Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Feb. 26, 2016 | Jun. 30, 2015 | |
Document And Entity Information [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Period End Date | Dec. 31, 2015 | ||
Document Fiscal Year Focus | 2,015 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | EXAC | ||
Entity Registrant Name | EXACTECH INC | ||
Entity Central Index Key | 913,165 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 14,027,809 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 214,994,762 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
ASSETS | ||
Cash and cash equivalents | $ 12,713 | $ 10,051 |
Accounts receivable, net of allowances of $1,011 and $946 | 52,442 | 50,731 |
Prepaid expenses and other assets, net | 2,552 | 2,436 |
Income taxes receivable | 486 | 1,492 |
Inventories – current | 71,429 | 72,827 |
Deferred tax assets – current | 1,735 | 1,620 |
Total current assets | 141,357 | 139,157 |
PROPERTY AND EQUIPMENT: | ||
Land | 4,494 | 2,742 |
Machinery and equipment | 37,008 | 35,434 |
Surgical instruments | 109,152 | 101,142 |
Furniture and fixtures | 4,655 | 4,556 |
Facilities | 20,348 | 19,981 |
Projects in process | 1,218 | 1,166 |
Total property and equipment | 176,875 | 165,021 |
Accumulated depreciation | (96,713) | (84,915) |
Net property and equipment | 80,162 | 80,106 |
OTHER ASSETS: | ||
Deferred financing and deposits, net | 858 | 676 |
Non-current inventories | 23,376 | 17,465 |
Goodwill | 18,850 | 13,091 |
Total other assets | 55,723 | 41,777 |
TOTAL ASSETS | 277,242 | 261,040 |
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||
Accounts payable | 13,932 | 13,615 |
Income taxes payable | 603 | 146 |
Accrued expenses and other liabilities | 9,498 | 9,194 |
Other current liabilities | 792 | 250 |
Current portion of long-term debt | 0 | 3,000 |
Total current liabilities | 24,825 | 26,205 |
LONG-TERM LIABILITIES: | ||
Deferred tax liabilities | 2,178 | 2,794 |
Line of credit | 16,000 | 0 |
Long-term debt, net of current portion | 0 | 20,250 |
Other long-term liabilities | 5,850 | 420 |
Total long-term liabilities | 24,028 | 23,464 |
Total liabilities | 48,853 | 49,669 |
SHAREHOLDERS’ EQUITY: | ||
Common stock, $.01 par value; 30,000,000 shares authorized, 14,153,669 and 13,890,696 shares issued and outstanding | 142 | 139 |
Additional paid-in capital | 81,963 | 76,126 |
Accumulated other comprehensive loss | (11,986) | (8,397) |
Retained earnings | 158,270 | 143,503 |
Total shareholders’ equity | 228,389 | 211,371 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 277,242 | 261,040 |
Product licenses and designs | ||
OTHER ASSETS: | ||
Product licenses and designs, net | 11,121 | 8,641 |
Patents and trademarks | ||
OTHER ASSETS: | ||
Product licenses and designs, net | 1,426 | 1,701 |
Customer relationships | ||
OTHER ASSETS: | ||
Product licenses and designs, net | $ 92 | $ 203 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowance | $ 1,011 | $ 946 |
Common Stock, Par or Stated Value Per Share | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 30,000,000 | 30,000,000 |
Common Stock, Shares, Issued | 14,153,669 | 13,890,696 |
Common Stock, Shares, Outstanding | 14,153,669 | 13,890,696 |
Consolidated Statements of Inco
Consolidated Statements of Income - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income Statement [Abstract] | |||
NET SALES | $ 241,838 | $ 248,373 | $ 237,088 |
COST OF GOODS SOLD | 73,639 | 74,244 | 73,019 |
Gross profit | 168,199 | 174,129 | 164,069 |
OPERATING EXPENSES: | |||
Sales and marketing | 87,095 | 89,796 | 84,999 |
General and administrative | 22,483 | 22,692 | 21,149 |
Research and development | 19,384 | 18,377 | 17,802 |
Depreciation and amortization | 16,940 | 16,990 | 16,190 |
Total operating expenses | 145,902 | 147,855 | 140,140 |
INCOME FROM OPERATIONS | 22,297 | 26,274 | 23,929 |
OTHER INCOME (EXPENSE): | |||
Interest income | 9 | 16 | 8 |
Other income | 468 | 78 | 138 |
Interest expense | (1,313) | (1,111) | (1,223) |
Foreign currency loss, net | (1,131) | (1,129) | (444) |
Total other income (expense) | (1,967) | (2,146) | (1,521) |
INCOME BEFORE INCOME TAXES | 20,330 | 24,128 | 22,408 |
PROVISION FOR INCOME TAXES | |||
Current | 8,734 | 9,228 | 5,516 |
Deferred | (3,171) | (1,588) | 1,520 |
Total provision for income taxes | 5,563 | 7,640 | 7,036 |
NET INCOME | $ 14,767 | $ 16,488 | $ 15,372 |
BASIC EARNINGS PER SHARE | $ 1.05 | $ 1.20 | $ 1.14 |
DILUTED EARNINGS PER SHARE | $ 1.04 | $ 1.18 | $ 1.12 |
Consolidated Statements Of Comp
Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Statement Of Income And Comprehensive Income [Abstract] | |||
Net Income | $ 14,767 | $ 16,488 | $ 15,372 |
Other comprehensive income (loss), net of tax: | |||
Change in fair value of cash flow hedges | 150 | 134 | 137 |
Change in currency translation | (3,739) | (4,629) | 758 |
Other comprehensive income (loss), net of tax | (3,589) | (4,495) | 895 |
Comprehensive income | $ 11,178 | $ 11,993 | $ 16,267 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Comprehensive Income (Loss) |
Balance at Dec. 31, 2012 | $ 170,897 | $ 133 | $ 63,918 | $ 111,643 | $ (4,797) |
Balance (in shares) at Dec. 31, 2012 | 13,331,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 15,372 | 15,372 | |||
Change in fair value of cash flow hedge, net of tax | 137 | 137 | |||
Change in currency translation | $ 758 | 758 | |||
Exercise of stock options (in shares) | 186,035 | 186,000 | |||
Exercise of stock options | $ 2,839 | $ 2 | 2,837 | ||
Issuance of restricted common stock for services (in shares) | 18,000 | ||||
Issuance of restricted common stock for services | $ 345 | 345 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 41,572 | 42,000 | |||
Issuance of common stock under Employee Stock Purchase Plan | $ 596 | $ 1 | 595 | ||
Compensation cost of stock options | 1,549 | 1,549 | |||
Tax impact on stock awards | (69) | (69) | |||
Balance at Dec. 31, 2013 | 192,424 | $ 136 | 69,175 | 127,015 | (3,902) |
Balance (in shares) at Dec. 31, 2013 | 13,577,000 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | 16,488 | 16,488 | |||
Change in fair value of cash flow hedge, net of tax | 134 | 134 | |||
Change in currency translation | $ (4,629) | (4,629) | |||
Exercise of stock options (in shares) | 261,769 | 262,000 | |||
Exercise of stock options | $ 4,319 | $ 3 | 4,316 | ||
Issuance of restricted common stock for services (in shares) | 18,000 | ||||
Issuance of restricted common stock for services | $ 423 | 423 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 33,715 | 34,000 | |||
Issuance of common stock under Employee Stock Purchase Plan | $ 660 | 660 | |||
Compensation cost of stock options | 1,800 | 1,800 | |||
Tax impact on stock awards | (248) | (248) | |||
Balance at Dec. 31, 2014 | $ 211,371 | $ 139 | 76,126 | 143,503 | (8,397) |
Balance (in shares) at Dec. 31, 2014 | 13,890,696 | 13,891,000 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net income | $ 14,767 | 14,767 | |||
Change in fair value of cash flow hedge, net of tax | 150 | 150 | |||
Change in currency translation | $ (3,739) | (3,739) | |||
Exercise of stock options (in shares) | 197,607 | 198,000 | |||
Exercise of stock options | $ 2,989 | $ 2 | 2,987 | ||
Issuance of restricted common stock for services (in shares) | 20,000 | ||||
Issuance of restricted common stock for services | $ 407 | 407 | |||
Issuance of common stock under Employee Stock Purchase Plan (in shares) | 45,397 | 45,000 | |||
Issuance of common stock under Employee Stock Purchase Plan | $ 752 | $ 1 | 751 | ||
Compensation cost of stock options | 1,794 | 1,794 | |||
Tax impact on stock awards | (102) | (102) | |||
Balance at Dec. 31, 2015 | $ 228,389 | $ 142 | $ 81,963 | $ 158,270 | $ (11,986) |
Balance (in shares) at Dec. 31, 2015 | 14,153,669 | 14,154,000 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
OPERATING ACTIVITIES: | |||
Net income | $ 14,767 | $ 16,488 | $ 15,372 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | |||
Provision for allowance for doubtful accounts and sales returns | 65 | 47 | 505 |
Inventory allowance | 1,523 | (81) | 2,838 |
Depreciation and amortization | 18,406 | 18,546 | 17,593 |
Restricted common stock issued for services | 407 | 423 | 345 |
Compensation cost of stock awards | 1,794 | 1,800 | 1,549 |
Loss on disposal of equipment | 1,598 | 1,552 | 636 |
Gain on sale of dental biologics product line | (442) | 0 | 0 |
Loss on disposal of trademarks and patents | 21 | 13 | 23 |
Foreign currency option gain | (39) | 0 | 0 |
Foreign currency exchange loss | 659 | 1,321 | 444 |
Deferred income taxes | (3,171) | (1,588) | 1,520 |
Changes in assets and liabilities which provided (used) cash: | |||
Accounts receivable | (3,061) | 6,433 | (11,093) |
Prepaids and other assets | 314 | 453 | 14 |
Inventories | (6,917) | (9,131) | (9,690) |
Accounts payable | (1,200) | (2,732) | 910 |
Income taxes receivable/payable | 1,706 | (54) | (2,978) |
Accrued expense & other liabilities | 1,649 | (1,522) | (1,301) |
Net cash provided by operating activities | 28,079 | 31,968 | 16,687 |
INVESTING ACTIVITIES: | |||
Purchases of property and equipment | (19,456) | (18,164) | (15,303) |
Proceeds from sale of property and equipment | 0 | 3 | 1 |
Proceeds from sale of dental biologics product line | 1,000 | 0 | 0 |
Purchase of business, net of cash acquired | (2,005) | 0 | 0 |
Purchase of intangible assets | 0 | (460) | (413) |
Net cash used in investing activities | (20,461) | (18,621) | (15,715) |
FINANCING ACTIVITIES: | |||
Net borrowing (repayments) on line of credit | 16,000 | (10,732) | (1,465) |
Principal payments on debt | (23,250) | (3,000) | (2,625) |
Payment of contingent consideration | (676) | 0 | 0 |
Payments on capital leases | (64) | (80) | (81) |
Debt issuance costs | (465) | (15) | (15) |
Proceeds from issuance of common stock | 3,741 | 4,979 | 3,435 |
Net cash used in financing activities | (4,714) | (8,848) | (751) |
Effect of foreign currency translation on cash and cash equivalents | (242) | (459) | (48) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 2,662 | 4,040 | 173 |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD | 10,051 | 6,011 | 5,838 |
CASH AND CASH EQUIVALENTS, END OF PERIOD | 12,713 | 10,051 | 6,011 |
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: | |||
Interest | 878 | 1,064 | 1,008 |
Income taxes | 7,398 | 9,243 | 8,897 |
Non-cash investing and financing activities: | |||
Change in fair value of cash flow hedge, net of tax | 150 | 134 | 137 |
Capitalized lease additions | 8 | 15 | 6 |
Purchase of equipment payable | $ 0 | $ 0 | $ 818 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2015 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Organization | 1. ORGANIZATION Exactech, Inc. designs, manufactures, markets and distributes orthopaedic implant devices including extremity, knee, and hip joint replacement systems, bone allograft materials, spinal implant systems, surgical instrumentation, and bone cement and accessories, primarily used by medical specialists for surgical procedures to repair damaged and/or diseased joints. We are headquartered in Gainesville, Florida with our principal market in the United States; however, we distribute our products in greater than 35 international markets through a network of independent distributors and wholly owned subsidiaries through our international headquarters, Exactech International Operations based in Bern, Switzerland. In China, we market our products through Exactech Asia, in the United Kingdom through Exactech (UK), Ltd., in Japan through Exactech KK, in France through Exactech France, in Spain through Exactech Iberica, and in Germany through Exactech Deutschland. We also maintain research operations through Exactech Taiwan and Blue Ortho. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation - The consolidated financial statements include the accounts of Exactech, Inc. and its subsidiaries. References in this document to “Exactech”, “the Company”, “us”, “we”, or “our”, refers to Exactech, Inc. and its subsidiaries on a consolidated basis unless the context requires otherwise. All material intercompany transactions and balances have been eliminated in consolidation. Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification on the consolidated financial statements had a material impact on the presentation. Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. Cash and Cash Equivalents - Cash and cash equivalents consist of cash on deposit in financial institutions, institutional money funds, overnight repurchase agreements and other short-term investments with a maturity of 90 days or less at the time of purchase. Concentration of Credit Risk - Our cash and cash equivalents are maintained at several financial institutions, and the balances with these financial institutions often exceed the amount of insurance provided on such accounts by the Federal Deposit Insurance Corporation. The cash and cash equivalents generally are maintained with financial institutions with reputable credit, and therefore bear minimal risk. Historically, we have not experienced any losses due to such concentration of credit risk. Our accounts receivable consist primarily of amounts due from hospitals and international government healthcare agencies. Amounts due from international distributors carry longer payment terms than domestic customers, typically due in 90-120 days. We typically perform credit evaluations on our customers and generally do not require collateral. We generally invoice sales to independent international distributors in U.S. dollars; however, our international subsidiaries mainly invoice sales in their respective functional currencies, which make our accounts receivable subject to currency exchange rate risk. We maintain an allowance for doubtful accounts to estimate the losses due to the inability to collect required payment from our customers for products and services rendered. In calculating the allowance, we utilize a model that ages the accounts receivable and applies a progressively higher allowance percentage, based upon our historical experience with balances written-off as uncollectible, to each tier of past due receivables. Financial Instruments - Our financial instruments include cash and cash equivalents, trade receivables, debt and cash flow hedges. The carrying amounts of cash and cash equivalents, and trade receivables approximate fair value due to their short maturities. The carrying amount of debt approximates fair value due to the variable rate associated with the debt. The fair values of cash flow hedges are based on dealer quotes. Inventories - Inventories are valued at the lower of cost or market and include implants consigned to customers and agents. We also provide significant loaned implant inventory to non-distributor customers. The consigned or loaned inventory remains our inventory until we are notified of the implantation. We are also required to maintain substantial levels of inventory as it is necessary to maintain all sizes of each component to fill customer orders. The size of the component to be used for a specific patient is typically not known with certainty until the time of surgery. Due to this uncertainty, a minimum of one of each size of each component in the system to be used must be available to each sales representative at the time of surgery. As a result of the need to maintain substantial levels of inventory, we are subject to the risk of inventory obsolescence. In the event that a substantial portion of our inventory becomes obsolete, it would have a material adverse effect on the Company. Charges for obsolete and slow moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items. For slow moving inventory, this analysis compares the quantity of inventory on hand to the historical sales of such inventory items. As a result of this analysis, we record an estimated charge for slow moving inventory in the form of an inventory impairment that increases cost of goods sold and decreases gross profit. In circumstances when the obsolete or slow moving inventory subsequently experiences increased sales and inventory that was previously impaired is sold, cost of goods sold is decreased and gross profit is increased. During the years ended December 31, 2015 and 2013 we experienced net inventory charges of $1.5 million and $2.8 million, respectively. Recoveries for the year ended December 31, 2014, were $0.1 million. We also test our inventory levels for the amount of inventory that would be sold within one year. At certain times, as we stock new subsidiaries, add consignment locations, and launch new products, the level of inventory can exceed the forecasted level of cost of goods sold for the next twelve months. We classify our estimate of such inventory as non-current. The following table summarizes our classifications of inventory as of December 31,: (in thousands) 2015 2014 Raw materials $ 19,481 $ 21,091 Work in process 1,633 1,283 Finished goods on hand 28,878 31,105 Finished goods on loan/consignment 44,813 36,813 Inventory total 94,805 90,292 Non-current inventories 23,376 17,465 Inventories, current $ 71,429 $ 72,827 Property and Equipment - Property and equipment is stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the related assets: for machinery and equipment, five years, for surgical instrumentation, seven years, for furniture and fixtures, five years, and for facilities, thirty-nine years. Depreciation expense for the years ended December 31, 2015, 2014, and 2013 was $16.7 million, $16.6 million, and $15.5 million, respectively. Included in depreciation expense, is depreciation on manufacturing equipment, which is expensed to cost of goods sold. Depreciation expense on our surgical instruments is for our instruments that we use both internally and loan to our domestic customers for their use, and is expensed as an operating expense. Maintenance and repairs are charged to expense as incurred. Management reviews property and equipment for impairment on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A potential impairment is indicated if the carrying amount of the asset exceeds the expected future cash flows (undiscounted and without interest charges) resulting from use of the asset and its eventual disposition. If an impairment were indicated by this analysis, an impairment charge to reduce the asset to its fair value would be recorded. Revenue Recognition - For sales through U.S. sales agents and our international subsidiaries, revenue is recognized upon notification from our sales agent that a product or service has been implanted in a patient customer. As this implantation represents delivery of our products and services without any right of return, we recognize the associated revenue accordingly. Our U.S. sales agents are generally present at the time the product is implanted in a patient and are therefore aware of all sales, including the use of products maintained by non-distributor customers. For sales to international independent distributors, revenue is recognized upon shipment as title, risk and rewards of ownership pass to the buyer and there typically are no contractual rights of return granted or post shipment obligations; however, we have accepted returns in certain circumstances. As sales returns are granted on a case by case basis, we provide for an allowance for returns based upon an analysis of our prior returns experience. At December 31, 2015 and 2014, our allowance for sales returns was $40,000 and $36,000, respectively. Shipping and Handling Costs - Our shipping and handling costs for shipments of our product to our customers, independent distributors and subsidiaries, are included in cost of goods sold. All shipping and handling charges that are billed to customers are included in net sales. All other shipping and handling costs are included in operating expenses. Deferred Financing Costs - Deferred financing costs of $0.4 million as of December 31, 2015 and $0.6 million as of December 31, 2014, are stated net of amortization of $5,000 and $0.4 million, respectively. These costs are amortized to interest expense over the expected life of the underlying debt using the straight line method, which approximates the effective interest method of amortization. Goodwill and Other Intangible Assets - We assess the value of goodwill and other intangibles in accordance with guidance from the Financial Accounting Standards Board, or FASB. Goodwill is not amortized but is evaluated for impairment, as of October 1 each year, or sooner if an event occurs that would more-likely-than-not reduce the fair value of a reporting unit. In testing goodwill for impairment, we compare the carrying value of the reporting units to their fair value, using a discounted cash flow method of valuation. In determining the fair value of the reporting units, we make assumptions regarding estimated future cash flows based on our estimated future net sales and operating expenses, as well as our estimated growth, as a result of projected market penetration and general economic conditions. We initially allocate goodwill to the reporting units based on estimated future sales of the reporting units. We allocate and test goodwill for impairment on a reporting unit level, which is aligned with our product lines and the way that our management analyzes and reviews the discrete financial information. Changes to these estimates could cause an impairment of goodwill to occur. If events or circumstances indicate the carrying value of intangibles may not be recoverable, we assess the value of other intangible assets, by making assumptions regarding the estimated future cash flows, economic life and other factors to determine fair value of the respective assets. If these estimates or assumptions change in the future, we may be required to record an impairment charge for these assets. We analyze our other intangible assets for impairment issues on a quarterly and annual basis, if required. Income Taxes - Deferred income taxes are provided with respect to temporary differences that arise from certain transactions being reported for financial statement purposes in different periods than for income tax purposes. Deferred tax assets and liabilities are recognized using an asset and liability approach and are based on differences between financial statement and tax bases of assets and liabilities using presently enacted tax rates. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates on the date of enactment. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination, if any. Interest and penalties associated with unrecognized tax benefits are classified as interest and other expense in the consolidated statements of income. Other Taxes - Taxes assessed by a governmental authority that are imposed concurrent with our revenue transactions with customers are presented on a net basis in our consolidated statements of income. We have completed an assessment of our nexus for sales and use tax purposes in all states, and continue to evaluate changes in tax laws, and we believe that we are currently in compliance. Accrued Expenses - Accrued expenses as of December 31, 2015 and 2014 consist of the following: (in thousands) 2015 2014 Commissions payable $ 4,218 $ 3,346 Compensation payable 3,071 3,440 Royalties payable 1,599 1,800 Miscellaneous accrued expenses 610 608 $ 9,498 $ 9,194 Research and Development - Research and development costs are expensed in the period incurred. Earnings Per Share - Basic earnings per common share are calculated by dividing net income by the average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive stock options. Options and Stock Awards - We account for stock-based compensation granted to our directors and employees in accordance with guidance issued by the FASB. The guidance requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, and recognize as compensation cost the fair value of our stock-based compensation granted to employees and directors. For stock-based compensation granted to non-employees we re-measure the fair value of stock awards until a measurement date is achieved. Our Executive Incentive Compensation Plan provides for issuance of stock-based compensation, including the grant of stock, stock appreciation rights, stock options, and other stock-based compensation. Under the plan, the exercise price of option awards equals the market price of our stock on the date of grant. At the discretion of the Compensation Committee of our Board of Directors, option awards granted to employees have typically vested in equal increments over a three to five-year period starting on the first anniversary of the date of grant. An option's maximum term is ten years. See Note 10 - Shareholders' Equity for additional information regarding our stock option awards, including the employee stock purchase plan, or ESPP. Hedging Activities and Foreign Currency Transactions Hedging Activities - We account for derivative hedging activities in accordance with guidance issued by the FASB. The guidance requires that all hedging activities be recognized in the balance sheet as assets or liabilities and be measured at fair value. Gains or losses from the change in fair value of hedging instruments that qualify for hedge accounting are recorded in other comprehensive income or loss. Our policy is to specifically identify the assets, liabilities or future commitments being hedged and monitor any hedging instruments to determine if they continue to be effective. We terminated our interest rate swap during the fourth quarter of 2015. We do not enter into or hold derivative instruments for trading or speculative purposes. The fair value of any hedging instruments we hold is based on dealer quotes and includes adjustments for nonperformance risk. Any change in fair value is recorded in the consolidated balance sheet as accumulated other comprehensive income. Foreign Currency Transactions - The following table provides information on the components of our foreign currency activities recognized in the Consolidated Statements of Income for the years ended December 31,: (in thousands) 2015 2014 2013 Foreign currency transactions loss, net $ (659 ) $ (1,321 ) $ (444 ) Forward currency option (loss) gain (472 ) 192 — Foreign currency loss, net $ (1,131 ) $ (1,129 ) $ (444 ) Foreign Currency Transactions – Gains and losses resulting from our transactions and our subsidiaries’ transactions, which are made in a currency that differs from the functional currency, are included in income as they occur, as other income (expense) in the Consolidated Statements of Income. Forward Currency Option – During December 2015, we terminated foreign currency forward contracts we had entered into in June 2015, as economic hedges against the continued strengthening of the U.S. Dollar (USD) against the Euro (EUR) and the Japanese Yen (JPY). The initial aggregate notional amount of the forward contracts was $11.6 million. During the year ended December 31, 2015, we recognized losses of $0.5 million, related to these instruments. The recognized losses are recorded in other income (expense) in the consolidated statements of income related to the fair value of these currency options based upon dealer quotes. During December 2014 we terminated a foreign currency option we had entered into in September 2014. The foreign currency put option instrument was for a notional value of $6.4 million, as an economic hedge against strengthening of the USD against the EUR. During the year ended December 31, 2014, we realized a gain of $0.2 million on the Consolidated Statements of Income related to the termination of this currency option. Foreign Currency Translation - We are exposed to market risk related to changes in foreign currency exchange rates. The functional currency of substantially all of our international subsidiaries is the local currency. Transactions are translated into U.S. dollars and exchange gains and losses arising from translation are recognized in “Other comprehensive income (loss)”. Fluctuations in exchange rates affect our financial position and results of operations. The majority of our foreign currency exposure is to the EUR, British Pound (GBP), and JPY. During the twelve months ended December 31, 2015, translation losses were $3.7 million, which were primarily due to the weakening of the JPY and EUR. During the year ended December 31, 2014, translation losses were $4.6 million, which were a result of the weakening of the JPY and EUR. We may experience translation gains and losses during the year ending December 31, 2016; however, these gains and losses are not expected to have a material effect on our financial position, results of operations, or cash flows. Other Comprehensive Income (Loss) - Other comprehensive income (loss) is composed of unrealized gains or losses from the change in fair value of certain derivative instruments that qualify for hedge accounting, and for foreign currency translation effects. The following table provides information on the components of our other comprehensive loss: (in thousands) Cash Foreign Total Balance December 31, 2013 $ (284 ) $ (3,618 ) $ (3,902 ) 2014 Adjustments 134 (4,629 ) (4,495 ) Balance December 31, 2014 $ (150 ) $ (8,247 ) $ (8,397 ) 2015 Adjustments 150 (3,739 ) (3,589 ) Balance December 31, 2015 $ — $ (11,986 ) $ (11,986 ) We do not enter into or hold derivative instruments for trading or speculative purposes. We entered into our interest rate swap to eliminate variability in future cash flows by converting LIBOR-based variable-rate interest payments into fixed-rate interest payments. The fair value of our interest rate swap agreement was based on dealer quotes, and the change in fair value was recorded as accumulated other comprehensive loss in the consolidated balance sheets. We terminated our interest rate swap during the fourth quarter ended December 31, 2015. New Accounting Pronouncements - In February 2016, the Financial Accounting Standards Board, or FASB, issued updated guidance on leases. The new standard requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. A modified retrospective approach should be applied for leases existing at the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. We are currently assessing the impact of adopting this guidance on our financial statements. In November 2015, the FASB issued amended guidance on income taxes, which simplifies the classification of deferred income tax liabilities and assets in a classified statement of financial position. The amendment requires entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. The amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and may be early adopted on a prospective basis or on a retrospective basis to all periods presented. In 2016, we intend to early adopt this amendment, which is not expected to have a material impact on our financial statements. In September 2015, the FASB issued guidance on business combination provisional adjustments during the measurement period. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for annual and interim periods beginning on or after December 15, 2017, and early application is permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In July 2015, the FASB issued guidance on simplifying the measurement of inventory. The updated standard changes the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance should be applied prospectively, and is effective for annual and interim periods beginning on or after December 15, 2015, with early application permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In April 2015, the FASB issued guidance on the presentation of debt issuance costs on the balance sheet. The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance is effective for annual and interim periods beginning on or after December 15, 2015, and early application is permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In May 2014, the FASB issued new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. The new guidance is based on the principle that revenue is recognized upon the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and clarify guidance for multiple-element arrangements. In July 2015, the FASB delayed the effective date of this guidance by one year. The guidance is effective for the first fiscal quarter of 2018, and early application is not permitted earlier than January 1, 2015. We are currently assessing the impact of adopting this guidance on our financial statements. |
Fair Value Measures
Fair Value Measures | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measures | 3. FAIR VALUE MEASURES Certain financial assets and liabilities are accounted for at fair value, which is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value: Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reporting date. Level 2 includes those financial instruments that are valued using models or other valuation methodologies. Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value from the perspective of a market participant. The table below provides information on our liabilities that are measured at fair value on a recurring basis: (In Thousands) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable (Level 2) Significant Unobservable Inputs (Level 3) At December 31, 2015 Contingent consideration $ 6,222 $ — $ — $ 6,222 At December 31, 2014 Interest rate swap $ 254 $ — $ 254 $ — The fair value of our contingent consideration liability is management's best estimate based on the present value of estimated payment scenarios, which were determined based on inputs not observable in the market. We use assumptions we believe would be made by a market participant. We evaluate our estimates on a quarterly basis, as additional data impacting the assumptions is obtained, and will recognize any changes in the Consolidated Statements of Income. See Note 12. Business Acquisition for further discussion on the contingent consideration. The fair value of our interest rate swap agreement was based on dealer quotes and was recorded as accumulated other comprehensive loss and other long-term liabilities in the Consolidated Balance Sheets. Effective December 17, 2015, we terminated the interest rate swap. |
Goodwill And Other Intangible A
Goodwill And Other Intangible Assets | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Goodwill And Other Intangible Assets | 4. GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill – The following table provides the changes to the carrying value of goodwill for the years ended December 31, 2015 and 2014: (in thousands) Knee Hip Biologics and Spine Extremities Other Total Balance as of January 1, 2014 $ 3,830 $ 670 $ 7,553 $ 459 $ 1,002 $ 13,514 Foreign currency translation effects (191 ) (73 ) — (48 ) (111 ) (423 ) Balance as of December 31, 2014 3,639 597 7,553 411 891 13,091 Business combination 1,760 391 — 4,368 — 6,519 Foreign currency translation effects (267 ) (84 ) — (318 ) (91 ) (760 ) Balance as of December 31, 2015 $ 5,132 $ 904 $ 7,553 $ 4,461 $ 800 $ 18,850 During the fourth quarter of 2015 we tested goodwill for impairment, and based on our evaluation, we did not identify any impairment. Other Intangible Assets – The following tables summarize our carrying values of our other intangible assets at December 31, 2015 and 2014: (in thousands) Carrying Accumulated Amortization Net Weighted Avg Amortization Period Balance at December 31, 2015 Product licenses and designs $ 16,675 $ 5,554 $ 11,121 11.1 Patents and trademarks 4,678 3,252 1,426 14.2 Customer relationships 2,923 2,831 92 7.0 Balance at December 31, 2014 Product licenses and designs $ 15,640 $ 6,999 $ 8,641 9.8 Patents and trademarks 4,704 3,003 1,701 14.0 Customer relationships 3,033 2,830 203 6.9 Our product licenses and designs are amortized on a straight-line basis over their estimated useful lives ranging from five to twenty years. Patents and trademarks are amortized on a straight-line basis over their estimated useful lives ranging from five to seventeen years. Customer relationships are amortized on a straight-line basis over their estimated useful lives of six to seven years. We recognized amortization expense on our intangible assets of $1.7 million, $2.0 million, and $2.1 million for the three years ended December 31, 2015, 2014 and 2013, respectively. The following table provides information for the estimated amortization by year for our amortizable intangible assets: Year ending December 31, (in thousands) 2016 2017 2018 2019 2020 Product licenses and designs $ 1,319 $ 1,228 $ 1,123 $ 1,061 $ 1,057 Patents and trademarks 268 231 212 141 71 Customer relationships 58 34 — — — |
Income Tax
Income Tax | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Income Tax | 5. INCOME TAX The provision for income taxes consists of the following (in thousands): 2015 2014 2013 Current: Federal $ 7,014 $ 6,657 $ 3,083 State 1,289 1,783 1,598 Foreign 431 788 835 Total current 8,734 9,228 5,516 Deferred: Federal (1,920 ) (1,297 ) 1,294 State (367 ) (39 ) 264 Foreign (884 ) (252 ) (38 ) Total deferred (3,171 ) (1,588 ) 1,520 Total provision for income taxes $ 5,563 $ 7,640 $ 7,036 The components of income before income taxes were as follows (in thousands): 2015 2014 2013 United States $ 18,855 $ 20,564 $ 17,157 Foreign 1,475 3,564 5,251 Total $ 20,330 $ 24,128 $ 22,408 A reconciliation between the amount of reported income tax provision and the amount computed at the statutory Federal income tax rate for the years ended December 31, 2015, 2014 and 2013 follows: 2015 2014 2013 Statutory Federal rate 35.0 % 35.0 % 35.0 % State income taxes (net of Federal income tax benefit) 2.5 4.7 5.8 Effect of rates different than statutory (4.3 ) (5.5 ) (5.7 ) Valuation allowance on net operating loss carry forwards (0.8 ) 0.7 0.6 Tax benefit relating to U.S. manufacturer's deduction (3.2 ) (2.6 ) (1.4 ) Research & development credit (3.2 ) (3.0 ) (2.4 ) Other 1.4 2.4 (0.5 ) 27.4 % 31.7 % 31.4 % The types of temporary differences and their related tax effects that give rise to deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows (in thousands): 2015 2014 Deferred tax liabilities: Basis difference in property and equipment $ 9,871 $ 10,553 Basis difference in intangibles 1,476 465 Other 567 229 Gross deferred tax liabilities 11,914 11,247 Deferred tax assets: Accrued liabilities and reserves not currently deductible 764 968 Inventory basis difference 5,428 4,797 Non-qualified stock options 1,100 902 Other 17 — Loss carry forwards 8,463 8,482 Valuation allowance on net operating loss carry forwards (4,301 ) (5,076 ) Gross deferred tax assets 11,471 10,073 Net deferred tax liabilities $ 443 $ 1,174 At December 31, 2015, net operating loss carry forwards of our foreign and domestic subsidiaries in their federal, state, and local jurisdictions totaled $27.3 million, some of which begin to expire in 2020. For accounting purposes, the estimated tax effect of these net operating loss carry forwards results in a deferred tax asset. The deferred tax asset was $8.5 million as of December 31, 2015 and $8.5 million as of December 31, 2014. Valuation allowances for net operating loss carry forwards have been established in the amount of $4.3 million and $5.1 million at December 31, 2015 and 2014, respectively. This deferred tax asset and associated valuation allowance have been recorded based on the statutory expiration of the available net operating losses. During 2015, the valuation allowance for one of our subsidiaries was eliminated due to its continued improvement in results of operations. If we recorded the net operating loss carry forwards and associated valuation allowance based on the amount expected to be ultimately utilized, we would reduce the deferred tax asset and associated valuation allowance by $2.6 million. As part of a previous business combination, $3.4 million of our valuation allowance was established through goodwill. During the year ended December 31, 2015, the changes in our deferred tax assets and liabilities were primarily the result of book-to-tax differences for non-deductible accrued liabilities and allowances, depreciation of property and equipment, and net operating losses in certain subsidiaries. Deferred taxes have not been provided on the unremitted earnings of subsidiaries because such earnings are intended to be indefinitely reinvested or can be recovered in a tax-free manner. At December 31, 2015, we had an aggregate of approximately $24.9 million of unremitted earnings of foreign subsidiaries that have been, or are intended to be, indefinitely reinvested for continued use in foreign operations. If the total undistributed earnings of foreign subsidiaries were remitted, a significant amount of additional tax would be offset by the allowable foreign tax credits. It is not practical for us to determine the additional tax of remitting these earnings. As of December 31, 2015, management determined there were no unrecognized tax benefits that require recognition in the consolidated financial statements. Our policy is to recognize interest and penalties accrued on unrecognized tax benefits as part of interest and other expense. We file income tax returns in the United States, various states, and foreign jurisdictions. Our U.S. federal return for the years ended December 31, 2015 through 2012 are open to examination. Our state and foreign income tax returns are generally open for examination for a period of three to five years after the filing of the return. Currently, we are not under audit in our federal or foreign jurisdictions. We are currently under audit by the states of Maryland and Minnesota for the periods ending December 31, 2009 through 2011. We do not expect that the net amount of tax liability for unrecognized tax benefits will change in the next twelve months. |
Debt
Debt | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Debt | 6. DEBT Debt consisted of the following as of December 31,: (in thousands) 2015 2014 Term loan payable in quarterly principal installment of $750, variable interest rate at 1.76% as of December 31, 2014, a component of which was fixed by a swap agreement at 1.47% as a cash flow hedge. $ — $ 23,250 Business line of credit payable on a revolving basis, plus interest based on adjustable rate as determined by one month LIBOR based on our ratio of funded debt to EBITDA, 2.19% as of December 31, 2015. 16,000 — Total debt 16,000 23,250 Less current portion — (3,000 ) $ 16,000 $ 20,250 The following is a schedule of debt maturities as of December 31, 2015 (in thousands): 2016 $ — 2017 — 2018 — 2019 — 2020 16,000 Thereafter — $ 16,000 On December 17, 2015, we terminated and repaid all amounts outstanding under our Prior Credit Agreement and entered into a $150 million revolving credit line, referred to as the Credit Agreement, with JPMorgan Chase Bank, as Administrative Agent, JPMorgan Securities, as Lead Arranger and Lead Bookrunner, and Compass Bank, as Syndication Agent. The Credit Agreement includes a $5 million sub-facility for swingline loans and a $5 million sub-facility for the issuance of letters of credit. The Credit Agreement has a five year term and matures on December At our option, borrowings under the Credit Agreement (other than swingline loans) bear interest at (i) the Alternate Base Rate (defined as the highest of (a) the prime rate , (ii) the federal funds effective rate plus one-half of one percent (0.50%) and(c) the LIBOR rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) for an interest period of one month plus 1%) plus an applicable margin ranging 0.25% to 0.75% based on our leverage ratio or (ii) the LIBOR rate (adjusted for statutory reserve requirements for Eurocurrency liabilities) plus an applicable margin ranging from 1.25% to 1.75% based on our total leverage ratio. Swingline loans bear interest at the Alternate Base Rate plus the applicable margin. The Credit Agreement also calls for other customary fees and charges, including an unused commitment fee ranging from 0.175% or 0.25% based on our total leverage ratio. Our obligations under the Credit Agreement have been unconditionally guaranteed, jointly and severally, by all of our 100% owned domestic subsidiaries, referred to as the Guarantors. Additionally The outstanding balance under the Credit Agreement may be prepaid at any time without premium or penalty. The Credit Agreement contains customary events of default and remedies upon an event of default, including the acceleration of repayment of outstanding amounts under the Credit Agreement and other remedies with respect to the collateral securing the obligations under the Credit Agreement. The Credit Agreement includes covenants and terms that, among other things, place certain restrictions on our ability to incur additional debt, incur liens, make investments, effect mergers, declare or pay dividends, sell assets, engage in transactions with affiliates, effect sale and leaseback transactions, enter into hedging agreements and make capital expenditures. Certain of the foregoing restrictions limit our ability to fund our foreign subsidiaries in excess of certain thresholds. Additionally, the Credit Agreement contains financial covenants requiring that we maintain a leverage ratio of not greater than 3.00 to 1.00 and a fixed charge coverage ratio (as defined in the Credit Agreement) of not less than 1.50 to1.00. As of December 31, 2015, we were in compliance with the financial covenants. On the closing date, we used $16.0 million of proceeds from the revolving loan under the Credit Agreement and approximately $5.0 million in cash to pay all obligations under our Prior Credit Agreement. On the closing date, we terminated the Prior Credit Agreement, together with all other agreements and instruments ancillary thereto. The Prior Credit Agreement was for a maximum aggregate principal amount of $100.0 million, composed of a $30.0 million term loan facility and revolving credit line in an aggregate principal amount of up to $70.0 million, of which, a portion was a $5.0 million swingline facility. Interest on loans outstanding under the Prior Credit Agreement was based, at our election, on a base rate, a Eurodollar Rate or an index rate, in each case plus an applicable margin. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 7. RELATED PARTY TRANSACTIONS We have an oral consulting agreement with our former director, Albert Burstein, Ph.D., pursuant to which he provides services regarding many facets of the orthopaedic industry, including product design rationale, manufacturing and development techniques, and product sales and marketing. Dr. Burstein resigned from the board of directors effective April 30, 2015; however Dr. Burstein continues to provide consulting services. Pursuant to the consulting agreement, we paid Dr. Burstein consulting fees of $180,000 in each of 2015, 2014 and 2013. We have entered into consulting agreements with certain of our executive officers, directors and principal shareholders in connection with product design which entitles them to royalty payments aggregating 1% of the Company's net sales of such products in the United States and less than 1% of our net sales of such products outside the United States. During each of the years ended December 31, 2015, 2014 and 2013, we paid royalties in the aggregate of $300,000, pursuant to these consulting agreements. These royalties were paid to Dr. William Petty, M.D. and Dr. Gary J. Miller, Ph.D. and pursuant to their employment agreements, each were subject to a ceiling of $150,000 per year. |
Commitments And Contingencies
Commitments And Contingencies | 12 Months Ended |
Dec. 31, 2015 | |
Commitments And Contingencies Disclosure [Abstract] | |
Commitments And Contingencies | 8. COMMITMENTS AND CONTINGENCIES Litigation There are various claims, lawsuits, and disputes with third parties and pending actions involving various allegations against us incident to the operation of our business, principally product liability cases. While we believe that the various claims are without merit, we are unable to predict the ultimate outcome of such litigation. We therefore maintain insurance, subject to self-insured retention limits, for all such claims, and establish accruals for product liability and other claims based upon our experience with similar past claims, advice of counsel and the best information available. At December 31, 2015 and 2014, we had $100,000 and $135,000 accrued for product liability claims, respectively. These matters are subject to various uncertainties, and it is possible that they may be resolved unfavorably to us. However, while it is not possible to predict with certainty the outcome of the various cases, it is the opinion of management that, upon ultimate resolution, the cases will not have a material adverse effect on our consolidated financial position, results of operations or cash flows. Our insurance policies covering product liability claims must be renewed annually. Although we have been able to obtain insurance coverage concerning product liability claims at a cost and on other terms and conditions that are acceptable to us, we may not be able to procure acceptable policies in the future. The five year term of our Corporate Integrity Agreement, or CIA, entered into with the Office of the Inspector General of the United States Department of Health and Human Services (OIG) on December 7, 2010, expired in December 2015. We are awaiting the OIG’s approval of our compliance with its terms. We continue to enhance and apply our corporate compliance program, and we monitor our practices on an ongoing basis to ensure that we have in place proper controls necessary to comply with applicable laws in the jurisdictions in which we do business. Our failure to maintain compliance with U.S. healthcare and regulatory laws could expose us to significant liability including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, civil and criminal fines or penalties, and additional litigation cost and expense. Purchase Commitments At December 31, 2015, we had outstanding commitments for the purchase of inventory, raw materials and supplies of $17.3 million and outstanding commitments for the purchase of capital equipment of $7.5 million. Purchases under our distribution agreements were $3.5 million during the year ended December 31, 2015. Our Taiwanese subsidiary, Exactech Taiwan, has entered into a license agreement with the Industrial Technology Research Institute (ITRI) and the National Taiwan University Hospital (NTUH) for the rights to technology and patents related to the repair of cartilage lesions. As of December 31, 2015, we have paid approximately $2.1 million for the licenses, patents, and equipment related to this license agreement, and we will make royalty payments when the technology becomes marketable. Using the technology, we plan to launch a cartilage repair program that will include a device and method for the treatment and repair of cartilage in the knee joint. The agreement terms include a license fee based on the achievement of specific, regulatory milestones and a royalty arrangement based on sales once regulatory clearances are established. We are currently evaluating regulatory approval pathways for this technology. |
Pension Plan
Pension Plan | 12 Months Ended |
Dec. 31, 2015 | |
Compensation And Retirement Disclosure [Abstract] | |
Pension Plan | 9. PENSION PLAN We currently sponsor a defined contribution plan for our employees. Beginning in 2008, we have provided matching contributions of 100% on the first 5% of salary deferral by employees. Our total contributions to this plan during the years ended December 31, 2015, 2014 and 2013 were $1.2 million, $1.1 million and $1.1 million, respectively. |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders Equity Note [Abstract] | |
Shareholders' Equity | 10. SHAREHOLDERS’ EQUITY Earnings Per Share The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for net income and net income available to common shareholders (in thousands, except per share amounts): 2015 2014 2013 Income (Numera tor) Shares (Denominator) Per Share Income (Numerator) Shares (Denominator) Per Share Income (Numera tor) Shares (Denominator) Per Share Net income $ 14,767 $ 16,488 $ 15,372 Basic EPS: Net income available to common shareholders $ 14,767 14,022 $ 1.05 $ 16,488 13,732 $ 1.20 $ 15,372 13,462 $ 1.14 Effect of dilutive securities: Stock options 180 284 221 Diluted EPS: Net income available to common shareholders plus assumed conversions $ 14,767 14,202 $ 1.04 $ 16,488 14,016 $ 1.18 $ 15,372 13,683 $ 1.12 For the year ended December 31, 2015, weighted average options to purchase 386,638 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. For the year ended December 31, 2014, weighted average options to purchase 143,967 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. For the year ended December 31, 2013, weighted average options to purchase 264,765 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. Stock-based Compensation Awards: We sponsor an Executive Incentive Compensation Plan, which provides for the award of stock-based compensation, including options, stock appreciation rights, restricted stock and other stock-based incentive compensation awards to key employees, directors and independent agents and consultants. We implemented a comprehensive, consolidated incentive compensation plan upon shareholder approval at our Annual Meeting of Shareholders on May 7, 2009, referred to as the 2009 Plan, which replaced the 2003 incentive compensation plan. At our 2014 Annual Meeting of Shareholders, held on May 8, 2014, our shareholders approved the amended and restated 2009 Plan that increased the maximum number of shares issuable under the 2009 Plan. The maximum number of common shares issuable under the 2009 Plan is 1,500,000 plus (a) the number of shares with respect to awards previously granted under our preexisting plans that terminate without being exercised, expire, are forfeited or canceled, plus (b) the number of shares that remain available for future issuance under our preexisting plans plus (c) the number of shares that are surrendered in payment of any awards or any tax withholding with respect thereto. Common stock issued upon exercise of stock options is settled with authorized but unissued shares available. Under the plans, the exercise price of option awards equals the market price of our common stock on the date of grant, and each award has a maximum term of ten years. As of December 31, 2015, there were 305,728 total remaining shares issuable under the 2009 Plan. During 2015, there were no stock-based compensation awards granted under the plan other than the options to purchase shares of our common stock and restricted stock awards, as discussed herein. Stock Options: A summary of the status of stock option activity under our stock-based compensation plans as of December 31, 2015, 2014 and 2013 and changes during the years then ended is presented below: 2015 2014 2013 Options Weighted Avg Options Weighted Avg Exercise Options Weighted Avg Exercise Outstanding - January 1 1,244,166 $ 17.49 1,317,678 $ 16.78 1,293,293 $ 16.35 Granted 176,125 23.28 201,217 20.90 241,000 18.55 Exercised (197,607 ) 15.13 (261,769 ) 16.49 (186,035 ) 15.26 Forfeited or Expired (5,681 ) 19.87 (12,960 ) 18.46 (30,580 ) 21.66 Outstanding - December 31 1,217,003 $ 18.70 1,244,166 $ 17.49 1,317,678 $ 16.78 Exercisable - December 31 632,603 $ 17.35 688,529 $ 16.50 830,967 $ 16.35 The following table summarizes additional stock option terms as of December 31, 2015: Weighted avg remaining contractual Aggregate intrinsic value (in thousands) Options outstanding 3.39 $ 908 Options exercisable 1.97 703 The aggregate intrinsic value of options exercised during the years ended December 31, 2015, 2014 and 2013 was $1.1 million, $0.5 million, and $0.8 million, respectively. Outstanding options, consisting of five year to ten year incentive stock options, vest and become exercisable ratably over a three to five year period from the date of grant. The outstanding options expire from five to ten years from the date of grant or upon retirement from Exactech, and are contingent upon continued employment during the applicable option term. The fair value of each option granted to employees and non-employee directors is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants: Years ended December 31, 2015 2014 2013 Options granted 176,125 201,217 241,000 Dividend yield — — — Expected life 7 years 7 years 7 years Expected volatility 42 % 43 % 43 % Risk free interest rates 1.7 % 2.3 % 1.3 % Weighted average fair value per share of options granted $ 10.64 $ 9.87 $ 8.50 During the years ended December 31, 2015, 2014 and 2013, no options were granted to non-employee sales agents, consultants and employees of our foreign subsidiaries, and, at December 31, 2015, there were 900 such options outstanding and exercisable. The compensation cost that has been charged against income for the incentive compensation plans for the years ended December 31 was: (in thousands) 2015 2014 2013 Employee stock compensation expense $ 1,794 $ 1,800 $ 1,549 Non-employee stock compensation expense — — — 1,794 1,800 1,549 Income tax benefit 515 461 325 $ 1,279 $ 1,339 $ 1,224 As of December 31, 2015, total unrecognized compensation cost related to nonvested awards was $1.9 million and is expected to be recognized over a weighted-average period of 1.60 years. Restricted Stock Awards: Under the plans, we may grant restricted stock awards to eligible employees, directors, and independent agents and consultants. Restrictions on transferability, risk of forfeiture and other restrictions are determined by the Compensation Committee of the Board of Directors, or the Committee, at the time of the award. During February 2015, the Committee approved equity compensation to the five outside members of the Board of Directors for their service on the Board of Directors. The compensation for each director was for the grant of stock awards with an annual market value of $77,500, payable in the form of four equal quarterly grants of common stock based on the market price at the respective dates of grant. The summary information of the restricted stock grants for the year ended 2015 is presented below: Grant date February 2015 May 29, 2015 August 31, 2015 November 30, 2015 Aggregate shares of restricted stock granted 4,974 4,530 4,940 5,525 Grant date fair value $ 116,000 $ 97,000 $ 97,000 $ 97,000 Weighted average fair value per share $ 23.35 $ 21.38 $ 19.61 $ 17.53 During February 2014, the Committee approved equity compensation to the six outside members of the Board of Directors for their service on the Board of Directors. The compensation for each director was for the grant of stock awards with an annual market value of $75,000, payable in the form of four equal quarterly grants of common stock based on the market price at the respective dates of grant. The summary information of the restricted stock grants for the year ended 2014 is presented below: Grant date February 28, 2014 May 30, 2014 August 29, 2014 November 28, 2014 Aggregate shares of restricted stock granted 4,020 4,502 4,710 5,070 Grant date fair value $ 93,666 $ 104,852 $ 112,475 $ 112,453 Weighted average fair value per share $ 23.30 $ 23.29 $ 23.88 $ 22.18 During February 2013, the Committee approved equity compensation to the five outside members of the Board of Directors for their service on the Board of Directors. The compensation for each director was for the grant of stock awards to each director with an annual market value of $69,000, payable in the form of four equal quarterly grants of common stock based on the market price at the respective dates of grant. The summary information of the restricted stock grants for 2013 is presented below: Grant date February 28, 2013 May 31, 2013 August 30, 2013 November 29, 2013 Aggregate shares of restricted stock granted 4,685 4,735 4,530 3,465 Grant date fair value $ 86,251 $ 86,177 $ 86,251 $ 86,209 Weighted average fair value per share $ 18.41 $ 18.20 $ 19.04 $ 24.88 All of the restricted stock awards in 2015, 2014 and 2013 were fully vested at each of the grant dates. The restricted stock awards require no service period and thus contain no risk or provision for forfeiture. Employee Stock Purchase Plan: On February 18, 2009, our Board of Directors adopted the 2009 ESPP, and our shareholders approved the 2009 ESPP at our Annual Meeting of Shareholders on May 7, 2009. Under the 2009 ESPP, employees are allowed to purchase shares of our common stock at a fifteen percent (15%) discount via payroll deduction. There are four offering periods during each calendar year. At our 2012 Annual Meeting of Shareholders, held on May 3, 2012, our shareholders approved an amendment to the 2009 ESPP that increased the maximum number of shares issuable under the 2009 ESPP to 300,000. As of December 31, 2015, 39,179 shares remained available to purchase under the 2009 ESPP. The fair value of the employees' purchase rights is estimated using the Black-Scholes model. Purchase information and fair value assumptions are presented in the following table: Twelve Months Ended December 31, 2015 2014 2013 Shares purchased 45,397 33,715 41,572 Dividend yield — — — Expected life 1 year 1 year 1 year Expected volatility 33 % 27 % 32 % Risk free interest rates 0.3 % 0.1 % 0.1 % Weighted average per share fair value $ 4.48 $ 4.84 $ 4.03 |
Lease Obligations
Lease Obligations | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Lease Obligations | 11. LEASE OBLIGATIONS We have non-cancelable operating leases for various properties and equipment throughout the company; that expire at various dates, with various options for renewal. The latest expiration is during 2022. Rent expense associated with operating leases was $2.0 million, $2.1 million and $2.0 million for the years ended December 31, 2015, 2014 and 2013, respectively. The following is a schedule, by year, of minimum payments due on all non-cancelable operating leases as of December 31, 2015 (in thousands): Year Ended December 31, 2016 $ 1,397 2017 802 2018 340 2019 75 2020 52 Thereafter 49 $ 2,715 In addition we have entered into various capital leases for equipment that expire at various dates, between January 2016 and November 2020, and are included in property and equipment on the consolidated balance sheet for a gross value of $0.3 million and $0.3 million and accumulated amortization of $0.2 million and $0.2 million as of December 31, 2015 and 2014, respectively. The following is a schedule, by year, of minimum payments due on all non-cancelable capital leases as of December 31, 2015 (in thousands): Year Ending December 31, 2016 $ 36 2017 9 2018 6 2019 5 2020 2 Thereafter — Net minimum lease payments 58 Less: amount representing interest 15 Present value of minimum lease payments $ 43 |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Results of Operations (Unaudited) | 12. QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) Following is a summary of the quarterly results of operations for the years ended December 31, 2015 and 2014. All dollar amounts are in thousands, except per share amounts: Quarter First Second Third Fourth Total 2015 Net sales $ 61,376 $ 61,493 $ 56,237 $ 62,732 $ 241,838 Gross profit 42,734 42,159 39,640 43,666 168,199 Net income 4,112 3,661 2,878 4,116 14,767 Basic EPS 0.30 0.26 0.21 0.29 1.05 Diluted EPS 0.29 0.26 0.20 0.29 1.04 2014 Net sales $ 63,258 $ 63,919 $ 57,884 $ 63,312 $ 248,373 Gross profit 44,624 44,354 40,955 44,196 174,129 Net income 4,198 4,160 3,011 5,119 16,488 Basic EPS 0.31 0.30 0.22 0.37 1.20 Diluted EPS 0.30 0.30 0.21 0.36 1.18 |
Segment Information
Segment Information | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Segment Information | 13. SEGMENT INFORMATION We evaluate our operating segments by our major product lines: knee implants, hip implants, biologics and spine, extremity implants and other products. The “other products” segment includes miscellaneous sales categories, such as surgical instruments held for sale, bone cement, instrument rental fees, shipping charges, and other implant product lines. Evaluation of the performance of operating segments is based on their respective income from operations before taxes, interest income and expense, and nonrecurring items. Intersegment sales and transfers are not significant. The accounting policies of the reportable segments are the same as those described in Note 2. Total assets not identified with a specific segment are listed as “corporate” and include cash and cash equivalents, accounts receivable, income taxes receivable, deposits and prepaid expenses, deferred tax assets, land, facilities, office furniture and computer equipment, notes receivable, and other investments. Depreciation and amortization on corporate assets is allocated to the product segments for purposes of evaluating the income (loss) from operations, and capitalized surgical instruments are allocated to the appropriate product line supported by those assets. Summarized information concerning our reportable segments is shown in the following table (in thousands): Year Ended December 31, Knee Hip Biologics & Spine Extremity Other Corporate Total 2015 Net sales $ 70,865 $ 42,655 $ 22,619 $ 84,418 $ 21,281 $ — $ 241,838 Segment profit (loss) 3,056 1,111 531 17,222 377 (1,967 ) 20,330 Total assets, net 64,679 36,222 22,217 37,817 13,898 102,409 277,242 Capital expenditures 4,864 4,151 1,179 3,668 546 5,056 19,464 Depreciation and Amortization 7,530 2,684 1,172 2,847 575 3,598 18,406 2014 Net sales $ 78,678 $ 43,491 $ 23,826 $ 79,003 $ 23,375 $ — $ 248,373 Segment profit (loss) 4,840 2,736 539 17,118 1,041 (2,146 ) 24,128 Total assets, net 66,840 32,168 24,187 27,033 15,159 95,653 261,040 Capital expenditures 4,798 3,416 887 3,565 1,161 4,812 18,639 Depreciation and Amortization 7,992 2,809 1,212 2,199 582 3,752 18,546 2013 Net sales $ 80,532 $ 40,958 $ 25,486 $ 65,528 $ 24,584 $ — $ 237,088 Segment profit (loss) 7,318 1,638 53 14,057 862 (1,520 ) 22,408 Total assets, net 67,332 31,171 24,436 25,269 12,607 101,027 261,842 Capital expenditures 6,255 1,606 928 3,093 317 4,341 16,540 Depreciation and Amortization 7,529 2,791 1,337 1,827 407 3,702 17,593 Geographic distribution of our long-lived assets and inventory is shown in the following table (in thousands): As of December 31, 2015 2014 Domestic International Domestic International Long lived assets, gross $ 147,291 $ 53,859 $ 144,750 $ 43,648 Accumulated depreciation and amortization (88,958 ) (19,391 ) (82,167 ) (15,580 ) Long lived assets, net 58,333 34,468 62,583 28,068 Inventory $ 58,106 $ 36,699 $ 57,361 $ 32,931 Geographic distribution of our sales is summarized in the following table (in thousands): Twelve Months Ended December 31, 2015 2014 2013 2015-2014% Inc/Decr 2014-2013% Inc/Decr Domestic sales $ 168,140 $ 165,575 $ 159,649 1.5 3.7 International sales 73,698 82,798 77,439 (11.0 ) 6.9 Total sales $ 241,838 $ 248,373 $ 237,088 (2.6 ) 4.8 |
Business Acquisition (Notes)
Business Acquisition (Notes) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Business Combination Disclosure [Text Block] | 14. BUSINESS ACQUISITION On January 15, 2015, we completed the acquisition of all of the outstanding capital stock of Blue Ortho SAS, a France-based company. Blue Ortho is the computer-assisted surgical technology development and manufacturing firm that partnered with the Company to develop the ExactechGPS® Guided Personalized Surgery system. We acquired Blue Ortho to further the partnership between us and the team at Blue Ortho and expand the development of ExactechGPS to other segments of our portfolio. The aggregate purchase price for Blue Ortho is a maximum of €10.0 million, of which €2.0 million, or $2.3 million at a 1.16 USD exchange rate at closing, was paid to the Blue Ortho shareholders in cash at the closing of the acquisition, and the remainder will be paid to such shareholders contingent on the achievement of certain future surgical case milestones. During the second quarter ended June 30, 2015, we revised our preliminary valuation of the contingent consideration, effective as of the January 15, 2015 acquisition date, and reduced the fair value of the consideration by approximately $1.1 million. The estimated fair value of the contingent consideration was determined using the following assumptions: discount rates of 4.5-6.5%, probability levels of milestone range of outcomes, and expected timing of achievement of contingent consideration earn-out amounts. We expect the contingent consideration to be paid over the next five to ten years. We financed the acquisition from our operating cash flows. Upon completion of the acquisition, we effectively settled a pre-existing development agreement for the development of the ExactechGPS. Blue Ortho's results of operations for the fiscal year ended December 31, 2014 through January 15, 2015 were finalized during the quarter ended June 30, 2015, which resulted in an increase in our net assets acquired, as compared to our previous estimation. Preliminary valuation assessment of the acquired assets, including valuation and useful lives of the acquired identifiable intangible assets was revised during the second quarter of 2015, and we recognized an adjustment to the identifiable intangible assets acquired. The accounting for our acquisition of Blue Ortho was finalized during the fourth quarter of 2015. The goodwill was determined as the excess of the consideration over the fair value of the net assets acquired, and allocated to the knee, extremity and hip segments based on such valuation. Pro forma revenue and earnings for the business combination have not been presented because the effects, both individually and in the aggregate, were not material to our results of operations. The following table summarizes the preliminary purchase price allocation and determination of goodwill, which is not deductible for tax purposes, as of January 2015 (in thousands): Amounts at Acquisition Consideration: Cash $ 2,329 Fair value of contingent consideration 7,148 Total Purchase Price 9,477 Settlement of pre-existing agreement 3,080 12,557 Acquisition related expenses - incurred as of December 31, 2015 278 Identifiable assets acquired and liabilities assumed: Current assets acquired 1,315 Property and equipment 164 Current liabilities assumed (416 ) Deferred tax liability assumed (2,486 ) Identifiable intangible assets 7,460 6,037 Goodwill 6,520 Net assets acquired $ 12,557 The identifiable intangible assets are being amortized using the straight-line method using estimated ten year useful lives, and are recorded net of accumulated amortization in Product licenses and designs on the Consolidated Balance Sheet. The following table summarizes the contingent consideration balance and activity for the year ended December 31, 2015 (in thousands): Beginning fair value of contingent liability $ 7,148 Period change in valuation 186 Payments (676 ) Foreign currency translation effects (436 ) Contingent liability balance, December 31, 2015 6,222 Current liability 471 Non-current liability $ 5,751 Due to our expected timing of earn-out payments, a portion of the contingent consideration is classified in other current liabilities on our Consolidated Balance Sheets. The remainder is classified as other non-current liabilities. The period change in the contingent consideration during the year ended December 31, 2015 was recognized as interest expense in the consolidated statements of income. |
Subsequent Event
Subsequent Event | 12 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
Subsequent Event | 1 5 . SUBSEQUENT EVENT Effective February 1, 2016, we completed the acquisition of all of the outstanding capital stock of Exactech Australia Pty Ltd, an Australia-based company. Exactech Australia has been our independent importer and distribution partner in Australia for the past four years. The acquisition was accomplished to further the partnership between us and the team at Exactech Australia and to further service customers in the Asia Pacific area. The aggregate purchase price for Exactech Australia will range from $3.0 million Australian Dollars (AUD) to $7.6 million AUD, of which $1.6 million AUD, or $1.1 million USD at a 0.71 AUD:USD exchange rate, was paid to the Exactech Australia shareholders in cash at the closing of the acquisition, and the remainder will be paid to such shareholders contingent on the achievement of certain future milestones. We expect the contingent payment to be paid over the next two years. We are currently awaiting finalization of Exactech Australia’s closing balance sheet to complete purchase accounting. Pro forma revenue and earnings for the business combination have not been presented because the effects, both individually and in the aggregate, were not material to our results of operations. |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2015 | |
Valuation And Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | Schedule II-Valuation and Qualifying Accounts EXACTECH, INC. SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS THREE YEARS ENDED DECEMBER 31, 2015, 2014 and 2013 (in thousands) Balance at Beginning of Year Charged to Costs and Expenses Deductions (Chargeoffs) Balance at End of Year Allowance for doubtful accounts 2013 965 121 (510 ) 576 2014 576 171 163 910 2015 910 668 (607 ) 971 Allowance for sales returns 2013 47 384 (14 ) 417 2014 417 3 (384 ) 36 2015 36 4 — 40 Inventory Allowance 2013 8,673 2,839 — 11,512 2014 11,512 — (81 ) 11,431 2015 11,431 1,523 — 12,954 |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation - The consolidated financial statements include the accounts of Exactech, Inc. and its subsidiaries. References in this document to “Exactech”, “the Company”, “us”, “we”, or “our”, refers to Exactech, Inc. and its subsidiaries on a consolidated basis unless the context requires otherwise. All material intercompany transactions and balances have been eliminated in consolidation. |
Reclassification | Reclassification - Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation. No reclassification on the consolidated financial statements had a material impact on the presentation. |
Use of Estimates | Use of Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents - Cash and cash equivalents consist of cash on deposit in financial institutions, institutional money funds, overnight repurchase agreements and other short-term investments with a maturity of 90 days or less at the time of purchase. |
Concentration of Credit Risk | Concentration of Credit Risk - Our cash and cash equivalents are maintained at several financial institutions, and the balances with these financial institutions often exceed the amount of insurance provided on such accounts by the Federal Deposit Insurance Corporation. The cash and cash equivalents generally are maintained with financial institutions with reputable credit, and therefore bear minimal risk. Historically, we have not experienced any losses due to such concentration of credit risk. Our accounts receivable consist primarily of amounts due from hospitals and international government healthcare agencies. Amounts due from international distributors carry longer payment terms than domestic customers, typically due in 90-120 days. We typically perform credit evaluations on our customers and generally do not require collateral. We generally invoice sales to independent international distributors in U.S. dollars; however, our international subsidiaries mainly invoice sales in their respective functional currencies, which make our accounts receivable subject to currency exchange rate risk. We maintain an allowance for doubtful accounts to estimate the losses due to the inability to collect required payment from our customers for products and services rendered. In calculating the allowance, we utilize a model that ages the accounts receivable and applies a progressively higher allowance percentage, based upon our historical experience with balances written-off as uncollectible, to each tier of past due receivables. |
Financial Instruments | Financial Instruments - Our financial instruments include cash and cash equivalents, trade receivables, debt and cash flow hedges. The carrying amounts of cash and cash equivalents, and trade receivables approximate fair value due to their short maturities. The carrying amount of debt approximates fair value due to the variable rate associated with the debt. The fair values of cash flow hedges are based on dealer quotes. |
Inventories | Inventories - Inventories are valued at the lower of cost or market and include implants consigned to customers and agents. We also provide significant loaned implant inventory to non-distributor customers. The consigned or loaned inventory remains our inventory until we are notified of the implantation. We are also required to maintain substantial levels of inventory as it is necessary to maintain all sizes of each component to fill customer orders. The size of the component to be used for a specific patient is typically not known with certainty until the time of surgery. Due to this uncertainty, a minimum of one of each size of each component in the system to be used must be available to each sales representative at the time of surgery. As a result of the need to maintain substantial levels of inventory, we are subject to the risk of inventory obsolescence. In the event that a substantial portion of our inventory becomes obsolete, it would have a material adverse effect on the Company. Charges for obsolete and slow moving inventories are recorded based upon an analysis of specific identification of obsolete inventory items and quantification of slow moving inventory items. For slow moving inventory, this analysis compares the quantity of inventory on hand to the historical sales of such inventory items. As a result of this analysis, we record an estimated charge for slow moving inventory in the form of an inventory impairment that increases cost of goods sold and decreases gross profit. In circumstances when the obsolete or slow moving inventory subsequently experiences increased sales and inventory that was previously impaired is sold, cost of goods sold is decreased and gross profit is increased. During the years ended December 31, 2015 and 2013 we experienced net inventory charges of $1.5 million and $2.8 million, respectively. Recoveries for the year ended December 31, 2014, were $0.1 million. We also test our inventory levels for the amount of inventory that would be sold within one year. At certain times, as we stock new subsidiaries, add consignment locations, and launch new products, the level of inventory can exceed the forecasted level of cost of goods sold for the next twelve months. We classify our estimate of such inventory as non-current. The following table summarizes our classifications of inventory as of December 31,: (in thousands) 2015 2014 Raw materials $ 19,481 $ 21,091 Work in process 1,633 1,283 Finished goods on hand 28,878 31,105 Finished goods on loan/consignment 44,813 36,813 Inventory total 94,805 90,292 Non-current inventories 23,376 17,465 Inventories, current $ 71,429 $ 72,827 |
Property and Equipment | Property and Equipment - Property and equipment is stated at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over estimated useful lives of the related assets: for machinery and equipment, five years, for surgical instrumentation, seven years, for furniture and fixtures, five years, and for facilities, thirty-nine years. Depreciation expense for the years ended December 31, 2015, 2014, and 2013 was $16.7 million, $16.6 million, and $15.5 million, respectively. Included in depreciation expense, is depreciation on manufacturing equipment, which is expensed to cost of goods sold. Depreciation expense on our surgical instruments is for our instruments that we use both internally and loan to our domestic customers for their use, and is expensed as an operating expense. Maintenance and repairs are charged to expense as incurred. Management reviews property and equipment for impairment on a quarterly basis or whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. A potential impairment is indicated if the carrying amount of the asset exceeds the expected future cash flows (undiscounted and without interest charges) resulting from use of the asset and its eventual disposition. If an impairment were indicated by this analysis, an impairment charge to reduce the asset to its fair value would be recorded. |
Revenue Recognition | Revenue Recognition - For sales through U.S. sales agents and our international subsidiaries, revenue is recognized upon notification from our sales agent that a product or service has been implanted in a patient customer. As this implantation represents delivery of our products and services without any right of return, we recognize the associated revenue accordingly. Our U.S. sales agents are generally present at the time the product is implanted in a patient and are therefore aware of all sales, including the use of products maintained by non-distributor customers. For sales to international independent distributors, revenue is recognized upon shipment as title, risk and rewards of ownership pass to the buyer and there typically are no contractual rights of return granted or post shipment obligations; however, we have accepted returns in certain circumstances. As sales returns are granted on a case by case basis, we provide for an allowance for returns based upon an analysis of our prior returns experience. At December 31, 2015 and 2014, our allowance for sales returns was $40,000 and $36,000, respectively. |
Shipping and Handling Costs | Shipping and Handling Costs - Our shipping and handling costs for shipments of our product to our customers, independent distributors and subsidiaries, are included in cost of goods sold. All shipping and handling charges that are billed to customers are included in net sales. All other shipping and handling costs are included in operating expenses. |
Deferred Financing Costs | Deferred Financing Costs - Deferred financing costs of $0.4 million as of December 31, 2015 and $0.6 million as of December 31, 2014, are stated net of amortization of $5,000 and $0.4 million, respectively. These costs are amortized to interest expense over the expected life of the underlying debt using the straight line method, which approximates the effective interest method of amortization. |
Goodwill and Other Intangible Assets | Goodwill and Other Intangible Assets - We assess the value of goodwill and other intangibles in accordance with guidance from the Financial Accounting Standards Board, or FASB. Goodwill is not amortized but is evaluated for impairment, as of October 1 each year, or sooner if an event occurs that would more-likely-than-not reduce the fair value of a reporting unit. In testing goodwill for impairment, we compare the carrying value of the reporting units to their fair value, using a discounted cash flow method of valuation. In determining the fair value of the reporting units, we make assumptions regarding estimated future cash flows based on our estimated future net sales and operating expenses, as well as our estimated growth, as a result of projected market penetration and general economic conditions. We initially allocate goodwill to the reporting units based on estimated future sales of the reporting units. We allocate and test goodwill for impairment on a reporting unit level, which is aligned with our product lines and the way that our management analyzes and reviews the discrete financial information. Changes to these estimates could cause an impairment of goodwill to occur. If events or circumstances indicate the carrying value of intangibles may not be recoverable, we assess the value of other intangible assets, by making assumptions regarding the estimated future cash flows, economic life and other factors to determine fair value of the respective assets. If these estimates or assumptions change in the future, we may be required to record an impairment charge for these assets. We analyze our other intangible assets for impairment issues on a quarterly and annual basis, if required. |
Income Taxes | Income Taxes - Deferred income taxes are provided with respect to temporary differences that arise from certain transactions being reported for financial statement purposes in different periods than for income tax purposes. Deferred tax assets and liabilities are recognized using an asset and liability approach and are based on differences between financial statement and tax bases of assets and liabilities using presently enacted tax rates. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of the changes in tax laws and rates on the date of enactment. When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. The benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more-likely-than-not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above is reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination, if any. Interest and penalties associated with unrecognized tax benefits are classified as interest and other expense in the consolidated statements of income. |
Other Taxes | Other Taxes - Taxes assessed by a governmental authority that are imposed concurrent with our revenue transactions with customers are presented on a net basis in our consolidated statements of income. We have completed an assessment of our nexus for sales and use tax purposes in all states, and continue to evaluate changes in tax laws, and we believe that we are currently in compliance. |
Accrued Expenses | Accrued Expenses - Accrued expenses as of December 31, 2015 and 2014 consist of the following: (in thousands) 2015 2014 Commissions payable $ 4,218 $ 3,346 Compensation payable 3,071 3,440 Royalties payable 1,599 1,800 Miscellaneous accrued expenses 610 608 $ 9,498 $ 9,194 |
Research and Development | Research and Development - Research and development costs are expensed in the period incurred. |
Earnings Per Share | Earnings Per Share - Basic earnings per common share are calculated by dividing net income by the average number of common shares outstanding during the year. Diluted earnings per common share is calculated by adjusting outstanding shares, assuming conversion of all potentially dilutive stock options. |
Options and Stock Awards | Options and Stock Awards - We account for stock-based compensation granted to our directors and employees in accordance with guidance issued by the FASB. The guidance requires companies to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award, and recognize as compensation cost the fair value of our stock-based compensation granted to employees and directors. For stock-based compensation granted to non-employees we re-measure the fair value of stock awards until a measurement date is achieved. Our Executive Incentive Compensation Plan provides for issuance of stock-based compensation, including the grant of stock, stock appreciation rights, stock options, and other stock-based compensation. Under the plan, the exercise price of option awards equals the market price of our stock on the date of grant. At the discretion of the Compensation Committee of our Board of Directors, option awards granted to employees have typically vested in equal increments over a three to five-year period starting on the first anniversary of the date of grant. An option's maximum term is ten years. See Note 10 - Shareholders' Equity for additional information regarding our stock option awards, including the employee stock purchase plan, or ESPP. |
Hedging Activities | Hedging Activities - We account for derivative hedging activities in accordance with guidance issued by the FASB. The guidance requires that all hedging activities be recognized in the balance sheet as assets or liabilities and be measured at fair value. Gains or losses from the change in fair value of hedging instruments that qualify for hedge accounting are recorded in other comprehensive income or loss. Our policy is to specifically identify the assets, liabilities or future commitments being hedged and monitor any hedging instruments to determine if they continue to be effective. We terminated our interest rate swap during the fourth quarter of 2015. We do not enter into or hold derivative instruments for trading or speculative purposes. The fair value of any hedging instruments we hold is based on dealer quotes and includes adjustments for nonperformance risk. Any change in fair value is recorded in the consolidated balance sheet as accumulated other comprehensive income. |
Foreign Currency Transactions and Translations | Foreign Currency Transactions - The following table provides information on the components of our foreign currency activities recognized in the Consolidated Statements of Income for the years ended December 31,: (in thousands) 2015 2014 2013 Foreign currency transactions loss, net $ (659 ) $ (1,321 ) $ (444 ) Forward currency option (loss) gain (472 ) 192 — Foreign currency loss, net $ (1,131 ) $ (1,129 ) $ (444 ) Foreign Currency Transactions – Gains and losses resulting from our transactions and our subsidiaries’ transactions, which are made in a currency that differs from the functional currency, are included in income as they occur, as other income (expense) in the Consolidated Statements of Income. Forward Currency Option – During December 2015, we terminated foreign currency forward contracts we had entered into in June 2015, as economic hedges against the continued strengthening of the U.S. Dollar (USD) against the Euro (EUR) and the Japanese Yen (JPY). The initial aggregate notional amount of the forward contracts was $11.6 million. During the year ended December 31, 2015, we recognized losses of $0.5 million, related to these instruments. The recognized losses are recorded in other income (expense) in the consolidated statements of income related to the fair value of these currency options based upon dealer quotes. During December 2014 we terminated a foreign currency option we had entered into in September 2014. The foreign currency put option instrument was for a notional value of $6.4 million, as an economic hedge against strengthening of the USD against the EUR. During the year ended December 31, 2014, we realized a gain of $0.2 million on the Consolidated Statements of Income related to the termination of this currency option. Foreign Currency Translation - We are exposed to market risk related to changes in foreign currency exchange rates. The functional currency of substantially all of our international subsidiaries is the local currency. Transactions are translated into U.S. dollars and exchange gains and losses arising from translation are recognized in “Other comprehensive income (loss)”. Fluctuations in exchange rates affect our financial position and results of operations. The majority of our foreign currency exposure is to the EUR, British Pound (GBP), and JPY. During the twelve months ended December 31, 2015, translation losses were $3.7 million, which were primarily due to the weakening of the JPY and EUR. During the year ended December 31, 2014, translation losses were $4.6 million, which were a result of the weakening of the JPY and EUR. We may experience translation gains and losses during the year ending December 31, 2016; however, these gains and losses are not expected to have a material effect on our financial position, results of operations, or cash flows. |
Other Comprehensive Income (Loss) | Other Comprehensive Income (Loss) - Other comprehensive income (loss) is composed of unrealized gains or losses from the change in fair value of certain derivative instruments that qualify for hedge accounting, and for foreign currency translation effects. The following table provides information on the components of our other comprehensive loss: (in thousands) Cash Foreign Total Balance December 31, 2013 $ (284 ) $ (3,618 ) $ (3,902 ) 2014 Adjustments 134 (4,629 ) (4,495 ) Balance December 31, 2014 $ (150 ) $ (8,247 ) $ (8,397 ) 2015 Adjustments 150 (3,739 ) (3,589 ) Balance December 31, 2015 $ — $ (11,986 ) $ (11,986 ) We do not enter into or hold derivative instruments for trading or speculative purposes. We entered into our interest rate swap to eliminate variability in future cash flows by converting LIBOR-based variable-rate interest payments into fixed-rate interest payments. The fair value of our interest rate swap agreement was based on dealer quotes, and the change in fair value was recorded as accumulated other comprehensive loss in the consolidated balance sheets. We terminated our interest rate swap during the fourth quarter ended December 31, 2015. |
New Accounting Pronouncements | New Accounting Pronouncements - In February 2016, the Financial Accounting Standards Board, or FASB, issued updated guidance on leases. The new standard requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance. A modified retrospective approach should be applied for leases existing at the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. We are currently assessing the impact of adopting this guidance on our financial statements. In November 2015, the FASB issued amended guidance on income taxes, which simplifies the classification of deferred income tax liabilities and assets in a classified statement of financial position. The amendment requires entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. The amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and may be early adopted on a prospective basis or on a retrospective basis to all periods presented. In 2016, we intend to early adopt this amendment, which is not expected to have a material impact on our financial statements. In September 2015, the FASB issued guidance on business combination provisional adjustments during the measurement period. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for annual and interim periods beginning on or after December 15, 2017, and early application is permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In July 2015, the FASB issued guidance on simplifying the measurement of inventory. The updated standard changes the current lower of cost or market test with the lower of cost or net realizable value test. Net realizable value is defined as the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. The guidance should be applied prospectively, and is effective for annual and interim periods beginning on or after December 15, 2015, with early application permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In April 2015, the FASB issued guidance on the presentation of debt issuance costs on the balance sheet. The new standard requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The guidance is effective for annual and interim periods beginning on or after December 15, 2015, and early application is permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations. In May 2014, the FASB issued new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. The new guidance is based on the principle that revenue is recognized upon the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and clarify guidance for multiple-element arrangements. In July 2015, the FASB delayed the effective date of this guidance by one year. The guidance is effective for the first fiscal quarter of 2018, and early application is not permitted earlier than January 1, 2015. We are currently assessing the impact of adopting this guidance on our financial statements. |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Summary of classification of Inventory | The following table summarizes our classifications of inventory as of December 31,: (in thousands) 2015 2014 Raw materials $ 19,481 $ 21,091 Work in process 1,633 1,283 Finished goods on hand 28,878 31,105 Finished goods on loan/consignment 44,813 36,813 Inventory total 94,805 90,292 Non-current inventories 23,376 17,465 Inventories, current $ 71,429 $ 72,827 |
Schedule of accrued liabilities | Accrued Expenses - Accrued expenses as of December 31, 2015 and 2014 consist of the following: (in thousands) 2015 2014 Commissions payable $ 4,218 $ 3,346 Compensation payable 3,071 3,440 Royalties payable 1,599 1,800 Miscellaneous accrued expenses 610 608 $ 9,498 $ 9,194 |
Schedule of foreign exchange contracts | Foreign Currency Transactions - The following table provides information on the components of our foreign currency activities recognized in the Consolidated Statements of Income for the years ended December 31,: (in thousands) 2015 2014 2013 Foreign currency transactions loss, net $ (659 ) $ (1,321 ) $ (444 ) Forward currency option (loss) gain (472 ) 192 — Foreign currency loss, net $ (1,131 ) $ (1,129 ) $ (444 ) |
Schedule of comprehensive income (loss) | The following table provides information on the components of our other comprehensive loss: (in thousands) Cash Foreign Total Balance December 31, 2013 $ (284 ) $ (3,618 ) $ (3,902 ) 2014 Adjustments 134 (4,629 ) (4,495 ) Balance December 31, 2014 $ (150 ) $ (8,247 ) $ (8,397 ) 2015 Adjustments 150 (3,739 ) (3,589 ) Balance December 31, 2015 $ — $ (11,986 ) $ (11,986 ) |
Fair Value Measures (Tables)
Fair Value Measures (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The table below provides information on our liabilities that are measured at fair value on a recurring basis: (In Thousands) Total Fair Value Quoted Prices in Active Markets (Level 1) Significant Other Observable (Level 2) Significant Unobservable Inputs (Level 3) At December 31, 2015 Contingent consideration $ 6,222 $ — $ — $ 6,222 At December 31, 2014 Interest rate swap $ 254 $ — $ 254 $ — |
Goodwill and Other Intangible27
Goodwill and Other Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill – The following table provides the changes to the carrying value of goodwill for the years ended December 31, 2015 and 2014: (in thousands) Knee Hip Biologics and Spine Extremities Other Total Balance as of January 1, 2014 $ 3,830 $ 670 $ 7,553 $ 459 $ 1,002 $ 13,514 Foreign currency translation effects (191 ) (73 ) — (48 ) (111 ) (423 ) Balance as of December 31, 2014 3,639 597 7,553 411 891 13,091 Business combination 1,760 391 — 4,368 — 6,519 Foreign currency translation effects (267 ) (84 ) — (318 ) (91 ) (760 ) Balance as of December 31, 2015 $ 5,132 $ 904 $ 7,553 $ 4,461 $ 800 $ 18,850 |
Schedule of Finite-Lived Intangible Assets by Major Class | Other Intangible Assets – The following tables summarize our carrying values of our other intangible assets at December 31, 2015 and 2014: (in thousands) Carrying Accumulated Amortization Net Weighted Avg Amortization Period Balance at December 31, 2015 Product licenses and designs $ 16,675 $ 5,554 $ 11,121 11.1 Patents and trademarks 4,678 3,252 1,426 14.2 Customer relationships 2,923 2,831 92 7.0 Balance at December 31, 2014 Product licenses and designs $ 15,640 $ 6,999 $ 8,641 9.8 Patents and trademarks 4,704 3,003 1,701 14.0 Customer relationships 3,033 2,830 203 6.9 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | The following table provides information for the estimated amortization by year for our amortizable intangible assets: Year ending December 31, (in thousands) 2016 2017 2018 2019 2020 Product licenses and designs $ 1,319 $ 1,228 $ 1,123 $ 1,061 $ 1,057 Patents and trademarks 268 231 212 141 71 Customer relationships 58 34 — — — |
Income Tax (Tables)
Income Tax (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense (Benefit) | The provision for income taxes consists of the following (in thousands): 2015 2014 2013 Current: Federal $ 7,014 $ 6,657 $ 3,083 State 1,289 1,783 1,598 Foreign 431 788 835 Total current 8,734 9,228 5,516 Deferred: Federal (1,920 ) (1,297 ) 1,294 State (367 ) (39 ) 264 Foreign (884 ) (252 ) (38 ) Total deferred (3,171 ) (1,588 ) 1,520 Total provision for income taxes $ 5,563 $ 7,640 $ 7,036 |
Schedule of Income before Income Tax, Domestic and Foreign | The components of income before income taxes were as follows (in thousands): 2015 2014 2013 United States $ 18,855 $ 20,564 $ 17,157 Foreign 1,475 3,564 5,251 Total $ 20,330 $ 24,128 $ 22,408 |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation between the amount of reported income tax provision and the amount computed at the statutory Federal income tax rate for the years ended December 31, 2015, 2014 and 2013 follows: 2015 2014 2013 Statutory Federal rate 35.0 % 35.0 % 35.0 % State income taxes (net of Federal income tax benefit) 2.5 4.7 5.8 Effect of rates different than statutory (4.3 ) (5.5 ) (5.7 ) Valuation allowance on net operating loss carry forwards (0.8 ) 0.7 0.6 Tax benefit relating to U.S. manufacturer's deduction (3.2 ) (2.6 ) (1.4 ) Research & development credit (3.2 ) (3.0 ) (2.4 ) Other 1.4 2.4 (0.5 ) 27.4 % 31.7 % 31.4 % |
Schedule of Deferred Tax Assets and Liabilities | The types of temporary differences and their related tax effects that give rise to deferred tax assets and liabilities at December 31, 2015 and 2014 are as follows (in thousands): 2015 2014 Deferred tax liabilities: Basis difference in property and equipment $ 9,871 $ 10,553 Basis difference in intangibles 1,476 465 Other 567 229 Gross deferred tax liabilities 11,914 11,247 Deferred tax assets: Accrued liabilities and reserves not currently deductible 764 968 Inventory basis difference 5,428 4,797 Non-qualified stock options 1,100 902 Other 17 — Loss carry forwards 8,463 8,482 Valuation allowance on net operating loss carry forwards (4,301 ) (5,076 ) Gross deferred tax assets 11,471 10,073 Net deferred tax liabilities $ 443 $ 1,174 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Debt consisted of the following as of December 31,: (in thousands) 2015 2014 Term loan payable in quarterly principal installment of $750, variable interest rate at 1.76% as of December 31, 2014, a component of which was fixed by a swap agreement at 1.47% as a cash flow hedge. $ — $ 23,250 Business line of credit payable on a revolving basis, plus interest based on adjustable rate as determined by one month LIBOR based on our ratio of funded debt to EBITDA, 2.19% as of December 31, 2015. 16,000 — Total debt 16,000 23,250 Less current portion — (3,000 ) $ 16,000 $ 20,250 |
Schedule of Maturities of Long-term Debt | The following is a schedule of debt maturities as of December 31, 2015 (in thousands): 2016 $ — 2017 — 2018 — 2019 — 2020 16,000 Thereafter — $ 16,000 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Stockholders Equity Note [Abstract] | |
Schedule of Earnings Per Share Reconciliation | The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for net income and net income available to common shareholders (in thousands, except per share amounts): 2015 2014 2013 Income (Numera tor) Shares (Denominator) Per Share Income (Numerator) Shares (Denominator) Per Share Income (Numera tor) Shares (Denominator) Per Share Net income $ 14,767 $ 16,488 $ 15,372 Basic EPS: Net income available to common shareholders $ 14,767 14,022 $ 1.05 $ 16,488 13,732 $ 1.20 $ 15,372 13,462 $ 1.14 Effect of dilutive securities: Stock options 180 284 221 Diluted EPS: Net income available to common shareholders plus assumed conversions $ 14,767 14,202 $ 1.04 $ 16,488 14,016 $ 1.18 $ 15,372 13,683 $ 1.12 |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | A summary of the status of stock option activity under our stock-based compensation plans as of December 31, 2015, 2014 and 2013 and changes during the years then ended is presented below: 2015 2014 2013 Options Weighted Avg Options Weighted Avg Exercise Options Weighted Avg Exercise Outstanding - January 1 1,244,166 $ 17.49 1,317,678 $ 16.78 1,293,293 $ 16.35 Granted 176,125 23.28 201,217 20.90 241,000 18.55 Exercised (197,607 ) 15.13 (261,769 ) 16.49 (186,035 ) 15.26 Forfeited or Expired (5,681 ) 19.87 (12,960 ) 18.46 (30,580 ) 21.66 Outstanding - December 31 1,217,003 $ 18.70 1,244,166 $ 17.49 1,317,678 $ 16.78 Exercisable - December 31 632,603 $ 17.35 688,529 $ 16.50 830,967 $ 16.35 The following table summarizes additional stock option terms as of December 31, 2015: Weighted avg remaining contractual Aggregate intrinsic value (in thousands) Options outstanding 3.39 $ 908 Options exercisable 1.97 703 |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The fair value of each option granted to employees and non-employee directors is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for grants: Years ended December 31, 2015 2014 2013 Options granted 176,125 201,217 241,000 Dividend yield — — — Expected life 7 years 7 years 7 years Expected volatility 42 % 43 % 43 % Risk free interest rates 1.7 % 2.3 % 1.3 % Weighted average fair value per share of options granted $ 10.64 $ 9.87 $ 8.50 |
Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan | The compensation cost that has been charged against income for the incentive compensation plans for the years ended December 31 was: (in thousands) 2015 2014 2013 Employee stock compensation expense $ 1,794 $ 1,800 $ 1,549 Non-employee stock compensation expense — — — 1,794 1,800 1,549 Income tax benefit 515 461 325 $ 1,279 $ 1,339 $ 1,224 |
Schedule of Share-based Compensation, Nonemployee Director Stock Award Plan, Activity | Under the plans, we may grant restricted stock awards to eligible employees, directors, and independent agents and consultants. Restrictions on transferability, risk of forfeiture and other restrictions are determined by the Compensation Committee of the Board of Directors, or the Committee, at the time of the award. During February 2015, the Committee approved equity compensation to the five outside members of the Board of Directors for their service on the Board of Directors. The compensation for each director was for the grant of stock awards with an annual market value of $77,500, payable in the form of four equal quarterly grants of common stock based on the market price at the respective dates of grant. The summary information of the restricted stock grants for the year ended 2015 is presented below: Grant date February 2015 May 29, 2015 August 31, 2015 November 30, 2015 Aggregate shares of restricted stock granted 4,974 4,530 4,940 5,525 Grant date fair value $ 116,000 $ 97,000 $ 97,000 $ 97,000 Weighted average fair value per share $ 23.35 $ 21.38 $ 19.61 $ 17.53 During February 2014, the Committee approved equity compensation to the six outside members of the Board of Directors for their service on the Board of Directors. The compensation for each director was for the grant of stock awards with an annual market value of $75,000, payable in the form of four equal quarterly grants of common stock based on the market price at the respective dates of grant. The summary information of the restricted stock grants for the year ended 2014 is presented below: Grant date February 28, 2014 May 30, 2014 August 29, 2014 November 28, 2014 Aggregate shares of restricted stock granted 4,020 4,502 4,710 5,070 Grant date fair value $ 93,666 $ 104,852 $ 112,475 $ 112,453 Weighted average fair value per share $ 23.30 $ 23.29 $ 23.88 $ 22.18 During February 2013, the Committee approved equity compensation to the five outside members of the Board of Directors for their service on the Board of Directors. The compensation for each director was for the grant of stock awards to each director with an annual market value of $69,000, payable in the form of four equal quarterly grants of common stock based on the market price at the respective dates of grant. The summary information of the restricted stock grants for 2013 is presented below: Grant date February 28, 2013 May 31, 2013 August 30, 2013 November 29, 2013 Aggregate shares of restricted stock granted 4,685 4,735 4,530 3,465 Grant date fair value $ 86,251 $ 86,177 $ 86,251 $ 86,209 Weighted average fair value per share $ 18.41 $ 18.20 $ 19.04 $ 24.88 |
Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity | On February 18, 2009, our Board of Directors adopted the 2009 ESPP, and our shareholders approved the 2009 ESPP at our Annual Meeting of Shareholders on May 7, 2009. Under the 2009 ESPP, employees are allowed to purchase shares of our common stock at a fifteen percent (15%) discount via payroll deduction. There are four offering periods during each calendar year. At our 2012 Annual Meeting of Shareholders, held on May 3, 2012, our shareholders approved an amendment to the 2009 ESPP that increased the maximum number of shares issuable under the 2009 ESPP to 300,000. As of December 31, 2015, 39,179 shares remained available to purchase under the 2009 ESPP. The fair value of the employees' purchase rights is estimated using the Black-Scholes model. Purchase information and fair value assumptions are presented in the following table: Twelve Months Ended December 31, 2015 2014 2013 Shares purchased 45,397 33,715 41,572 Dividend yield — — — Expected life 1 year 1 year 1 year Expected volatility 33 % 27 % 32 % Risk free interest rates 0.3 % 0.1 % 0.1 % Weighted average per share fair value $ 4.48 $ 4.84 $ 4.03 |
Lease Obligations (Tables)
Lease Obligations (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Leases [Abstract] | |
Schedule of Future Minimum Rental Payments for Operating Leases | The following is a schedule, by year, of minimum payments due on all non-cancelable operating leases as of December 31, 2015 (in thousands): Year Ended December 31, 2016 $ 1,397 2017 802 2018 340 2019 75 2020 52 Thereafter 49 $ 2,715 |
Schedule of Future Minimum Lease Payments for Capital Leases | The following is a schedule, by year, of minimum payments due on all non-cancelable capital leases as of December 31, 2015 (in thousands): Year Ending December 31, 2016 $ 36 2017 9 2018 6 2019 5 2020 2 Thereafter — Net minimum lease payments 58 Less: amount representing interest 15 Present value of minimum lease payments $ 43 |
Quarterly Results of Operatio32
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Quarterly Financial Information Disclosure [Abstract] | |
Summary of Quarterly Results of Operations | Following is a summary of the quarterly results of operations for the years ended December 31, 2015 and 2014. All dollar amounts are in thousands, except per share amounts: Quarter First Second Third Fourth Total 2015 Net sales $ 61,376 $ 61,493 $ 56,237 $ 62,732 $ 241,838 Gross profit 42,734 42,159 39,640 43,666 168,199 Net income 4,112 3,661 2,878 4,116 14,767 Basic EPS 0.30 0.26 0.21 0.29 1.05 Diluted EPS 0.29 0.26 0.20 0.29 1.04 2014 Net sales $ 63,258 $ 63,919 $ 57,884 $ 63,312 $ 248,373 Gross profit 44,624 44,354 40,955 44,196 174,129 Net income 4,198 4,160 3,011 5,119 16,488 Basic EPS 0.31 0.30 0.22 0.37 1.20 Diluted EPS 0.30 0.30 0.21 0.36 1.18 |
Segment Information (Tables)
Segment Information (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Summarized information concerning our reportable segments is shown in the following table (in thousands): Year Ended December 31, Knee Hip Biologics & Spine Extremity Other Corporate Total 2015 Net sales $ 70,865 $ 42,655 $ 22,619 $ 84,418 $ 21,281 $ — $ 241,838 Segment profit (loss) 3,056 1,111 531 17,222 377 (1,967 ) 20,330 Total assets, net 64,679 36,222 22,217 37,817 13,898 102,409 277,242 Capital expenditures 4,864 4,151 1,179 3,668 546 5,056 19,464 Depreciation and Amortization 7,530 2,684 1,172 2,847 575 3,598 18,406 2014 Net sales $ 78,678 $ 43,491 $ 23,826 $ 79,003 $ 23,375 $ — $ 248,373 Segment profit (loss) 4,840 2,736 539 17,118 1,041 (2,146 ) 24,128 Total assets, net 66,840 32,168 24,187 27,033 15,159 95,653 261,040 Capital expenditures 4,798 3,416 887 3,565 1,161 4,812 18,639 Depreciation and Amortization 7,992 2,809 1,212 2,199 582 3,752 18,546 2013 Net sales $ 80,532 $ 40,958 $ 25,486 $ 65,528 $ 24,584 $ — $ 237,088 Segment profit (loss) 7,318 1,638 53 14,057 862 (1,520 ) 22,408 Total assets, net 67,332 31,171 24,436 25,269 12,607 101,027 261,842 Capital expenditures 6,255 1,606 928 3,093 317 4,341 16,540 Depreciation and Amortization 7,529 2,791 1,337 1,827 407 3,702 17,593 |
Geographic Distribution of Sales, Long-Lived Assets and Inventory | Geographic distribution of our long-lived assets and inventory is shown in the following table (in thousands): As of December 31, 2015 2014 Domestic International Domestic International Long lived assets, gross $ 147,291 $ 53,859 $ 144,750 $ 43,648 Accumulated depreciation and amortization (88,958 ) (19,391 ) (82,167 ) (15,580 ) Long lived assets, net 58,333 34,468 62,583 28,068 Inventory $ 58,106 $ 36,699 $ 57,361 $ 32,931 Geographic distribution of our sales is summarized in the following table (in thousands): Twelve Months Ended December 31, 2015 2014 2013 2015-2014% Inc/Decr 2014-2013% Inc/Decr Domestic sales $ 168,140 $ 165,575 $ 159,649 1.5 3.7 International sales 73,698 82,798 77,439 (11.0 ) 6.9 Total sales $ 241,838 $ 248,373 $ 237,088 (2.6 ) 4.8 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2015 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition [Table Text Block] | The following table summarizes the preliminary purchase price allocation and determination of goodwill, which is not deductible for tax purposes, as of January 2015 (in thousands): Amounts at Acquisition Consideration: Cash $ 2,329 Fair value of contingent consideration 7,148 Total Purchase Price 9,477 Settlement of pre-existing agreement 3,080 12,557 Acquisition related expenses - incurred as of December 31, 2015 278 Identifiable assets acquired and liabilities assumed: Current assets acquired 1,315 Property and equipment 164 Current liabilities assumed (416 ) Deferred tax liability assumed (2,486 ) Identifiable intangible assets 7,460 6,037 Goodwill 6,520 Net assets acquired $ 12,557 |
Schedule of Business Acquisitions by Acquisition, Contingent Consideration [Table Text Block] | The following table summarizes the contingent consideration balance and activity for the year ended December 31, 2015 (in thousands): Beginning fair value of contingent liability $ 7,148 Period change in valuation 186 Payments (676 ) Foreign currency translation effects (436 ) Contingent liability balance, December 31, 2015 6,222 Current liability 471 Non-current liability $ 5,751 |
Organization (Details)
Organization (Details) | 12 Months Ended |
Dec. 31, 2015market | |
Maximum | |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |
Number of international Markets | 35 |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Cash and cash equivalents investment maturity period | 90 days |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) | 12 Months Ended |
Dec. 31, 2015 | |
Minimum | |
Accounting Policies [Line Items] | |
Payment term due days from international distributors | 90 days |
Maximum | |
Accounting Policies [Line Items] | |
Payment term due days from international distributors | 120 days |
Summary of Significant Accoun38
Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies [Abstract] | |||
Inventory Write-down | $ 1,523 | $ (81) | $ 2,838 |
Inventory sales turnover period | 1 year | ||
Cost of goods sold turnover period | 12 months | ||
Raw materials | $ 19,481 | 21,091 | |
Work in process | 1,633 | 1,283 | |
Finished goods on hand | 28,878 | 31,105 | |
Finished goods on loan/consignment | 44,813 | 36,813 | |
Inventory total | 94,805 | 90,292 | |
Non-current inventories | 23,376 | 17,465 | |
Inventories, current | $ 71,429 | $ 72,827 |
Summary of Significant Accoun39
Summary of Significant Accounting Policies - Property, Plant and Equipment (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Property Plant And Equipment [Line Items] | |||
Depreciation expense | $ 16.7 | $ 16.6 | $ 15.5 |
Machinery and Equipment [Member] | |||
Property Plant And Equipment [Line Items] | |||
Estimated useful lives | 5 years | ||
Surgical Instrumentation [Member] | |||
Property Plant And Equipment [Line Items] | |||
Estimated useful lives | 7 years | ||
Furniture and Fixtures [Member] | |||
Property Plant And Equipment [Line Items] | |||
Estimated useful lives | 5 years | ||
Facilities [Member] | |||
Property Plant And Equipment [Line Items] | |||
Estimated useful lives | 39 years |
Summary of Significant Accoun40
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Accounting Policies [Line Items] | ||
Allowance for sales returns | $ 40,000 | $ 36,000 |
Deferred financing costs | 400,000 | 600,000 |
Amortization of financing costs | $ 5,000 | $ 400,000 |
Defined tax benefit, percentage | 50.00% | |
Stock Options [Member] | ||
Accounting Policies [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Maximum Vesting Term | 10 years | |
Stock Options [Member] | Minimum | ||
Accounting Policies [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |
Stock Options [Member] | Maximum | ||
Accounting Policies [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years |
Summary of Significant Accoun41
Summary of Significant Accounting Policies - Accrued Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Accounting Policies [Abstract] | ||
Commissions payable | $ 4,218 | $ 3,346 |
Compensation payable | 3,071 | 3,440 |
Royalties payable | 1,599 | 1,800 |
Miscellaneous accrued expenses | 610 | 608 |
Accrued expenses and other liabilities | $ 9,498 | $ 9,194 |
Summary of Significant Accoun42
Summary of Significant Accounting Policies - Foreign Currency Translation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Accounting Policies [Abstract] | |||
Foreign currency transactions loss, net | $ (659) | $ (1,321) | $ (444) |
Forward currency option (loss) gain | (472) | 192 | |
Foreign currency loss, net | (1,131) | (1,129) | $ (444) |
Initial aggregate notional amount of the forward contracts. | 11,600 | ||
Investment Foreign Currency, Contract, Foreign Currency Amount | 6,400 | ||
Foreign currency translations (loss) gain, net | $ (3,700) | $ (4,600) |
Summary of Significant Accoun43
Summary of Significant Accounting Policies - Other Comprehensive Income (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Other Comprehensive Income (Loss) [Roll Forward] | |||
Cash Flow Hedge, Beginning of Period | $ (150) | $ (284) | |
Change in fair value of cash flow hedges | 150 | 134 | $ 137 |
Cash Flow Hedge, End of Period | (150) | (284) | |
Foreign Currency Translation, Beginning of Period | (8,247) | (3,618) | |
Change in currency translation | (3,739) | (4,629) | 758 |
Foreign Currency Translation, End of Period | (11,986) | (8,247) | (3,618) |
Total, Beginning of Period | (8,397) | (3,902) | |
Other comprehensive income (loss), net of tax | (3,589) | (4,495) | 895 |
Total, End of Period | $ (11,986) | $ (8,397) | $ (3,902) |
Fair Value Measures (Details)
Fair Value Measures (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration Fair Value | $ 6,222 | |
Interest rate swap | $ 254 | |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Interest rate swap | $ 254 | |
Significant Unobservable Inputs (Level 3) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingent Consideration Fair Value | $ 6,222 |
Goodwill And Other Intangible45
Goodwill And Other Intangible Assets (Goodwill) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Goodwill [Roll Forward] | ||
Beginning Balance | $ 13,091 | $ 13,514 |
Business combination | 6,519 | |
Foreign currency translation effects | (760) | (423) |
Ending Balance | 18,850 | 13,091 |
Knee | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 3,639 | 3,830 |
Business combination | 1,760 | |
Foreign currency translation effects | (267) | (191) |
Ending Balance | 5,132 | 3,639 |
Hip | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 597 | 670 |
Business combination | 391 | |
Foreign currency translation effects | (84) | (73) |
Ending Balance | 904 | 597 |
Biologics and Spine | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 7,553 | 7,553 |
Business combination | 0 | |
Foreign currency translation effects | 0 | 0 |
Ending Balance | 7,553 | 7,553 |
Extremities | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 411 | 459 |
Business combination | 4,368 | |
Foreign currency translation effects | (318) | (48) |
Ending Balance | 4,461 | 411 |
Other | ||
Goodwill [Roll Forward] | ||
Beginning Balance | 891 | 1,002 |
Business combination | 0 | |
Foreign currency translation effects | (91) | (111) |
Ending Balance | $ 800 | $ 891 |
Goodwill And Other Intangible46
Goodwill And Other Intangible Assets (Other intangible Assets) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 10 years | ||
Amortization expense on intangible assets | $ 1,700 | $ 2,000 | $ 2,100 |
Product licenses and designs | |||
Finite-Lived Intangible Assets [Line Items] | |||
Carrying Value | 16,675 | 15,640 | |
Accumulated Amortization | 5,554 | 6,999 | |
Net Carrying Value | $ 11,121 | $ 8,641 | |
Weighted Avg Amortization Period | 11 years 1 month 6 days | 9 years 9 months 18 days | |
Product licenses and designs | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 5 years | ||
Product licenses and designs | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 20 years | ||
Patents and trademarks | |||
Finite-Lived Intangible Assets [Line Items] | |||
Carrying Value | $ 4,678 | $ 4,704 | |
Accumulated Amortization | 3,252 | 3,003 | |
Net Carrying Value | $ 1,426 | $ 1,701 | |
Weighted Avg Amortization Period | 14 years 2 months 12 days | 14 years | |
Patents and trademarks | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 5 years | ||
Patents and trademarks | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 17 years | ||
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Carrying Value | $ 2,923 | $ 3,033 | |
Accumulated Amortization | 2,831 | 2,830 | |
Net Carrying Value | $ 92 | $ 203 | |
Weighted Avg Amortization Period | 7 years | 6 years 10 months 24 days | |
Customer relationships | Minimum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 6 years | ||
Customer relationships | Maximum | |||
Finite-Lived Intangible Assets [Line Items] | |||
Estimated useful life | 7 years |
Goodwill and Other Intangible47
Goodwill and Other Intangible Assets Goodwill and Other Intangible Assets - Future Amortization Expense (Details) $ in Thousands | Dec. 31, 2015USD ($) |
Product licenses and designs | |
Acquired Finite Lived Intangible Assets [Line Items] | |
2,016 | $ 1,319 |
2,017 | 1,228 |
2,018 | 1,123 |
2,019 | 1,061 |
2,020 | 1,057 |
Patents and trademarks | |
Acquired Finite Lived Intangible Assets [Line Items] | |
2,016 | 268 |
2,017 | 231 |
2,018 | 212 |
2,019 | 141 |
2,020 | 71 |
Customer relationships | |
Acquired Finite Lived Intangible Assets [Line Items] | |
2,016 | 58 |
2,017 | 34 |
2,018 | 0 |
2,019 | 0 |
2,020 | $ 0 |
Income Tax - Provision for Inco
Income Tax - Provision for Income Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Current: | |||
Federal | $ 7,014 | $ 6,657 | $ 3,083 |
State | 1,289 | 1,783 | 1,598 |
Foreign | 431 | 788 | 835 |
Current | 8,734 | 9,228 | 5,516 |
Deferred: | |||
Federal | (1,920) | (1,297) | 1,294 |
State | (367) | (39) | 264 |
Foreign | (884) | (252) | (38) |
Deferred income taxes | (3,171) | (1,588) | 1,520 |
Total provision for income taxes | $ 5,563 | $ 7,640 | $ 7,036 |
Income Tax - Components of Taxe
Income Tax - Components of Taxes Before Income Tax (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Income (Loss) from Continuing Operations before Equity Method Investments, Income Taxes, Extraordinary Items, Noncontrolling Interest [Abstract] | |||
United States | $ 18,855 | $ 20,564 | $ 17,157 |
Foreign | 1,475 | 3,564 | 5,251 |
INCOME BEFORE INCOME TAXES | $ 20,330 | $ 24,128 | $ 22,408 |
Income Tax - Reconciliation of
Income Tax - Reconciliation of Effective Tax Rate (Details) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Effective Income Tax Rate, Continuing Operations, Tax Rate Reconciliation [Abstract] | |||
Statutory Federal rate | 35.00% | 35.00% | 35.00% |
State income taxes (net of Federal income tax benefit) | 2.50% | 4.70% | 5.80% |
Effect of rates different than statutory | (4.30%) | (5.50%) | (5.70%) |
Valuation allowance on net operating loss carry forwards | (0.80%) | 0.70% | 0.60% |
Tax benefit relating to U.S. manufacturer's deduction | (3.20%) | (2.60%) | (1.40%) |
Research & development credit | (3.20%) | (3.00%) | (2.40%) |
Other | 1.40% | 2.40% | (0.50%) |
Effective Income Tax Rate, Continuing Operations | 27.40% | 31.70% | 31.40% |
Income Tax - Deferred Tax Asset
Income Tax - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Deferred tax liabilities: | ||
Basis difference in property and equipment | $ 9,871 | $ 10,553 |
Basis difference in intangibles | 1,476 | 465 |
Other | 567 | 229 |
Gross deferred tax liabilities | 11,914 | 11,247 |
Deferred tax assets: | ||
Accrued liabilities and reserves not currently deductible | 764 | 968 |
Inventory basis difference | 5,428 | 4,797 |
Non-qualified stock options | 1,100 | 902 |
Other | 17 | |
Loss carry forwards | 8,463 | 8,482 |
Valuation allowance on net operating loss carry forwards | (4,301) | (5,076) |
Gross deferred tax assets | 11,471 | 10,073 |
Net deferred tax liabilities | $ 443 | $ 1,174 |
Income Tax (Details)
Income Tax (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Income Tax Disclosure [Abstract] | ||
Operating loss carryforwards | $ 27,300 | |
Deferred tax assets | 8,463 | $ 8,482 |
Valuation allowance | 4,301 | $ 5,076 |
Decrease in deferred tax asset if net operating loss carryforward was recorded at expected utilized value | 2,600 | |
Decrease in valuation allowance if net operating loss carryforward was recorded at expected utilized value | 2,600 | |
Valuation allowance established through goodwill from a business combination | 3,400 | |
Unremitted earnings of foreign subsidiaries | 24,900 | |
Unrecognized Tax Benefits | $ 0 |
Debt (Schedule of Long-term Deb
Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | ||
Term loan payable in quarterly principal installment of $750, variable interest rate at 1.76% as of December 31, 2014, a component of which was fixed by a swap agreement at 1.47% as a cash flow hedge. | $ 23,250 | |
Line of credit | $ 16,000 | 0 |
Total debt | 16,000 | 23,250 |
Less current portion | 0 | (3,000) |
Long-term debt, net of current portion | 16,000 | $ 20,250 |
Quarterly principal installments during the remaining years of the term | $ 750 | |
Interest rate at period end | 1.76% | |
Percentage of fixed interest rate on swap as cash flow hedge | 1.47% | |
Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Interest rate at period end | 2.19% |
Debt (Schedule of Debt Maturiti
Debt (Schedule of Debt Maturities) (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
2,016 | $ 0 | |
2,017 | 0 | |
2,018 | 0 | |
2,019 | 0 | |
2,020 | 16,000 | |
Thereafter | 0 | |
Total debt | $ 16,000 | $ 23,250 |
Debt (Narrative) (Details)
Debt (Narrative) (Details) - USD ($) | Dec. 17, 2015 | Dec. 31, 2015 |
Debt Instrument [Line Items] | ||
Maximum aggregate principal amount | $ 150,000,000 | $ 100,000,000 |
Swingline note amount | 5,000,000 | 5,000,000 |
Letters of credit amount | $ 5,000,000 | |
Debt Instrument, Maturity Date | Dec. 16, 2020 | |
Proceeds from loan originations | 16,000,000 | |
Repayments of lines of credit | 5,000,000 | |
Term loan facility amount | 30,000,000 | |
Revolving credit line amount | $ 70,000,000 | |
Line of Credit [Member] | Domestic [Member] | ||
Debt Instrument [Line Items] | ||
Pledged of equity in subsidiaries (percentage) | 100.00% | |
Line of Credit [Member] | Foreign | ||
Debt Instrument [Line Items] | ||
Pledged of equity in subsidiaries (percentage) | 65.00% | |
Federal Funds Rate | ||
Debt Instrument [Line Items] | ||
Basis spread on variable rate | 0.50% | |
Minimum | ||
Debt Instrument [Line Items] | ||
Leverage Ratio for determining applicable margin | 1.25% | |
Minimum | Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Leverage ratio on debt covenant | 1 | |
Fixed charge coverage | 1 | |
Minimum | Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Fee on unused borrowing capacity | 0.175% | |
Minimum | Base Rate | ||
Debt Instrument [Line Items] | ||
Leverage Ratio for determining applicable margin | 0.25% | |
Maximum | ||
Debt Instrument [Line Items] | ||
Leverage Ratio for determining applicable margin | 1.75% | |
Maximum | Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Leverage ratio on debt covenant | 3 | |
Fixed charge coverage | 1.50 | |
Maximum | Line of Credit [Member] | ||
Debt Instrument [Line Items] | ||
Fee on unused borrowing capacity | 0.25% | |
Maximum | Base Rate | ||
Debt Instrument [Line Items] | ||
Leverage Ratio for determining applicable margin | 0.75% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Related Party Transaction [Line Items] | |||
Percent of domestic net sales paid through royalties | 1.00% | ||
Percent of foreign net sales paid through royalties | 1.00% | ||
Payments for royalties | $ 300,000 | $ 300,000 | $ 300,000 |
Albert Burstein [Member] | |||
Related Party Transaction [Line Items] | |||
Compensation paid under consulting agreement | 180,000 | 180,000 | 180,000 |
William Petty [Member] | |||
Related Party Transaction [Line Items] | |||
Maximum royalties paid annually | 150,000 | 150,000 | 150,000 |
Gary Miller [Member] | |||
Related Party Transaction [Line Items] | |||
Maximum royalties paid annually | $ 150,000 | $ 150,000 | $ 150,000 |
Commitments And Contingencies (
Commitments And Contingencies (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Legal Disclosure [Abstract] | ||
Amount accrued for product liability claims | $ 100,000 | $ 135,000 |
Outstanding commitments for purchase of inventory, raw materials and supplies | 17,300,000 | |
Outstanding commitments for purchase of capital equipment | 7,500,000 | |
Purchases under distribution agreements | 3,500,000 | |
Product development payments | $ 2,100,000 |
Pension Plan (Details)
Pension Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Compensation And Retirement Disclosure [Abstract] | |||
Percent of employee salary that company matches | 5.00% | ||
Employer matching percent for defined benefit plans | 100.00% | ||
Total contributions for defined benefit plans | $ 1.2 | $ 1.1 | $ 1.1 |
Shareholders' Equity (Earnings
Shareholders' Equity (Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Stockholders Equity Note [Abstract] | |||||||||||
Net Income | $ 4,116 | $ 2,878 | $ 3,661 | $ 4,112 | $ 5,119 | $ 3,011 | $ 4,160 | $ 4,198 | $ 14,767 | $ 16,488 | $ 15,372 |
Net income available to common shareholders | 14,767 | 16,488 | 15,372 | ||||||||
Net income available to common shareholders plus assumed conversions | $ 14,767 | $ 16,488 | $ 15,372 | ||||||||
Net income available to common shareholders (in shares) | 14,022 | 13,732 | 13,462 | ||||||||
Effect of dilutive securities, stock options (in shares) | 180 | 284 | 221 | ||||||||
Net income available to common shareholders plus assumed conversions (in shares) | 14,202 | 14,016 | 13,683 | ||||||||
Basic earnings per share (in dollars per share) | $ 0.29 | $ 0.21 | $ 0.26 | $ 0.30 | $ 0.37 | $ 0.22 | $ 0.30 | $ 0.31 | $ 1.05 | $ 1.20 | $ 1.14 |
Diluted earnings per share (in dollars per share) | $ 0.29 | $ 0.20 | $ 0.26 | $ 0.29 | $ 0.36 | $ 0.21 | $ 0.30 | $ 0.30 | $ 1.04 | $ 1.18 | $ 1.12 |
Earnings Per Share, Basic and Diluted, Other Disclosures [Abstract] | |||||||||||
Antidilutive shares | 386,638 | 143,967 | 264,765 |
Shareholders' Equity (Share Bas
Shareholders' Equity (Share Based Compensation) (Details) | Nov. 30, 2015USD ($)$ / sharesshares | Aug. 31, 2015USD ($)$ / sharesshares | May. 29, 2015USD ($)$ / sharesshares | Feb. 27, 2015USD ($)$ / sharesshares | Nov. 28, 2014USD ($)$ / sharesshares | Aug. 29, 2014USD ($)$ / sharesshares | May. 30, 2014USD ($)$ / sharesshares | Feb. 28, 2014USD ($)$ / sharesshares | Nov. 29, 2013USD ($)$ / sharesshares | Aug. 30, 2013USD ($)$ / sharesshares | May. 31, 2013USD ($)$ / sharesshares | Feb. 28, 2013USD ($)$ / sharesshares | Dec. 31, 2015USD ($)periodmember$ / sharesshares | Dec. 31, 2014USD ($)periodmember$ / sharesshares | Dec. 31, 2013USD ($)periodmember$ / sharesshares | May. 08, 2014shares |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Abstract] | ||||||||||||||||
Shares authorized | 1,500,000 | |||||||||||||||
Remaining shares issuable under 2009 Plan | 305,728 | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||||||||||||||
Outstanding - January 1, Options (in shares) | 1,244,166 | 1,317,678 | 1,293,293 | |||||||||||||
Granted, Options (in shares) | 176,125 | 201,217 | 241,000 | |||||||||||||
Exercised, Options (in shares) | (197,607) | (261,769) | (186,035) | |||||||||||||
Forfeited or Expired, Options (in shares) | (5,681) | (12,960) | (30,580) | |||||||||||||
Outstanding - December 31, Options (in shares) | 1,217,003 | 1,244,166 | 1,317,678 | |||||||||||||
Exercisable - December 31, Options (in shares) | 632,603 | 688,529 | 830,967 | |||||||||||||
Outstanding - January 1, Weighted Avg Exercise Price (in dollars per share) | $ / shares | $ 17.49 | $ 16.78 | $ 16.35 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | 23.28 | 20.90 | 18.55 | |||||||||||||
Exercised, Weighted Avg Exercise Price (in dollars per share) | $ / shares | 15.13 | 16.49 | 15.26 | |||||||||||||
Forfeited or Expired, Weighted Avg Exercise Price (in dollars per share) | $ / shares | 19.87 | 18.46 | 21.66 | |||||||||||||
Outstanding - December 31, Weighted Avg Exercise Price (in dollars per share) | $ / shares | 18.70 | 17.49 | 16.78 | |||||||||||||
Exercisable - December 31, Weighted Avg Exercise Price (in dollars per share) | $ / shares | $ 17.35 | $ 16.50 | $ 16.35 | |||||||||||||
Dividend yield | 0.00% | 0.00% | 0.00% | |||||||||||||
Expected life | 1 year | 1 year | 1 year | |||||||||||||
Expected volatility | 33.00% | 27.00% | 32.00% | |||||||||||||
Risk free interest rates | 0.30% | 0.10% | 0.10% | |||||||||||||
Outstanding - December 31, Weighted Avg Remaining Contractual Term | 3 years 4 months 21 days | |||||||||||||||
Exercisable - December 31, Weighted Avg Remaining Contractual Term | 1 year 11 months 19 days | |||||||||||||||
Outstanding - December 31, Aggregate Intrinsic Value (In thousands) | $ | $ 908,000 | |||||||||||||||
Exercisable - December 31, Aggregate Intrinsic Value (In thousands) | $ | 703,000 | |||||||||||||||
Exercised, Aggregate Intrinsic Value (In thousands) | $ | 1,100,000 | $ 500,000 | $ 800,000 | |||||||||||||
Unrecognized compensation cost related to unvested awards | $ | $ 1,900,000 | |||||||||||||||
Recognition weighted-average period | 1 year 7 months 6 days | |||||||||||||||
Restricted Stock Awards Disclosure [Abstract] | ||||||||||||||||
Restricted Stock Awards, Value, Granted To Director | $ | $ 77,500 | 75,000 | 69,000 | |||||||||||||
Number Of Offering Period In Annual Period | period | 4 | |||||||||||||||
Aggregate shares of restricted stock granted (in shares) | 5,525 | 4,940 | 4,530 | 4,974 | 5,070 | 4,710 | 4,502 | 4,020 | 3,465 | 4,530 | 4,735 | 4,685 | ||||
Issuance of restricted common stock for services | $ | $ 97,000 | $ 97,000 | $ 97,000 | $ 116,000 | $ 112,453 | $ 112,475 | $ 104,852 | $ 93,666 | $ 86,209 | $ 86,251 | $ 86,177 | $ 86,251 | $ 407,000 | $ 423,000 | $ 345,000 | |
Weighted average fair value per share (in dollars per share) | $ / shares | $ 17.53 | $ 19.61 | $ 21.38 | $ 23.35 | $ 22.18 | $ 23.88 | $ 23.29 | $ 23.30 | $ 24.88 | $ 19.04 | $ 18.20 | $ 18.41 | ||||
Stock Options [Member] | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||||||||||||||
Granted, Options (in shares) | 176,125 | 201,217 | 241,000 | |||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value | $ / shares | $ 10.64 | $ 9.87 | $ 8.50 | |||||||||||||
Dividend yield | 0.00% | 0.00% | 0.00% | |||||||||||||
Expected life | 7 years | 7 years | 7 years | |||||||||||||
Expected volatility | 42.00% | 43.00% | 43.00% | |||||||||||||
Risk free interest rates | 1.70% | 2.30% | 1.30% | |||||||||||||
Non-Employee Stock Option | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||||||||||||||
Granted, Options (in shares) | 0 | 0 | 0 | |||||||||||||
Outstanding - December 31, Options (in shares) | 900 | |||||||||||||||
Exercisable - December 31, Options (in shares) | 900 | |||||||||||||||
Restricted Stock | ||||||||||||||||
Restricted Stock Awards Disclosure [Abstract] | ||||||||||||||||
Number of Outside Members of the Board of Directors | member | 5 | 6 | 5 | |||||||||||||
Number Of Offering Period In Annual Period | period | 4 | 4 | 4 | |||||||||||||
Maximum | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||
Incentive Stock Option Plan, Term | 10 years | |||||||||||||||
Maximum | Stock Options [Member] | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||
Incentive Stock Option Plan, Term | 10 years | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 5 years | |||||||||||||||
Expiration period of stock options | 10 years | |||||||||||||||
Minimum | Stock Options [Member] | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||||||||||||
Incentive Stock Option Plan, Term | 5 years | |||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward] | ||||||||||||||||
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period | 3 years | |||||||||||||||
Expiration period of stock options | 5 years |
Shareholders' Equity Compensati
Shareholders' Equity Compensation cost (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Allocated Share-based Compensation Expense | $ 1,794 | $ 1,800 | $ 1,549 |
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense | 515 | 461 | 325 |
Allocated Share-based Compensation Expense, Net of Tax | 1,279 | 1,339 | 1,224 |
Stock Options [Member] | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Allocated Share-based Compensation Expense | 1,794 | 1,800 | 1,549 |
Non-Employee Stock Option | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Allocated Share-based Compensation Expense | $ 0 | $ 0 | $ 0 |
Shareholders' Equity (Employee
Shareholders' Equity (Employee Stock Purchase Plan) (Details) | 12 Months Ended | |||
Dec. 31, 2015period$ / sharesshares | Dec. 31, 2014$ / sharesshares | Dec. 31, 2013$ / sharesshares | May. 03, 2012shares | |
Stockholders Equity Note [Abstract] | ||||
ESPP, discount from market price | 15.00% | |||
Number Of Offering Period In Annual Period | period | 4 | |||
ESPP reserved shares | 300,000 | |||
ESPP remaining reserved shares | 39,179 | |||
Shares purchased | 45,397 | 33,715 | 41,572 | |
Dividend yield | 0.00% | 0.00% | 0.00% | |
Expected life | 1 year | 1 year | 1 year | |
Expected volatility | 33.00% | 27.00% | 32.00% | |
Risk free interest rates | 0.30% | 0.10% | 0.10% | |
Weighted average per share fair value (in dollars per share) | $ / shares | $ 4.48 | $ 4.84 | $ 4.03 |
Lease Obligations - Operating L
Lease Obligations - Operating Leases (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Leases [Abstract] | |||
Rent expense | $ 2,000 | $ 2,100 | $ 2,000 |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |||
2,016 | 1,397 | ||
2,017 | 802 | ||
2,018 | 340 | ||
2,019 | 75 | ||
2,020 | 52 | ||
Thereafter | 49 | ||
Operating Leases, Future Minimum Payments Due | $ 2,715 |
Lease Obligations - Capital Lea
Lease Obligations - Capital Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2015 | Dec. 31, 2014 |
Capital Leases, Future Minimum Payments Due, Rolling Maturity [Abstract] | ||
2,016 | $ 36 | |
2,017 | 9 | |
2,018 | 6 | |
2,019 | 5 | |
2,020 | 2 | |
Net minimum lease payments | 58 | |
Less: amount representing interest | 15 | |
Present value of minimum lease payments | 43 | |
Property and Equipment [Member] | ||
Capital Leased Assets [Line Items] | ||
Gross value of capital leases | 300 | $ 300 |
Accumulated amortization of gross capital leases | $ 200 | $ 200 |
Quarterly Results of Operatio65
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Net sales | $ 62,732 | $ 56,237 | $ 61,493 | $ 61,376 | $ 63,312 | $ 57,884 | $ 63,919 | $ 63,258 | $ 241,838 | $ 248,373 | $ 237,088 |
Gross profit | 43,666 | 39,640 | 42,159 | 42,734 | 44,196 | 40,955 | 44,354 | 44,624 | 168,199 | 174,129 | 164,069 |
Net income | $ 4,116 | $ 2,878 | $ 3,661 | $ 4,112 | $ 5,119 | $ 3,011 | $ 4,160 | $ 4,198 | $ 14,767 | $ 16,488 | $ 15,372 |
Basic earnings per share (in dollars per share) | $ 0.29 | $ 0.21 | $ 0.26 | $ 0.30 | $ 0.37 | $ 0.22 | $ 0.30 | $ 0.31 | $ 1.05 | $ 1.20 | $ 1.14 |
Diluted earnings per share (in dollars per share) | $ 0.29 | $ 0.20 | $ 0.26 | $ 0.29 | $ 0.36 | $ 0.21 | $ 0.30 | $ 0.30 | $ 1.04 | $ 1.18 | $ 1.12 |
Segment Information (Business S
Segment Information (Business Segments) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Segment Reporting Information [Line Items] | |||||||||||
Net sales | $ 62,732 | $ 56,237 | $ 61,493 | $ 61,376 | $ 63,312 | $ 57,884 | $ 63,919 | $ 63,258 | $ 241,838 | $ 248,373 | $ 237,088 |
Segment profit (loss) | 20,330 | 24,128 | 22,408 | ||||||||
Total assets, net | 277,242 | 261,040 | 277,242 | 261,040 | 261,842 | ||||||
Capital expenditures | 19,464 | 18,639 | 16,540 | ||||||||
Depreciation and Amortization | 18,406 | 18,546 | 17,593 | ||||||||
Knee | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 70,865 | 78,678 | 80,532 | ||||||||
Segment profit (loss) | 3,056 | 4,840 | 7,318 | ||||||||
Total assets, net | 64,679 | 66,840 | 64,679 | 66,840 | 67,332 | ||||||
Capital expenditures | 4,864 | 4,798 | 6,255 | ||||||||
Depreciation and Amortization | 7,530 | 7,992 | 7,529 | ||||||||
Hip | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 42,655 | 43,491 | 40,958 | ||||||||
Segment profit (loss) | 1,111 | 2,736 | 1,638 | ||||||||
Total assets, net | 36,222 | 32,168 | 36,222 | 32,168 | 31,171 | ||||||
Capital expenditures | 4,151 | 3,416 | 1,606 | ||||||||
Depreciation and Amortization | 2,684 | 2,809 | 2,791 | ||||||||
Biologics and Spine | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 22,619 | 23,826 | 25,486 | ||||||||
Segment profit (loss) | 531 | 539 | 53 | ||||||||
Total assets, net | 22,217 | 24,187 | 22,217 | 24,187 | 24,436 | ||||||
Capital expenditures | 1,179 | 887 | 928 | ||||||||
Depreciation and Amortization | 1,172 | 1,212 | 1,337 | ||||||||
Extremity | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 84,418 | 79,003 | 65,528 | ||||||||
Segment profit (loss) | 17,222 | 17,118 | 14,057 | ||||||||
Total assets, net | 37,817 | 27,033 | 37,817 | 27,033 | 25,269 | ||||||
Capital expenditures | 3,668 | 3,565 | 3,093 | ||||||||
Depreciation and Amortization | 2,847 | 2,199 | 1,827 | ||||||||
Other | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Net sales | 21,281 | 23,375 | 24,584 | ||||||||
Segment profit (loss) | 377 | 1,041 | 862 | ||||||||
Total assets, net | 13,898 | 15,159 | 13,898 | 15,159 | 12,607 | ||||||
Capital expenditures | 546 | 1,161 | 317 | ||||||||
Depreciation and Amortization | 575 | 582 | 407 | ||||||||
Corporate | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Segment profit (loss) | (1,967) | (2,146) | (1,520) | ||||||||
Total assets, net | $ 102,409 | $ 95,653 | 102,409 | 95,653 | 101,027 | ||||||
Capital expenditures | 5,056 | 4,812 | 4,341 | ||||||||
Depreciation and Amortization | $ 3,598 | $ 3,752 | $ 3,702 |
Segment Information (Revenue an
Segment Information (Revenue and Long-term Assets by Geographic Location) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Geographical [Line Items] | |||||||||||
Inventory | $ 94,805 | $ 90,292 | $ 94,805 | $ 90,292 | |||||||
Net sales | 62,732 | $ 56,237 | $ 61,493 | $ 61,376 | 63,312 | $ 57,884 | $ 63,919 | $ 63,258 | $ 241,838 | $ 248,373 | $ 237,088 |
Total sales, % Inc/Decr | (2.60%) | 4.80% | |||||||||
Domestic [Member] | |||||||||||
Geographical [Line Items] | |||||||||||
Long lived assets, gross | 147,291 | 144,750 | $ 147,291 | $ 144,750 | |||||||
Accumulated depreciation and amortization | (88,958) | (82,167) | (88,958) | (82,167) | |||||||
Long lived assets, net | 58,333 | 62,583 | 58,333 | 62,583 | |||||||
Inventory | 58,106 | 57,361 | 58,106 | 57,361 | |||||||
Net sales | $ 168,140 | $ 165,575 | 159,649 | ||||||||
Total sales, % Inc/Decr | 1.50% | 3.70% | |||||||||
International [Member] | |||||||||||
Geographical [Line Items] | |||||||||||
Long lived assets, gross | 53,859 | 43,648 | $ 53,859 | $ 43,648 | |||||||
Accumulated depreciation and amortization | (19,391) | (15,580) | (19,391) | (15,580) | |||||||
Long lived assets, net | 34,468 | 28,068 | 34,468 | 28,068 | |||||||
Inventory | $ 36,699 | $ 32,931 | 36,699 | 32,931 | |||||||
Net sales | $ 73,698 | $ 82,798 | $ 77,439 | ||||||||
Total sales, % Inc/Decr | (11.00%) | 6.90% |
Business Acquisition Business C
Business Acquisition Business Combination Text(Details) $ in Thousands, € in Millions | Jan. 15, 2015USD ($)$ / € | Jan. 15, 2015EUR (€) | Jun. 30, 2015USD ($) | Dec. 31, 2015 | Jan. 15, 2015EUR (€)$ / € |
Business Acquisition [Line Items] | |||||
Estimated useful life | 10 years | ||||
Blue Ortho [Member] | |||||
Business Acquisition [Line Items] | |||||
Business Acquisition, Effective Date of Acquisition | Jan. 15, 2015 | ||||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | 100.00% | |||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | $ 12,557 | € 10 | |||
Business Combination, Consideration Transferred | $ 2,329 | € 2 | |||
Foreign Currency Exchange Rate, Translation | $ / € | 1.16 | 1.16 | |||
Business Combination, Provisional Information, Initial Accounting Incomplete, Adjustment, Contingent Consideration | $ | $ 1,100 | ||||
Blue Ortho [Member] | Minimum | |||||
Business Acquisition [Line Items] | |||||
Discount rate used to calculate fair value of contingent consideration | 4.50% | ||||
Contingent consideration payment period | 5 years | 5 years | |||
Blue Ortho [Member] | Maximum | |||||
Business Acquisition [Line Items] | |||||
Discount rate used to calculate fair value of contingent consideration | 6.50% | ||||
Contingent consideration payment period | 10 years | 10 years |
Business Acquisition Business69
Business Acquisition Business Combination Table (Details) $ in Thousands, € in Millions | Jan. 15, 2015USD ($) | Jan. 15, 2015EUR (€) | Dec. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Dec. 31, 2013USD ($) | Jan. 15, 2015EUR (€) |
Business Acquisition [Line Items] | ||||||
Goodwill | $ 18,850 | $ 13,091 | $ 13,514 | |||
contingent consideration payment | (676) | 0 | $ 0 | |||
Blue Ortho [Member] | ||||||
Business Acquisition [Line Items] | ||||||
Business Combination, Consideration Transferred | $ 2,329 | € 2 | ||||
Contingent Consideration Fair Value | 7,148 | |||||
Business Combination, Consideration Recognized | 9,477 | |||||
Business Combination, Consideration Transferred, Other | 3,080 | |||||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | 12,557 | € 10 | ||||
Business Combination, Acquisition Related Costs | 278 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets | 1,315 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment | 164 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities | (416) | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent | (2,486) | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill | 7,460 | |||||
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net | 6,037 | |||||
Goodwill | $ 6,520 | |||||
Contingent Consideration Fair Value, Beginning | 7,148 | |||||
Contingent Consideration, Period Change in Valuation | 186 | |||||
contingent consideration payment | (676) | |||||
Contingent Consideration, Translation Adjustment | (436) | |||||
Contingent Consideration Fair Value, Ending | 6,222 | $ 7,148 | ||||
Business Combination, Contingent Consideration, Liability, Current | 471 | |||||
Business Combination, Contingent Consideration, Liability, Noncurrent | $ 5,751 |
Subsequent Events Subsequent Ev
Subsequent Events Subsequent Event (Details) - Exactech Australia Pty Ltd [Member] AUD in Millions, $ in Millions | Feb. 01, 2016USD ($) | Feb. 01, 2016AUDAUD / $ | Dec. 31, 2015 |
Subsequent Event [Line Items] | |||
Business Acquisition, Effective Date of Acquisition | Feb. 1, 2016 | ||
Subsequent Event [Member] | |||
Subsequent Event [Line Items] | |||
Business Acquisition, Percentage of Voting Interests Acquired | 100.00% | ||
Business Combination, Consideration Transferred | $ 1.1 | AUD 1.6 | |
Foreign Currency Exchange Rate, Translation | AUD / $ | 0.71 | ||
Subsequent Event [Member] | Minimum | |||
Subsequent Event [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | AUD 3 | ||
Subsequent Event [Member] | Maximum | |||
Subsequent Event [Line Items] | |||
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | AUD 7.6 |
Schedule II - Valuation and Q71
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | |
Allowance for doubtful accounts | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | $ 910 | $ 576 | $ 965 |
Charged to Costs and Expenses | 668 | 171 | 121 |
Deductions (Chargeoffs) | (607) | 163 | (510) |
Balance at End of Year | 971 | 910 | 576 |
Allowance for sales returns | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 36 | 417 | 47 |
Charged to Costs and Expenses | 4 | 3 | 384 |
Deductions (Chargeoffs) | (384) | (14) | |
Balance at End of Year | 40 | 36 | 417 |
Inventory Allowance | |||
Movement in Valuation Allowances and Reserves [Roll Forward] | |||
Balance at Beginning of Year | 11,431 | 11,512 | 8,673 |
Charged to Costs and Expenses | 1,523 | 2,839 | |
Deductions (Chargeoffs) | (81) | ||
Balance at End of Year | $ 12,954 | $ 11,431 | $ 11,512 |