Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | Apr. 25, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | CONMED CORP | |
Entity Central Index Key | 816,956 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 27,871,783 |
Consolidated Condensed Statemen
Consolidated Condensed Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Statement of Comprehensive Income [Abstract] | ||
Net sales | $ 186,567 | $ 181,201 |
Cost of sales | 86,682 | 83,461 |
Gross profit | 99,885 | 97,740 |
Selling and administrative expense | 94,761 | 85,943 |
Research and development expense | 7,618 | 8,258 |
Operating expenses | 102,379 | 94,201 |
Income (loss) from operations | (2,494) | 3,539 |
Other expense | 0 | 2,942 |
Interest expense | 4,119 | 3,830 |
Loss before income taxes | (6,613) | (3,233) |
Benefit from income taxes | (2,068) | (968) |
Net loss | (4,545) | (2,265) |
Comprehensive income (loss) | $ (924) | $ 787 |
Per share data: | ||
Basic (in dollars per share) | $ (0.16) | $ (0.08) |
Diluted (in dollars per share) | (0.16) | (0.08) |
Dividends per share of common stock (in dollars per share) | $ 0.20 | $ 0.20 |
Weighted average common shares: | ||
Basic (shares) | 27,867 | 27,721 |
Diluted (shares) | 27,867 | 27,721 |
Consolidated Condensed Balance
Consolidated Condensed Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 34,660 | $ 27,428 |
Accounts receivable, net | 139,855 | 148,244 |
Inventories | 140,083 | 135,869 |
Prepaid expenses and other current assets | 18,905 | 18,971 |
Total current assets | 333,503 | 330,512 |
Property, plant and equipment, net | 119,742 | 122,029 |
Goodwill | 398,154 | 397,664 |
Other intangible assets, net | 414,766 | 419,549 |
Other assets | 61,860 | 59,229 |
Total assets | 1,328,025 | 1,328,983 |
Current liabilities: | ||
Current portion of long-term debt | 11,296 | 10,202 |
Accounts payable | 46,857 | 41,647 |
Accrued compensation and benefits | 24,622 | 32,036 |
Other current liabilities | 42,670 | 30,067 |
Total current liabilities | 125,445 | 113,952 |
Long-term debt | 487,045 | 488,288 |
Deferred income taxes | 114,358 | 119,143 |
Other long-term liabilities | 25,655 | 27,024 |
Total liabilities | 752,503 | 748,407 |
Commitments and contingencies | ||
Shareholders' equity: | ||
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 2017 and 2016, respectively | 313 | 313 |
Paid-in capital | 329,691 | 329,276 |
Retained earnings | 396,814 | 406,932 |
Accumulated other comprehensive loss | (54,905) | (58,526) |
Less: 3,434,513 and 3,471,121 shares of common stock in treasury, at cost in 2017 and 2016, respectively | (96,391) | (97,419) |
Total shareholders’ equity | 575,522 | 580,576 |
Total liabilities and shareholders’ equity | $ 1,328,025 | $ 1,328,983 |
Consolidated Condensed Balance4
Consolidated Condensed Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 31,299,194 | 31,299,194 |
Treasury stock, shares (in shares) | 3,434,513 | 3,471,121 |
Consolidated Condensed Stateme5
Consolidated Condensed Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities: | ||
Net loss | $ (4,545) | $ (2,265) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation | 4,866 | 4,986 |
Amortization | 9,058 | 8,272 |
Stock-based compensation | 1,955 | 2,489 |
Deferred income taxes | (4,266) | (2,942) |
Loss on early extinguishment of debt | 0 | 254 |
Increase (decrease) in cash flows from changes in assets and liabilities, net of acquired assets: | ||
Accounts receivable | 10,242 | 11,428 |
Inventories | (3,374) | (1,239) |
Accounts payable | 5,202 | (11,109) |
Accrued compensation and benefits | (8,665) | (7,519) |
Other assets | (8,157) | (17,143) |
Other liabilities | 12,982 | (1,770) |
Total operating | 19,843 | (14,293) |
Net cash provided by (used in) operating activities | 15,298 | (16,558) |
Cash flows from investing activities: | ||
Purchases of property, plant and equipment | (2,584) | (2,789) |
Payments related to business acquisitions, net of cash acquired | 0 | (256,424) |
Net cash used in investing activities | (2,584) | (259,213) |
Cash flows from financing activities: | ||
Payments on term loan | (2,188) | (2,188) |
Proceeds from term loan | 0 | 175,000 |
Proceeds from revolving line of credit | 38,000 | 137,000 |
Payments on revolving line of credit | (36,000) | (58,995) |
Payments related to distribution agreement | 0 | (16,667) |
Payments related to debt issuance costs | 0 | (5,556) |
Dividends paid on common stock | (5,566) | (5,542) |
Other, net | (512) | (612) |
Net cash provided by (used in) financing activities | (6,266) | 222,440 |
Effect of exchange rate changes on cash and cash equivalents | 784 | 721 |
Net increase (decrease) in cash and cash equivalents | 7,232 | (52,610) |
Cash and cash equivalents at beginning of period | 27,428 | 72,504 |
Cash and cash equivalents at end of period | 34,660 | 19,894 |
Non-cash financing activities: | ||
Dividends payable | $ 5,573 | $ 5,546 |
Operations
Operations | 3 Months Ended |
Mar. 31, 2017 | |
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, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [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, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 . 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, 2016 included in our Annual Report on Form 10-K. |
Business Acquisition
Business Acquisition | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Business Acquisition | Business Acquisition On January 4, 2016, we acquired all of the stock of SurgiQuest, Inc. ("SurgiQuest") for $257.7 million in cash (based on an aggregate purchase price of $265 million as adjusted pursuant to the merger agreement governing the acquisition). SurgiQuest develops, manufactures and markets the AirSeal ® System, the first integrated access management technology for use in laparoscopic and robotic procedures. This proprietary and differentiated access system is complementary to our current advanced surgical offering. The acquisition was funded through a combination of cash on hand and long-term borrowings. The unaudited pro forma information for the three months ended March 31, 2016 , assuming SurgiQuest occurred as of January 1, 2015 are presented below. This information has been prepared for comparative purposes only and does not purport to be indicative of the results of operations which actually would have resulted had the SurgiQuest acquisition occurred on the dates indicated, or which may result in the future. Three Months Ended March 31, 2016 Net sales $ 181,201 Net income 6,323 These pro forma results include certain adjustments, primarily due to increases in amortization expense due to fair value adjustments of intangible assets, increases in interest expense due to additional borrowings incurred to finance the acquisition, and acquisition related costs including transaction costs such as legal, accounting, valuation and other professional services as well as integration costs such as severance and retention. Acquisition related costs excluded from the determination of pro forma net income for the three months ended March 31, 2016 totaled $9.0 million . Net sales associated with SurgiQuest of $12.7 million have been recorded in the consolidated condensed statements of comprehensive income for the three months ended March 31, 2016 . It is impracticable to determine the earnings recorded in the consolidated condensed statements of comprehensive income associated with the SurgiQuest acquisition for the three months ended March 31, 2016 as these amounts are not separately measured. |
Comprehensive Income (Loss)
Comprehensive Income (Loss) | 3 Months Ended |
Mar. 31, 2017 | |
Comprehensive Income [Abstract] | |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) consists of the following: Three Months Ended March 31, 2017 2016 Net loss $ (4,545 ) $ (2,265 ) Other comprehensive income (loss): Pension liability, net of income tax (income tax expense of $293 and $257 for the three months ended March 31, 2017 and 2016, respectively) 500 438 Cash flow hedging loss, net of income tax (income tax benefit of $(496) and ($1,299) for the three months ended March 31, 2017 and 2016, respectively) (847 ) (2,217 ) Foreign currency translation adjustment 3,968 4,831 Comprehensive income (loss) $ (924 ) $ 787 Accumulated other comprehensive loss consists of the following: Cash Flow Hedging Gain (Loss) Pension Liability Cumulative Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2016 $ 1,546 $ (26,458 ) $ (33,614 ) $ (58,526 ) Other comprehensive income (loss) before reclassifications, net of tax (638 ) — 3,968 3,330 Amounts reclassified from accumulated other comprehensive income (loss) before tax a (331 ) 793 — 462 Income tax 122 (293 ) — (171 ) Net current-period other comprehensive income (loss) (847 ) 500 3,968 3,621 Balance, March 31, 2017 $ 699 $ (25,958 ) $ (29,646 ) $ (54,905 ) Cash Flow Hedging Gain (Loss) Pension Liability Cumulative Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2015 $ 1,201 $ (25,982 ) $ (29,113 ) $ (53,894 ) Other comprehensive income (loss) before reclassifications, net of tax (1,891 ) — 4,831 2,940 Amounts reclassified from accumulated other comprehensive income before tax a (517 ) 695 — 178 Income tax 191 (257 ) — (66 ) Net current-period other comprehensive income (loss) (2,217 ) 438 4,831 3,052 Balance, March 31, 2016 $ (1,016 ) $ (25,544 ) $ (24,282 ) $ (50,842 ) (a) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income (loss) components are included in sales or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 5 and Note 10, respectively, for further details. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2017 | |
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, 2017 which have been accounted for as cash flow hedges totaled $106.0 million . Net realized gains recognized for forward contracts accounted for as cash flow hedges approximated $0.3 million and $0.5 million for the three months ended March 31, 2017 and 2016 , respectively. Net unrealized gains on forward contracts outstanding, which have been accounted for as cash flow hedges and which have been included in accumulated other comprehensive income, totaled $0.7 million at March 31, 2017 . It is expected these unrealized gains will be recognized in the consolidated condensed statement of comprehensive income in 2017 and 2018 . 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, 2017 which have not been designated as hedges totaled $30.7 million . Net realized losses recognized in connection with those forward contracts not accounted for as hedges approximated $(0.2) million and $(0.3) million for the three months ended March 31, 2017 and 2016 , respectively, offsetting gains on our intercompany receivables of $0.0 million and $0.4 million for the three months ended March 31, 2017 and 2016 , respectively. These gains and losses have been recorded in selling and administrative expense in the consolidated condensed statements of comprehensive income. 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, 2017 and December 31, 2016 : March 31, 2017 Asset Fair Value Liabilities Fair Value Net Fair Value Derivatives designated as hedged instruments: Foreign exchange contracts $ 2,528 $ (1,419 ) $ 1,109 Derivatives not designated as hedging instruments: Foreign exchange contracts 21 (41 ) (20 ) Total derivatives $ 2,549 $ (1,460 ) $ 1,089 December 31, 2016 Asset Fair Value Liabilities Fair Value Net Fair Value Derivatives designated as hedged instruments: Foreign exchange contracts $ 3,962 $ (1,510 ) $ 2,452 Derivatives not designated as hedging instruments: Foreign exchange contracts 48 (54 ) (6 ) Total derivatives $ 4,010 $ (1,564 ) $ 2,446 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, 2017 and December 31, 2016 , we have recorded the net fair value of $1.1 million and $2.4 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. Valuation Techniques. Assets and liabilities carried at fair value and measured on a recurring basis as of March 31, 2017 consist of forward foreign exchange contracts and contingent liabilities associated with a business acquisition. 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 valued using Level 2 inputs and are listed in the table above. Certain acquisitions involve the potential for the payment of future contingent consideration upon the achievement of certain product development milestones and revenue based payments. 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. We 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, 2017 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories Inventories consist of the following: March 31, December 31, Raw materials $ 51,215 $ 42,821 Work-in-process 13,252 13,315 Finished goods 75,616 79,733 Total $ 140,083 $ 135,869 |
Earnings (Loss) Per Share
Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Share | Earnings (Loss) 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 ("SARs") during the period. The following table sets forth the computation of basic and diluted earnings (loss) per share for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Net loss $ (4,545 ) $ (2,265 ) Basic – weighted average shares outstanding 27,867 27,721 Effect of dilutive potential securities — — Diluted – weighted average shares outstanding 27,867 27,721 Net loss (per share) Basic $ (0.16 ) $ (0.08 ) Diluted (0.16 ) (0.08 ) The shares used in the calculation of diluted EPS exclude options and SARs to purchase shares 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 anti-dilutive. As the Company was in a net loss position at March 31, 2017 and 2016 , there were no anti-dilutive shares. |
Goodwill and Other Intangible A
Goodwill and Other Intangible Assets | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [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, 2017 are as follows: Balance as of December 31, 2016 $ 397,664 Foreign currency translation 490 Balance as of March 31, 2017 $ 398,154 Assets and liabilities of acquired businesses are recorded at their estimated fair values as of the date of acquisition. Goodwill represents costs in excess of fair values assigned to the underlying net assets of acquired businesses. Other intangible assets consist of the following: March 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortized intangible assets: Customer and distributor relationships $ 213,423 $ (77,851 ) $ 213,259 $ (75,164 ) Promotional, marketing and distribution rights 149,376 (31,500 ) 149,376 (30,000 ) Patents and other intangible assets 67,673 (40,825 ) 67,509 (40,335 ) Developed technology 49,600 (1,674 ) 49,600 (1,240 ) Unamortized intangible assets: Trademarks and tradenames 86,544 — 86,544 — $ 566,616 $ (151,850 ) $ 566,288 $ (146,739 ) Customer and distributor relationships, trademarks and tradenames, developed technology 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”). Amortization expense related to intangible assets which are subject to amortization totaled $5.2 million and $5.0 million in the three months ended March 31, 2017 and 2016 , 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 statements of comprehensive income. The weighted average amortization period for intangible assets which are amortized is 25 years. Customer and distributor relationships are being amortized over a weighted average life of 29 years. Developed technology is being amortized over a weighted average life of 17 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 13 years. Included in patents and other intangible assets at March 31, 2017 is an in-process research and development asset that is not currently amortized. The estimated intangible asset amortization expense remaining for the year ending December 31, 2017 and for each of the five succeeding years is as follows: Amortization included in expense Amortization recorded as a reduction of revenue Total Remaining, 2017 $ 10,905 $ 4,500 $ 15,405 2018 15,823 6,000 21,823 2019 15,678 6,000 21,678 2020 15,699 6,000 21,699 2021 14,307 6,000 20,307 2022 13,136 6,000 19,136 |
Guarantees
Guarantees | 3 Months Ended |
Mar. 31, 2017 | |
Guarantees [Abstract] | |
Guarantees | Guarantees We provide warranties on certain of our products at the time of sale and sell extended warranties. The standard warranty period for our capital and reusable equipment is generally one year and our extended warranties can vary in length. 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: 2017 2016 Balance as of January 1, $ 1,954 $ 2,509 Provision for warranties 777 833 Claims made (906 ) (841 ) Balance as of March 31, $ 1,825 $ 2,501 |
Pension Plan
Pension Plan | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Pension Plan | Pension Plan Net periodic pension cost consists of the following: Three Months Ended March 31, 2017 2016 Service cost $ 151 $ 113 Interest cost on projected benefit obligation 693 719 Expected return on plan assets (1,325 ) (1,297 ) Net amortization and deferral 793 695 Net periodic pension cost $ 312 $ 230 We do not expect to make any pension contributions during 2017 . |
Acquisition, Restructuring and
Acquisition, Restructuring and Other Expense | 3 Months Ended |
Mar. 31, 2017 | |
Acquisition, Restructuring and Other Expense [Abstract] | |
Acquisition, Restructuring and Other Expense | Acquisition, Restructuring and Other Expense Acquisition, restructuring and other expense consists of the following: Three Months Ended March 31, 2017 2016 Restructuring costs included in cost of sales $ 1,169 $ 864 Restructuring costs $ 1,322 $ 2,791 Business acquisition costs 1,488 9,045 SurgiQuest litigation verdict 12,200 — Patent settlement costs and other 1,048 — Acquisition, restructuring and other expense included in selling and administrative expense $ 16,058 $ 11,836 Debt refinancing costs included in other expense $ — $ 2,942 During the three months ended March 31, 2017 and 2016 , we incurred $1.5 million and $9.0 million in costs associated with the January 4, 2016 acquisition of SurgiQuest, Inc. as further described in Note 3. The costs incurred in 2016 consist of investment banking fees, consulting fees, legal fees associated with the acquisition as well as legal fees associated with the Lexion case as further described in Note 13, costs associated with expensing of unvested options acquired and integration related costs. The costs incurred in 2017 consist of legal fees associated with the Lexion case, costs associated with expensing of unvested options acquired and integration related cost. During the three months ended March 31, 2017 , we incurred $12.2 million in costs associated with the SurgiQuest, Inc. vs. Lexion Medical litigation verdict whereby SurgiQuest was found liable for $2.2 million in compensatory damages with an additional $10.0 million in punitive damages as further described in Note 13. We have recorded an accrual in other current liabilities at March 31, 2017 . During the three months ended March 31, 2017 , we incurred $1.0 million in costs associated with a patent settlement agreement as well as other legal costs. During 2017 and 2016 , we continued our operational restructuring plan. We incurred $1.2 million and $0.9 million in costs associated with the operational restructuring during the three months ended March 31, 2017 and 2016 , respectively. These costs were charged to cost of sales and include severance and other charges. During 2017 and 2016 , we restructured certain selling and administrative functions and incurred severance and other related costs in the amount of $1.3 million and $2.8 million for the three months ended March 31, 2017 and 2016 , respectively. We have recorded an accrual in current and other long term liabilities of $1.8 million at March 31, 2017 mainly related to severance costs associated with the restructuring. Below is a roll forward of the costs incurred and cash expenditures associated with these activities during the three months ended March 31, 2017 and 2016 : 2017 2016 Balance as of January 1, $ 2,643 $ 7,175 Expenses incurred 2,515 3,655 Payments made (3,401 ) (6,955 ) Balance at March 31, $ 1,757 $ 3,875 |
Business Segments
Business Segments | 3 Months Ended |
Mar. 31, 2017 | |
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 executive management team) 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. We adjusted our product line disclosures to align with the way we review net sales beginning in fiscal year 2017. In doing so, we consolidated our surgical visualization line into our orthopedic surgery product line disclosure. Our product lines consist of orthopedic surgery and general surgery. Orthopedic surgery consists of sports medicine instrumentation and small bone, large bone and specialty powered surgical instruments as well as imaging systems for use in minimally invasive surgery procedures including 2DHD and 3DHD vision technologies 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. These product lines' net sales are as follows: Three Months Ended March 31, 2017 2016 Orthopedic surgery $ 103,789 $ 105,299 General surgery 82,778 75,902 Consolidated net sales $ 186,567 $ 181,201 |
Legal Proceedings
Legal Proceedings | 3 Months Ended |
Mar. 31, 2017 | |
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. Likewise, we receive reports of alleged misconduct from employees and third parties, which we investigate as appropriate. Manufacturers of medical devices have been the subject of various enforcement actions relating to interactions with health care providers domestically or internationally whereby companies are claimed to have provided health care providers with inappropriate incentives to purchase their products. Similarly, the Foreign Corrupt Practices Act ("FCPA") imposes obligations on manufacturers with respect to interactions with health care providers who may be considered government officials based on their affiliation with public hospitals. The FCPA also requires publicly listed manufacturers to maintain accurate books and records, and maintain internal accounting controls sufficient to provide assurance that transactions are accurately recorded, lawful and in accordance with management's authorization. The FCPA poses unique challenges both because manufacturers operate in foreign cultures in which conduct illegal under the FCPA may not be illegal in local jurisdictions, and because, in some cases, a United States manufacturer may face risks under the FCPA based on the conduct of third parties over whom the manufacturer may not have complete control. 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, results of operations or cash flows. 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. 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, investigations or reports of alleged misconduct 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, investigations or reports of misconduct, 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. 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. In September 2013, Lexion Medical ("Lexion") filed suit against SurgiQuest in federal court in the District of Minnesota alleging false advertising under the Lanham Act, as well as various state law claims, including common law trade libel and unfair competition. In March 2014, SurgiQuest’s motion to dismiss for lack of personal jurisdiction was granted and that same day, SurgiQuest filed suit against Lexion in federal court in the District of Delaware seeking, among other claims, a declaratory judgment that SurgiQuest’s actions did not violate the Lanham Act. Lexion filed an answer generally denying SurgiQuest’s claims, and asserted counterclaims that were substantially similar to the claims Lexion brought in the Minnesota action. The underlying claims were that SurgiQuest had engaged in false advertising under the Lanham Act, and had engaged in violations of Delaware state laws, including deceptive trade practices and unfair competition. Lexion sought damages of $22.0 million for alleged lost profits and $18.7 million for costs related to alleged “corrective advertising” as well as an unspecified sum for disgorgement of SurgiQuest’s alleged profit. On January 4, 2016, SurgiQuest became a subsidiary of CONMED as further described in Note 3, and we assumed the costs and liabilities related to the Lexion lawsuit subject to the terms of the merger agreement referenced in Note 3. On April 11, 2017, a jury returned a verdict finding SurgiQuest liable for $2.2 million in compensatory damages with an additional $10.0 million in punitive damages. These costs are recorded in selling and administrative expense as of March 31, 2017 . The Court entered judgment on April 13, 2017. We are currently evaluating our plans for an appeal. There can be no assurance an appeal will be successful, if we pursue one. In 2014, the Company acquired EndoDynamix, Inc. The agreement governing the terms of the acquisition provide that, if various conditions are met, certain contingent payments relating to the first commercial sale of the products (the milestone payment), as well as royalties based on sales (the revenue based payments), are due to the seller. We have notified the seller that there is a need to redesign the product, and that as a consequence, the first commercial sale has been delayed. Consequently, the payment of contingent milestone and revenue-based payments have been delayed. On January 18, 2017, the seller provided notice ("the Notice") seeking $12.7 million , which essentially represents the sum of the projected contingent milestone and revenue-based payments on an accelerated basis. CONMED responded to the Notice denying that there was any basis for acceleration of the payments due under the acquisition agreement. On February 22, 2017, the representative of the former shareholders of EndoDynamix filed a complaint in Delaware Chancery Court claiming breach of contract and seeking the contingent payments on an accelerated basis. We do not believe that there is a legitimate basis for seeking the acceleration of the contingent payments, and expect to defend the claims asserted by the sellers of EndoDynamix in the Delaware Court. |
New Accounting Pronouncements
New Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2017 | |
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. In March, April and May 2016, the FASB issued ASU 2016-08 related to principal versus agent considerations; ASU 2016-10 related to identifying performance obligations and licensing; and ASU 2016-12 clarifying the guidance on assessing collectability, presenting sales taxes, measuring noncash consideration, and certain transition matters, respectively. These additional ASUs provide supplemental adoption guidance and clarification to ASU 2014-09. The guidance in these ASUs is effective for annual reporting periods beginning after December 15, 2017 and early adoption is permitted as of January 1, 2017. The standard allows the option of either a full retrospective adoption, meaning the standard is applied to all periods presented, or a modified retrospective adoption, meaning the standard is applied only to the most current period. The Company will adopt the new standard on January 1, 2018. The Company is currently evaluating the impact of adopting this new guidance on the consolidated financial statements, however we currently anticipate applying the modified retrospective approach. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory. An entity should measure inventory within the scope of this ASU at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal and transportation. This ASU is effective for annual periods beginning after December 15, 2016. We implemented this new guidance during the first quarter of 2017 and it did not have a material impact on the consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842) (“ASU 2016-02”). This requires lessees to put most leases on their balance sheets but recognize the expenses on their income statements in a manner similar to current practice. ASU 2016-02 states that a lessee would recognize a lease liability for the obligation to make lease payments and a right-to-use asset for the right to use the underlying asset for the lease term. The new standard is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently evaluating the impact of the adoption of ASU 2016-02. In March 2016, the FASB issued ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting. We adopted this new guidance effective January 1, 2017. This ASU requires the following: • All tax effects are now recorded in the statement of operations and are accounted for as an operating activity in the statement of cash flows on a prospective basis. Historically, tax benefits in excess of compensation cost were recorded in equity and were accounted for in the financing section of the cash flow. This ASU was not material during the three months ended March 31, 2017, however there can be no assurance it will not be material in future periods. • All cash payments made to taxing authorities on the employee's behalf for withheld shares are to be presented as financing activities in the statement of cash flows on a retrospective basis. As a result, we reclassified a $0.7 million cash outflow from operating activities to financing activities for the three months ended March 31, 2016. • In the diluted net earnings per share calculation, when applying the treasury stock method for shares that could be repurchased, the assumed proceeds no longer include the amount of excess tax benefit. This did not have a material impact on the Company's diluted net earnings per share calculation. In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (A Consensus of the FASB Emerging Issues Task Force). This ASU provides amendments to specific statement of cash flows classification issues. This new guidance is effective for periods beginning after December 15, 2017, however early adoption is permitted. The Company adopted this new guidance effective January 1, 2017 and it did not have a material impact on the consolidated financial statements. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this ASU require that a statement of cash flows explain the change during the period in total cash, cash equivalents and amounts generally described as restricted cash or restricted cash equivalents. The ASU is effective for periods beginning after December 15, 2017, however early adoption is permitted. The Company is currently assessing the impact of this guidance on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-01, Clarifying the Definition of a Business. This ASU states w hen substantially all of the fair value of gross assets acquired is concentrated in a single asset (or a group of similar assets), the assets acquired would not represent a business. In addition, this guidance states in order to be a business, an input and a substantive process must significantly contribute to the ability to produce outputs. This new guidance is effective for periods beginning after December 15, 2017, however early adoption is permitted. The Company is currently assessing the impact of this guidance on our consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Accounting for Goodwill Impairment. This ASU removes Step 2 of the goodwill impairment test, which requires hypothetical purchase price allocation. A goodwill impairment will now be the amount by which the reporting unit's carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. This new guidance is effective for periods beginning after December 15, 2019, however early adoption is permitted. The Company is currently assessing the impact of this guidance on our consolidated financial statements. |
Business Acquisition Business A
Business Acquisition Business Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Business Combinations [Abstract] | |
Business Acquisition, Pro Forma Information | The unaudited pro forma information for the three months ended March 31, 2016 , assuming SurgiQuest occurred as of January 1, 2015 are presented below. This information has been prepared for comparative purposes only and does not purport to be indicative of the results of operations which actually would have resulted had the SurgiQuest acquisition occurred on the dates indicated, or which may result in the future. Three Months Ended March 31, 2016 Net sales $ 181,201 Net income 6,323 |
Comprehensive Income (Loss) (Ta
Comprehensive Income (Loss) (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Comprehensive Income [Abstract] | |
Schedule of Comprehensive Income (Loss) | Comprehensive income (loss) consists of the following: Three Months Ended March 31, 2017 2016 Net loss $ (4,545 ) $ (2,265 ) Other comprehensive income (loss): Pension liability, net of income tax (income tax expense of $293 and $257 for the three months ended March 31, 2017 and 2016, respectively) 500 438 Cash flow hedging loss, net of income tax (income tax benefit of $(496) and ($1,299) for the three months ended March 31, 2017 and 2016, respectively) (847 ) (2,217 ) Foreign currency translation adjustment 3,968 4,831 Comprehensive income (loss) $ (924 ) $ 787 |
Schedule of Accumulated Other Comprehensive Loss | Accumulated other comprehensive loss consists of the following: Cash Flow Hedging Gain (Loss) Pension Liability Cumulative Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2016 $ 1,546 $ (26,458 ) $ (33,614 ) $ (58,526 ) Other comprehensive income (loss) before reclassifications, net of tax (638 ) — 3,968 3,330 Amounts reclassified from accumulated other comprehensive income (loss) before tax a (331 ) 793 — 462 Income tax 122 (293 ) — (171 ) Net current-period other comprehensive income (loss) (847 ) 500 3,968 3,621 Balance, March 31, 2017 $ 699 $ (25,958 ) $ (29,646 ) $ (54,905 ) Cash Flow Hedging Gain (Loss) Pension Liability Cumulative Translation Adjustments Accumulated Other Comprehensive Income (Loss) Balance, December 31, 2015 $ 1,201 $ (25,982 ) $ (29,113 ) $ (53,894 ) Other comprehensive income (loss) before reclassifications, net of tax (1,891 ) — 4,831 2,940 Amounts reclassified from accumulated other comprehensive income before tax a (517 ) 695 — 178 Income tax 191 (257 ) — (66 ) Net current-period other comprehensive income (loss) (2,217 ) 438 4,831 3,052 Balance, March 31, 2016 $ (1,016 ) $ (25,544 ) $ (24,282 ) $ (50,842 ) (a) The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income (loss) components are included in sales or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 5 and Note 10, respectively, for further details. |
Fair Value of Financial Instr22
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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, 2017 and December 31, 2016 : March 31, 2017 Asset Fair Value Liabilities Fair Value Net Fair Value Derivatives designated as hedged instruments: Foreign exchange contracts $ 2,528 $ (1,419 ) $ 1,109 Derivatives not designated as hedging instruments: Foreign exchange contracts 21 (41 ) (20 ) Total derivatives $ 2,549 $ (1,460 ) $ 1,089 December 31, 2016 Asset Fair Value Liabilities Fair Value Net Fair Value Derivatives designated as hedged instruments: Foreign exchange contracts $ 3,962 $ (1,510 ) $ 2,452 Derivatives not designated as hedging instruments: Foreign exchange contracts 48 (54 ) (6 ) Total derivatives $ 4,010 $ (1,564 ) $ 2,446 |
Inventories (Tables)
Inventories (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Inventory Disclosure [Abstract] | |
Schedule of inventory | Inventories consist of the following: March 31, December 31, Raw materials $ 51,215 $ 42,821 Work-in-process 13,252 13,315 Finished goods 75,616 79,733 Total $ 140,083 $ 135,869 |
Earnings (Loss) Per Share (Tabl
Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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 (loss) per share for the three months ended March 31, 2017 and 2016 : Three Months Ended March 31, 2017 2016 Net loss $ (4,545 ) $ (2,265 ) Basic – weighted average shares outstanding 27,867 27,721 Effect of dilutive potential securities — — Diluted – weighted average shares outstanding 27,867 27,721 Net loss (per share) Basic $ (0.16 ) $ (0.08 ) Diluted (0.16 ) (0.08 ) |
Goodwill and Other Intangible25
Goodwill and Other Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | The changes in the net carrying amount of goodwill for the three months ended March 31, 2017 are as follows: Balance as of December 31, 2016 $ 397,664 Foreign currency translation 490 Balance as of March 31, 2017 $ 398,154 |
Schedule of Finite-Lived and Indefinite-Lived Intangible Assets | Other intangible assets consist of the following: March 31, 2017 December 31, 2016 Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Amortized intangible assets: Customer and distributor relationships $ 213,423 $ (77,851 ) $ 213,259 $ (75,164 ) Promotional, marketing and distribution rights 149,376 (31,500 ) 149,376 (30,000 ) Patents and other intangible assets 67,673 (40,825 ) 67,509 (40,335 ) Developed technology 49,600 (1,674 ) 49,600 (1,240 ) Unamortized intangible assets: Trademarks and tradenames 86,544 — 86,544 — $ 566,616 $ (151,850 ) $ 566,288 $ (146,739 ) |
Schedule of Estimated Amortization Expense | The estimated intangible asset amortization expense remaining for the year ending December 31, 2017 and for each of the five succeeding years is as follows: Amortization included in expense Amortization recorded as a reduction of revenue Total Remaining, 2017 $ 10,905 $ 4,500 $ 15,405 2018 15,823 6,000 21,823 2019 15,678 6,000 21,678 2020 15,699 6,000 21,699 2021 14,307 6,000 20,307 2022 13,136 6,000 19,136 |
Guarantees (Tables)
Guarantees (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
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: 2017 2016 Balance as of January 1, $ 1,954 $ 2,509 Provision for warranties 777 833 Claims made (906 ) (841 ) Balance as of March 31, $ 1,825 $ 2,501 |
Pension Plan (Tables)
Pension Plan (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of net benefit cost | Net periodic pension cost consists of the following: Three Months Ended March 31, 2017 2016 Service cost $ 151 $ 113 Interest cost on projected benefit obligation 693 719 Expected return on plan assets (1,325 ) (1,297 ) Net amortization and deferral 793 695 Net periodic pension cost $ 312 $ 230 |
Acquisition, Restructuring an28
Acquisition, Restructuring and Other Expense (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Acquisition, Restructuring and Other Expense [Abstract] | |
Schedule of Acquisition, Restructuring and Other Expense | Acquisition, restructuring and other expense consists of the following: Three Months Ended March 31, 2017 2016 Restructuring costs included in cost of sales $ 1,169 $ 864 Restructuring costs $ 1,322 $ 2,791 Business acquisition costs 1,488 9,045 SurgiQuest litigation verdict 12,200 — Patent settlement costs and other 1,048 — Acquisition, restructuring and other expense included in selling and administrative expense $ 16,058 $ 11,836 Debt refinancing costs included in other expense $ — $ 2,942 |
Schedule of Restructuring Accrual | Below is a roll forward of the costs incurred and cash expenditures associated with these activities during the three months ended March 31, 2017 and 2016 : 2017 2016 Balance as of January 1, $ 2,643 $ 7,175 Expenses incurred 2,515 3,655 Payments made (3,401 ) (6,955 ) Balance at March 31, $ 1,757 $ 3,875 |
Business Segments (Tables)
Business Segments (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Segment Reporting [Abstract] | |
Schedule of net sales information by product line | These product lines' net sales are as follows: Three Months Ended March 31, 2017 2016 Orthopedic surgery $ 103,789 $ 105,299 General surgery 82,778 75,902 Consolidated net sales $ 186,567 $ 181,201 |
Business Acquisition Business30
Business Acquisition Business Acquisition (Details) - USD ($) $ in Thousands | Jan. 04, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Business Acquisition [Line Items] | |||
Net sales | $ 186,567 | $ 181,201 | |
SurgiQuestInc [Member] | |||
Business Acquisition [Line Items] | |||
Business combination, consideration transferred | $ 257,700 | ||
Payments to acquire business | $ 265,000 | ||
Net sales | 12,700 | ||
Pro Forma Information [Abstract] | |||
Net sales | 181,201 | ||
Net income | 6,323 | ||
Pro Forma [Member] | SurgiQuestInc [Member] | |||
Business Acquisition [Line Items] | |||
Business acquisition costs | $ 9,000 |
Comprehensive Income (Loss) (De
Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Comprehensive Income [Abstract] | ||
Net loss | $ (4,545) | $ (2,265) |
Pension liability, net of income tax | 500 | 438 |
Cash flow hedging loss, net of income tax | (847) | (2,217) |
Foreign currency translation adjustment | 3,968 | 4,831 |
Comprehensive income (loss) | (924) | 787 |
Pension liability, tax | 293 | 257 |
Cash flow hedging gain (loss), tax | $ (496) | $ (1,299) |
Comprehensive Income (Loss) (Ac
Comprehensive Income (Loss) (Accumulated Other Comprehensive income (loss)) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | ||
Accumulated other comprehensive income (loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss) | $ (58,526) | ||
Income tax | 2,068 | $ 968 | |
Accumulated other comprehensive income (loss) | (54,905) | ||
Accumulated Other Comprehensive Income (Loss) [Member] | |||
Accumulated other comprehensive income (loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss) | (58,526) | (53,894) | |
Other comprehensive income (loss) before reclassifications | 3,330 | 2,940 | |
Amounts reclassified from other accumulated comprehensive income (loss) before tax | [1] | 462 | 178 |
Income tax | (171) | (66) | |
Net current-period other comprehensive income (loss) | 3,621 | 3,052 | |
Accumulated other comprehensive income (loss) | (54,905) | (50,842) | |
Cash Flow Hedging Gain (Loss) [Member] | |||
Accumulated other comprehensive income (loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss) | 1,546 | 1,201 | |
Other comprehensive income (loss) before reclassifications | (638) | (1,891) | |
Amounts reclassified from other accumulated comprehensive income (loss) before tax | [1] | (331) | (517) |
Income tax | 122 | 191 | |
Net current-period other comprehensive income (loss) | (847) | (2,217) | |
Accumulated other comprehensive income (loss) | 699 | (1,016) | |
Pension Liability [Member] | |||
Accumulated other comprehensive income (loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss) | (26,458) | (25,982) | |
Other comprehensive income (loss) before reclassifications | 0 | 0 | |
Amounts reclassified from other accumulated comprehensive income (loss) before tax | [1] | 793 | 695 |
Income tax | (293) | (257) | |
Net current-period other comprehensive income (loss) | 500 | 438 | |
Accumulated other comprehensive income (loss) | (25,958) | (25,544) | |
Cumulative Translation Adjustment [Member] | |||
Accumulated other comprehensive income (loss) [Roll Forward] | |||
Accumulated other comprehensive income (loss) | (33,614) | (29,113) | |
Other comprehensive income (loss) before reclassifications | 3,968 | 4,831 | |
Amounts reclassified from other accumulated comprehensive income (loss) before tax | [1] | 0 | 0 |
Income tax | 0 | 0 | |
Net current-period other comprehensive income (loss) | 3,968 | 4,831 | |
Accumulated other comprehensive income (loss) | $ (29,646) | $ (24,282) | |
[1] | The cash flow hedging gain (loss) and pension liability accumulated other comprehensive income (loss) components are included in sales or cost of sales and as a component of net periodic pension cost, respectively. Refer to Note 5 and Note 10, respectively, for further details. |
Fair Value of Financial Instr33
Fair Value of Financial Instruments (Foreign Currency Forward Contracts) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Derivative [Line Items] | |||
Gains (losses) on intercompany receivables | $ 0 | $ 400 | |
Derivative Assets and Liabilities at Fair Value [Abstract] | |||
Fair value, assets | 2,549 | $ 4,010 | |
Derivative Liability, Fair Value, Gross Liability | (1,460) | (1,564) | |
Derivative Assets (Liabilities), at Fair Value, Net | 1,089 | 2,446 | |
Foreign Currency Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Forward contracts not designated as hedging instruments net realized gains (losses) | (200) | (300) | |
Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member] | |||
Derivative Assets and Liabilities at Fair Value [Abstract] | |||
Fair value, assets | 2,528 | 3,962 | |
Derivative Liability, Fair Value, Gross Liability | (1,419) | (1,510) | |
Derivative Assets (Liabilities), at Fair Value, Net | 1,109 | 2,452 | |
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Notional amount of cash flow hedges | 30,700 | ||
Not Designated as Hedging Instrument [Member] | Foreign Currency Forward Contracts [Member] | Prepaid Expenses and Other Current Assets [Member] | |||
Derivative Assets and Liabilities at Fair Value [Abstract] | |||
Fair value, assets | 21 | 48 | |
Derivative Liability, Fair Value, Gross Liability | (41) | (54) | |
Derivative Assets (Liabilities), at Fair Value, Net | (20) | $ (6) | |
Cash Flow Hedging [Member] | Foreign Currency Forward Contracts [Member] | |||
Derivative [Line Items] | |||
Notional amount of cash flow hedges | 106,000 | ||
Cash flow hedges realized gains | 300 | $ 500 | |
Unrealized gains on cash flow hedges in accumulated other comprehensive income (loss) expected to be recognized in the next fiscal year | $ 700 |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 51,215 | $ 42,821 |
Work-in-process | 13,252 | 13,315 |
Finished goods | 75,616 | 79,733 |
Total inventory | $ 140,083 | $ 135,869 |
Earnings (Loss) Per Share (Deta
Earnings (Loss) Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Earnings Per Share [Abstract] | ||
Net loss | $ (4,545) | $ (2,265) |
Basic-weighted average shares outstanding (in shares) | 27,867,000 | 27,721,000 |
Effect of dilutive potential securities (in shares) | 0 | 0 |
Diluted- weighted average shares outstanding (in shares) | 27,867,000 | 27,721,000 |
Basic (in dollars per share) | $ (0.16) | $ (0.08) |
Diluted (in dollars per share) | $ (0.16) | $ (0.08) |
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 0 |
Goodwill and Other Intangible36
Goodwill and Other Intangible Assets (Goodwill) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2017USD ($) | |
Goodwill [Roll Forward] | |
Beginning balance | $ 397,664 |
Foreign currency translation | 490 |
Ending balance | $ 398,154 |
Goodwill and Other Intangible37
Goodwill and Other Intangible Assets (Intangible Assets) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Intangible assets, Gross carrying amount | $ 566,616 | $ 566,288 |
Intangible assets, Accumulated amortization | (151,850) | (146,739) |
Future amortization expense [Abstract] | ||
Remaining, 2017 | 15,405 | |
2,018 | 21,823 | |
2,019 | 21,678 | |
2,020 | 21,699 | |
2,021 | 20,307 | |
2,022 | 19,136 | |
Expense [Member] | ||
Future amortization expense [Abstract] | ||
Remaining, 2017 | 10,905 | |
2,018 | 15,823 | |
2,019 | 15,678 | |
2,020 | 15,699 | |
2,021 | 14,307 | |
2,022 | 13,136 | |
Reduction of Revenue [Member] | ||
Future amortization expense [Abstract] | ||
Remaining, 2017 | 4,500 | |
2,018 | 6,000 | |
2,019 | 6,000 | |
2,020 | 6,000 | |
2,021 | 6,000 | |
2,022 | 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 and Distributor Relationships [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Amortized intangible assets, Gross carrying amount | 213,423 | 213,259 |
Intangible assets, Accumulated amortization | (77,851) | (75,164) |
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 | (31,500) | (30,000) |
Patents and Other Intangible Assets [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Amortized intangible assets, Gross carrying amount | 67,673 | 67,509 |
Intangible assets, Accumulated amortization | (40,825) | (40,335) |
Technology-Based Intangible Assets [Member] | ||
Schedule of Finite-Lived and Indefinite-Lived Assets [Line Items] | ||
Amortized intangible assets, Gross carrying amount | 49,600 | 49,600 |
Intangible assets, Accumulated amortization | $ (1,674) | $ (1,240) |
Goodwill and Other Intangible38
Goodwill and Other Intangible Assets (Other Intangible Assets) (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Other Intangible Assets [Line Items] | ||
Amortization expense | $ 5.2 | $ 5 |
Weighted average amortization period (in years) | 25 years | |
Customer and Distributor Relationships [Member] | ||
Other Intangible Assets [Line Items] | ||
Weighted average amortization period (in years) | 29 years | |
Technology-Based Intangible Assets [Member] | ||
Other Intangible Assets [Line Items] | ||
Weighted average amortization period (in years) | 17 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) | 13 years |
Guarantees (Details)
Guarantees (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Guarantees [Abstract] | ||
Standard warranty period (in years) | 1 year | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 1,954 | $ 2,509 |
Provision for warranties | 777 | 833 |
Claims made | (906) | (841) |
Ending balance | $ 1,825 | $ 2,501 |
Pension Plan (Details)
Pension Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | ||
Service cost | $ 151 | $ 113 |
Interest cost on projected benefit obligation | 693 | 719 |
Expected return on plan assets | (1,325) | (1,297) |
Net amortization and deferral | 793 | 695 |
Net periodic pension cost | $ 312 | $ 230 |
Acquisition, Restructuring an41
Acquisition, Restructuring and Other Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Acquisition, Restructuring and Other Expense [Line Items] | ||||
Restructuring costs | $ 2,515 | $ 3,655 | ||
Debt refinancing costs included in other expense | 0 | 2,942 | ||
Restructuring reserve | 1,757 | 3,875 | $ 2,643 | $ 7,175 |
Cost of Sales [Member] | ||||
Acquisition, Restructuring and Other Expense [Line Items] | ||||
Restructuring costs | 1,169 | 864 | ||
Selling and Administrative Expenses [Member] | ||||
Acquisition, Restructuring and Other Expense [Line Items] | ||||
Patent settlement costs and other | 1,048 | 0 | ||
SurgiQuest litigation verdict | 12,200 | 0 | ||
Acquisition, restructuring and other expense included in selling and administrative expense | 16,058 | 11,836 | ||
Compensatory damages awarded | 2,200 | |||
Punitive damages awarded | 10,000 | |||
Selling and Administrative Expenses [Member] | Administrative Restructuring [Member] | ||||
Acquisition, Restructuring and Other Expense [Line Items] | ||||
Restructuring costs | 1,322 | 2,791 | ||
Other Expense [Member] | ||||
Acquisition, Restructuring and Other Expense [Line Items] | ||||
Debt refinancing costs included in other expense | 0 | 2,942 | ||
SurgiQuestInc [Member] | Selling and Administrative Expenses [Member] | ||||
Acquisition, Restructuring and Other Expense [Line Items] | ||||
Business acquisition costs | 1,488 | $ 9,045 | ||
SurgiQuest litigation verdict | 12,200 | |||
Compensatory damages awarded | 2,200 | |||
Punitive damages awarded | $ 10,000 |
Acquisition, Restructuring an42
Acquisition, Restructuring and Other Expense (Restructuring Accrual) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Restructuring accrual | ||
Restructuring accrual, beginning balance | $ 2,643 | $ 7,175 |
Expenses incurred | 2,515 | 3,655 |
Payments made | (3,401) | (6,955) |
Restructuring accrual, ending balance | $ 1,757 | $ 3,875 |
Business Segments (Details)
Business Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Segment Reporting Information [Line Items] | ||
Net sales | $ 186,567 | $ 181,201 |
Orthopedic Surgery [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | 103,789 | 105,299 |
General Surgery [Member] | ||
Segment Reporting Information [Line Items] | ||
Net sales | $ 82,778 | $ 75,902 |
Legal Proceedings (Details)
Legal Proceedings (Details) - USD ($) $ in Millions | Jan. 18, 2017 | Mar. 31, 2017 |
Loss Contingencies [Line Items] | ||
Product liability insurance, amount per incident | $ 25 | |
Product liability insurance, aggregate annual amount | 25 | |
Lexion Alleged Lost Profits [Member] | ||
Loss Contingencies [Line Items] | ||
Damages sought | 22 | |
Lexion Costs Related to Alleged Corrective Advertising [Member] | ||
Loss Contingencies [Line Items] | ||
Damages sought | 18.7 | |
Pending Litigation [Member] | EndoDynamix, Inc. [Member] | ||
Loss Contingencies [Line Items] | ||
Damages sought | $ 12.7 | |
Selling and Administrative Expenses [Member] | ||
Loss Contingencies [Line Items] | ||
Compensatory damages awarded | 2.2 | |
Punitive damages awarded | $ 10 |
New Accounting Pronouncements N
New Accounting Pronouncements New Accounting Pronouncements (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by (used in) financing activities | $ (6,266) | $ 222,440 |
Net cash provided by (used in) operating activities | $ 15,298 | (16,558) |
Accounting Standards Update 2016-09, Statutory Tax Withholding Component [Member] | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Net cash provided by (used in) financing activities | (700) | |
Net cash provided by (used in) operating activities | $ 700 |