND RELATED INFORMATION (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||
SEGMENT AND RELATED INFORMATION | ' | ||||||||||||||||
Summarized financial information concerning the Company's operating segments | ' | ||||||||||||||||
(In thousands) | Patient | Products & | Other | Consolidating | Total | ||||||||||||
Care | Services | Adjustments | |||||||||||||||
2013 | |||||||||||||||||
Net sales | |||||||||||||||||
Customers | $ | 873,203 | $ | 173,235 | $ | — | $ | — | $ | 1,046,438 | |||||||
Intersegments | — | 226,025 | — | (226,025 | ) | — | |||||||||||
Depreciation and amortization | 16,509 | 12,539 | 8,438 | — | 37,486 | ||||||||||||
Income (loss) from operations | 141,461 | 50,658 | (57,147 | ) | (1,108 | ) | 133,864 | ||||||||||
Interest (income) expense | 30,815 | 14,760 | (19,100 | ) | — | 26,475 | |||||||||||
Extinguishment of debt | — | — | 6,645 | — | 6,645 | ||||||||||||
Income (loss) before taxes | 110,646 | 35,898 | (44,692 | ) | (1,108 | ) | 100,744 | ||||||||||
Total assets | 1,502,721 | 408,628 | — | (639,689 | ) | 1,271,660 | |||||||||||
Capital expenditures | 12,524 | 3,316 | 22,606 | 38,446 | |||||||||||||
2012 | |||||||||||||||||
Net sales | |||||||||||||||||
Customers | $ | 803,243 | $ | 171,186 | $ | — | $ | — | $ | 974,429 | |||||||
Intersegments | — | 212,725 | — | (212,725 | ) | — | |||||||||||
Depreciation and amortization | 14,193 | 12,515 | 7,944 | — | 34,652 | ||||||||||||
Income (loss) from operations | 142,467 | 40,215 | (52,278 | ) | (1,066 | ) | 129,338 | ||||||||||
Interest (income) expense | 30,353 | 9,037 | (8,221 | ) | — | 31,169 | |||||||||||
Income (loss) before taxes | 112,114 | 31,178 | (44,057 | ) | (1,066 | ) | 98,169 | ||||||||||
Total assets | 1,389,224 | 336,319 | — | (488,216 | ) | 1,237,327 | |||||||||||
Capital expenditures | $ | 15,335 | 4,386 | $ | 13,442 | $ | — | 33,163 | |||||||||
2011 | |||||||||||||||||
Net sales | |||||||||||||||||
Customers | $ | 743,324 | $ | 164,470 | $ | — | $ | — | $ | 907,794 | |||||||
Intersegments | — | 193,804 | — | (193,804 | ) | — | |||||||||||
Depreciation and amortization | 12,495 | 11,633 | 6,954 | (113 | ) | 30,969 | |||||||||||
Income (loss) from operations | 133,321 | 32,371 | (49,432 | ) | (305 | ) | 115,955 | ||||||||||
Interest (income) expense | 28,440 | 9,118 | (5,737 | ) | — | 31,821 | |||||||||||
Income (loss) before taxes | 104,881 | 23,253 | (43,695 | ) | (305 | ) | 84,134 | ||||||||||
Total assets | 1,249,382 | 307,139 | — | (429,802 | ) | 1,126,719 | |||||||||||
Capital expenditures | 11,897 | 5,535 | 11,242 | — | 28,674 |
THE_COMPANY_Details
THE COMPANY (Details) | 12 Months Ended |
Dec. 31, 2013 | |
item | |
segment | |
clinic | |
state | |
THE COMPANY | ' |
Number of years of clinical excellence and innovation | '150 years |
Number of segments | 2 |
Minimum number of O&P provider network of clinics managed | 1,150 |
Minimum number of O&P patient-care clinics operated | 740 |
Number of states in which patient-care clinics are operated | 45 |
Number of business days during which products are delivered | '2 days |
Minimum number of long-term care facilities and other sub-acute rehabilitation providers served | 4,200 |
SIGNIFICANT_ACCOUNTING_POLICIE3
SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Consolidated Statements of Income and Comprehensive Income | ' | ' | ' |
Net Sales | $1,046,438,000 | $974,429,000 | $907,794,000 |
Other operating expenses | 186,304,000 | 178,918,000 | 169,131,000 |
Consolidated Statements of Cash Flows | ' | ' | ' |
Provision for doubtful accounts | 14,330,000 | 9,589,000 | 9,396,000 |
Change in accounts receivable | -32,060,000 | -30,259,000 | -26,583,000 |
Allowance for doubtful accounts | ' | ' | ' |
Allowance for doubtful accounts | ' | ' | ' |
Balance at beginning of year | 7,526,000 | 7,236,000 | 5,153,000 |
Additions Charged to Costs and Expenses | 14,330,000 | 9,589,000 | 9,396,000 |
Write-offs | 11,834,000 | 9,299,000 | 7,313,000 |
Balance at end of year | 10,022,000 | 7,526,000 | 7,236,000 |
Other operating expense | ' | ' | ' |
Consolidated Statements of Cash Flows | ' | ' | ' |
Acquisition expense | ' | 1,200,000 | 800,000 |
Relocation expense | ' | ' | 1,200,000 |
Error in the classification of certain components of bad debt expense | As Previously Reported | ' | ' | ' |
Consolidated Statements of Income and Comprehensive Income | ' | ' | ' |
Net Sales | ' | 985,550,000 | 918,539,000 |
Other operating expenses | ' | 188,868,000 | 177,910,000 |
Consolidated Statements of Cash Flows | ' | ' | ' |
Provision for doubtful accounts | ' | 19,773,000 | 24,837,000 |
Change in accounts receivable | ' | -40,443,000 | -42,024,000 |
Error in the classification of certain components of bad debt expense | As Previously Reported | Allowance for doubtful accounts | ' | ' | ' |
Allowance for doubtful accounts | ' | ' | ' |
Balance at beginning of year | ' | 22,028,000 | 16,686,000 |
Additions Charged to Costs and Expenses | ' | 19,773,000 | 22,101,000 |
Write-offs | ' | 20,422,000 | 16,759,000 |
Balance at end of year | ' | $21,379,000 | $22,028,000 |
SIGNIFICANT_ACCOUNTING_POLICIE4
SIGNIFICANT ACCOUNTING POLICIES (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Restricted Cash | ' | ' | ' |
Restricted cash | ' | $3,120,000 | ' |
Inventories | ' | ' | ' |
Raw materials, work-in-process and finished goods | 141,518,000 | 127,295,000 | ' |
Raw materials | 40,970,000 | 41,372,000 | ' |
Finished goods | 33,716,000 | 28,992,000 | ' |
Patient-Care | ' | ' | ' |
Inventories | ' | ' | ' |
Raw materials, work-in-process and finished goods | 109,200,000 | 98,300,000 | ' |
(Increase) decrease in physical inventory | 2,300,000 | 500,000 | -2,300,000 |
Hanger Clinics | ' | ' | ' |
Inventories | ' | ' | ' |
Raw materials and work-in-process | 99,000,000 | 86,900,000 | ' |
Dosteon | ' | ' | ' |
Inventories | ' | ' | ' |
Raw materials | 8,900,000 | 9,700,000 | ' |
Cares | ' | ' | ' |
Inventories | ' | ' | ' |
Finished goods | $1,300,000 | $1,700,000 | ' |
SIGNIFICANT_ACCOUNTING_POLICIE5
SIGNIFICANT ACCOUNTING POLICIES (Details 3) (USD $) | 12 Months Ended | |||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Dec. 31, 2013 | Jun. 30, 2013 | Dec. 31, 2012 | Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2012 | |
Term Loan | Term Loan | Term Loan | Prior Term Loan Facility | Revolving Credit Facility | Revolving Credit Facility | Revolving Credit Facility | Prior Revolving Credit Facility | 7.125% Senior Notes due 2018 | 7.125% Senior Notes due 2018 | Seller Notes | Seller Notes | Recurring basis | Recurring basis | |||
Money Market Funds | Money Market Funds | |||||||||||||||
Fair Value of Financial Instruments | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of assets | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $7,700,000 | $11,000,000 |
Market price (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $1 | ' |
Maximum borrowing capacity | ' | ' | ' | 225,000,000 | ' | 300,000,000 | ' | 200,000,000 | ' | 100,000,000 | ' | ' | ' | ' | ' | ' |
Carrying value | 468,259,000 | 520,646,000 | 222,188,000 | ' | 293,300,000 | ' | 25,000,000 | ' | 0 | ' | 200,000,000 | 200,000,000 | 21,071,000 | 27,346,000 | ' | ' |
Fair value of Senior Notes | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 213,300,000 | 211,500,000 | ' | ' | ' | ' |
Revenue Recognition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Estimated reserve for future contractual adjustments and discounts | $20,600,000 | $13,900,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Customer contract term, minimum | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Customer contract term, maximum | '5 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
SIGNIFICANT_ACCOUNTING_POLICIE6
SIGNIFICANT ACCOUNTING POLICIES (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Outline of investment in equipment leased to third parties under operating lease | ' | ' | ' |
Program equipment | $302,021,000 | $297,264,000 | ' |
Less: Accumulated depreciation | -175,223,000 | -182,803,000 | ' |
Total property, plant and equipment, net | 126,798,000 | 114,461,000 | ' |
Depreciation expense related to property, plant and equipment | 30,800,000 | 29,200,000 | 26,200,000 |
Furniture and fixtures | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '5 years | ' | ' |
Machinery and equipment | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '5 years | ' | ' |
Computers and software | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '5 years | ' | ' |
Buildings | ' | ' | ' |
Outline of investment in equipment leased to third parties under operating lease | ' | ' | ' |
Asset under capital lease | 10,900,000 | 4,400,000 | ' |
Accumulated depreciation on capital leases asset | 900,000 | 400,000 | ' |
Annual future minimum lease payments under capital leases | ' | ' | ' |
2014 | 1,600,000 | ' | ' |
2015 | 1,600,000 | ' | ' |
2016 | 1,600,000 | ' | ' |
2017 | 1,700,000 | ' | ' |
2018 | 1,700,000 | ' | ' |
Thereafter | 6,200,000 | ' | ' |
Interest included in future minimum lease payments | 4,300,000 | ' | ' |
Buildings | Minimum | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '10 years | ' | ' |
Buildings | Maximum | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '40 years | ' | ' |
Assets under capital leases | Maximum | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '10 years | ' | ' |
Leasehold improvements | Maximum | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '10 years | ' | ' |
Equipment leased to third parties under operating leases | ' | ' | ' |
Outline of investment in equipment leased to third parties under operating lease | ' | ' | ' |
Program equipment | 34,142,000 | ' | ' |
Less: Accumulated depreciation | -14,184,000 | ' | ' |
Total property, plant and equipment, net | $19,958,000 | ' | ' |
Equipment leased to third parties under operating leases | Maximum | ' | ' | ' |
Property, Plant and Equipment | ' | ' | ' |
Estimated life | '10 years | ' | ' |
SIGNIFICANT_ACCOUNTING_POLICIE7
SIGNIFICANT ACCOUNTING POLICIES (Details 5) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
In Thousands, unless otherwise specified | ||
SIGNIFICANT ACCOUNTING POLICIES | ' | ' |
Allowance for Doubtful Accounts Receivable | $10,022 | $7,526 |
Accounts Receivable | ' | ' |
0-60 days | 113,483 | 110,978 |
61-120 days | 30,659 | 27,512 |
Over 120 days | 51,649 | 34,704 |
Total | 195,791 | 173,194 |
Patient Care | Commercial insurance | ' | ' |
Accounts Receivable | ' | ' |
0-60 days | 52,899 | 51,658 |
61-120 days | 12,092 | 10,468 |
Over 120 days | 14,507 | 12,249 |
Total | 79,498 | 74,375 |
Patient Care | Private pay | ' | ' |
Accounts Receivable | ' | ' |
0-60 days | 3,991 | 5,437 |
61-120 days | 3,413 | 4,545 |
Over 120 days | 5,751 | 5,783 |
Total | 13,155 | 15,765 |
Patient Care | Medicaid | ' | ' |
Accounts Receivable | ' | ' |
0-60 days | 11,876 | 11,812 |
61-120 days | 4,122 | 3,181 |
Over 120 days | 5,282 | 3,228 |
Total | 21,280 | 18,221 |
Patient Care | Medicare | ' | ' |
Accounts Receivable | ' | ' |
0-60 days | 30,587 | 27,433 |
61-120 days | 7,097 | 5,611 |
Over 120 days | 20,918 | 9,029 |
Total | 58,602 | 42,073 |
Patient Care | VA | ' | ' |
Accounts Receivable | ' | ' |
0-60 days | 2,589 | 2,082 |
61-120 days | 565 | 558 |
Over 120 days | 463 | 324 |
Total | 3,617 | 2,964 |
Products & Services | Trade accounts receivable | ' | ' |
Accounts Receivable | ' | ' |
0-60 days | 11,541 | 12,556 |
61-120 days | 3,370 | 3,149 |
Over 120 days | 4,728 | 4,091 |
Total | $19,639 | $19,796 |
SIGNIFICANT_ACCOUNTING_POLICIE8
SIGNIFICANT ACCOUNTING POLICIES (Details 6) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Long-Lived Asset Impairment | ' | ' | ' |
Impairments of long-lived asset | $0 | $0 | ' |
Marketing | ' | ' | ' |
Marketing costs, including advertising | $4.50 | $4.20 | $3.90 |
Non-compete agreements | Minimum | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' |
Estimated useful life | '2 years | ' | ' |
Non-compete agreements | Maximum | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' |
Estimated useful life | '7 years | ' | ' |
Other definite-lived intangible assets | Maximum | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' |
Estimated useful life | '20 years | ' | ' |
Trade Name | Minimum | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' |
Estimated useful life | '1 year | ' | ' |
Trade Name | Maximum | ' | ' | ' |
Goodwill and Other Intangible Assets | ' | ' | ' |
Estimated useful life | '3 years | ' | ' |
SIGNIFICANT_ACCOUNTING_POLICIE9
SIGNIFICANT ACCOUNTING POLICIES (Details 7) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Stock Based Compensation | ' |
Number of stock-based compensation plans | 1 |
Number of shares of available for future issuance | 1.1 |
Restricted stock units | Minimum | ' |
Stock Based Compensation | ' |
Period for vesting of awards | '1 year |
Restricted stock units | Maximum | ' |
Stock Based Compensation | ' |
Period for vesting of awards | '4 years |
SUPPLEMENTAL_CASH_FLOW_FINANCI2
SUPPLEMENTAL CASH FLOW FINANCIAL INFORMATION (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Cash paid during the period for: | ' | ' | ' |
Interest | $25,230 | $27,362 | $27,799 |
Income taxes | 34,409 | 34,468 | 17,152 |
Non-cash financing and investing activities: | ' | ' | ' |
Issuance of notes in connection with acquisitions | 2,650 | 21,895 | 6,700 |
Issuance of restricted stock units | $11,698 | $5,996 | $12,754 |
GOODWILL_AND_OTHER_INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
Net | ' | ' |
Balance at the beginning of the period | $674,774 | $609,484 |
Additions due to acquisitions | 7,317 | 64,813 |
Adjustments | -544 | ' |
Contingent consideration | ' | 477 |
Balance at the end of the period | 681,547 | 674,774 |
Patient Care | ' | ' |
Net | ' | ' |
Balance at the beginning of the period | 538,492 | 474,166 |
Additions due to acquisitions | 7,317 | 63,849 |
Adjustments | -544 | ' |
Contingent consideration | ' | 477 |
Balance at the end of the period | 545,265 | 538,492 |
Products & Services | ' | ' |
Net | ' | ' |
Balance at the beginning of the period | ' | 135,318 |
Additions due to acquisitions | ' | 964 |
Balance at the end of the period | $136,282 | $136,282 |
GOODWILL_AND_OTHER_INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Intangible assets | ' | ' |
Gross Carrying Amount | $85,396,000 | $84,924,000 |
Accumulated Amortization | -27,375,000 | -20,643,000 |
Net Carrying Amount | 48,952,000 | ' |
Net Carrying Amount | 58,021,000 | 64,281,000 |
Amortization expense | 6,700,000 | 5,500,000 |
Weighted average life of the additions to customer lists, patents and other intangibles | '7 years 9 months 18 days | ' |
Trade Name | ' | ' |
Intangible assets | ' | ' |
Gross Carrying Amount | 10,023,000 | 9,070,000 |
Accumulated Amortization | -264,000 | ' |
Net Carrying Amount | 9,759,000 | 9,070,000 |
Trade Name | Minimum | ' | ' |
Intangible assets | ' | ' |
Amortization period | '1 year | ' |
Trade Name | Maximum | ' | ' |
Intangible assets | ' | ' |
Amortization period | '3 years | ' |
Customer Lists | ' | ' |
Intangible assets | ' | ' |
Gross Carrying Amount | 46,932,000 | 48,044,000 |
Accumulated Amortization | -11,627,000 | -7,846,000 |
Net Carrying Amount | 35,305,000 | 40,198,000 |
Customer Lists | Minimum | ' | ' |
Intangible assets | ' | ' |
Amortization period | '10 years | ' |
Customer Lists | Maximum | ' | ' |
Intangible assets | ' | ' |
Amortization period | '14 years | ' |
Patents and Other Intangibles | ' | ' |
Intangible assets | ' | ' |
Gross Carrying Amount | 28,441,000 | 27,810,000 |
Accumulated Amortization | -15,484,000 | -12,797,000 |
Net Carrying Amount | $12,957,000 | $15,013,000 |
Patents | ' | ' |
Intangible assets | ' | ' |
Amortization period | '5 years | ' |
GOODWILL_AND_OTHER_INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) (USD $) | Dec. 31, 2013 |
In Thousands, unless otherwise specified | |
Estimated aggregate amortization expense for definite-lived intangible assets | ' |
2014 | $6,752 |
2015 | 6,505 |
2016 | 5,813 |
2017 | 5,401 |
2018 | 4,932 |
Thereafter | 19,549 |
Net Carrying Amount | $48,952 |
INVENTORIES_Details
INVENTORIES (Details) (USD $) | 12 Months Ended | |
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 |
INVENTORIES | ' | ' |
Raw materials | $40,970 | $41,372 |
Work in process | 66,832 | 56,931 |
Finished goods | 33,716 | 28,992 |
Total | $141,518 | $127,295 |
Percentage of finished goods inventory transferred to the patient care segment | 72.00% | ' |
Percentage of finished goods inventory sold to third party customer | 28.00% | ' |
ACQUISITIONS_Details
ACQUISITIONS (Details) (O & P company, USD $) | 3 Months Ended | 12 Months Ended | ||
In Millions, unless otherwise specified | Mar. 19, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
company | clinic | clinic | clinic | |
company | company | company | ||
O & P company | ' | ' | ' | ' |
Acquisitions | ' | ' | ' | ' |
Number of Businesses Acquired | 7 | 9 | 18 | 8 |
Number of patient care clinics operated by acquiree | ' | 18 | 59 | 21 |
Aggregate purchase price of businesses | $29 | $14.10 | $83.10 | $24.90 |
Purchase price for acquisition paid in cash | ' | 9.1 | 60.1 | 14.1 |
Promissory notes as a part of purchase price | ' | 2.7 | 21.4 | 6.7 |
Contingent consideration payable reported as other liabilities | ' | 2.3 | 1.6 | 4.1 |
Maximum term for payment of contingent consideration | ' | '2 years | '5 years | '4 years |
Goodwill recorded related to acquisitions | ' | 7.3 | 63.8 | 17.2 |
Customer lists recorded, related to acquisitions | ' | 1.8 | 12.1 | ' |
Accounts receivable recorded, related to acquisitions | ' | 3.1 | 6 | ' |
Other assets and liabilities recorded, related to acquisitions | ' | 1.9 | 1.2 | ' |
Transaction costs incurred on acquisition | ' | 0.9 | 1.2 | 0.8 |
Goodwill recorded, expected election to treat as asset acquisition | ' | $5.20 | $13 | $14 |
ACQUISITIONS_Details_2
ACQUISITIONS (Details 2) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Acquired intangible assets | ' | ' | ' |
Amount accrued related to contingent consideration | $2.60 | ' | ' |
Acquisitions completed prior to adoption of the revised authoritative guidance | ' | ' | ' |
Acquired intangible assets | ' | ' | ' |
Contingent consideration paid on acquisitions prior to adoption of new authoritative guidance | 0 | 0.5 | 0.7 |
Acquisitions completed subsequent to adoption of the revised authoritative guidance | ' | ' | ' |
Acquired intangible assets | ' | ' | ' |
Contingent consideration paid after adoption of new authoritative guidance | $2.60 | $2.50 | $1.50 |
LONGTERM_DEBT_Details
LONG-TERM DEBT (Details) (USD $) | 3 Months Ended | 12 Months Ended | |
Jun. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
Long-Term Debt | ' | ' | ' |
Total debt | ' | $468,259,000 | $520,646,000 |
Less current portion | ' | -15,998,000 | -11,082,000 |
Total long term debt | ' | 452,261,000 | 509,564,000 |
Maturities of long-term debt | ' | ' | ' |
2014 | ' | 15,998,000 | ' |
2015 | ' | 22,200,000 | ' |
2016 | ' | 23,488,000 | ' |
2017 | ' | 29,171,000 | ' |
2018 | ' | 377,226,000 | ' |
Thereafter | ' | 176,000 | ' |
Total | ' | 468,259,000 | 520,646,000 |
Revolving credit facility | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Total debt | ' | 25,000,000 | 0 |
Maximum borrowing capacity | 200,000,000 | ' | ' |
Interest, base rate | 'LIBOR | ' | ' |
Interest rate margin (as a percent) | 1.75% | ' | ' |
Balance available under the credit facility | ' | 171,400,000 | ' |
Amounts outstanding under the credit facility | ' | 25,000,000 | ' |
Maturities of long-term debt | ' | ' | ' |
Total | ' | 25,000,000 | 0 |
Standby letters of credit | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Amount outstanding | ' | 3,600,000 | ' |
Term loan | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Total debt | ' | 222,188,000 | 293,300,000 |
Maximum borrowing capacity | 225,000,000 | ' | ' |
Interest, base rate | 'LIBOR | ' | ' |
Interest rate margin (as a percent) | 1.75% | ' | ' |
Mandatory prepayment | ' | 0 | ' |
Maturities of long-term debt | ' | ' | ' |
Total | ' | 222,188,000 | 293,300,000 |
Term loan | Minimum | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Quarterly principal payment percentage | ' | 0.63% | ' |
Term loan | Maximum | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Quarterly principal payment percentage | ' | 3.75% | ' |
7.125% Senior notes due 2018 | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Total debt | ' | 200,000,000 | 200,000,000 |
Interest rate stated percentage | ' | 7.13% | ' |
Maturities of long-term debt | ' | ' | ' |
Total | ' | 200,000,000 | 200,000,000 |
7.125% Senior notes due 2018 | Prior to November 15, 2014 | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Percentage of the aggregate principal amount at which the notes may be redeemed | ' | 103.60% | ' |
7.125% Senior notes due 2018 | On or after November 15, 2014 | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Redemption premium (as a percent) | ' | 1.04% | ' |
7.125% Senior notes due 2018 | On or after November 15, 2015 | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Redemption premium (as a percent) | ' | 1.02% | ' |
Subordinated seller notes, non-collateralized, net of unamortized discount with principal and interest payable in either monthly, quarterly or annual installments at effective interest rates ranging from 2.00% to 4.0%, maturing through November 2018 | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Total debt | ' | 21,071,000 | 27,346,000 |
Interest rate, minimum (as a percent) | ' | 2.00% | ' |
Interest rate, maximum (as a percent) | ' | 4.00% | ' |
Maturities of long-term debt | ' | ' | ' |
Total | ' | 21,071,000 | 27,346,000 |
New credit agreement | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Term of agreement | '5 years | ' | ' |
Maximum borrowing capacity | 425,000,000 | ' | ' |
Pre-tax non-cash charge related to the write-off of existing debt issuance costs associated with its previous credit agreement | 6,600,000 | ' | ' |
Prepayment penalties | 0 | ' | ' |
New credit agreement | Minimum | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Consolidated interest coverage ratio | 3.5 | ' | ' |
New credit agreement | Maximum | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Total leverage ratio | 4 | ' | ' |
Previous credit agreement | ' | ' | ' |
Long-Term Debt | ' | ' | ' |
Maximum borrowing capacity | $400,000,000 | ' | ' |
COMMITMENTS_AND_CONTINGENT_LIA1
COMMITMENTS AND CONTINGENT LIABILITIES (Details) (Non-binding purchase agreement, Innovative Neurotronics, Inc. (IN, Inc.), USD $) | 12 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2013 |
Non-binding purchase agreement | Innovative Neurotronics, Inc. (IN, Inc.) | ' |
Commitments | ' |
Outstanding purchase commitments | $0.40 |
Expected fulfillment period of purchase commitments | '3 months |
NET_INCOME_PER_COMMON_SHARE_De
NET INCOME PER COMMON SHARE (Details) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
NET INCOME PER COMMON SHARE | ' | ' | ' |
Net income applicable to common stock | $63,584 | $63,692 | $54,477 |
Shares of common stock outstanding used to compute basic per common share amounts | 34,818,214 | 34,282,591 | 33,544,813 |
Effect of dilutive restricted stock units and options (in shares) | 576,507 | 550,239 | 675,443 |
Shares used to compute diluted per common share amounts | 35,394,721 | 34,832,830 | 34,220,256 |
Basic income per share applicable to common stock (in dollars per share) | $1.83 | $1.86 | $1.62 |
Diluted income per share applicable to common stock (in dollars per share) | $1.80 | $1.83 | $1.59 |
INCOME_TAXES_Details
INCOME TAXES (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Current: | ' | ' | ' |
Federal | $32,521 | $32,394 | $18,976 |
State | 6,241 | 6,386 | 2,242 |
Total Current | 38,762 | 38,780 | 21,218 |
Deferred: | ' | ' | ' |
Federal | -1,510 | -3,273 | 6,242 |
State | -92 | -1,030 | 2,197 |
Total Deferred | -1,602 | -4,303 | 8,439 |
Provision for income taxes | $37,160 | $34,477 | $29,657 |
Reconciliation of the federal statutory tax rate to the Company's effective tax rate | ' | ' | ' |
Federal statutory tax rate (as a percent) | 35.00% | 35.00% | 35.00% |
Increase (decrease) in taxes resulting from: | ' | ' | ' |
State income taxes (net of federal effect) (as a percent) | 4.00% | 4.30% | 4.30% |
Domestic manufacturing deduction (as a percent) | -2.10% | -2.40% | -2.00% |
Other (as a percent) | ' | -1.80% | -2.10% |
Provision for income taxes (as a percent) | 36.90% | 35.10% | 35.20% |
INCOME_TAXES_Details_2
INCOME TAXES (Details 2) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Deferred tax liabilities: | ' | ' | ' |
Goodwill amortization | $68,735,000 | $63,405,000 | ' |
Property, plant and equipment | 4,239,000 | 3,339,000 | ' |
Acquired Intangibles | 16,980,000 | 18,062,000 | ' |
Debt issuance costs | ' | 1,600,000 | ' |
Tax accounting method changes | ' | 1,278,000 | ' |
Other | 6,830,000 | 4,511,000 | ' |
Total deferred tax liabilities | 96,784,000 | 92,195,000 | ' |
Deferred tax assets: | ' | ' | ' |
Net operating loss carryforwards | 5,599,000 | 4,415,000 | ' |
Accrued expenses | 13,553,000 | 15,573,000 | ' |
Deferred benefit plan compensation | 8,103,000 | 8,363,000 | ' |
Provision for doubtful accounts | 12,313,000 | 7,911,000 | ' |
Inventory capitalization and reserves | 2,642,000 | 2,408,000 | ' |
Restricted stock | 2,752,000 | 2,182,000 | ' |
Deferred rent | 1,855,000 | 1,432,000 | ' |
Other | 4,711,000 | 557,000 | ' |
Gross deferred tax assets | 51,528,000 | 42,841,000 | ' |
Valuation allowance | -991,000 | -691,000 | ' |
Net deferred tax assets | 50,537,000 | 42,150,000 | ' |
Net deferred tax liabilities | 46,247,000 | 50,045,000 | ' |
Reconciliation of beginning and ending balances of unrecognized tax benefits | ' | ' | ' |
Unrecognized tax benefits, at beginning of the year | 377,000 | 230,000 | 420,000 |
Additions for tax positions related to the current year | ' | 107,000 | ' |
Additions for tax positions of prior years | 207,000 | 79,000 | ' |
Decrease related to prior year positions | -107,000 | ' | -190,000 |
Decrease for lapse of applicable statute of limitations | ' | -39,000 | ' |
Unrecognized tax benefits, at end of the year | 477,000 | 377,000 | 230,000 |
Total amount of unrecognized tax benefits, if recognized, would affect the effective tax rate | 0 | ' | ' |
Unrecognized tax benefits that the Company expects would change significantly over the next 12 months | 0 | ' | ' |
Federal | ' | ' | ' |
Income Taxes | ' | ' | ' |
Accumulated net operating losses | 9,900,000 | 7,000,000 | ' |
State | ' | ' | ' |
Income Taxes | ' | ' | ' |
Accumulated net operating losses | $45,000,000 | $39,800,000 | ' |
EMPLOYEE_BENEFITS_Details
EMPLOYEE BENEFITS (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
payment | |||
EMPLOYEE BENEFITS | ' | ' | ' |
Matching employer contributions under 401(k) Savings and Retirement plan | $6,000,000 | $4,200,000 | $3,900,000 |
Supplemental Executive Retirement Plan | ' | ' | ' |
Number of annual payments upon retirement | 15 | ' | ' |
Average remaining service period | '7 years 7 months 6 days | ' | ' |
Change in Benefit Obligation | ' | ' | ' |
Benefit obligation at the beginning of the period | 22,377,000 | 20,230,000 | 17,510,000 |
Service cost | 556,000 | 878,000 | 986,000 |
Interest cost | 696,000 | 761,000 | 807,000 |
Amortization of loss | 121,000 | 40,000 | ' |
Payments | -1,247,000 | -706,000 | -526,000 |
Actuarial gain (loss) | -1,551,000 | 1,174,000 | 1,453,000 |
Benefit obligation at the end of the period | 20,952,000 | 22,377,000 | 20,230,000 |
Unfunded status | 20,952,000 | ' | ' |
Net amount recognized | 20,952,000 | ' | ' |
Amounts Recognized in the Consolidated Balance Sheet | ' | ' | ' |
Current accrued expenses and other current liabilities | 1,247,000 | ' | ' |
Non-Current other liabilities | 19,705,000 | ' | ' |
Total Accrued liabilities | 20,952,000 | ' | ' |
Tax obligation (benefit) on the unrealized gain (loss) | 531,000 | -439,000 | -546,000 |
Actuarial losses included in accumulated other comprehensive loss | 899,000 | -734,000 | -906,000 |
Weighted average assumptions used to determine the benefit obligation and net benefit cost | ' | ' | ' |
Discount rate, to determine the benefit obligation (as a percent) | 4.03% | 3.25% | 3.90% |
Average rate of increase in compensation, to determine the benefit obligation (as a percent) | 3.00% | 3.00% | 3.00% |
Discount rate, to determine net benefit cost (as a percent) | 4.03% | 3.25% | 3.90% |
Average rate of increase in compensation, to determine net benefit cost (as a percent) | 3.00% | 3.00% | 3.00% |
Estimated accumulated benefit obligation | 21,000,000 | ' | ' |
Future payments under the Plan | ' | ' | ' |
2014 | 1,247,000 | ' | ' |
2015 | 1,585,000 | ' | ' |
2016 | 1,585,000 | ' | ' |
2017 | 1,585,000 | ' | ' |
2018 | 1,928,000 | ' | ' |
Thereafter | 13,022,000 | ' | ' |
Total | $20,952,000 | $22,377,000 | $20,230,000 |
STOCKBASED_COMPENSATION_Detail
STOCK-BASED COMPENSATION (Details) (USD $) | Dec. 31, 2013 | 13-May-10 | Dec. 31, 2013 | 13-May-10 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2010 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2011 | 13-May-10 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | Dec. 31, 2013 |
2010 Omnibus Incentive Plan | 2010 Omnibus Incentive Plan | 2002 Stock Incentive and Bonus Plan and 2003 Non-Employee Directors' Stock Incentive Plan | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Incentive stock options | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | Restricted stock units | ||
Employee Awards | Employee Awards | Employee Awards | Director Awards | Director Awards | Director Awards | Non-Qualified Awards | 2010 Omnibus Incentive Plan | Employee Awards | Employee Awards | Employee Awards | Director Awards | Director Awards | Director Awards | 2010 Omnibus Incentive Plan | |||||||||||
Stock Based Compensation | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock reserved for issuance | ' | 2,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock authorized for issuance under the share-based compensation plan | ' | 2,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares of available for future issuance | 1,100,000 | ' | 1,100,000 | 500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Plan expiration unless earlier terminated by the Board of Directors | ' | '10 years | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of common stock issued under the Plan | ' | ' | 1,600,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of authorized shares canceled | ' | ' | 200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized stock-based compensation expense related to non-vested stock | ' | ' | ' | ' | $0 | $0 | $0 | ' | ' | ' | ' | ' | ' | ' | ' | $14,300,000 | ' | ' | ' | ' | ' | ' | ' | ' | $14,300,000 |
Period over which unrecognized stock-based compensation cost will be expensed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '4 years |
The weighted average period over which unrecognized share-based compensation cost will be expensed | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '2 years | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock-based compensation expense | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 9,000,000 | 8,100,000 | 8,100,000 | ' | ' | ' | ' | ' | ' | ' |
Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonvested at the beginning of the period (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 811,559 | 893,523 | 808,071 | 121,356 | 115,918 | 133,754 | ' |
Granted (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 371,111 | 468,500 | 487,620 | 71,651 | 63,497 | 59,698 | ' |
Vested (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -370,006 | -376,986 | -436,600 | -262,860 | -318,927 | -374,067 | -107,146 | -58,059 | -62,533 | ' |
Forfeited (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | -53,174 | -231,537 | -28,101 | -997 | ' | -15,001 | ' |
Nonvested at the end of the period (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 866,636 | 811,559 | 893,523 | 84,864 | 121,356 | 115,918 | ' |
Weighted Average Grant Date Fair Value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Nonvested at the beginning of the period (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $21.76 | $21.84 | $16.33 | $22.62 | $21.12 | $16.38 | ' |
Granted (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $29.35 | $20.47 | $25.25 | $26.05 | $22.35 | $25.72 | ' |
Vested (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $21.58 | $20.17 | $14.61 | $20.69 | $19.34 | $15.46 | ' |
Forfeited (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $22.81 | $21.26 | $19.17 | $25.72 | ' | $20.80 | ' |
Nonvested at the end of the period (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $25 | $21.76 | $21.84 | $27.92 | $22.62 | $21.12 | ' |
Intrinsic value of shares fully vested during the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 7,900,000 | 7,600,000 | 6,400,000 | ' | ' | ' | ' | ' | ' | ' |
Value of grants during the period | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12,800,000 | 11,000,000 | 13,300,000 | ' | ' | ' | ' | ' | ' | ' |
Shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding at the beginning of the period (in shares) | ' | ' | ' | ' | ' | ' | ' | 203,000 | 434,500 | 434,500 | 18,855 | 28,259 | 80,091 | 376,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Terminated (in shares) | ' | ' | ' | ' | ' | ' | ' | -3,000 | -1,500 | ' | ' | ' | -10,373 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercised (in shares) | ' | ' | ' | ' | ' | ' | ' | -200,000 | -230,000 | ' | -5,535 | -9,404 | -41,459 | -376,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding at the end of the period (in shares) | ' | ' | ' | ' | ' | ' | ' | ' | 203,000 | 434,500 | 13,320 | 18,855 | 28,259 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted Average Exercise Price | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding at the beginning of the period (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $11.88 | $13.45 | $13.45 | $10.02 | $11.99 | $11.08 | $5.95 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Terminated (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $12.10 | $15.60 | ' | ' | ' | $10.79 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercised (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | $11.88 | $14.82 | ' | $11.21 | $16.04 | $10.38 | $5.98 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding at the end of the period (in dollars per share) | ' | ' | ' | ' | ' | ' | ' | ' | $11.88 | $13.45 | $9.53 | $10.02 | $11.99 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate intrinsic value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 126,956 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average remaining contractual term | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '1 year | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Intrinsic value of options exercised | ' | ' | ' | ' | 2,400,000 | 3,600,000 | 2,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options exercisable (in shares) | ' | ' | ' | ' | 13,320 | 221,855 | 462,759 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Weighted average exercise price of options exercisable (in dollars per share) | ' | ' | ' | ' | $9.53 | $11.72 | $13.36 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Average remaining contractual term of options exercisable | ' | ' | ' | ' | '1 year | '1 year | '1 year 8 months 12 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Aggregate intrinsic value of exercisable options | ' | ' | ' | ' | 100,000 | 2,600,000 | 6,200,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Cash received related to exercise of options | ' | ' | ' | ' | $2,400,000 | $3,600,000 | $2,700,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
STOCKBASED_COMPENSATION_Detail1
STOCK-BASED COMPENSATION (Details 2) (Range of Exercise Prices $5.09 to $16.10, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Range of Exercise Prices $5.09 to $16.10 | ' |
Options Outstanding and Exercisable | ' |
Exercise price range, lower range limit (in dollars per share) | $5.09 |
Exercise price range, upper range limit (in dollars per share) | $16.10 |
Number of Options or Awards (in shares) | 13,320 |
Weighted Average Remaining Life | '1 year |
Weighted Average Exercise Price (in dollars per share) | $9.53 |
LEASES_Details
LEASES (Details) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
LEASES | ' | ' | ' |
Rent expense | $48,800,000 | $43,000,000 | $41,400,000 |
Sublease rental income netted against rent expense | 1,500,000 | 1,300,000 | 600,000 |
Sublease rent income expected to be received over the next four years | 1,200,000 | ' | ' |
Future minimum rental payments, by year and in the aggregate, under operating leases | ' | ' | ' |
2014 | 47,100,000 | ' | ' |
2015 | 35,637,000 | ' | ' |
2016 | 28,031,000 | ' | ' |
2017 | 21,522,000 | ' | ' |
2018 | 14,350,000 | ' | ' |
Thereafter | 27,418,000 | ' | ' |
Total | $174,058,000 | ' | ' |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (Foley & Lardner LLP, USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Foley & Lardner LLP | ' | ' | ' |
Related Party Transactions | ' | ' | ' |
Fees paid | $3 | $2.40 | $2.60 |
SEGMENT_AND_RELATED_INFORMATIO2
SEGMENT AND RELATED INFORMATION (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
segment | |||
SEGMENT AND RELATED INFORMATION | ' | ' | ' |
Number of operating segments | 2 | ' | ' |
Net sales | ' | ' | ' |
Customers | $1,046,438 | $974,429 | $907,794 |
Depreciation and amortization | 37,486 | 34,652 | 30,969 |
Income (loss) from operations | 133,864 | 129,338 | 115,955 |
Interest (income) expense | 26,475 | 31,169 | 31,821 |
Extinguishment of debt | 6,645 | ' | ' |
Income before taxes | 100,744 | 98,169 | 84,134 |
Total assets | 1,271,660 | 1,237,327 | 1,126,719 |
Capital expenditures | 38,446 | 33,163 | 28,674 |
Patient Care | ' | ' | ' |
Summarized financial information concerning the Company's operating segments | ' | ' | ' |
Minimum age for health insurance coverage under Medicare health insurance program | 65 | ' | ' |
Medicare reimbursement for O&P products and services based on prices set forth in fee schedules, number of regional pricing areas | 10 | ' | ' |
Minimum age to supplement Medicare benefits for financially needy persons under Medicaid health insurance program | 65 | ' | ' |
Number of O&P provider locations | 1,150 | ' | ' |
Number of O&P independent providers | 400 | ' | ' |
Number of contracts with national and regional providers | 57 | ' | ' |
Net sales | ' | ' | ' |
Customers | 873,203 | 803,243 | 743,324 |
Depreciation and amortization | 16,509 | 14,193 | 12,495 |
Income (loss) from operations | 141,461 | 142,467 | 133,321 |
Interest (income) expense | 30,815 | 30,353 | 28,440 |
Income before taxes | 110,646 | 112,114 | 104,881 |
Total assets | 1,502,721 | 1,389,224 | 1,249,382 |
Capital expenditures | 12,524 | 15,335 | 11,897 |
Products and Services | ' | ' | ' |
Net sales | ' | ' | ' |
Customers | 173,235 | 171,186 | 164,470 |
Intersegments | 226,025 | 212,725 | 193,804 |
Depreciation and amortization | 12,539 | 12,515 | 11,633 |
Income (loss) from operations | 50,658 | 40,215 | 32,371 |
Interest (income) expense | 14,760 | 9,037 | 9,118 |
Income before taxes | 35,898 | 31,178 | 23,253 |
Total assets | 408,628 | 336,319 | 307,139 |
Capital expenditures | 3,316 | 4,386 | 5,535 |
Other | ' | ' | ' |
Net sales | ' | ' | ' |
Depreciation and amortization | 8,438 | 7,944 | 6,954 |
Income (loss) from operations | -57,147 | -52,278 | -49,432 |
Interest (income) expense | -19,100 | -8,221 | -5,737 |
Extinguishment of debt | 6,645 | ' | ' |
Income before taxes | -44,692 | -44,057 | -43,695 |
Capital expenditures | 22,606 | 13,442 | 11,242 |
Consolidating Adjustments | ' | ' | ' |
Net sales | ' | ' | ' |
Intersegments | -226,025 | -212,725 | -193,804 |
Depreciation and amortization | ' | ' | -113 |
Income (loss) from operations | -1,108 | -1,066 | -305 |
Income before taxes | -1,108 | -1,066 | -305 |
Total assets | ($639,689) | ($488,216) | ($429,802) |
SCHEDULE_II_VALUATION_AND_QUAL1
SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS (Details) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Allowance for doubtful accounts | ' | ' | ' |
Movement in reserves | ' | ' | ' |
Balance at beginning of year | $7,526 | $7,236 | $5,153 |
Additions Charged to Costs and Expenses | 14,330 | 9,589 | 9,396 |
Write-offs | 11,834 | 9,299 | 7,313 |
Balance at end of year | 10,022 | 7,526 | 7,236 |
Deferred tax asset valuation allowance | ' | ' | ' |
Movement in reserves | ' | ' | ' |
Balance at beginning of year | 691 | 1,374 | 828 |
Acquisitions | 249 | ' | ' |
Generated | 134 | 12 | 547 |
Utilized/Released | 83 | 695 | 1 |
Balance at end of year | $991 | $691 | $1,374 |