Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 21, 2015 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CONMED CORP | |
Entity Central Index Key | 816956 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | FALSE | |
Entity Common Stock, Shares Outstanding | 27,598,167 |
Consolidated_Condensed_Stateme
Consolidated Condensed Statements of Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Net sales | $177,940 | $181,941 |
Cost of sales | 85,658 | 79,359 |
Gross profit | 92,282 | 102,582 |
Selling and administrative expense | 74,786 | 78,364 |
Research and development expense | 6,542 | 6,910 |
Total operating expenses | 81,328 | 85,274 |
Income from operations | 10,954 | 17,308 |
Interest expense | 1,460 | 1,461 |
Income before income taxes | 9,494 | 15,847 |
Provision for income taxes | 3,182 | 7,221 |
Net income | 6,312 | 8,626 |
Comprehensive income (loss) | ($3,715) | $9,577 |
Per share data: | ||
Basic | $0.23 | $0.32 |
Diluted | $0.23 | $0.31 |
Dividends per share of common stock | $0.20 | $0.20 |
Weighted average common shares: | ||
Basic (shares) | 27,573 | 27,349 |
Diluted (shares) | 27,820 | 27,854 |
Consolidated_Condensed_Balance
Consolidated Condensed Balance Sheets (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
ASSETS | ||
Cash and cash equivalents | $65,729 | $66,332 |
Accounts receivable, net | 128,950 | 129,287 |
Inventories | 144,199 | 148,149 |
Deferred income taxes | 12,812 | 14,348 |
Prepaid expenses and other current assets | 22,376 | 23,034 |
Total current assets | 374,066 | 381,150 |
Property, plant and equipment, net | 132,958 | 133,429 |
Deferred income taxes | 1,193 | 1,398 |
Goodwill | 255,748 | 256,232 |
Other intangible assets, net | 313,798 | 316,440 |
Other assets | 9,983 | 9,545 |
Total assets | 1,087,746 | 1,098,194 |
LIABILITIES AND SHAREHOLDERS' EQUITY | ||
Current portion of long-term debt | 1,234 | 1,234 |
Accounts payable | 27,834 | 23,752 |
Accrued compensation and benefits | 31,375 | 36,446 |
Income taxes payable | 3,010 | 2,668 |
Other current liabilities | 50,032 | 51,856 |
Total current liabilities | 113,485 | 115,956 |
Long-term debt | 257,201 | 240,201 |
Deferred income taxes | 112,659 | 112,223 |
Other long-term liabilities | 30,311 | 48,516 |
Total liabilities | 513,656 | 516,896 |
Commitments and contingencies | ||
Preferred stock, par value $.01 per share; authorized 500,000 shares; none outstanding | 0 | 0 |
Common stock, par value $.01 per share; 100,000,000 shares authorized; 31,299,194 shares issued in 2015 and 2014, respectively | 313 | 313 |
Paid-in capital | 320,993 | 319,752 |
Retained earnings | 406,941 | 406,145 |
Accumulated other comprehensive loss | -49,849 | -39,822 |
Less: 3,718,911 and 3,744,473 shares of common stock in treasury, at cost in 2015 and 2014, respectively | -104,308 | -105,090 |
Total shareholders' equity | 574,090 | 581,298 |
Total liabilities and shareholders' equity | $1,087,746 | $1,098,194 |
Consolidated_Condensed_Balance1
Consolidated Condensed Balance Sheets (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
Preferred stock, par value (dollars per share) | $0.01 | $0.01 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 31,299,194 | 31,299,194 |
Treasury stock, shares | 3,718,911 | 3,744,473 |
Consolidated_Condensed_Stateme1
Consolidated Condensed Statements of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Cash flows from operating activities: | ||
Net income | $6,312 | $8,626 |
Adjustments to reconcile net income to net cash provided by operating acitivites: | ||
Depreciation | 4,633 | 4,568 |
Amortization | 5,537 | 6,300 |
Stock-based compensation | 1,856 | 1,185 |
Deferred income taxes | 1,253 | 3,325 |
Increase (decrease) in cash flows from changes in assets and liabilities: | ||
Accounts receivable | -3,805 | 10,636 |
Inventories | -1,155 | -11,936 |
Accounts payable | 3,733 | -1,151 |
Income taxes receivable (payable) | 675 | 1,826 |
Accrued compensation and benefits | -4,485 | -9,164 |
Other assets | 2,917 | 2,088 |
Other liabilities | -2,662 | 722 |
Total operating | 8,497 | 8,399 |
Net cash provided by operating activities | 14,809 | 17,025 |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | -4,061 | -4,065 |
Payments related to a business acquisition | -853 | 0 |
Net cash used in investing activities | -4,914 | -4,065 |
Cash flows from financing activities: | ||
Net proceeds from common stock issued under employee plans | 181 | 729 |
Repurchase of common stock | 0 | -16,862 |
Proceeds from senior credit agreement | 17,000 | 27,000 |
Payments related to distribution agreement | -16,667 | -16,667 |
Dividends paid on common stock | -5,510 | -5,545 |
Other, net | 362 | 138 |
Net cash used in financing activities | -4,634 | -11,207 |
Effect of exchange rate changes on cash and cash equivalents | -5,864 | 122 |
Net increase (decrease) in cash and cash equivalents | -603 | 1,875 |
Cash and cash equivalents at beginning of period | 66,332 | 54,443 |
Cash and cash equivalents at end of period | 65,729 | 56,318 |
Non-cash financing activities: | ||
Dividends payable | $5,516 | $5,442 |
Operations
Operations | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Operations | Operations |
CONMED Corporation (“CONMED”, the “Company”, “we” or “us”) is a medical technology company that provides surgical devices and equipment for minimally invasive procedures. The Company’s products are used by surgeons and physicians in a variety of specialties including orthopedics, general surgery, gynecology, neurosurgery and gastroenterology. |
Interim_Financial_Information
Interim Financial Information | 3 Months Ended |
Mar. 31, 2015 | |
Interim financial information [Abstract] | |
Interim financial information | Interim Financial Information |
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for annual financial statements. Results for the period ended March 31, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. | |
The consolidated condensed financial statements and notes thereto should be read in conjunction with the consolidated financial statements and notes for the year ended December 31, 2014 included in our Annual Report on Form 10-K. | |
Certain prior year amounts have been reclassified to conform to the current year presentation. These reclassifications had no impact on net earnings or shareholders' equity as previously reported. |
Comprehensive_Income
Comprehensive Income | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Comprehensive Income (Loss) [Abstract] | ||||||||||||||||
Comprehensive Income | Comprehensive Income | |||||||||||||||
Comprehensive income consists of the following: | ||||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Net income | $ | 6,312 | $ | 8,626 | ||||||||||||
Other comprehensive income: | ||||||||||||||||
Pension liability, net of income tax (income tax expense of $300 and $157 for the three months ended March 31, 2015 and 2014, respectively) | 512 | 270 | ||||||||||||||
Cash flow hedging gain, net of income tax (income tax expense of $1,150 and $425 for the three months ended March 31, 2015 and 2014, respectively) | 1,962 | 725 | ||||||||||||||
Foreign currency translation adjustment | (12,501 | ) | (44 | ) | ||||||||||||
Comprehensive income (loss) | $ | (3,715 | ) | $ | 9,577 | |||||||||||
Accumulated other comprehensive loss consists of the following: | ||||||||||||||||
Cash Flow | Pension | Cumulative | Accumulated | |||||||||||||
Hedging | Liability | Translation | Other | |||||||||||||
Gain (Loss) | Adjustments | Comprehensive | ||||||||||||||
Income (Loss) | ||||||||||||||||
Balance, December 31, 2014 | $ | 3,276 | $ | (30,760 | ) | $ | (12,338 | ) | $ | (39,822 | ) | |||||
Other comprehensive income (loss) before reclassifications | 275 | — | (12,501 | ) | (12,226 | ) | ||||||||||
Amounts reclassified from other accumulated comprehensive income (loss) before taxa | 2,676 | 812 | — | 3,488 | ||||||||||||
Income tax | (989 | ) | (300 | ) | — | (1,289 | ) | |||||||||
Net current-period other comprehensive income (loss) | 1,962 | 512 | (12,501 | ) | (10,027 | ) | ||||||||||
Balance, March 31, 2015 | $ | 5,238 | $ | (30,248 | ) | $ | (24,839 | ) | $ | (49,849 | ) | |||||
Cash Flow | Pension | Cumulative | Accumulated | |||||||||||||
Hedging | Liability | Translation | Other | |||||||||||||
Gain (Loss) | Adjustments | Comprehensive | ||||||||||||||
Income (Loss) | ||||||||||||||||
Balance, December 31, 2013 | $ | (1,385 | ) | $ | (18,918 | ) | $ | 2,731 | $ | (17,572 | ) | |||||
Other comprehensive income (loss) before reclassifications | 800 | — | (44 | ) | 756 | |||||||||||
Amounts reclassified from other accumulated comprehensive income (loss) before taxa | (119 | ) | 427 | — | 308 | |||||||||||
Income tax | 44 | (157 | ) | — | (113 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 725 | 270 | (44 | ) | 951 | |||||||||||
Balance, March 31, 2014 | $ | (660 | ) | $ | (18,648 | ) | $ | 2,687 | $ | (16,621 | ) | |||||
(a) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales or cost of sales and as a component of net periodic pension cost (income), respectively. Refer to Note 4 and Note 9, respectively, for further details. |
Fair_Value_Measurement
Fair Value Measurement | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||||||||||||||||
We enter into derivative instruments for risk management purposes only. We operate internationally and, in the normal course of business, are exposed to fluctuations in interest rates, foreign exchange rates and commodity prices. These fluctuations can increase the costs of financing, investing and operating the business. We use forward contracts, a type of derivative instrument, to manage certain foreign currency exposures. | |||||||||||||||||
By nature, all financial instruments involve market and credit risks. We enter into forward contracts with major investment grade financial institutions and have policies to monitor the credit risk of those counterparties. While there can be no assurance, we do not anticipate any material non-performance by any of these counterparties. | |||||||||||||||||
Foreign Currency Forward Contracts. We hedge forecasted intercompany sales denominated in foreign currencies through the use of forward contracts. We account for these forward contracts as cash flow hedges. To the extent these forward contracts meet hedge accounting criteria, changes in their fair value are not included in current earnings but are included in accumulated other comprehensive loss. These changes in fair value will be recognized into earnings as a component of sales or cost of sales when the forecasted transaction occurs. The notional contract amounts for forward contracts outstanding at March 31, 2015 which have been accounted for as cash flow hedges totaled $77.8 million. Net realized gains (losses) recognized for forward contracts accounted for as cash flow hedges approximated $2.7 million and $(0.1) million for the three months ended March 31, 2015 and 2014, respectively. Net unrealized gains on forward contracts outstanding, which have been accounted for as cash flow hedges and which have been included in other comprehensive loss totaled $5.2 million at March 31, 2015. It is expected these unrealized gains will be recognized in the consolidated condensed statements of comprehensive income (loss) in 2015. | |||||||||||||||||
We also enter into forward contracts to exchange foreign currencies for United States dollars in order to hedge our currency transaction exposures on intercompany receivables denominated in foreign currencies. These forward contracts settle each month at month-end, at which time we enter into new forward contracts. We have not designated these forward contracts as hedges and have not applied hedge accounting to them. The notional contract amounts for forward contracts outstanding at March 31, 2015 which have not been designated as hedges totaled $35.8 million. Net realized gains recognized in connection with those forward contracts not accounted for as hedges approximated $0.6 million and $0.2 million for the three months ended March 31, 2015 and 2014, respectively, offsetting losses on our intercompany receivables of $(0.7) million and $(0.3) million for the three months ended March 31, 2015 and 2014, respectively. These gains and losses have been recorded in selling and administrative expense in the consolidated condensed statements of comprehensive income (loss). | |||||||||||||||||
We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at March 31, 2015 and December 31, 2014: | |||||||||||||||||
31-Mar-15 | Asset | Fair | Liabilities | Fair | Net | ||||||||||||
Balance Sheet | Value | Balance Sheet | Value | Fair | |||||||||||||
Location | Location | Value | |||||||||||||||
Derivatives designated as hedged instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 9,291 | Prepaid expenses and other current assets | $ | (984 | ) | $ | 8,307 | ||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | 1 | Prepaid expenses and other current assets | (50 | ) | (49 | ) | ||||||||||
Total derivatives | $ | 9,292 | $ | (1,034 | ) | $ | 8,258 | ||||||||||
31-Dec-14 | Asset | Fair | Liabilities | Fair | Net | ||||||||||||
Balance Sheet | Value | Balance Sheet | Value | Fair | |||||||||||||
Location | Location | Value | |||||||||||||||
Derivatives designated as hedged instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 6,167 | Prepaid expenses and other current assets | $ | (971 | ) | $ | 5,196 | ||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | 44 | Prepaid expenses and other current assets | (61 | ) | (17 | ) | ||||||||||
Total derivatives | $ | 6,211 | $ | (1,032 | ) | $ | 5,179 | ||||||||||
Our forward foreign exchange contracts are subject to a master netting agreement and qualify for netting in the consolidated balance sheets. Accordingly, at March 31, 2015 and December 31, 2014, we have recorded the net fair value of $8.3 million and $5.2 million, respectively, in prepaid expenses and other current assets. | |||||||||||||||||
Fair Value Disclosure. FASB guidance defines fair value and establishes a framework for measuring fair value and related disclosure requirements. This guidance applies when fair value measurements are required or permitted. The guidance indicates, among other things, that a fair value measurement assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability. Fair value is defined based upon an exit price model. | |||||||||||||||||
Valuation Hierarchy. A valuation hierarchy was established for disclosure of the inputs to the valuations used to measure fair value. This hierarchy prioritizes the inputs into three broad levels as follows. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets in markets that are not active; inputs other than quoted prices that are observable for the asset or liability, including interest rates, yield curves and credit risks or inputs that are derived principally from, or corroborated by, observable market data through correlation. Level 3 inputs are unobservable inputs based on our own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. There have been no significant changes in the assumptions since the EndoDynamix, Inc. acquisition. | |||||||||||||||||
Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2015 consist of forward foreign exchange contracts and contingent liabilities associated with the EndoDynamix, Inc. acquisition as further described in Note 7. The Company values its forward foreign exchange contracts using quoted prices for similar assets. The most significant assumption is quoted currency rates. The value of the forward foreign exchange contract assets and liabilities were determined within Level 2 of the valuation hierarchy and are listed in the table above. | |||||||||||||||||
The EndoDynamix, Inc. acquisition involves the potential for the payment of future contingent consideration upon the achievement of certain product development milestones and revenue based payments as further described in Note 7. Contingent consideration is recorded at the estimated fair value of the contingent milestone and revenue based payments on the acquisition date. The fair value of the contingent consideration is remeasured at the estimated fair value at each reporting period with the change in fair value recognized as income or expense within selling and administrative expenses in the consolidated condensed statements of comprehensive income (loss). We measure the initial liability and remeasure the liability on a recurring basis using Level 3 inputs as defined under authoritative guidance for fair value measurements. | |||||||||||||||||
The carrying amounts reported in our consolidated condensed balance sheets for cash and cash equivalents, accounts receivable, accounts payable and long-term debt approximate fair value. |
Inventories
Inventories | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Inventories | Inventories | |||||||
Inventories consist of the following: | ||||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 42,600 | $ | 44,847 | ||||
Work-in-process | 15,912 | 13,876 | ||||||
Finished goods | 85,687 | 89,426 | ||||||
Total | $ | 144,199 | $ | 148,149 | ||||
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Earnings Per Share | Earnings Per Share | |||||||
Basic earnings per share (“basic EPS”) is computed by dividing net income by the weighted average number of common shares outstanding for the reporting period. Diluted earnings per share (“diluted EPS”) gives effect to all dilutive potential shares outstanding resulting from employee stock options, restricted stock units, performance share units and stock appreciation rights during the period. The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2015 and 2014. | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Net income | $ | 6,312 | $ | 8,626 | ||||
Basic – weighted average shares outstanding | 27,573 | 27,349 | ||||||
Effect of dilutive potential securities | 247 | 505 | ||||||
Diluted – weighted average shares outstanding | 27,820 | 27,854 | ||||||
Net income | ||||||||
Basic (per share) | $ | 0.23 | $ | 0.32 | ||||
Diluted (per share) | 0.23 | 0.31 | ||||||
The shares used in the calculation of diluted EPS exclude options to purchase shares of approximately 38 and 0 for the three months ended March 31, 2015 and 2014, respectively, where the exercise price was greater than the average market price of common shares for the period and the effect of the inclusion would be antidilutive. |
Goodwill_and_Other_Intangible_
Goodwill and Other Intangible Assets | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Goodwill and Other Intangible Assets [Abstract] | ||||||||||||||||
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets | |||||||||||||||
The changes in the net carrying amount of goodwill for the three months ended March 31, 2015 are as follows: | ||||||||||||||||
Balance as of December 31, 2014 | $ | 256,232 | ||||||||||||||
Reduction in goodwill resulting from a business acquisition purchase price allocation adjustment | (525 | ) | ||||||||||||||
Foreign currency translation | 41 | |||||||||||||||
Balance as of March 31, 2015 | $ | 255,748 | ||||||||||||||
The purchase price was allocated based on information available at the acquisition date. During the quarter ended March 31, 2015, we recorded a measurement period adjustment, which reduced goodwill by $0.5 million. The amount was not considered material and therefore prior periods have not been revised. | ||||||||||||||||
Other intangible assets consist of the following: | ||||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||||
Carrying | Amortization | Carrying | Amortization | |||||||||||||
Amount | Amount | |||||||||||||||
Amortized intangible assets: | ||||||||||||||||
Customer relationships | $ | 136,689 | $ | (60,896 | ) | $ | 136,126 | $ | (59,707 | ) | ||||||
Promotional, marketing and distribution rights | 149,376 | (19,500 | ) | 149,376 | (18,000 | ) | ||||||||||
Patents and other intangible assets | 63,138 | (41,553 | ) | 63,464 | (41,363 | ) | ||||||||||
Unamortized intangible assets: | ||||||||||||||||
Trademarks and tradenames | 86,544 | — | 86,544 | — | ||||||||||||
$ | 435,747 | $ | (121,949 | ) | $ | 435,510 | $ | (119,070 | ) | |||||||
Customer relationships, trademarks and tradenames and patents and other intangible assets primarily represent allocations of purchase price to identifiable intangible assets of acquired businesses. Promotional, marketing and distribution rights represent intangible assets created under our Sports Medicine Joint Development and Distribution Agreement (the "JDDA") with Musculoskeletal Transplant Foundation (“MTF”). | ||||||||||||||||
On January 3, 2012, the Company entered into the JDDA with MTF to obtain MTF's worldwide promotion rights with respect to allograft tissues within the field of sports medicine and related products. The initial consideration from the Company included a $63.0 million up-front payment for the rights and certain assets, with an additional $84.0 million contingently payable over a four year period depending on MTF meeting supply targets for tissue. On January 5, 2015 and January 3, 2014, we paid equal installments of $16.7 million and on January 3, 2013, we paid $34.0 million of the additional consideration. The remaining $16.7 million of the additional consideration is due in January 2016 and is accrued in other current liabilities as we believe it is probable MTF will meet the supply targets. | ||||||||||||||||
On July 30, 2014, the Company purchased the stock of EndoDynamix, Inc., a developer of minimally invasive surgical instruments. The purchase price included $13.9 million in contingent consideration based upon certain milestones being achieved totaling $10.3 million and future royalties to be incurred of $3.6 million. Contingent consideration was valued using a discounted cash flow method. We paid $3.7 million of the milestone payment on October 17, 2014 and another $2.4 million payment on April 13, 2015. We expect the remaining milestones to be achieved and paid by the end of 2015. We expect the royalty payments to be made between 2015 and 2020. The remaining contingent consideration totaled $10.2 million as of March 31, 2015. | ||||||||||||||||
Amortization expense related to intangible assets which are subject to amortization totaled $3.2 million and $3.3 million in the three months ended March 31, 2015 and 2014, respectively, and is included as a reduction of revenue (for amortization related to our promotional, marketing and distribution rights) and in selling and administrative expense (for all other intangible assets) in the consolidated condensed statements of comprehensive income (loss). The weighted average amortization period for intangible assets which are amortized is 27 years. Customer relationships are being amortized over a weighted average life of 33 years. Promotional, marketing and distribution rights are being amortized over a weighted average life of 25 years. Patents and other intangible assets are being amortized over a weighted average life of 14 years. Included in patents and other intangible assets at March 31, 2015 is an in-process research and development asset related to the EndoDynamix, Inc. acquisition that is not currently amortized. | ||||||||||||||||
The estimated intangible asset amortization expense for the year ending December 31, 2015, including the three month period ended March 31, 2015 and for each of the five succeeding years is as follows: | ||||||||||||||||
Amortization included in expense | Amortization recorded as a reduction of revenue | Total | ||||||||||||||
2015 | $ | 6,657 | 6,000 | $ | 12,657 | |||||||||||
2016 | $ | 7,503 | 6,000 | $ | 13,503 | |||||||||||
2017 | $ | 7,485 | 6,000 | $ | 13,485 | |||||||||||
2018 | $ | 7,430 | 6,000 | $ | 13,430 | |||||||||||
2019 | $ | 7,430 | 6,000 | $ | 13,430 | |||||||||||
2020 | $ | 7,458 | 6,000 | $ | 13,458 | |||||||||||
Guarantees
Guarantees | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Guarantees [Abstract] | ||||||||
Guarantees | Guarantees | |||||||
We provide warranties on certain of our products at the time of sale. The standard warranty period for our capital and reusable equipment is generally one year. Liability under service and warranty policies is based upon a review of historical warranty and service claim experience. Adjustments are made to accruals as claim data and historical experience warrant. | ||||||||
Changes in the carrying amount of service and product warranties for the three months ended March 31, are as follows: | ||||||||
2015 | 2014 | |||||||
Balance as of January 1, | $ | 2,286 | $ | 2,422 | ||||
Provision for warranties | 951 | 828 | ||||||
Claims made | (873 | ) | (873 | ) | ||||
Balance as of March 31, | $ | 2,364 | $ | 2,377 | ||||
Pension_Plan
Pension Plan | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||
Pension Plan | Pension Plan | |||||||
Net periodic pension (income) cost consists of the following: | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Service cost | $ | 67 | $ | 72 | ||||
Interest cost on projected benefit obligation | 888 | 877 | ||||||
Expected return on plan assets | (1,469 | ) | (1,496 | ) | ||||
Net amortization and deferral | 812 | 427 | ||||||
Net periodic pension (income) cost | $ | 298 | $ | (120 | ) | |||
We do not expect to make any pension contributions during 2015. |
Restructuring_and_Other_Expens
Restructuring and Other Expense | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Restructuring Expenses and Other Operating Expenses [Abstract] | ||||||||
Restructuring and Other Expense | Restructuring and Other Expense | |||||||
Restructuring and other expense consists of the following: | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Restructuring costs included in cost of sales | $ | 2,329 | $ | 948 | ||||
Restructuring costs | $ | 6,180 | $ | 713 | ||||
Patent dispute and shareholder activism costs | — | 2,484 | ||||||
Restructuring and other expense included in selling and administrative expense | $ | 6,180 | $ | 3,197 | ||||
During the three months ended March 31, 2014, we incurred $1.9 million in legal fees associated with a patent infringement claim, including $0.9 million in settlement costs. We also incurred $0.6 million in consulting fees related to shareholder activism. | ||||||||
During 2015 and 2014, we continued our operational restructuring plan. In 2015, we continued the consolidation of our Centennial, Colorado manufacturing operations into other existing CONMED manufacturing facilities. We expect our Centennial, Colorado consolidation is to be completed over the next 9 months. During 2014, we completed the consolidation of our Finland, operations into our Largo, Florida and Utica, New York manufacturing facilities and the consolidation of our Westborough, Massachusetts manufacturing operations into our Largo, Florida and Chihuahua, Mexico facilities. We incurred $2.3 million and $0.9 million in costs associated with the operational restructuring during the three months ended March 31, 2015 and 2014, respectively. These costs were charged to cost of sales and include severance and other charges associated with the consolidation of our Finland; Westborough, Massachusetts and Centennial, Colorado operations. | ||||||||
During 2015 and 2014, we restructured certain selling and administrative functions and incurred severance and other related costs in the amount of $6.2 million and $0.7 million, respectively, for the three months ended March 31, 2015 and 2014, respectively. | ||||||||
We have recorded an accrual in current and other long term liabilities of $8.9 million at March 31, 2015 mainly related to severance and lease impairment costs associated with the restructuring. Below is a rollforward of the accrual: | ||||||||
Balance as of January 1, 2015 | $ | 8,254 | ||||||
Expenses incurred | 2,794 | |||||||
Payments made | (2,170 | ) | ||||||
Balance at March 31, 2015 | $ | 8,878 | ||||||
Business_Segments
Business Segments | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Business Segments | Business Segments | |||||||
We are accounting and reporting for our business as a single operating segment entity engaged in the development, manufacturing and sale on a global basis of surgical devices and related equipment. Our chief operating decision maker (the CEO) evaluates the various global product portfolios on a net sales basis and evaluates profitability, investment and cash flow metrics on a consolidated worldwide basis due to shared infrastructure and resources. | ||||||||
Our product lines consist of orthopedic surgery, general surgery and surgical visualization. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments and service fees related to the promotion and marketing of sports medicine allograft tissue. General surgery consists of a complete line of endo-mechanical instrumentation for minimally invasive laparoscopic and gastrointestinal procedures, a line of cardiac monitoring products as well as electrosurgical generators and related instruments. Surgical visualization consists of imaging systems for use in minimally invasive orthopedic and general surgery procedures including 2DHD and 3DHD vision technologies. These product lines' net sales are as follows: | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Orthopedic surgery | $ | 98,597 | $ | 105,948 | ||||
General surgery | 66,062 | 63,460 | ||||||
Surgical visualization | 13,281 | 12,533 | ||||||
Consolidated net sales | $ | 177,940 | $ | 181,941 | ||||
Legal_Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Legal Proceedings | Legal Proceedings |
From time to time, we are subject to claims alleging product liability, patent infringement or other claims incurred in the ordinary course of business. These may involve our United States or foreign operations, or sales by foreign distributors. Likewise, from time to time, the Company may receive an information request or subpoena from a government agency such as the Securities and Exchange Commission, Department of Justice, Equal Employment Opportunity Commission, the Occupational Safety and Health Administration, the Department of Labor, the Treasury Department or other federal and state agencies or foreign governments or government agencies. These information requests or subpoenas may or may not be routine inquiries, or may begin as routine inquiries and over time develop into enforcement actions of various types. The product liability claims are generally covered by various insurance policies, subject to certain deductible amounts, maximum policy limits and certain exclusions in the respective policies or as required as a matter of law. In some cases, we may be entitled to indemnification by third parties. We establish reserves sufficient to cover probable losses associated with any such pending claims. We do not expect that the resolution of any pending claims or investigations will have a material adverse effect on our financial condition, results of operations or cash flows. There can be no assurance, however, that future claims or investigations, or the costs associated with responding to such claims or investigations, especially claims and investigations not covered by insurance, will not have a material adverse effect on our financial condition, results of operations or cash flows. | |
Manufacturers of medical products may face exposure to significant product liability claims. To date, we have not experienced any product liability claims that have been material to our financial statements or financial condition, but any such claims arising in the future could have a material adverse effect on our business or results of operations. We currently maintain commercial product liability insurance of $25 million per incident and $25 million in the aggregate annually, which we believe is adequate. This coverage is on a claims-made basis. There can be no assurance that claims will not exceed insurance coverage, that the carriers will be solvent or that such insurance will be available to us in the future at a reasonable cost. | |
Our operations are subject, and in the past have been subject, to a number of environmental laws and regulations governing, among other things, air emissions; wastewater discharges; the use, handling and disposal of hazardous substances and wastes; soil and groundwater remediation and employee health and safety. In some jurisdictions, environmental requirements may be expected to become more stringent in the future. In the United States, certain environmental laws can impose liability for the entire cost of site restoration upon each of the parties that may have contributed to conditions at the site regardless of fault or the lawfulness of the party’s activities. While we do not believe that the present costs of environmental compliance and remediation are material, there can be no assurance that future compliance or remedial obligations would not have a material adverse effect on our financial condition, results of operations or cash flows. | |
During the third quarter of 2013, the U.S. Food and Drug Administration ("FDA") inspected our Centennial, Colorado manufacturing facility and issued a Form 483 with observations on September 20, 2013. We subsequently submitted responses to the Observations and the FDA issued a Warning Letter on January 30, 2014 relating to the inspection and the responses to the Form 483 Observations. Accordingly, we undertook corrective actions. During the fourth quarter of 2014, the FDA again inspected our Centennial, Colorado manufacturing facility and, on November 18, 2014, issued a Form 483 with eight observations, three of which the FDA characterized as repeat observations. On December 10, 2014, we responded to the Form 483 Observations. We have received some additional questions from the FDA, and are in the process of responding to and addressing these questions. The remediation costs to date have not been material, although there can be no assurance that a future inspection by the FDA will not result in an additional Form 483 or warning letter, or other regulatory actions, which may include consent decrees or fines. |
New_Accounting_Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2015 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements |
In May 2014, the FASB issued Accounting Standards Update ("ASU") No. 2014-09, "Revenue from Contracts with Customers." This ASU is a comprehensive new revenue recognition model that requires a company to recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration the company expects to receive in exchange for those goods or services. This ASU is effective for annual reporting periods beginning after December 15, 2016 and early adoption is not permitted. Accordingly, we will adopt this ASU on January 1, 2017. The new standard will become effective beginning with the first quarter of 2017 and can be adopted either retrospectively to each prior reporting period presented or as a cumulative effect adjustment as of the date of adoption. The Company is currently evaluating both the impact of adopting this new guidance on the consolidated financial statements and the method of adoption. | |
In April 2015, the FASB issued Accounting Standards Update ("ASU") No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs". This ASU requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. This ASU is effective for annual reporting periods beginning after December 15, 2015, early adoption is permitted for financial statements that have not been previously issued and the ASU must be adopted on a retrospective basis. Accordingly, we will adopt this ASU on January 1, 2016. The new standard will become effective beginning with the first quarter of 2016. We do not believe this will have a material impact on the consolidated financial statements. | |
The Company does not believe there are any other new accounting pronouncements that would have a material impact on its financial position or results of operations. |
Income_Taxes_Notes
Income Taxes (Notes) | 3 Months Ended |
Mar. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes |
A provision for income taxes has been recorded at an effective tax rate of 33.5% for the quarter ended March 31, 2015 compared to the 45.6% effective tax rate recorded in the same period a year ago due to tax legislation changes. In New York State, corporate tax reform enacted in March 2014 changed the tax rate of a manufacturing company such as CONMED to essentially 0%. While this will be positive for the future, previously recorded New York State deferred tax assets of $2.3 million that would have been used to offset taxes otherwise payable, no longer had value due to a zero percent tax rate. Accordingly, we had written off these New York State tax assets as a non-cash charge to income tax expense in the quarter ended March 31, 2014. |
Comprehensive_Income_Tables
Comprehensive Income (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Comprehensive Income (Loss) [Abstract] | ||||||||||||||||
Schedule of Comprehensive Income | Comprehensive income consists of the following: | |||||||||||||||
Three Months Ended March 31, | ||||||||||||||||
2015 | 2014 | |||||||||||||||
Net income | $ | 6,312 | $ | 8,626 | ||||||||||||
Other comprehensive income: | ||||||||||||||||
Pension liability, net of income tax (income tax expense of $300 and $157 for the three months ended March 31, 2015 and 2014, respectively) | 512 | 270 | ||||||||||||||
Cash flow hedging gain, net of income tax (income tax expense of $1,150 and $425 for the three months ended March 31, 2015 and 2014, respectively) | 1,962 | 725 | ||||||||||||||
Foreign currency translation adjustment | (12,501 | ) | (44 | ) | ||||||||||||
Comprehensive income (loss) | $ | (3,715 | ) | $ | 9,577 | |||||||||||
Schedule of Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss consists of the following: | |||||||||||||||
Cash Flow | Pension | Cumulative | Accumulated | |||||||||||||
Hedging | Liability | Translation | Other | |||||||||||||
Gain (Loss) | Adjustments | Comprehensive | ||||||||||||||
Income (Loss) | ||||||||||||||||
Balance, December 31, 2014 | $ | 3,276 | $ | (30,760 | ) | $ | (12,338 | ) | $ | (39,822 | ) | |||||
Other comprehensive income (loss) before reclassifications | 275 | — | (12,501 | ) | (12,226 | ) | ||||||||||
Amounts reclassified from other accumulated comprehensive income (loss) before taxa | 2,676 | 812 | — | 3,488 | ||||||||||||
Income tax | (989 | ) | (300 | ) | — | (1,289 | ) | |||||||||
Net current-period other comprehensive income (loss) | 1,962 | 512 | (12,501 | ) | (10,027 | ) | ||||||||||
Balance, March 31, 2015 | $ | 5,238 | $ | (30,248 | ) | $ | (24,839 | ) | $ | (49,849 | ) | |||||
Cash Flow | Pension | Cumulative | Accumulated | |||||||||||||
Hedging | Liability | Translation | Other | |||||||||||||
Gain (Loss) | Adjustments | Comprehensive | ||||||||||||||
Income (Loss) | ||||||||||||||||
Balance, December 31, 2013 | $ | (1,385 | ) | $ | (18,918 | ) | $ | 2,731 | $ | (17,572 | ) | |||||
Other comprehensive income (loss) before reclassifications | 800 | — | (44 | ) | 756 | |||||||||||
Amounts reclassified from other accumulated comprehensive income (loss) before taxa | (119 | ) | 427 | — | 308 | |||||||||||
Income tax | 44 | (157 | ) | — | (113 | ) | ||||||||||
Net current-period other comprehensive income (loss) | 725 | 270 | (44 | ) | 951 | |||||||||||
Balance, March 31, 2014 | $ | (660 | ) | $ | (18,648 | ) | $ | 2,687 | $ | (16,621 | ) | |||||
(a) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales or cost of sales and as a component of net periodic pension cost (income), respectively. Refer to Note 4 and Note 9, respectively, for further details. |
Fair_Value_Measurement_Tables
Fair Value Measurement (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||
Schedule of Fair Value for Forward Foreign Exchange Contracts | We record these forward foreign exchange contracts at fair value; the following tables summarize the fair value for forward foreign exchange contracts outstanding at March 31, 2015 and December 31, 2014: | ||||||||||||||||
31-Mar-15 | Asset | Fair | Liabilities | Fair | Net | ||||||||||||
Balance Sheet | Value | Balance Sheet | Value | Fair | |||||||||||||
Location | Location | Value | |||||||||||||||
Derivatives designated as hedged instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 9,291 | Prepaid expenses and other current assets | $ | (984 | ) | $ | 8,307 | ||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | 1 | Prepaid expenses and other current assets | (50 | ) | (49 | ) | ||||||||||
Total derivatives | $ | 9,292 | $ | (1,034 | ) | $ | 8,258 | ||||||||||
31-Dec-14 | Asset | Fair | Liabilities | Fair | Net | ||||||||||||
Balance Sheet | Value | Balance Sheet | Value | Fair | |||||||||||||
Location | Location | Value | |||||||||||||||
Derivatives designated as hedged instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | $ | 6,167 | Prepaid expenses and other current assets | $ | (971 | ) | $ | 5,196 | ||||||||
Derivatives not designated as hedging instruments: | |||||||||||||||||
Foreign exchange contracts | Prepaid expenses and other current assets | 44 | Prepaid expenses and other current assets | (61 | ) | (17 | ) | ||||||||||
Total derivatives | $ | 6,211 | $ | (1,032 | ) | $ | 5,179 | ||||||||||
Inventories_Tables
Inventories (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Inventory Disclosure [Abstract] | ||||||||
Schedule of inventory | Inventories consist of the following: | |||||||
March 31, | December 31, | |||||||
2015 | 2014 | |||||||
Raw materials | $ | 42,600 | $ | 44,847 | ||||
Work-in-process | 15,912 | 13,876 | ||||||
Finished goods | 85,687 | 89,426 | ||||||
Total | $ | 144,199 | $ | 148,149 | ||||
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Schedule of calculation of basic and diluted earnings per share | The following table sets forth the computation of basic and diluted earnings per share for the three months ended March 31, 2015 and 2014. | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Net income | $ | 6,312 | $ | 8,626 | ||||
Basic – weighted average shares outstanding | 27,573 | 27,349 | ||||||
Effect of dilutive potential securities | 247 | 505 | ||||||
Diluted – weighted average shares outstanding | 27,820 | 27,854 | ||||||
Net income | ||||||||
Basic (per share) | $ | 0.23 | $ | 0.32 | ||||
Diluted (per share) | 0.23 | 0.31 | ||||||
Goodwill_and_Other_Intangible_1
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Goodwill and Other Intangible Assets [Abstract] | ||||||||||||||||
Schedule of Goodwill | The changes in the net carrying amount of goodwill for the three months ended March 31, 2015 are as follows: | |||||||||||||||
Balance as of December 31, 2014 | $ | 256,232 | ||||||||||||||
Reduction in goodwill resulting from a business acquisition purchase price allocation adjustment | (525 | ) | ||||||||||||||
Foreign currency translation | 41 | |||||||||||||||
Balance as of March 31, 2015 | $ | 255,748 | ||||||||||||||
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets | Other intangible assets consist of the following: | |||||||||||||||
March 31, 2015 | December 31, 2014 | |||||||||||||||
Gross | Accumulated | Gross | Accumulated | |||||||||||||
Carrying | Amortization | Carrying | Amortization | |||||||||||||
Amount | Amount | |||||||||||||||
Amortized intangible assets: | ||||||||||||||||
Customer relationships | $ | 136,689 | $ | (60,896 | ) | $ | 136,126 | $ | (59,707 | ) | ||||||
Promotional, marketing and distribution rights | 149,376 | (19,500 | ) | 149,376 | (18,000 | ) | ||||||||||
Patents and other intangible assets | 63,138 | (41,553 | ) | 63,464 | (41,363 | ) | ||||||||||
Unamortized intangible assets: | ||||||||||||||||
Trademarks and tradenames | 86,544 | — | 86,544 | — | ||||||||||||
$ | 435,747 | $ | (121,949 | ) | $ | 435,510 | $ | (119,070 | ) | |||||||
Schedule of Estimated Amortization Expense | The estimated intangible asset amortization expense for the year ending December 31, 2015, including the three month period ended March 31, 2015 and for each of the five succeeding years is as follows: | |||||||||||||||
Amortization included in expense | Amortization recorded as a reduction of revenue | Total | ||||||||||||||
2015 | $ | 6,657 | 6,000 | $ | 12,657 | |||||||||||
2016 | $ | 7,503 | 6,000 | $ | 13,503 | |||||||||||
2017 | $ | 7,485 | 6,000 | $ | 13,485 | |||||||||||
2018 | $ | 7,430 | 6,000 | $ | 13,430 | |||||||||||
2019 | $ | 7,430 | 6,000 | $ | 13,430 | |||||||||||
2020 | $ | 7,458 | 6,000 | $ | 13,458 | |||||||||||
Guarantees_Tables
Guarantees (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Guarantees [Abstract] | ||||||||
Changes in the carrying amount of service and product warranties | Changes in the carrying amount of service and product warranties for the three months ended March 31, are as follows: | |||||||
2015 | 2014 | |||||||
Balance as of January 1, | $ | 2,286 | $ | 2,422 | ||||
Provision for warranties | 951 | 828 | ||||||
Claims made | (873 | ) | (873 | ) | ||||
Balance as of March 31, | $ | 2,364 | $ | 2,377 | ||||
Pension_Plan_Tables
Pension Plan (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Compensation and Retirement Disclosure [Abstract] | ||||||||
Schedule of net benefit cost | Net periodic pension (income) cost consists of the following: | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Service cost | $ | 67 | $ | 72 | ||||
Interest cost on projected benefit obligation | 888 | 877 | ||||||
Expected return on plan assets | (1,469 | ) | (1,496 | ) | ||||
Net amortization and deferral | 812 | 427 | ||||||
Net periodic pension (income) cost | $ | 298 | $ | (120 | ) | |||
Restructuring_and_Other_Expens1
Restructuring and Other Expense (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Restructuring Expenses and Other Operating Expenses [Abstract] | ||||||||
Schedule of Restructuring Expense and Other Operating Expense | Restructuring and other expense consists of the following: | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Restructuring costs included in cost of sales | $ | 2,329 | $ | 948 | ||||
Restructuring costs | $ | 6,180 | $ | 713 | ||||
Patent dispute and shareholder activism costs | — | 2,484 | ||||||
Restructuring and other expense included in selling and administrative expense | $ | 6,180 | $ | 3,197 | ||||
Schedule of Restructuring Accrual | Below is a rollforward of the accrual: | |||||||
Balance as of January 1, 2015 | $ | 8,254 | ||||||
Expenses incurred | 2,794 | |||||||
Payments made | (2,170 | ) | ||||||
Balance at March 31, 2015 | $ | 8,878 | ||||||
Business_Segments_Tables
Business Segments (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Segment Reporting [Abstract] | ||||||||
Schedule of net sales information by product line | These product lines' net sales are as follows: | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Orthopedic surgery | $ | 98,597 | $ | 105,948 | ||||
General surgery | 66,062 | 63,460 | ||||||
Surgical visualization | 13,281 | 12,533 | ||||||
Consolidated net sales | $ | 177,940 | $ | 181,941 | ||||
Comprehensive_Income_Details
Comprehensive Income (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Comprehensive Income (Loss) [Abstract] | ||
Net income | $6,312 | $8,626 |
Pension liability, net of income tax | 512 | 270 |
Pension liability, tax | 300 | 157 |
Cash flow hedging gain, net of income tax | 1,962 | 725 |
Cash flow hedging gain, tax | 1,150 | 425 |
Foreign currency translation adjustment | -12,501 | -44 |
Comprehensive income (loss) | ($3,715) | $9,577 |
Comprehensive_Income_Accumulat
Comprehensive Income Accumulated Other Comprehensive income (loss) (Details) (USD $) | 3 Months Ended | |||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | ||
Accumulated other comprehensive income (loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss) | ($39,822) | |||
Income tax | -3,182 | -7,221 | ||
Accumulated other comprehensive income (loss) | -49,849 | |||
Accumulated Other Comprehensive Income (Loss) [Member] | ||||
Accumulated other comprehensive income (loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss) | -39,822 | -17,572 | ||
Other comprehensive income (loss) before reclassifications | -12,226 | 756 | ||
Amounts reclassified from other accumulated comprehensive income (loss) before tax | 3,488 | [1] | 308 | [1] |
Income tax | -1,289 | -113 | ||
Net current-period other comprehensive income (loss) | -10,027 | 951 | ||
Accumulated other comprehensive income (loss) | -49,849 | -16,621 | ||
Cash Flow Hedging Gain (Loss) [Member] | ||||
Accumulated other comprehensive income (loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss) | 3,276 | -1,385 | ||
Other comprehensive income (loss) before reclassifications | 275 | 800 | ||
Amounts reclassified from other accumulated comprehensive income (loss) before tax | 2,676 | [1] | -119 | [1] |
Income tax | -989 | 44 | ||
Net current-period other comprehensive income (loss) | 1,962 | 725 | ||
Accumulated other comprehensive income (loss) | 5,238 | -660 | ||
Pension Liability [Member] | ||||
Accumulated other comprehensive income (loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss) | -30,760 | -18,918 | ||
Other comprehensive income (loss) before reclassifications | 0 | 0 | ||
Amounts reclassified from other accumulated comprehensive income (loss) before tax | 812 | [1] | 427 | [1] |
Income tax | -300 | -157 | ||
Net current-period other comprehensive income (loss) | 512 | 270 | ||
Accumulated other comprehensive income (loss) | -30,248 | -18,648 | ||
Cumulative Translation Adjustment [Member] | ||||
Accumulated other comprehensive income (loss) [Roll Forward] | ||||
Accumulated other comprehensive income (loss) | -12,338 | 2,731 | ||
Other comprehensive income (loss) before reclassifications | -12,501 | -44 | ||
Amounts reclassified from other accumulated comprehensive income (loss) before tax | 0 | [1] | 0 | [1] |
Income tax | 0 | 0 | ||
Net current-period other comprehensive income (loss) | -12,501 | -44 | ||
Accumulated other comprehensive income (loss) | ($24,839) | $2,687 | ||
[1] | The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income components are included in sales or cost of sales and as a component of net periodic pension cost (income), respectively. Refer to Note 4 and Note 9, respectively, for further details. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments (Foreign Currency Forward Contracts) (Details) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 | |
Derivative [Line Items] | |||
Gains (losses) on intercompany receivables | ($700,000) | ($300,000) | |
Derivative Asset [Abstract] | |||
Fair value, assets | 9,292,000 | 6,211,000 | |
Fair value, liabilities | -1,034,000 | -1,032,000 | |
Derivative Assets (Liabilities), at Fair Value, Net | 8,258,000 | 5,179,000 | |
Foreign Currency Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Forward contracts not designated as hedging instruments net realized gains (losses) | 600,000 | 200,000 | |
Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member] | |||
Derivative Asset [Abstract] | |||
Fair value, assets | 9,291,000 | 6,167,000 | |
Fair value, liabilities | -984,000 | -971,000 | |
Derivative Assets (Liabilities), at Fair Value, Net | 8,307,000 | 5,196,000 | |
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Notional amount of cash flow hedges | 35,800,000 | ||
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member] | |||
Derivative Asset [Abstract] | |||
Fair value, assets | 1,000 | 44,000 | |
Fair value, liabilities | -50,000 | -61,000 | |
Derivative Assets (Liabilities), at Fair Value, Net | -49,000 | -17,000 | |
Cash Flow Hedging [Member] | Foreign Currency Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Notional amount of cash flow hedges | 77,800,000 | ||
Cash flow hedges realized gains (losses) | 2,700,000 | -100,000 | |
Unrealized gain (loss) on cash flow hedges in accumulated other comprehensive income (loss) expected to be recognized in the next fiscal year | $5,200,000 |
Inventories_Details
Inventories (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventory Disclosure [Abstract] | ||
Raw materials | $42,600 | $44,847 |
Work-in-process | 15,912 | 13,876 |
Finished goods | 85,687 | 89,426 |
Total inventory | $144,199 | $148,149 |
Earnings_Per_Share_Details
Earnings Per Share (Details) (USD $) | 3 Months Ended | |
In Thousands, except Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Net income | $6,312 | $8,626 |
Basic-weighted average shares outstanding | 27,573,000 | 27,349,000 |
Effect of dilutive potential securities | 247,000 | 505,000 |
Diluted- weighted average shares outstanding | 27,820,000 | 27,854,000 |
Basic | $0.23 | $0.32 |
Diluted | $0.23 | $0.31 |
Shares excluded from computation of earnings per share | 38,000 | 0 |
Goodwill_and_Other_Intangible_2
Goodwill and Other Intangible Assets (Goodwill) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Goodwill [Roll Forward] | |
Beginning balance | $256,232 |
Reduction in goodwill resulting from a business acquisition purchase price allocation adjustment | -525 |
Foreign currency translation | 41 |
Ending balance | $255,748 |
Goodwill_and_Other_Intangible_3
Goodwill and Other Intangible Assets (Intangible Assets) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Intangible assets, gross carrying amount | $435,747 | $435,510 |
Intangible assets, accumulated amortization | -121,949 | -119,070 |
Future amortization expense [Abstract] | ||
2015 | 12,657 | |
2016 | 13,503 | |
2017 | 13,485 | |
2018 | 13,430 | |
2019 | 13,430 | |
2020 | 13,458 | |
Expense [Member] | ||
Future amortization expense [Abstract] | ||
2015 | 6,657 | |
2016 | 7,503 | |
2017 | 7,485 | |
2018 | 7,430 | |
2019 | 7,430 | |
2020 | 7,458 | |
Reduction of Revenue [Member] | ||
Future amortization expense [Abstract] | ||
2015 | 6,000 | |
2016 | 6,000 | |
2017 | 6,000 | |
2018 | 6,000 | |
2019 | 6,000 | |
2020 | 6,000 | |
Trademarks and Tradenames [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Unamortized intangible assets, gross carrying amount | 86,544 | 86,544 |
Customer Relationships [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Amortized intangible assets, gross carrying amount | 136,689 | 136,126 |
Intangible assets, accumulated amortization | -60,896 | -59,707 |
Promotional, Marketing and Distribution Rights [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Amortized intangible assets, gross carrying amount | 149,376 | 149,376 |
Intangible assets, accumulated amortization | -19,500 | -18,000 |
Patents and Other Intangible Assets [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Amortized intangible assets, gross carrying amount | 63,138 | 63,464 |
Intangible assets, accumulated amortization | ($41,553) | ($41,363) |
Goodwill_and_Other_Intangible_4
Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) (USD $) | 0 Months Ended | 3 Months Ended | 0 Months Ended | ||||||
In Millions, unless otherwise specified | Jan. 03, 2012 | Mar. 31, 2015 | Mar. 31, 2014 | Jan. 03, 2013 | Jan. 03, 2014 | Jan. 05, 2015 | Oct. 17, 2014 | Apr. 13, 2015 | Jul. 30, 2014 |
Other Intangible Assets [Line Items] | |||||||||
Up-front payment | $63 | ||||||||
Additional contingent cash payment | 84 | ||||||||
Contingent payment period | 4 years | ||||||||
Amortization expense | 3.2 | 3.3 | |||||||
Weighted average amortization period (in years) | 27 years | ||||||||
Customer Relationships [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Weighted average amortization period (in years) | 33 years | ||||||||
Promotional, Marketing and Distribution Rights [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Weighted average amortization period (in years) | 25 years | ||||||||
Patents and Other Intangible Assets [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Weighted average amortization period (in years) | 14 years | ||||||||
After One Year of Meeting Supply Target [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Conditional payment, amount paid | 34 | ||||||||
After Two Year of Meeting Supply Target [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Conditional payment, amount paid | 16.7 | ||||||||
After Year Three of Meeting Supply Target [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Conditional payment, amount paid | 16.7 | ||||||||
After Year Four of Meeting Supply Target [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Additional contingent cash payment | 16.7 | ||||||||
EndoDynamix, Inc. [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Contractual obligations for acquisitions of a business | 10.2 | 13.9 | |||||||
Milestone based payments | EndoDynamix, Inc. [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Contractual obligations for acquisitions of a business | 10.3 | ||||||||
Decrease in contingent liability | 3.7 | ||||||||
Royalty Agreements [Member] | EndoDynamix, Inc. [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Contractual obligations for acquisitions of a business | 3.6 | ||||||||
Subsequent Event [Member] | Milestone based payments | EndoDynamix, Inc. [Member] | |||||||||
Other Intangible Assets [Line Items] | |||||||||
Decrease in contingent liability | $2.40 |
Guarantees_Details
Guarantees (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Guarantees [Abstract] | ||
Standard warranty period | 1 year | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $2,286 | $2,422 |
Provision for warranties | 951 | 828 |
Claims made | -873 | -873 |
Ending balance | $2,364 | $2,377 |
Pension_Plan_Details
Pension Plan (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Compensation and Retirement Disclosure [Abstract] | ||
Service cost | $67 | $72 |
Interest cost on projected benefit obligation | 888 | 877 |
Expected return on plan assets | -1,469 | -1,496 |
Net amortization and deferral | 812 | 427 |
Net periodic pension (income) cost | $298 | ($120) |
Restructuring_and_Other_Expens2
Restructuring and Other Expense (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Restructuring and Other Expense [Line Items] | ||
Restructuring costs | $2,794,000 | |
Completion period | 9 months | |
Cost of Sales [Member] | Facility Consolidation Costs [Member] | ||
Restructuring and Other Expense [Line Items] | ||
Restructuring costs | 2,329,000 | 948,000 |
Selling and Administrative Expenses [Member] | ||
Restructuring and Other Expense [Line Items] | ||
Restructuring costs | 6,180,000 | 713,000 |
Patent dispute and shareholder activism costs | 0 | 2,484,000 |
Restructuring and other expense included in selling and administrative expense | 6,180,000 | 3,197,000 |
Professional Fees | 600,000 | |
Selling and Administrative Expenses [Member] | Patent Infringement [Member] | ||
Restructuring and Other Expense [Line Items] | ||
Patent dispute and shareholder activism costs | 1,900,000 | |
Settlement costs | $900,000 |
Restructuring_and_Other_Expens3
Restructuring and Other Expense (Restructuring Accrual) (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Restructuring accrual | |
Restructuring accrual, beginning balance | $8,254 |
Expenses incurred | 2,794 |
Payments made | -2,170 |
Restructuring accrual, ending balance | $8,878 |
Business_Segments_Details
Business Segments (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Net sales | $177,940 | $181,941 |
Orthopedic Surgery [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 98,597 | 105,948 |
General Surgery [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 66,062 | 63,460 |
Surgical Visualization [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $13,281 | $12,533 |
Legal_Proceedings_Details
Legal Proceedings (Details) (USD $) | Mar. 31, 2015 |
In Millions, unless otherwise specified | |
Commitments and Contingencies Disclosure [Abstract] | |
Product liability insurance, amount per incident | $25 |
Product liability insurance, aggregate annual amount | $25 |
Income_Taxes_Details
Income Taxes (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Tax [Line Items] | ||
Effective Income Tax Rate Reconciliation, Percent | 33.50% | 45.60% |
Deferred income taxes | $1,253 | $3,325 |
NEW YORK | ||
Income Tax [Line Items] | ||
Effective Income Tax Rate Reconciliation, State and Local Income Taxes, Percent | 0.00% | |
Deferred income taxes | $2,300 |