Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 29, 2015 | |
Document Documentand Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | iart | |
Entity Registrant Name | INTEGRA LIFESCIENCES HOLDINGS CORP | |
Entity Central Index Key | 917520 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 32,934,413 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Statement [Abstract] | ||
Total revenue, net | $233,665 | $215,059 |
Costs and expenses: | ||
Cost of goods sold | 86,722 | 82,383 |
Research and development | 12,556 | 12,567 |
Selling, general and administrative | 114,064 | 108,338 |
Intangible asset amortization | 3,535 | 3,033 |
Total costs and expenses | 216,877 | 206,321 |
Operating income | 16,788 | 8,738 |
Interest income | 5 | 62 |
Interest expense | -5,492 | -5,142 |
Other income, net | 1,316 | 317 |
Income before income taxes | 12,617 | 3,975 |
Income tax expense | 4,233 | 1,769 |
Net income | 8,384 | 2,206 |
Basic net income per common share (in dollars per share) | $0.26 | $0.07 |
Diluted net income per common share (in dollars per share) | $0.25 | $0.07 |
Weighted average common shares outstanding (See Note 10): | ||
Basic (in shares) | 32,736 | 32,275 |
Diluted (in shares) | 33,342 | 32,768 |
Comprehensive (loss) income (See Note 11) | ($15,744) | $3,206 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $79,871 | $71,994 |
Trade accounts receivable, net of allowances of $6,515 and $6,184 | 126,785 | 131,918 |
Inventories, net | 233,043 | 237,114 |
Deferred tax assets | 58,293 | 58,663 |
Prepaid expenses and other current assets | 23,958 | 29,632 |
Total current assets | 521,950 | 529,321 |
Property, plant and equipment, net | 210,111 | 209,986 |
Intangible assets, net | 447,424 | 459,459 |
Goodwill | 354,202 | 363,888 |
Deferred tax assets | 5,684 | 5,603 |
Other assets | 11,436 | 10,368 |
Total assets | 1,550,807 | 1,578,625 |
Current liabilities: | ||
Borrowings under senior credit facility | 5,625 | 3,750 |
Accounts payable, trade | 42,630 | 34,060 |
Deferred revenue | 4,303 | 5,176 |
Accrued compensation | 33,209 | 40,943 |
Accrued expenses and other current liabilities | 41,038 | 42,096 |
Total current liabilities | 126,805 | 126,025 |
Long-term borrowings under senior credit facility | 396,250 | 413,125 |
Long-term convertible securities | 215,177 | 213,121 |
Deferred tax liabilities | 92,431 | 91,623 |
Other liabilities | 32,045 | 30,409 |
Total liabilities | 862,708 | 874,303 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Preferred stock; no par value; 15,000 authorized shares; none outstanding | 0 | 0 |
Common stock; $0.01 par value; 60,000 authorized shares; 41,755 and 41,644 issued at March 31, 2015 and December 31, 2014, respectively | 418 | 416 |
Additional paid-in capital | 779,074 | 779,555 |
Treasury stock, at cost; 8,903 shares at March 31, 2015 and December 31, 2014 | -367,121 | -367,121 |
Accumulated other comprehensive loss | -47,616 | -23,488 |
Retained earnings | 323,344 | 314,960 |
Total stockholders’ equity | 688,099 | 704,322 |
Total liabilities and stockholders’ equity | $1,550,807 | $1,578,625 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Statement of Financial Position [Abstract] | ||
Trade accounts receivable, allowances | $6,515 | $6,184 |
Preferred Stock, par value (in dollars per share) | $0 | $0 |
Preferred Stock, authorized shares (in shares) | 15,000,000 | 15,000,000 |
Preferred Stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $0.01 | $0.01 |
Common stock, shares authorized (in shares) | 60,000,000 | 60,000,000 |
Common stock, shares issued (in shares) | 41,755,000 | 41,644,000 |
Treasury stock, shares (in shares) | 8,903,000 | 8,903,000 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
OPERATING ACTIVITIES: | ||
Net income | $8,384 | $2,206 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 15,414 | 13,961 |
Non-cash impairment charges | 409 | 600 |
Deferred income tax | 1,184 | 1,563 |
Amortization of debt issuance costs | 530 | 608 |
Non-cash interest expense | 1,859 | 1,666 |
Gain on disposal of property and equipment | -19 | 0 |
Change in fair value of contingent consideration | 125 | 128 |
Share-based compensation | 2,377 | 2,471 |
Excess tax benefits from stock-based compensation arrangements | -1,121 | -541 |
Changes in assets and liabilities, net of business acquisitions: | ||
Accounts receivable | 2,100 | 5,671 |
Inventories | -2,789 | -8,516 |
Prepaid expenses and other current assets | 6,003 | -1,582 |
Other non-current assets | -1,730 | -127 |
Accounts payable, accrued expenses and other current liabilities | -1,885 | -4,438 |
Deferred revenue | -769 | 21 |
Other non-current liabilities | 1,547 | -2,437 |
Net cash provided by operating activities | 31,619 | 11,254 |
INVESTING ACTIVITIES: | ||
Purchases of property and equipment | -8,901 | -11,335 |
Sale of property and equipment | 1,438 | 0 |
Cash used in business acquisition, net of cash acquired | 0 | -235,000 |
Proceeds from working capital purchase price adjustment | 1,831 | 0 |
Net cash used in investing activities | -5,632 | -246,335 |
FINANCING ACTIVITIES: | ||
Borrowings under senior credit facility | 0 | 235,000 |
Repayments under senior credit facility | -15,000 | 0 |
Principal payments under capital lease obligations | -178 | -122 |
Proceeds from exercised stock options | 231 | 7,755 |
Excess tax benefits from stock-based compensation arrangements | 1,121 | 541 |
Net cash (used in) provided by financing activities | -13,826 | 243,174 |
Effect of exchange rate changes on cash and cash equivalents | -4,284 | 331 |
Net change in cash and cash equivalents | 7,877 | 8,424 |
Cash and cash equivalents at beginning of period | 71,994 | 120,614 |
Cash and cash equivalents at end of period | $79,871 | $129,038 |
BASIS_OF_PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION |
General | |
The terms “we,” “our,” “us,” “Company” and “Integra” refer to Integra LifeSciences Holdings Corporation, a Delaware corporation, and its subsidiaries unless the context suggests otherwise. | |
In the opinion of management, the March 31, 2015 unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair statement of the financial position, results of operations and cash flows of the Company. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s consolidated financial statements for the year ended December 31, 2014 included in the Company’s Annual Report on Form 10-K. The December 31, 2014 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States. Operating results for the three-month period ended March 31, 2015 are not necessarily indicative of the results to be expected for the entire year. | |
The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, valuation of intangible assets including in-process research and development, amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets and goodwill, estimates of projected cash flows and depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation, valuation of pension assets and liabilities, valuation of derivative instruments, valuation of the equity component of convertible debt instruments, valuation of contingent liabilities, the fair value of debt instruments and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. | |
Certain amounts from the prior year’s financial statements have been reclassified in order to conform to the current year’s presentation. | |
Recently Issued Accounting Standards | |
In April 2014, the FASB issued amendments to guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014 (early adoption is permitted only for disposals that have not been previously reported). The new guidance is effective for Integra prospectively for all disposals (or classifications as held for sale) of components of an entity that occur after January 1, 2015. | |
In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised 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. To achieve that core principle, an entity should 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. This update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard on its financial statements. | |
In June 2014, the FASB issued Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Topic 718). The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This update is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The implementation of the amended guidance is not expected to have a material impact on our consolidated financial position or results of operations. | |
In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in the financial statements. | |
In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The implementation of the amended guidance is not expected to have a material impact on our consolidated results of operations and will result in a reclassification of our debt issuance costs from other long-term assets to long-term debt when adopted. | |
There are no other recently issued accounting pronouncements that are expected to have a material effect on our financial position, results of operations or cash flows. |
BUSINESS_ACQUISITIONS
BUSINESS ACQUISITIONS | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Business Combinations [Abstract] | |||||
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS | ||||
Metasurg | |||||
On December 5, 2014, the Company acquired certain assets of Koby Ventures II, L.P. dba Metasurg ("Metasurg") for an aggregate purchase price of $27.2 million. The purchase price consists of an initial cash payment to Metasurg of $26.5 million and contingent consideration with an acquisition date fair value of $0.7 million. The potential maximum undiscounted contingent consideration of $38.5 million is based on reaching certain sales levels for acquired products from April 1, 2015 through June 30, 2016. The fair value of this liability is based on future sales projections of the Metasurg product under various potential scenarios and weighting the probability of these outcomes for the twelve-month period ended December 31, 2015. At the date of the acquisition, the cash flow projection was discounted using an internal rate of return of 19.9%. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement. | |||||
Metasurg develops intuitive implant systems for the foot and ankle market and sells almost entirely in the U.S. market. The acquired foot and ankle products will enhance the Company's lower extremities market position. | |||||
The Company recorded revenue for Metasurg of approximately $1.6 million in the condensed consolidated statements of operations for the three-month period ended March 31, 2015. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations. | |||||
The following summarizes the preliminary allocation of the purchase price as of March 31, 2015 based on the fair value of the assets acquired and liabilities assumed: | |||||
Preliminary | |||||
Purchase Price | |||||
Allocation | |||||
(Dollars in thousands) | |||||
Inventory | $ | 4,730 | |||
Property, plant, and equipment | 1,171 | ||||
Intangible assets: | Wtd. Avg. Life: | ||||
Technology product rights | 20,590 | 8 - 14 Years | |||
In-process research and development | 190 | Indefinite | |||
Goodwill | 469 | ||||
Net assets acquired | $ | 27,150 | |||
MicroFrance | |||||
On October 27, 2014, the Company acquired all outstanding shares of Medtronic Xomed Instrumentation, SAS ("MicroFrance") from Medtronic, Inc. ("Medtronic") as well as certain assets of Medtronic for $60.1 million in cash (including working capital and purchase price adjustments of $1.5 million, of which $0.8 million was recorded against goodwill). MicroFrance specializes in manual ear, nose, and throat ("ENT") surgical instruments and designs, manufactures, and sells reusable handheld instruments to ENT and laparoscopy surgical specialists around the world. The acquired ENT instruments fill a portfolio gap for the Company with clear growth opportunities through market adjacencies and provides for increased scale and reach in the international market. | |||||
The Company recorded revenue for MicroFrance of approximately $5.8 million in the condensed consolidated statements of operations for the three-month period ended March 31, 2015. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations. | |||||
The Company adjusted the preliminary purchase price allocation during the quarter ended March 31, 2015 to reflect the $1.5 million working capital and purchase price adjustments. The following summarizes the preliminary allocation of the purchase price as of March 31, 2015 based on the fair value of the assets acquired and liabilities assumed: | |||||
Preliminary | |||||
Purchase Price | |||||
Allocation | |||||
(Dollars in thousands) | |||||
Cash | $ | 2,195 | |||
Inventory | 3,155 | ||||
Prepaid expenses | 620 | ||||
Property, plant, and equipment | 3,675 | ||||
Other current assets | 5,025 | ||||
Intangible assets: | Wtd. Avg. Life: | ||||
Trade name | 11,990 | 20 Years | |||
Technology | 4,580 | 15 - 16 Years | |||
Customer relationships | 18,130 | 12 - 16 Years | |||
Goodwill | 16,607 | ||||
Total assets acquired | 65,977 | ||||
Accounts payable and other liabilities | 5,910 | ||||
Net assets acquired | $ | 60,067 | |||
Confluent Surgical, Inc. | |||||
On January 15, 2014, the Company acquired all outstanding shares of Confluent Surgical, Inc., ("Confluent Surgical") - including its surgical sealant and adhesion barrier product lines - from Covidien Group S.a.r.l, ("Covidien") for an aggregate purchase price of $255.9 million. The purchase price consists of an initial cash payment to Covidien of $231.0 million upon the closing of the transaction, a separate prepayment of $4.0 million made under a transitional supply agreement with an affiliate of Covidien, and contingent consideration with an acquisition date fair value of $20.9 million. The potential maximum undiscounted contingent consideration of $30.0 million consists of $25.0 million upon obtaining certain U.S. governmental approvals and $5.0 million upon obtaining certain European governmental approvals, both related to the completion of the transition of the Confluent Surgical business to the Company. | |||||
The transitional supply agreement secures the supply of the acquired products from an affiliate of Covidien until the earlier of (i) the time that the transition of the Confluent Surgical business as discussed above is complete, or (ii) the fifth anniversary of the effective date of the agreement (the agreement also contains an option to extend for another two years by providing written notice at least 180 days prior to the end of the initial five-year period). This agreement contains financial incentives to the affiliate of Covidien for the timely supply of products each fiscal quarter through the third anniversary of the agreement. The prices paid under the supply agreement are essentially flat through the third anniversary of the agreement, and then increase significantly each of the following three years. The Company also entered into a transition services agreement with an affiliate of Covidien at the closing for services such as customer service, accounting and information technology management, clinical and regulatory affairs, manufacturing transition services, and other functions. | |||||
This acquisition complements the Company's global neurosurgery growth strategy aimed at providing a broader set of solutions for surgical procedures in the head. | |||||
The Company recorded revenue for Confluent Surgical of approximately $17.7 million and $14.1 million in the condensed consolidated statements of operations for the three-month periods ended March 31, 2015 and March 31, 2014, respectively. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been fully integrated into the Company's operations. | |||||
The Company adjusted the preliminary purchase price allocation during the quarter ended June 30, 2014 to reduce deferred tax liabilities by $12.4 million. This adjustment offset goodwill and was the result of the Company analyzing and revising its tax positions in certain jurisdictions. The following summarizes the final allocation of the purchase price as of March 31, 2015 based on the fair value of the assets acquired and liabilities assumed: | |||||
Final | |||||
Purchase Price | |||||
Allocation | |||||
(Dollars in thousands) | |||||
Inventory deposit | $ | 4,000 | |||
Fixed assets | 438 | ||||
Intangible assets: | Wtd. Avg. Life | ||||
Technology product rights | 239,800 | 3 - 20 Years | |||
Other | 400 | Less than 1 year | |||
Deferred tax assets - long term | 12 | ||||
Goodwill | 105,331 | ||||
Total assets acquired | 349,981 | ||||
Contingent supply liability | 5,891 | ||||
Other | 731 | ||||
Deferred tax liabilities - long term | 87,464 | ||||
Net assets acquired | $ | 255,895 | |||
Subsequent to the acquisition date, a regulatory event occurred that resulted in the full-impairment of one of the acquired technology product rights of $0.6 million. This event was not known, or knowable, at the time of the acquisition and therefore the impairment has been included in the Company's cost of sales. | |||||
The Company accounted for the contingent supply liability by recording its fair value as a liability on the date of the acquisition based on a discounted cash-flow model. This contingent supply liability relates to contractual quarterly incentive payments that will be made to an affiliate of Covidien if certain supply minimums under the transitional supply agreement are met. | |||||
The Company accounted for the contingent consideration by recording its fair value as a liability on the date of the acquisition. The contingent consideration relates to the Company's obtaining certain U.S. and European regulatory approvals. At the date of the acquisition, both of these milestones were valued using a discount rate of 2.2%, which is equivalent to the cost of debt for the estimated time horizon, and an overall probability of occurring of 95%. Accordingly, on January 15, 2014 the Company recorded a $20.9 million liability representing the initial fair value estimate of the probability weighted contingent consideration that management believes will be paid between early 2017 and late 2018. Depending on the expected timing of the estimated payments, the acquisition date fair value of the probability adjusted payments could have been $0.3 million higher or $0.4 million lower. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement. The contingent consideration is re-measured to fair value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings. | |||||
The goodwill recorded in connection with these acquisitions is based on (i) expected cost savings, operating synergies and other benefits expected to result from the combined operations, (ii) the value of the going-concern element of the existing businesses (that is, the higher rate of return on the assembled net assets versus if the Company had acquired all of the net assets separately), and (iii) intangible assets that do not qualify for separate recognition such as an assembled workforce. The acquisitions generated a combination of deductible and non-deductible goodwill. | |||||
Contingent consideration | |||||
The Company increased the fair value of contingent consideration during the three-month period ended March 31, 2015 to reflect the change in the time value of money during the period. A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands): | |||||
Location in Statement of Operations | |||||
Balance as of January 1, 2015 | $ | 22,008 | |||
Loss from increase in fair value of contingent consideration liabilities | 125 | Selling, general and administrative | |||
Fair value at March 31, 2015 | $ | 22,133 | |||
The entire contingent consideration balance was included in Other liabilities at March 31, 2015 and December 31, 2014. | |||||
Pro Forma Results | |||||
The following unaudited pro forma financial information summarizes the results of operations for the three months ended March 31, 2014 as if the acquisitions completed by the Company during 2014 had been completed as of January 1, 2013. The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisition and adjustments to reflect (i) the change in interest expense, depreciation expense, and intangible asset amortization, (ii) certain external expenses related to the acquisition as if they were incurred on January 1, 2013 that will not be recurring in the post-acquisition periods, and (iii) income taxes on the aforementioned adjustments at the Company’s statutory rate. No effect has been given to other cost reductions or operating synergies. As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place on the basis assumed above, nor are they indicative of the results of future combined operations. | |||||
Three Months Ended March 31, 2014 | |||||
(In thousands, except per share amounts) | |||||
Total revenue | $ | 225,509 | |||
Net income | $ | 5,572 | |||
Net income per share: | |||||
Basic | $ | 0.17 | |||
INVENTORIES
INVENTORIES | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Inventory, Net [Abstract] | ||||||||
INVENTORIES | INVENTORIES | |||||||
Inventories, net consisted of the following: | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
(In thousands) | ||||||||
Finished goods | $ | 143,866 | $ | 150,483 | ||||
Work in process | 53,168 | 50,166 | ||||||
Raw materials | 36,009 | 36,465 | ||||||
$ | 233,043 | $ | 237,114 | |||||
GOODWILL_AND_OTHER_INTANGIBLE_
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS | |||||||||||||||
In the first quarter of 2015 the Company revised its reportable segments in connection with the realignment of its portfolio. Specifically, the Company integrated the five existing business divisions into three global divisions, no longer focusing on international as a separate reportable segment but managing each business globally. The change in reportable segments resulted in the Company's requirement to reallocate existing goodwill to the new reportable segments based on the relative-fair-value of the Company's four underlying reporting units. With the reportable segments now being managed at a global level, goodwill previously assigned to the EMEA, LAPAC, and Private Label reporting units was reallocated to the new global reporting units. The Company estimated the fair value of the reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following: | ||||||||||||||||
• | The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans. | |||||||||||||||
• | The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans. | |||||||||||||||
• | The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. | |||||||||||||||
Based on the Company's fair value calculations, with the exception of the Spine reporting unit, given the excess of the Specialty Surgical Solutions Instruments, Specialty Surgical Solutions Neurosurgery, and Orthopedics and Tissue Technologies estimated fair value over their carrying value after the reallocation of goodwill, management concluded that any future goodwill impairment is not likely. The Company's allocation of goodwill to the Spine reporting unit has been impaired during the first quarter of 2015 as a result of the carrying value of its goodwill exceeding the implied fair value. Refer to Note 12 - Segment and Geographic Information for more information on the change in reportable segments. | ||||||||||||||||
Changes in the carrying amount of goodwill for the three months ended March 31, 2015 were as follows: | ||||||||||||||||
Specialty | Orthopedics and | Spine | Total | |||||||||||||
Surgical | Tissue Technologies | |||||||||||||||
Solutions | ||||||||||||||||
(In thousands) | ||||||||||||||||
Goodwill, gross | $ | 281,829 | $ | 81,650 | $ | 409 | $ | 363,888 | ||||||||
Accumulated impairment losses | — | — | — | — | ||||||||||||
Goodwill at December 31, 2014 | 281,829 | 81,650 | 409 | 363,888 | ||||||||||||
MicroFrance working capital and purchase price adjustments | (828 | ) | — | — | (828 | ) | ||||||||||
Goodwill impairment charge | — | — | (409 | ) | (409 | ) | ||||||||||
Foreign currency translation | (6,433 | ) | (2,016 | ) | — | (8,449 | ) | |||||||||
Balance, March 31, 2015 | $ | 274,568 | $ | 79,634 | $ | — | $ | 354,202 | ||||||||
The components of the Company’s identifiable intangible assets were as follows: | ||||||||||||||||
31-Mar-15 | ||||||||||||||||
Weighted | Cost | Accumulated | Net | |||||||||||||
Average | Amortization | |||||||||||||||
Life | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Completed technology | 18 years | $ | 343,942 | $ | (67,172 | ) | $ | 276,770 | ||||||||
Customer relationships | 12 years | 158,546 | (88,817 | ) | 69,729 | |||||||||||
Trademarks/brand names | 34 years | 42,713 | (15,457 | ) | 27,256 | |||||||||||
Trademarks/brand names | Indefinite | 48,484 | — | 48,484 | ||||||||||||
Supplier relationships | 27 years | 34,721 | (11,166 | ) | 23,555 | |||||||||||
All other (1) | 4 years | 4,620 | (2,990 | ) | 1,630 | |||||||||||
$ | 633,026 | $ | (185,602 | ) | $ | 447,424 | ||||||||||
31-Dec-14 | ||||||||||||||||
Weighted | Cost | Accumulated | Net | |||||||||||||
Average | Amortization | |||||||||||||||
Life | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Completed technology | 18 years | $ | 345,082 | $ | (62,920 | ) | $ | 282,162 | ||||||||
Customer relationships | 12 years | 162,031 | (87,653 | ) | 74,378 | |||||||||||
Trademarks/brand names | 34 years | 44,520 | (15,755 | ) | 28,765 | |||||||||||
Trademarks/brand names | Indefinite | 48,484 | — | 48,484 | ||||||||||||
Supplier relationships | 27 years | 34,721 | (10,809 | ) | 23,912 | |||||||||||
All other (1) | 4 years | 4,810 | (3,052 | ) | 1,758 | |||||||||||
$ | 639,648 | $ | (180,189 | ) | $ | 459,459 | ||||||||||
(1) | At March 31, 2015 and December 31, 2014, all other included in-process research and development ("IPR&D") of $1.4 million in both periods, which was indefinite-lived. | |||||||||||||||
During the three months ended March 31, 2014, the Company recorded an impairment charge of $0.6 million in cost of goods sold related to technology assets acquired from Confluent Surgical that will no longer be sold resulting from a regulatory event that occurred after the acquisition date. | ||||||||||||||||
Based on quarter-end exchange rates, annual amortization expense (including amounts reported in cost of product revenues, but excluding any possible future amortization associated with acquired in-process research and development) is expected to approximate $31.8 million in 2015, $29.6 million in 2016, $27.6 million in 2017, $27.2 million in 2018 and $26.5 million in 2019. Identifiable intangible assets are initially recorded at fair market value at the time of acquisition using an income or cost approach. |
DEBT
DEBT | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Debt Disclosure [Abstract] | ||||||||
DEBT | DEBT | |||||||
Amended and Restated Senior Credit Agreement | ||||||||
On December 19, 2014, the Company entered into an amendment to the amended and restated credit agreement (the "Senior Credit Facility") which modified covenants to permit the distribution and/or dividend by the Company of its spine business to the Company's public stockholders. The intent of the amendment is to permit the Company to consummate the spine business spin-off transaction. | ||||||||
On July 2, 2014, the Company entered into the Senior Credit Facility with a syndicate of lending banks, Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association, as Syndication Agent and HSBC Bank USA, National Association, Royal Bank of Canada, Citizens Bank, National Association, DNB Capital LLC, Credit Agricole-Corporate and Investment Bank and TD Bank, N.A., as Co-Documentation Agents. The Company's Senior Credit Facility was originally amended and restated on August 10, 2010, and that agreement was then amended on June 8, 2011, May 11, 2012, and June 21, 2013, as previously disclosed. | ||||||||
The 2014 amended and restated Senior Credit Facility created an aggregate principal amount of up to $900.0 million available to the Company through the following facilities: | ||||||||
i. | a $750.0 million revolving credit facility (increased from $600.0 million), which includes a $60.0 million sublimit for the issuance of standby letters of credit and a $60.0 million sublimit for swingline loans, and | |||||||
ii. | a $150.0 million term loan facility. | |||||||
The Senior Credit Facility allows the Company to further increase the size of either the revolving credit facility or the term loan facility, or a combination thereof, by an aggregate of $200.0 million with additional commitments. The July 2014 amended and restated Senior Credit Facility extended the maturity date of the prior facility from June 8, 2016 to July 2, 2019. | ||||||||
Borrowings under the Senior Credit Facility bear interest, at the Company’s option, at a rate equal to: | ||||||||
i. | the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from 1.00% to 1.75%), or | |||||||
ii. | the highest of: | |||||||
1 | the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%, or | |||||||
2 | the prime lending rate of Bank of America, N.A., or | |||||||
3 | the one-month Eurodollar Rate plus 1.00%. | |||||||
The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness less cash in excess of $40.0 million that is not subject to any restriction of the use or investment thereof to (b) consolidated EBITDA) at the time of the applicable borrowing. | ||||||||
The Company will also pay an annual commitment fee (ranging from 0.15% to 0.30%, based on the Company’s consolidated total leverage ratio) on the daily amount by which the revolving credit facility exceeds the outstanding loans and letters of credit under the credit facility. | ||||||||
The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets. The Senior Credit Facility is subject to various financial and negative covenants and at March 31, 2015 the Company was in compliance with all such covenants. In connection with the modification of the 2014 amendment and restatement of the Senior Credit Facility the Company capitalized $3.2 million of incremental financing costs, and expensed $0.3 million of previously capitalized financing costs. | ||||||||
On July 2, 2014, the Company borrowed $422.0 million under the Senior Credit Facility consisting of a $150.0 million term loan and $272.0 million under its revolving credit facility. The Company used the funds to repay the balance of its previous Senior Credit Facility. The outstanding borrowings have one, two, three, six months, or, if available, twelve months interest periods. | ||||||||
At March 31, 2015 and December 31, 2014, there was $251.9 million and $266.9 million outstanding under the revolving credit component of the Senior Credit Facility at a weighted average interest rate of 1.7%. At March 31, 2015, there was approximately $498.1 million available for borrowing under the Senior Credit Facility. The Company considers the balance to be long-term in nature based on its current intent and ability to repay the borrowing outside of the next twelve-month period. | ||||||||
At March 31, 2015 there was $150.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 1.7%. Contractual repayments of the term loan do not begin until September 30, 2015 and are due as follows: | ||||||||
Year Ended December 31, | Principal Repayment | |||||||
(In thousands) | ||||||||
2015 | $ | 3,750 | ||||||
2016 | 9,375 | |||||||
2017 | 13,125 | |||||||
2018 | 15,000 | |||||||
2019 | 108,750 | |||||||
$ | 150,000 | |||||||
The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit facility and term loan components at March 31, 2015 was approximately $235.8 million and $141.3 million, respectively. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities. | ||||||||
2016 Convertible Senior Notes | ||||||||
On June 15, 2011, the Company issued $230.0 million aggregate principal amount of its 1.625% Convertible Senior Notes due in 2016 (the “2016 Notes”). The 2016 Notes mature on December 15, 2016, and bear interest at a rate of 1.625% per annum payable semi-annually in arrears on December 15 and June 15 of each year. The portion of the debt proceeds that was classified as equity at the time of the offering was $43.2 million, an equivalent of that amount is being amortized to interest expense using the effective interest method through December 2016. The effective interest rate implicit in the liability component is 5.6%. | ||||||||
At March 31, 2015, the carrying amount of the liability component was $215.2 million, the remaining unamortized discount was $14.8 million, and the principal amount outstanding was $230.0 million. The fair value of the 2016 Notes at March 31, 2015 was approximately $272.3 million. At December 31, 2014, the carrying amount of the liability component was $213.1 million, the remaining unamortized discount was $16.9 million and the principal amount outstanding was $230.0 million. The fair value of the liability of the 2016 Notes was determined using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2. | ||||||||
The 2016 Notes are senior, unsecured obligations of the Company, and are convertible into cash and, if applicable, shares of its common stock based on an initial conversion rate, subject to adjustment of 17.4092 shares per $1,000 principal amount of 2016 Notes (which represents an initial conversion price of approximately $57.44 per share). The Company will satisfy any conversion of the 2016 Notes with cash up to the principal amount of the 2016 Notes pursuant to the net share settlement mechanism set forth in the indenture and, with respect to any excess conversion value, with shares of the Company’s common stock. The 2016 Notes are convertible only in the following circumstances: (1) if the closing sale price of the Company’s common stock exceeds 150% of the conversion price during a period as defined in the indenture; (2) if the average trading price per $1,000 principal amount of the 2016 Notes is less than or equal to 98% of the average conversion value of the 2016 Notes during a period as defined in the indenture; (3) at any time on or after June 15, 2016; or (4) if specified corporate transactions occur. The issue price of the 2016 Notes was equal to their face amount, which is also the amount holders are entitled to receive at maturity if the 2016 Notes are not converted. As of March 31, 2015, certain conversion features were triggered due to the proposed spin-off of the Company's subsidiary, Seaspine Holdings Corporation, which allows the holders to convert all or any of the 2016 Notes subject to certain conditions. The 2016 Notes are convertible through June 10, 2015. However, the Company has continued to classify these notes as long-term as of March 31, 2015, as the Company has the intent and ability to refinance the 2016 Notes. | ||||||||
In connection with the issuance of the 2016 Notes, the Company entered into call transactions and warrant transactions, primarily with affiliates of the initial purchasers of such notes (the “hedge participants”). The initial strike price of the call transaction is approximately $57.44 per share, subject to customary anti-dilution adjustments. The initial strike price of the warrant transaction is approximately $70.05 per share, subject to customary anti-dilution adjustments. | ||||||||
Convertible Note Interest | ||||||||
The interest expense components of the Company’s convertible notes are as follows (net of capitalized interest amounts): | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(In thousands) | ||||||||
2016 Notes: | ||||||||
Amortization of the discount on the liability component | $ | 1,859 | $ | 1,666 | ||||
Cash interest related to the contractual interest coupon | 845 | 801 | ||||||
Total | $ | 2,704 | $ | 2,467 | ||||
DERIVATIVE_INSTRUMENTS
DERIVATIVE INSTRUMENTS | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS | |||||||||||||||||
Interest Rate Hedging | ||||||||||||||||||
The Company’s interest rate risk relates to U.S. dollar denominated variable LIBOR interest rate borrowings. The Company uses an interest rate swap derivative instrument entered into on August 10, 2010 with an effective date of December 31, 2010 to manage its earnings and cash flow exposure to changes in interest rates by converting a portion of its floating-rate debt into fixed-rate debt beginning on December 31, 2010. This interest rate swap expires on August 10, 2015. | ||||||||||||||||||
The Company designates this derivative instrument as a cash flow hedge. The Company records the effective portion of any change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive income (“AOCI”), net of tax, until the hedged item affects earnings, at which point the effective portion of any gain or loss will be reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time. | ||||||||||||||||||
The Company expects that approximately $0.5 million of pre-tax losses recorded as net in AOCI related to the interest rate hedge could be reclassified to earnings within the next twelve months. | ||||||||||||||||||
Foreign Currency Hedging | ||||||||||||||||||
From time to time the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. The Company records the effective portion of any change in the fair value of foreign currency cash flow hedges in AOCI, net of tax, until the hedged item affects earnings. Once the related hedged item affects earnings, the Company reclassifies the effective portion of any related unrealized gain or loss on the foreign currency cash flow hedge to earnings. If the hedged forecasted transaction does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. | ||||||||||||||||||
The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in euros. The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may affect its earnings and cash flows. | ||||||||||||||||||
There were no contracts outstanding as of March 31, 2015. | ||||||||||||||||||
Counterparty Credit Risk | ||||||||||||||||||
The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an ongoing basis. Therefore, the Company considers the credit risk of the counterparties to be low. Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements, and none contain provisions that depend upon the Company’s credit ratings from any credit rating agency. | ||||||||||||||||||
Fair Value of Derivative Instruments | ||||||||||||||||||
The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair value of the foreign currency forward exchange contracts related to inventory purchases is determined by comparing the forward rate as of the period end and the settlement rate specified in each contract. The fair value of the interest rate swaps was developed using a market approach based on publicly available market yield curves and the terms of the related swap. The Company performs ongoing assessments of counterparty credit risk. | ||||||||||||||||||
The following table summarizes the fair value and presentation for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of March 31, 2015 and December 31, 2014: | ||||||||||||||||||
Fair Value as of | ||||||||||||||||||
Location on Balance Sheet (1): | March 31, 2015 | December 31, 2014 | ||||||||||||||||
(In thousands) | ||||||||||||||||||
Derivatives designated as hedges — Liabilities: | ||||||||||||||||||
Interest rate swap — Accrued expenses and other current liabilities (2) | $ | 527 | $ | 898 | ||||||||||||||
Total Derivatives designated as hedges — Liabilities | $ | 527 | $ | 898 | ||||||||||||||
(1) | The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months. | |||||||||||||||||
(2) | At March 31, 2015 and December 31, 2014, the notional amount related to the Company’s sole interest rate swap was $93.8 million and $97.5 million, respectively. In the next twelve months, the Company expects to reduce the notional amount by the entire $93.8 million. | |||||||||||||||||
The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statements of operations during the three months ended March 31, 2015 and 2014: | ||||||||||||||||||
Balance in AOCI | Amount of | Amount of Loss | Balance in AOCI | Location in | ||||||||||||||
Beginning of | Loss | Reclassified from | End of Quarter | Statements of | ||||||||||||||
Quarter | Recognized in | AOCI into | Operations | |||||||||||||||
AOCI- | Earnings-Effective | |||||||||||||||||
Effective Portion | Portion | |||||||||||||||||
(In thousands) | ||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||
Interest rate swap | (898 | ) | (18 | ) | (389 | ) | (527 | ) | Interest (expense) | |||||||||
$ | (898 | ) | $ | (18 | ) | $ | (389 | ) | $ | (527 | ) | |||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||
Interest rate swap | (2,439 | ) | (109 | ) | (451 | ) | (2,097 | ) | Interest (expense) | |||||||||
$ | (2,439 | ) | $ | (109 | ) | $ | (451 | ) | $ | (2,097 | ) | |||||||
The Company recognized no gains or losses resulting from ineffectiveness of cash flow hedges during the three months ended March 31, 2015 and 2014. |
STOCKBASED_COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION |
As of March 31, 2015, the Company had stock options, restricted stock awards, performance stock units, contract stock awards and restricted stock unit awards outstanding under three plans, the 2000 Equity Incentive Plan (the “2000 Plan”), the 2001 Equity Incentive Plan (the “2001 Plan”), and the 2003 Equity Incentive Plan (the “2003 Plan,” and collectively, the “Plans”). | |
Stock options issued under the Plans become exercisable over specified periods, generally within four years from the date of grant for officers, directors, and employees, and generally expire eight years from the grant date for employees, and from eight to ten years for directors and certain executive officers. Restricted stock issued under the Plans vests over specified periods, generally three years after the date of grant. The vesting of performance stock, issued under the Plans, is subject to service and performance conditions. | |
Stock Options | |
As of March 31, 2015, there were approximately $2.7 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately three years. There were 78,336 stock options granted during the three months ended March 31, 2015. | |
Awards of Restricted Stock, Performance Stock and Contract Stock | |
Performance stock, restricted stock and contract stock awards generally have requisite service periods of three years. Performance stock units are subject to graded vesting conditions and the Company expenses their fair value over the requisite service period. The Company expenses the fair value of restricted stock and contract stock awards on a straight-line basis over the vesting period or requisite service period, whichever is shorter. As of March 31, 2015, there were approximately $20.3 million of total unrecognized compensation costs related to these unvested awards. The Company expects to recognize these costs over a weighted-average period of approximately two years. The Company granted 117,763 restricted stock awards/stock units and 64,770 performance shares during the three months ended March 31, 2015. | |
The Company has no formal policy related to the repurchase of shares for the purpose of satisfying stock-based compensation obligations. | |
The Company also maintains an Employee Stock Purchase Plan (the “ESPP”), which provides eligible employees with the opportunity to acquire shares of common stock at periodic intervals by means of accumulated payroll deductions. The ESPP is a non-compensatory plan based on its terms. |
TREASURY_STOCK
TREASURY STOCK | 3 Months Ended |
Mar. 31, 2015 | |
Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract] | |
TREASURY STOCK | TREASURY STOCK |
On October 28, 2014, the Board of Directors terminated the October 2012 authorization and authorized up to $75.0 million of its outstanding common stock through December 2016. The Company has not repurchased any of its outstanding shares of common stock during the three-month periods ended March 31, 2015 and 2014. As of March 31, 2015, there remained $75.0 million available for repurchases under this authorization. |
INCOME_TAXES
INCOME TAXES | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Income Tax Disclosure [Abstract] | ||||||
INCOME TAXES | INCOME TAXES | |||||
The following table provides a summary of the Company’s effective tax rate: | ||||||
Three Months Ended March 31, | ||||||
2015 | 2014 | |||||
Reported tax rate | 33.5 | % | 44.5 | % | ||
The Company’s effective income tax rates for the three months ended March 31, 2015 and 2014 were 33.5% and 44.5%, respectively. The primary driver of the higher tax rate for the three months ended March 31, 2014 compared to the three months ended March 31, 2015 was a tax expense of $0.8 million relating to foreign and state income tax audit settlements. | ||||||
The Company expects its effective income tax rate for the full year to be approximately 29% to 30%, resulting largely from nondeductible spine spin-off costs and audit settlements offset by the release of uncertain tax positions, as well as the jurisdictional mix of pretax income in U.S.-based operations relative to foreign operations. This estimate could be revised in the future as additional information is presented to the Company. |
NET_INCOME_PER_SHARE
NET INCOME PER SHARE | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
NET INCOME PER SHARE | NET INCOME PER SHARE | |||||||
Basic and diluted net income per share was as follows: | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(In thousands, except per share amounts) | ||||||||
Basic net income per share: | ||||||||
Net income | $ | 8,384 | $ | 2,206 | ||||
Weighted average common shares outstanding | 32,736 | 32,275 | ||||||
Basic net income per common share | $ | 0.26 | $ | 0.07 | ||||
Diluted net income per share: | ||||||||
Net income | $ | 8,384 | $ | 2,206 | ||||
Weighted average common shares outstanding — Basic | 32,736 | 32,275 | ||||||
Effect of dilutive securities: | ||||||||
2016 Convertible notes | 30 | — | ||||||
Stock options and restricted stock | 576 | 493 | ||||||
Weighted average common shares for diluted earnings per share | 33,342 | 32,768 | ||||||
Diluted net income per common share | $ | 0.25 | $ | 0.07 | ||||
At March 31, 2015 and 2014, the Company had 1.3 million and 1.4 million of outstanding stock options, respectively. The Company also has warrants outstanding relating to its 2016 Notes at March 31, 2015 and 2014 and the Company's 2016 Notes are convertible to common shares in certain circumstances (see Note 5). Stock options, restricted stock, warrants and the excess conversion value of the 2016 Notes are included in the diluted earnings per share calculation using the treasury stock method, unless the effect of including such items would be anti-dilutive. | ||||||||
For the three months ended March 31, 2015, a minimal amount of anti-dilutive stock options were excluded from the diluted earnings per share calculation. For the three months ended March 31, 2014, 0.2 million of anti-dilutive stock options were excluded from the diluted earnings per share calculation. The effect of outstanding warrants were anti-dilutive because the strike price of the warrants exceeded the Company’s average stock price for the periods presented. The potential excess conversion value of the 2016 Notes were anti-dilutive because the conversion price exceeded the Company's stock price for the three months ended March 31, 2014; therefore, these amounts have been excluded from the diluted earnings per share calculation. However, for the three months ended March 31, 2015, the potential excess conversion value was included in the Company's dilutive share calculation because the average stock price for the three months ended March 31, 2015 exceeded the conversion price. |
COMPREHENSIVE_LOSS_INCOME
COMPREHENSIVE (LOSS) INCOME | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Equity [Abstract] | |||||||||||||||||
COMPREHENSIVE (LOSS) INCOME | COMPREHENSIVE (LOSS) INCOME | ||||||||||||||||
Comprehensive (loss) income was as follows: | |||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Net income | $ | 8,384 | $ | 2,206 | |||||||||||||
Foreign currency translation adjustment | (24,393 | ) | 819 | ||||||||||||||
Change in unrealized gain on derivatives, net of tax | 211 | 195 | |||||||||||||||
Pension liability adjustment, net of tax | 54 | (14 | ) | ||||||||||||||
Comprehensive (loss) income | $ | (15,744 | ) | $ | 3,206 | ||||||||||||
Changes in Accumulated Other Comprehensive Loss by component between December 31, 2014 and March 31, 2015 are presented in the table below, net of tax: | |||||||||||||||||
Gains and (Losses) on Cash Flow Hedges | Defined Benefit Pension Items | Foreign Currency Items | Total | ||||||||||||||
(In thousands) | |||||||||||||||||
Beginning balance | $ | (512 | ) | $ | (906 | ) | $ | (22,070 | ) | $ | (23,488 | ) | |||||
Other comprehensive income before reclassifications | (10 | ) | 54 | (24,393 | ) | (24,349 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 221 | — | — | 221 | |||||||||||||
Net current-period other comprehensive income | 211 | 54 | (24,393 | ) | (24,128 | ) | |||||||||||
Ending balance | $ | (301 | ) | $ | (852 | ) | $ | (46,463 | ) | $ | (47,616 | ) | |||||
The reclassification adjustments out of Accumulated Other Comprehensive Loss during the three months ended March 31, 2015 were as follows: | |||||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Affected Line Item in the Statement where Net Income (Loss) is Presented | |||||||||||||||
(In thousands) | |||||||||||||||||
Gains and losses on cash flow hedges | |||||||||||||||||
Interest rate swap | $ | (388 | ) | Interest (expense) | |||||||||||||
167 | Tax (expense) or benefit | ||||||||||||||||
$ | (221 | ) | Net of tax |
SEGMENT_AND_GEOGRAPHIC_INFORMA
SEGMENT AND GEOGRAPHIC INFORMATION | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION | ||||||||
Starting in the first quarter of 2015, because of changes in how the Company internally manages and reports the results of its businesses to its chief operating decision maker, the Company is disclosing three global reportable segments. The three global reportable segments and their activities are described below, as follows: | |||||||||
• | The Specialty Surgical Solutions segment includes (i) the Neurosurgery business which sells a full line of products specifically for neurosurgery and critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment and (ii) the Instruments business which sells more than 60,000 instrument patterns and surgical and lighting products to hospitals, surgery centers, and dental, podiatry, and veterinary offices. | ||||||||
• | The Orthopedics and Tissue Technologies segment includes such offerings as skin and wound repair, bone and joint fixation, implants in the upper and lower extremities, bone grafts and nerve and tendon repair. | ||||||||
• | The Spine segment focuses on spinal fusion, spinal implants, and deformity correction, together with bone graft substitutes and other related medical devices that are used to enhance the repair and regeneration of bone in various types of orthopedic surgical procedures. | ||||||||
The most notable change from the Company's financial statements for the year ended December 31, 2014 included in the Annual Report on Form 10-K is the integration of the former International reportable segment into the segments noted above as well as the Private Label segment into Orthopedics and Tissue Technologies and Spine. | |||||||||
The Corporate and other category includes (i) various legal, finance, information systems, executive, and human resource functions, (ii) brand management, and (iii) share-based compensation costs. Prior to the realignment, costs related to procurement, manufacturing operations and logistics for the Company's entire organization were not allocated to operating segments. In connection with the realignment, a portion of these costs have now been incorporated into the disclosed operating segments. | |||||||||
The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions, and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results. Net sales and profit by reportable segment for the three months ended March 31, 2015 and 2014 are as follows: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
(In thousands) | |||||||||
Segment Net Sales | |||||||||
Specialty Surgical Solutions | $ | 140,058 | $ | 127,195 | |||||
Orthopedics and Tissue Technologies | 61,367 | 54,589 | |||||||
Spine | 32,240 | 33,275 | |||||||
Total revenues | $ | 233,665 | $ | 215,059 | |||||
Segment Profit | |||||||||
Specialty Surgical Solutions | $ | 60,332 | $ | 48,297 | |||||
Orthopedics and Tissue Technologies | 19,582 | 17,001 | |||||||
Spine | 3,125 | 2,748 | |||||||
Segment profit | 83,039 | 68,046 | |||||||
Amortization | (3,535 | ) | -3,033 | ||||||
Corporate and other | (62,716 | ) | (56,275 | ) | |||||
Operating income (loss) | $ | 16,788 | $ | 8,738 | |||||
The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments that are generated from non-U.S. customers and therefore are included in Europe and the Rest of World revenues below. Total revenue by major geographic area consisted of the following: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
(In thousands) | |||||||||
United States | $ | 180,960 | $ | 163,382 | |||||
Europe | 26,764 | 25,324 | |||||||
Rest of World | 25,941 | 26,353 | |||||||
Total Revenues | $ | 233,665 | $ | 215,059 | |||||
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES |
In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on sales of certain products that it sells. The royalty payments that the Company made under these agreements were not significant for any of the periods presented. | |
The Company is subject to various claims, lawsuits and proceedings in the ordinary course of the Company's business, including claims by current or former employees, distributors and competitors and with respect to its products and product liability claims, lawsuits and proceedings, some of which have been settled by the Company. In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material adverse effect on our financial condition. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies. | |
The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds, and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. The Company consistently accrues legal fees expected to be incurred in connection with loss contingencies as those fees are incurred by outside counsel as a period cost. |
BASIS_OF_PRESENTATION_Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Mar. 31, 2015 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recently Issued Accounting Standards | Recently Issued Accounting Standards |
In April 2014, the FASB issued amendments to guidance for reporting discontinued operations and disposals of components of an entity. The amended guidance requires that a disposal representing a strategic shift that has (or will have) a major effect on an entity’s financial results or a business activity classified as held for sale should be reported as discontinued operations. The amendments also expand the disclosure requirements for discontinued operations and add new disclosures for individually significant dispositions that do not qualify as discontinued operations. The amendments are effective prospectively for fiscal years, and interim reporting periods within those years, beginning after December 15, 2014 (early adoption is permitted only for disposals that have not been previously reported). The new guidance is effective for Integra prospectively for all disposals (or classifications as held for sale) of components of an entity that occur after January 1, 2015. | |
In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised 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. To achieve that core principle, an entity should 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. This update is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period, and early adoption is not permitted. The Company is in the process of evaluating the impact of this standard on its financial statements. | |
In June 2014, the FASB issued Update No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (Topic 718). The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. As such, the performance target should not be reflected in estimating the grant-date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. This update is effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, and early adoption is permitted. The implementation of the amended guidance is not expected to have a material impact on our consolidated financial position or results of operations. | |
In August 2014, the FASB issued Update No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The amendment requires management to evaluate, for each annual and interim reporting period, whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity’s ability to continue as a going concern within one year after the date the financial statements are issued or are available to be issued. If substantial doubt is raised, additional disclosures around management’s plan to alleviate these doubts are required. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2016. The implementation of the amended guidance is not expected to have an impact on current disclosures in the financial statements. | |
In April 2015, the FASB issued Update No. 2015-03, Simplifying the Presentation of Debt Issuance Costs. The amendment requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. The new standard is limited to the presentation of debt issuance costs and does not affect the recognition or measurement of debt issuance costs. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2015. The implementation of the amended guidance is not expected to have a material impact on our consolidated results of operations and will result in a reclassification of our debt issuance costs from other long-term assets to long-term debt when adopted. | |
There are no other recently issued accounting pronouncements that are expected to have a material effect on our financial position, results of operations or cash flows. |
BUSINESS_ACQUISITIONS_Tables
BUSINESS ACQUISITIONS (Tables) | 3 Months Ended | ||||
Mar. 31, 2015 | |||||
Business Combinations [Abstract] | |||||
Schedule of Purchase Price Allocation | The following summarizes the preliminary allocation of the purchase price as of March 31, 2015 based on the fair value of the assets acquired and liabilities assumed: | ||||
Preliminary | |||||
Purchase Price | |||||
Allocation | |||||
(Dollars in thousands) | |||||
Inventory | $ | 4,730 | |||
Property, plant, and equipment | 1,171 | ||||
Intangible assets: | Wtd. Avg. Life: | ||||
Technology product rights | 20,590 | 8 - 14 Years | |||
In-process research and development | 190 | Indefinite | |||
Goodwill | 469 | ||||
Net assets acquired | $ | 27,150 | |||
The following summarizes the final allocation of the purchase price as of March 31, 2015 based on the fair value of the assets acquired and liabilities assumed: | |||||
Final | |||||
Purchase Price | |||||
Allocation | |||||
(Dollars in thousands) | |||||
Inventory deposit | $ | 4,000 | |||
Fixed assets | 438 | ||||
Intangible assets: | Wtd. Avg. Life | ||||
Technology product rights | 239,800 | 3 - 20 Years | |||
Other | 400 | Less than 1 year | |||
Deferred tax assets - long term | 12 | ||||
Goodwill | 105,331 | ||||
Total assets acquired | 349,981 | ||||
Contingent supply liability | 5,891 | ||||
Other | 731 | ||||
Deferred tax liabilities - long term | 87,464 | ||||
Net assets acquired | $ | 255,895 | |||
The following summarizes the preliminary allocation of the purchase price as of March 31, 2015 based on the fair value of the assets acquired and liabilities assumed: | |||||
Preliminary | |||||
Purchase Price | |||||
Allocation | |||||
(Dollars in thousands) | |||||
Cash | $ | 2,195 | |||
Inventory | 3,155 | ||||
Prepaid expenses | 620 | ||||
Property, plant, and equipment | 3,675 | ||||
Other current assets | 5,025 | ||||
Intangible assets: | Wtd. Avg. Life: | ||||
Trade name | 11,990 | 20 Years | |||
Technology | 4,580 | 15 - 16 Years | |||
Customer relationships | 18,130 | 12 - 16 Years | |||
Goodwill | 16,607 | ||||
Total assets acquired | 65,977 | ||||
Accounts payable and other liabilities | 5,910 | ||||
Net assets acquired | $ | 60,067 | |||
Schedule of Contingent Consideration | A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands): | ||||
Location in Statement of Operations | |||||
Balance as of January 1, 2015 | $ | 22,008 | |||
Loss from increase in fair value of contingent consideration liabilities | 125 | Selling, general and administrative | |||
Fair value at March 31, 2015 | $ | 22,133 | |||
Pro Forma Information | As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisition had taken place on the basis assumed above, nor are they indicative of the results of future combined operations. | ||||
Three Months Ended March 31, 2014 | |||||
(In thousands, except per share amounts) | |||||
Total revenue | $ | 225,509 | |||
Net income | $ | 5,572 | |||
Net income per share: | |||||
Basic | $ | 0.17 | |||
INVENTORIES_Tables
INVENTORIES (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Inventory, Net [Abstract] | ||||||||
Schedule of Inventory, Net | Inventories, net consisted of the following: | |||||||
March 31, 2015 | December 31, 2014 | |||||||
(In thousands) | ||||||||
Finished goods | $ | 143,866 | $ | 150,483 | ||||
Work in process | 53,168 | 50,166 | ||||||
Raw materials | 36,009 | 36,465 | ||||||
$ | 233,043 | $ | 237,114 | |||||
GOODWILL_AND_OTHER_INTANGIBLE_1
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended | |||||||||||||||
Mar. 31, 2015 | ||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||
Schedule of Changes In Carrying Amount Of Goodwill | Changes in the carrying amount of goodwill for the three months ended March 31, 2015 were as follows: | |||||||||||||||
Specialty | Orthopedics and | Spine | Total | |||||||||||||
Surgical | Tissue Technologies | |||||||||||||||
Solutions | ||||||||||||||||
(In thousands) | ||||||||||||||||
Goodwill, gross | $ | 281,829 | $ | 81,650 | $ | 409 | $ | 363,888 | ||||||||
Accumulated impairment losses | — | — | — | — | ||||||||||||
Goodwill at December 31, 2014 | 281,829 | 81,650 | 409 | 363,888 | ||||||||||||
MicroFrance working capital and purchase price adjustments | (828 | ) | — | — | (828 | ) | ||||||||||
Goodwill impairment charge | — | — | (409 | ) | (409 | ) | ||||||||||
Foreign currency translation | (6,433 | ) | (2,016 | ) | — | (8,449 | ) | |||||||||
Balance, March 31, 2015 | $ | 274,568 | $ | 79,634 | $ | — | $ | 354,202 | ||||||||
Components of Company's Identifiable Intangible Assets | The components of the Company’s identifiable intangible assets were as follows: | |||||||||||||||
31-Mar-15 | ||||||||||||||||
Weighted | Cost | Accumulated | Net | |||||||||||||
Average | Amortization | |||||||||||||||
Life | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Completed technology | 18 years | $ | 343,942 | $ | (67,172 | ) | $ | 276,770 | ||||||||
Customer relationships | 12 years | 158,546 | (88,817 | ) | 69,729 | |||||||||||
Trademarks/brand names | 34 years | 42,713 | (15,457 | ) | 27,256 | |||||||||||
Trademarks/brand names | Indefinite | 48,484 | — | 48,484 | ||||||||||||
Supplier relationships | 27 years | 34,721 | (11,166 | ) | 23,555 | |||||||||||
All other (1) | 4 years | 4,620 | (2,990 | ) | 1,630 | |||||||||||
$ | 633,026 | $ | (185,602 | ) | $ | 447,424 | ||||||||||
31-Dec-14 | ||||||||||||||||
Weighted | Cost | Accumulated | Net | |||||||||||||
Average | Amortization | |||||||||||||||
Life | ||||||||||||||||
(Dollars in thousands) | ||||||||||||||||
Completed technology | 18 years | $ | 345,082 | $ | (62,920 | ) | $ | 282,162 | ||||||||
Customer relationships | 12 years | 162,031 | (87,653 | ) | 74,378 | |||||||||||
Trademarks/brand names | 34 years | 44,520 | (15,755 | ) | 28,765 | |||||||||||
Trademarks/brand names | Indefinite | 48,484 | — | 48,484 | ||||||||||||
Supplier relationships | 27 years | 34,721 | (10,809 | ) | 23,912 | |||||||||||
All other (1) | 4 years | 4,810 | (3,052 | ) | 1,758 | |||||||||||
$ | 639,648 | $ | (180,189 | ) | $ | 459,459 | ||||||||||
(1) | At March 31, 2015 and December 31, 2014, all other included in-process research and development ("IPR&D") of $1.4 million in both periods, which was indefinite-lived. |
DEBT_Tables
DEBT (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Term loan maturities [Line Items] | ||||||||
Components of Interest Expense | The interest expense components of the Company’s convertible notes are as follows (net of capitalized interest amounts): | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(In thousands) | ||||||||
2016 Notes: | ||||||||
Amortization of the discount on the liability component | $ | 1,859 | $ | 1,666 | ||||
Cash interest related to the contractual interest coupon | 845 | 801 | ||||||
Total | $ | 2,704 | $ | 2,467 | ||||
Term Loan | ||||||||
Term loan maturities [Line Items] | ||||||||
Schedule of Maturities of Long-term Debt | At March 31, 2015 there was $150.0 million outstanding under the term loan component of the Senior Credit Facility at a weighted average interest rate of 1.7%. Contractual repayments of the term loan do not begin until September 30, 2015 and are due as follows: | |||||||
Year Ended December 31, | Principal Repayment | |||||||
(In thousands) | ||||||||
2015 | $ | 3,750 | ||||||
2016 | 9,375 | |||||||
2017 | 13,125 | |||||||
2018 | 15,000 | |||||||
2019 | 108,750 | |||||||
$ | 150,000 | |||||||
DERIVATIVE_INSTRUMENTS_Tables
DERIVATIVE INSTRUMENTS (Tables) | 3 Months Ended | |||||||||||||||||
Mar. 31, 2015 | ||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||
Summary of Fair Value In Balance Sheet For Derivatives Designated As Hedging Instruments | The following table summarizes the fair value and presentation for derivatives designated as hedging instruments in the condensed consolidated balance sheets as of March 31, 2015 and December 31, 2014: | |||||||||||||||||
Fair Value as of | ||||||||||||||||||
Location on Balance Sheet (1): | March 31, 2015 | December 31, 2014 | ||||||||||||||||
(In thousands) | ||||||||||||||||||
Derivatives designated as hedges — Liabilities: | ||||||||||||||||||
Interest rate swap — Accrued expenses and other current liabilities (2) | $ | 527 | $ | 898 | ||||||||||||||
Total Derivatives designated as hedges — Liabilities | $ | 527 | $ | 898 | ||||||||||||||
(1) | The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months. | |||||||||||||||||
(2) | At March 31, 2015 and December 31, 2014, the notional amount related to the Company’s sole interest rate swap was $93.8 million and $97.5 million, respectively. In the next twelve months, the Company expects to reduce the notional amount by the entire $93.8 million | |||||||||||||||||
Effect of Derivative Instruments Designated as Cash Flow Hedges on Statements of Operations | The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying condensed consolidated statements of operations during the three months ended March 31, 2015 and 2014: | |||||||||||||||||
Balance in AOCI | Amount of | Amount of Loss | Balance in AOCI | Location in | ||||||||||||||
Beginning of | Loss | Reclassified from | End of Quarter | Statements of | ||||||||||||||
Quarter | Recognized in | AOCI into | Operations | |||||||||||||||
AOCI- | Earnings-Effective | |||||||||||||||||
Effective Portion | Portion | |||||||||||||||||
(In thousands) | ||||||||||||||||||
Three Months Ended March 31, 2015 | ||||||||||||||||||
Interest rate swap | (898 | ) | (18 | ) | (389 | ) | (527 | ) | Interest (expense) | |||||||||
$ | (898 | ) | $ | (18 | ) | $ | (389 | ) | $ | (527 | ) | |||||||
Three Months Ended March 31, 2014 | ||||||||||||||||||
Interest rate swap | (2,439 | ) | (109 | ) | (451 | ) | (2,097 | ) | Interest (expense) | |||||||||
$ | (2,439 | ) | $ | (109 | ) | $ | (451 | ) | $ | (2,097 | ) | |||||||
INCOME_TAXES_Tables
INCOME TAXES (Tables) | 3 Months Ended | |||||
Mar. 31, 2015 | ||||||
Income Tax Disclosure [Abstract] | ||||||
Schedule of effective income tax rate reconciliation | The following table provides a summary of the Company’s effective tax rate: | |||||
Three Months Ended March 31, | ||||||
2015 | 2014 | |||||
Reported tax rate | 33.5 | % | 44.5 | % |
NET_INCOME_PER_SHARE_Tables
NET INCOME PER SHARE (Tables) | 3 Months Ended | |||||||
Mar. 31, 2015 | ||||||||
Earnings Per Share [Abstract] | ||||||||
Basic and Diluted Net Income Per Share | Basic and diluted net income per share was as follows: | |||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
(In thousands, except per share amounts) | ||||||||
Basic net income per share: | ||||||||
Net income | $ | 8,384 | $ | 2,206 | ||||
Weighted average common shares outstanding | 32,736 | 32,275 | ||||||
Basic net income per common share | $ | 0.26 | $ | 0.07 | ||||
Diluted net income per share: | ||||||||
Net income | $ | 8,384 | $ | 2,206 | ||||
Weighted average common shares outstanding — Basic | 32,736 | 32,275 | ||||||
Effect of dilutive securities: | ||||||||
2016 Convertible notes | 30 | — | ||||||
Stock options and restricted stock | 576 | 493 | ||||||
Weighted average common shares for diluted earnings per share | 33,342 | 32,768 | ||||||
Diluted net income per common share | $ | 0.25 | $ | 0.07 | ||||
COMPREHENSIVE_LOSS_INCOME_Tabl
COMPREHENSIVE (LOSS) INCOME (Tables) | 3 Months Ended | ||||||||||||||||
Mar. 31, 2015 | |||||||||||||||||
Equity [Abstract] | |||||||||||||||||
Schedule of Comprehensive (Loss) Income | Comprehensive (loss) income was as follows: | ||||||||||||||||
Three Months Ended March 31, | |||||||||||||||||
2015 | 2014 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Net income | $ | 8,384 | $ | 2,206 | |||||||||||||
Foreign currency translation adjustment | (24,393 | ) | 819 | ||||||||||||||
Change in unrealized gain on derivatives, net of tax | 211 | 195 | |||||||||||||||
Pension liability adjustment, net of tax | 54 | (14 | ) | ||||||||||||||
Comprehensive (loss) income | $ | (15,744 | ) | $ | 3,206 | ||||||||||||
Schedule of Changes in Accumulated Other Comprehensive Income by Component | Changes in Accumulated Other Comprehensive Loss by component between December 31, 2014 and March 31, 2015 are presented in the table below, net of tax: | ||||||||||||||||
Gains and (Losses) on Cash Flow Hedges | Defined Benefit Pension Items | Foreign Currency Items | Total | ||||||||||||||
(In thousands) | |||||||||||||||||
Beginning balance | $ | (512 | ) | $ | (906 | ) | $ | (22,070 | ) | $ | (23,488 | ) | |||||
Other comprehensive income before reclassifications | (10 | ) | 54 | (24,393 | ) | (24,349 | ) | ||||||||||
Amounts reclassified from accumulated other comprehensive income | 221 | — | — | 221 | |||||||||||||
Net current-period other comprehensive income | 211 | 54 | (24,393 | ) | (24,128 | ) | |||||||||||
Ending balance | $ | (301 | ) | $ | (852 | ) | $ | (46,463 | ) | $ | (47,616 | ) | |||||
Reclassification out of Accumulated Other Comprehensive Income (Loss) | The reclassification adjustments out of Accumulated Other Comprehensive Loss during the three months ended March 31, 2015 were as follows: | ||||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||||
Details about Accumulated Other Comprehensive Income (Loss) Components | Amount Reclassified from Accumulated Other Comprehensive Income (Loss) | Affected Line Item in the Statement where Net Income (Loss) is Presented | |||||||||||||||
(In thousands) | |||||||||||||||||
Gains and losses on cash flow hedges | |||||||||||||||||
Interest rate swap | $ | (388 | ) | Interest (expense) | |||||||||||||
167 | Tax (expense) or benefit | ||||||||||||||||
$ | (221 | ) | Net of tax |
SEGMENT_AND_GEOGRAPHIC_INFORMA1
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2015 | |||||||||
Segment Reporting [Abstract] | |||||||||
Total Revenue By Major Geographic Area | Net sales and profit by reportable segment for the three months ended March 31, 2015 and 2014 are as follows: | ||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
(In thousands) | |||||||||
Segment Net Sales | |||||||||
Specialty Surgical Solutions | $ | 140,058 | $ | 127,195 | |||||
Orthopedics and Tissue Technologies | 61,367 | 54,589 | |||||||
Spine | 32,240 | 33,275 | |||||||
Total revenues | $ | 233,665 | $ | 215,059 | |||||
Segment Profit | |||||||||
Specialty Surgical Solutions | $ | 60,332 | $ | 48,297 | |||||
Orthopedics and Tissue Technologies | 19,582 | 17,001 | |||||||
Spine | 3,125 | 2,748 | |||||||
Segment profit | 83,039 | 68,046 | |||||||
Amortization | (3,535 | ) | -3,033 | ||||||
Corporate and other | (62,716 | ) | (56,275 | ) | |||||
Operating income (loss) | $ | 16,788 | $ | 8,738 | |||||
The Company attributes revenues to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments that are generated from non-U.S. customers and therefore are included in Europe and the Rest of World revenues below. Total revenue by major geographic area consisted of the following: | |||||||||
Three Months Ended March 31, | |||||||||
2015 | 2014 | ||||||||
(In thousands) | |||||||||
United States | $ | 180,960 | $ | 163,382 | |||||
Europe | 26,764 | 25,324 | |||||||
Rest of World | 25,941 | 26,353 | |||||||
Total Revenues | $ | 233,665 | $ | 215,059 | |||||
BUSINESS_ACQUISITIONS_Narrativ
BUSINESS ACQUISITIONS - Narrative (Details) (USD $) | 3 Months Ended | 0 Months Ended | 3 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Dec. 05, 2014 | Oct. 27, 2014 | Jan. 15, 2014 | Jun. 30, 2014 | |
Business Acquisition [Line Items] | ||||||
Impairment of intangible assets | $409,000 | $600,000 | ||||
Metasurg | ||||||
Business Acquisition [Line Items] | ||||||
Consideration for acquisition | 27,200,000 | |||||
Payments for acquisition | 26,500,000 | |||||
Contingent consideration acquisition | 700,000 | |||||
Business acquisition, additional cash consideration payable upon completion of milestones | 38,500,000 | |||||
Fair value inputs, discount rate | 19.90% | |||||
Revenue of acquired company since acquisition | 1,600,000 | |||||
Net assets acquired | 27,150,000 | |||||
Medtronic MicroFrance | ||||||
Business Acquisition [Line Items] | ||||||
Payments for acquisition | 60,100,000 | |||||
Revenue of acquired company since acquisition | 5,800,000 | |||||
Adjustment of consideration for acquisition | -1,500,000 | 1,500,000 | ||||
Adjustment to goodwill | 800,000 | |||||
Net assets acquired | 60,067,000 | |||||
Confluent Surgical, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
Contingent consideration acquisition | 20,900,000 | |||||
Business acquisition, additional cash consideration payable upon completion of milestones | 30,000,000 | |||||
Fair value inputs, discount rate | 2.20% | |||||
Revenue of acquired company since acquisition | 17,700,000 | 14,100,000 | ||||
Net assets acquired | 255,895,000 | 255,895,000 | ||||
Payments to acquire business interest | 231,000,000 | |||||
Payments for transitional supply agreements from acquisition | 4,000,000 | |||||
Contingent liability extension period | 2 years | |||||
Consideration liability, number of required days for extension | 180 days | |||||
Contingent liability, period of consideration arrangement | 5 years | |||||
Contingent liability, period of transitional supply price increases | 3 years | |||||
Impairment of intangible assets | 600,000 | |||||
Fair value input, probability of event | 95.00% | |||||
Incremental increase in contingent liability | 300,000 | |||||
Incremental decrease in contingent liability | 400,000 | |||||
Confluent Surgical, Inc. | Potential Cash Consideration Fair Value | ||||||
Business Acquisition [Line Items] | ||||||
Business acquisition, additional cash consideration payable upon completion of milestones | 25,000,000 | |||||
Confluent Surgical, Inc. | Cash Consideration Two | ||||||
Business Acquisition [Line Items] | ||||||
Business acquisition, additional cash consideration payable upon completion of milestones | 5,000,000 | |||||
Deferred Tax Liability | Confluent Surgical, Inc. | ||||||
Business Acquisition [Line Items] | ||||||
MicroFrance working capital and purchase price adjustments | $12,400,000 |
BUSINESS_ACQUISITIONS_Schedule
BUSINESS ACQUISITIONS - Schedule of Purchase Price Allocation (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 | Jan. 15, 2014 |
Business Acquisition [Line Items] | |||
Goodwill | 354,202 | $363,888 | |
Metasurg | |||
Business Acquisition [Line Items] | |||
Inventory | 4,730 | ||
Fixed assets | 1,171 | ||
Goodwill | 469 | ||
Net assets acquired | 27,150 | ||
Metasurg | In Process Research and Development | |||
Business Acquisition [Line Items] | |||
Indefinite intangible assets | 190 | ||
Metasurg | Technology-Based Intangible Assets | |||
Business Acquisition [Line Items] | |||
Finite intangible assets | 20,590 | ||
Metasurg | Technology-Based Intangible Assets | Minimum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 8 years | ||
Metasurg | Technology-Based Intangible Assets | Maximum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 14 years | ||
Medtronic MicroFrance | |||
Business Acquisition [Line Items] | |||
Cash | 2,195 | ||
Inventory | 3,155 | ||
Inventory deposit | 620 | ||
Fixed assets | 3,675 | ||
Other current assets | 5,025 | ||
Goodwill | 16,607 | ||
Total assets acquired | 65,977 | ||
Accounts payable and other liabilities | 5,910 | ||
Net assets acquired | 60,067 | ||
Medtronic MicroFrance | Trade Names | |||
Business Acquisition [Line Items] | |||
Finite intangible assets | 11,990 | ||
Medtronic MicroFrance | Trade Names | Maximum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 20 years | ||
Medtronic MicroFrance | Technology-Based Intangible Assets | |||
Business Acquisition [Line Items] | |||
Finite intangible assets | 4,580 | ||
Medtronic MicroFrance | Technology-Based Intangible Assets | Minimum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 15 years | ||
Medtronic MicroFrance | Technology-Based Intangible Assets | Maximum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 16 years | ||
Medtronic MicroFrance | Customer relationships | |||
Business Acquisition [Line Items] | |||
Finite intangible assets | 18,130 | ||
Medtronic MicroFrance | Customer relationships | Minimum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 12 years | ||
Medtronic MicroFrance | Customer relationships | Maximum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 16 years | ||
Confluent Surgical, Inc. | |||
Business Acquisition [Line Items] | |||
Inventory deposit | 4,000 | ||
Fixed assets | 438 | ||
Deferred tax assets - long term | 12 | ||
Goodwill | 105,331 | ||
Total assets acquired | 349,981 | ||
Contingent supply liability | 5,891 | ||
Other | 731 | ||
Deferred tax liabilities - long term | 87,464 | ||
Net assets acquired | 255,895 | 255,895 | |
Confluent Surgical, Inc. | Technology-Based Intangible Assets | Minimum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 3 years | ||
Confluent Surgical, Inc. | Technology-Based Intangible Assets | Maximum | |||
Business Acquisition [Line Items] | |||
Weighted average useful life | 20 years | ||
Confluent Surgical, Inc. | Developed Technology Rights | |||
Business Acquisition [Line Items] | |||
Finite intangible assets | 239,800 | ||
Confluent Surgical, Inc. | Other Intangible Assets | |||
Business Acquisition [Line Items] | |||
Finite intangible assets | 400 |
BUSINESS_ACQUISITIONS_Schedule1
BUSINESS ACQUISITIONS - Schedule of Contingent Consideration (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Business Acquisition, Contingent Consideration [Roll Forward] | |||
Loss from increase in fair value of contingent consideration liabilities | $125 | $128 | |
Level 3 | Potential Cash Consideration Fair Value | |||
Business Acquisition, Contingent Consideration [Roll Forward] | |||
Balance as of January 1, 2015 | 22,008 | ||
Fair value at March 31, 2015 | 22,133 | 22,008 | |
Level 3 | Selling, General and Administrative Expenses | Potential Cash Consideration Fair Value | |||
Business Acquisition, Contingent Consideration [Roll Forward] | |||
Loss from increase in fair value of contingent consideration liabilities | $125 |
BUSINESS_ACQUISITIONS_Pro_Form
BUSINESS ACQUISITIONS - Pro Forma Information (Details) (USD $) | 3 Months Ended |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 |
Business Acquisition [Line Items] | |
Total revenue | $225,509 |
Net income | $5,572 |
Basic (in dollars per share) | $0.17 |
INVENTORIES_Inventory_Net_Deta
INVENTORIES (Inventory, Net) (Details) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Inventory, Net [Abstract] | ||
Finished goods | $143,866 | $150,483 |
Work-in process | 53,168 | 50,166 |
Raw materials | 36,009 | 36,465 |
Inventories, net | $233,043 | $237,114 |
GOODWILL_AND_OTHER_INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Goodwill (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Dec. 31, 2014 |
Goodwill [Roll Forward] | ||
Goodwill at December 31, 2014 | $363,888 | |
Balance, March 31, 2015 | 354,202 | 363,888 |
Orthopedics and Tissue Technologies | ||
Goodwill [Line Items] | ||
Goodwill, gross | 81,650 | |
Accumulated impairment losses | 0 | |
Goodwill [Roll Forward] | ||
Goodwill at December 31, 2014 | 81,650 | |
MicroFrance working capital and purchase price adjustments | 0 | |
Goodwill impairment charge | 0 | |
Foreign currency translation | -2,016 | |
Balance, March 31, 2015 | 79,634 | |
Spine | ||
Goodwill [Line Items] | ||
Goodwill, gross | 409 | |
Accumulated impairment losses | 0 | |
Goodwill [Roll Forward] | ||
Goodwill at December 31, 2014 | 409 | |
MicroFrance working capital and purchase price adjustments | 0 | |
Goodwill impairment charge | -409 | |
Foreign currency translation | 0 | |
Balance, March 31, 2015 | 0 | |
U.S. Spine And Other | ||
Goodwill [Line Items] | ||
Goodwill, gross | 363,888 | |
Accumulated impairment losses | 0 | |
Goodwill [Roll Forward] | ||
Goodwill at December 31, 2014 | 363,888 | |
MicroFrance working capital and purchase price adjustments | -828 | |
Goodwill impairment charge | -409 | |
Foreign currency translation | -8,449 | |
Balance, March 31, 2015 | 354,202 | |
Specialty Surgical Solutions | ||
Goodwill [Line Items] | ||
Goodwill, gross | 281,829 | |
Accumulated impairment losses | 0 | |
Goodwill [Roll Forward] | ||
Goodwill at December 31, 2014 | 281,829 | |
MicroFrance working capital and purchase price adjustments | -828 | |
Goodwill impairment charge | 0 | |
Foreign currency translation | -6,433 | |
Balance, March 31, 2015 | $274,568 |
GOODWILL_AND_OTHER_INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Components of Company's Identifiable Intangible Assets (Details) (USD $) | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2015 | Dec. 31, 2014 | |||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Cost | $633,026,000 | $639,648,000 | ||
Accumulated Amortization | -185,602,000 | -180,189,000 | ||
Net | 447,424,000 | 459,459,000 | ||
Completed technology | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted Average Life | 18 years | 18 years | ||
Cost | 343,942,000 | 345,082,000 | ||
Accumulated Amortization | -67,172,000 | -62,920,000 | ||
Net | 276,770,000 | 282,162,000 | ||
Customer relationships | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted Average Life | 12 years | 12 years | ||
Cost | 158,546,000 | 162,031,000 | ||
Accumulated Amortization | -88,817,000 | -87,653,000 | ||
Net | 69,729,000 | 74,378,000 | ||
Trademarks/brand names | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted Average Life | 34 years | 34 years | ||
Cost | 42,713,000 | 44,520,000 | ||
Accumulated Amortization | -15,457,000 | -15,755,000 | ||
Net | 27,256,000 | 28,765,000 | ||
Trademarks/brand names indefinite | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Cost | 48,484,000 | 48,484,000 | ||
Accumulated Amortization | 0 | 0 | ||
Net | 48,484,000 | 48,484,000 | ||
Supplier relationships | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted Average Life | 27 years | 27 years | ||
Cost | 34,721,000 | 34,721,000 | ||
Accumulated Amortization | -11,166,000 | -10,809,000 | ||
Net | 23,555,000 | 23,912,000 | ||
All other | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Weighted Average Life | 4 years | [1] | 4 years | [1] |
Cost | 4,620,000 | [1] | 4,810,000 | [1] |
Accumulated Amortization | -2,990,000 | [1] | -3,052,000 | [1] |
Net | 1,630,000 | [1] | 1,758,000 | [1] |
In Process Research and Development | ||||
Acquired Finite-Lived Intangible Assets [Line Items] | ||||
Other Indefinite-lived Intangible Assets | $1,400,000 | $1,400,000 | ||
[1] | At March 31, 2015 and December 31, 2014, all other included in-process research and development ("IPR&D") of $1.4 million in both periods, which was indefinite-lived. |
GOODWILL_AND_OTHER_INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Narrative (Details) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Goodwill [Line Items] | ||
Impairment of intangible assets | $409,000 | $600,000 |
Annual amortization expense expected to approximate in 2015 | 31,800,000 | |
Annual amortization expense expected to approximate in 2016 | 29,600,000 | |
Annual amortization expense expected to approximate in 2017 | 27,600,000 | |
Annual amortization expense expected to approximate in 2018 | 27,200,000 | |
Annual amortization expense expected to approximate in 2019 | 26,500,000 | |
Confluent Surgical, Inc. | ||
Goodwill [Line Items] | ||
Impairment of intangible assets | $600,000 |
DEBT_Narrative_Details
DEBT -Narrative (Details) (USD $) | 3 Months Ended | 0 Months Ended | |||
Mar. 31, 2015 | Mar. 31, 2014 | Jul. 02, 2014 | Jun. 15, 2011 | Dec. 31, 2014 | |
Debt Instrument [Line Items] | |||||
Amortization of debt issuance costs | $530,000 | $608,000 | |||
Term loan, amount outstanding | 150,000,000 | ||||
Carrying amount of liability | 215,177,000 | 213,121,000 | |||
July 2014 Amendment | |||||
Debt Instrument [Line Items] | |||||
Senior credit facility, maximum borrowing capacity | 900,000,000 | ||||
Additional commitments | 200,000,000 | ||||
Cash balance threshold above which excess amount is not subject to any restriction of use or investment | 40,000,000 | ||||
Deferred finance costs, gross | 3,200,000 | ||||
Amortization of debt issuance costs | 300,000 | ||||
July 2014 Amendment | Minimum | |||||
Debt Instrument [Line Items] | |||||
Line of credit, commitment fee percentage | 0.15% | ||||
July 2014 Amendment | Maximum | |||||
Debt Instrument [Line Items] | |||||
Line of credit, commitment fee percentage | 0.30% | ||||
Proceeds from lines of credit | 422,000,000 | ||||
July 2014 Amendment | Standby Letters of Credit | |||||
Debt Instrument [Line Items] | |||||
Senior credit facility, maximum borrowing capacity | 60,000,000 | ||||
July 2014 Amendment | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Senior credit facility, maximum borrowing capacity | 750,000,000 | ||||
Proceeds from lines of credit | 272,000,000 | ||||
July 2014 Amendment | Swingline Loan | |||||
Debt Instrument [Line Items] | |||||
Senior credit facility, maximum borrowing capacity | 60,000,000 | ||||
Term Loan | |||||
Debt Instrument [Line Items] | |||||
Weighted average interest rate on debt | 1.70% | ||||
Long-term debt, fair value | 141,300,000 | ||||
June 2011 Amendment | Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Senior credit facility, maximum borrowing capacity | 600,000,000 | ||||
Revolving Credit Facility | |||||
Debt Instrument [Line Items] | |||||
Line of credit facility outstanding | 251,900,000 | 266,900,000 | |||
Weighted average interest rate on debt | 1.70% | ||||
Available borrowings under senior secured revolving credit facility | 498,100,000 | ||||
Line of credit facility, fair value of amount outstanding | 235,800,000 | ||||
2016 Convertible Senior Notes | |||||
Debt Instrument [Line Items] | |||||
Principal amount outstanding | 230,000,000 | 230,000,000 | 230,000,000 | ||
Interest rate on debt | 1.63% | ||||
Portion of the debt proceeds that was classified as equity at the time of the offering | 43,200,000 | ||||
Effective interest rate implicit in the liability component | 5.60% | ||||
Carrying amount of liability | 215,200,000 | 213,100,000 | |||
Unamortized discount | 14,800,000 | 16,900,000 | |||
Fair value of outstanding borrowings | 272,300,000 | ||||
Common stock based on initial conversion rate ratio (in shares) | 17.4092 | ||||
Principal amount to be considered for conversion purpose | 1,000 | ||||
Initial conversion price, per share | $57.44 | ||||
Maximum selling price of company's common stock | 150.00% | ||||
Principal amount of notes per average trading price | 1,000 | ||||
Maximum average conversion value of the Notes | 98.00% | ||||
Strike price of the call transaction (in dollars per share) | $57.44 | ||||
Strike price of warrant transactions (in dollars per share) | $70.05 | ||||
Term Loan | July 2014 Amendment | |||||
Debt Instrument [Line Items] | |||||
Senior credit facility, maximum borrowing capacity | 150,000,000 | ||||
Proceeds from lines of credit | $150,000,000 | ||||
Federal Funds | July 2014 Amendment | |||||
Debt Instrument [Line Items] | |||||
Interest rates available to the Company at its option | 0.50% | ||||
(LIBOR) | July 2014 Amendment | |||||
Debt Instrument [Line Items] | |||||
Interest rates available to the Company at its option | 1.00% | ||||
Eurodollar | July 2014 Amendment | Minimum | |||||
Debt Instrument [Line Items] | |||||
Interest rates available to the Company at its option | 1.00% | ||||
Eurodollar | July 2014 Amendment | Maximum | |||||
Debt Instrument [Line Items] | |||||
Interest rates available to the Company at its option | 1.75% |
DEBT_5_year_payout_table_Detai
DEBT -5 year payout table (Details) (Term Loan, USD $) | Mar. 31, 2015 |
In Thousands, unless otherwise specified | |
Term Loan | |
Term loan maturities [Line Items] | |
Long-term Debt, Maturities, Repayments of Principal in 2015 | $3,750 |
Long-term Debt, Maturities, Repayments of Principal in 2016 | 9,375 |
Long-term Debt, Maturities, Repayments of Principal in 2017 | 13,125 |
Long-term Debt, Maturities, Repayments of Principal in 2018 | 15,000 |
Long-term Debt, Maturities, Repayments of Principal in 2019 | 108,750 |
Secured Debt | $150,000 |
DEBT_Components_of_Interest_Ex
DEBT - Components of Interest Expense (Detail) (2016 Convertible Senior Notes, USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
2016 Convertible Senior Notes | ||
Debt Instrument [Line Items] | ||
Amortization of the discount on the liability component | $1,859 | $1,666 |
Cash interest related to the contractual interest coupon | 845 | 801 |
Total | $2,704 | $2,467 |
DERIVATIVE_INSTRUMENTS_Narrati
DERIVATIVE INSTRUMENTS - Narrative (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Derivative [Line Items] | ||
Interest rate swap expiration date | August 10, 2015 | |
Gain (loss) on hedging ineffectiveness | $0 | $0 |
Interest Rate Swap | ||
Derivative [Line Items] | ||
Pretax losses expected to be reclassified from AOCI in next 12 months | $500,000 |
DERIVATIVE_INSTRUMENTS_Summary
DERIVATIVE INSTRUMENTS - Summary of Fair Value in Balance Sheet for Derivatives Designated Hedging Instruments (Detail) (USD $) | 3 Months Ended | |
Mar. 31, 2015 | Dec. 31, 2014 | |
Derivative Instruments and Hedging Activities Disclosure [Line Items] | ||
Fair value of derivative liabilities | $527,000 | $898,000 |
Interest Rate Swap | ||
Derivative Instruments and Hedging Activities Disclosure [Line Items] | ||
Notional amount derivative instruments | 93,800,000 | 97,500,000 |
Reduction in notional amount of interest rate derivatives in next twelve months | 93,800,000 | |
Interest Rate Swap | Accrued expenses and other current liabilities | ||
Derivative Instruments and Hedging Activities Disclosure [Line Items] | ||
Fair value of derivative liabilities | $527,000 | $898,000 |
DERIVATIVE_INSTRUMENTS_Effect_
DERIVATIVE INSTRUMENTS - Effect of Derivative Instruments Designated Cash Flow Hedges on Statements of Operations (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Balance in AOCI Beginning of Period | ($898) | ($2,439) |
Amount of Loss Recognized in AOCI- Effective Portion | -18 | -109 |
Amount of Loss Reclassified from AOCI into Earnings-Effective Portion | -389 | -451 |
Balance in AOCI End of Period | -527 | -2,097 |
Interest Expense | Interest Rate Swap | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Balance in AOCI Beginning of Period | -898 | -2,439 |
Amount of Loss Recognized in AOCI- Effective Portion | -18 | -109 |
Amount of Loss Reclassified from AOCI into Earnings-Effective Portion | -389 | -451 |
Balance in AOCI End of Period | ($527) | ($2,097) |
STOCKBASED_COMPENSATION_Narrat
STOCK-BASED COMPENSATION - Narrative (Detail) (USD $) | 3 Months Ended |
In Millions, except Share data, unless otherwise specified | Mar. 31, 2015 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Grants in period, net of forfeitures | 78,336 |
Requisite service periods of awards, in years | 3 years |
Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock options exercisable, vesting period, in years | 4 years |
Total unrecognized compensation costs | 2.7 |
Weighted-average period for cost recognition, in years | 3 years |
Restricted stock awards/stock units | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Stock options exercisable, vesting period, in years | 3 years |
Total unrecognized compensation costs | 20.3 |
Weighted-average period for cost recognition, in years | 2 years |
Awards granted during period | 117,763 |
Performance shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Awards granted during period | 64,770 |
Employee | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period, in years | 8 years |
Directors and certain executive officers | Minimum | Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period, in years | 8 years |
Directors and certain executive officers | Maximum | Stock options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expiration period, in years | 10 years |
TREASURY_STOCK_Additional_Info
TREASURY STOCK (Additional Information) (Detail) (USD $) | 3 Months Ended | ||
Mar. 31, 2015 | Mar. 31, 2014 | Oct. 28, 2014 | |
Accelerated Share Repurchases [Line Items] | |||
Stock repurchased during period, shares | 0 | 0 | |
Amount available for share repurchase under this latest authorization | $75,000,000 | ||
October 2012 Authorization | |||
Accelerated Share Repurchases [Line Items] | |||
Stock repurchase program, authorized amount | $75,000,000 |
INCOME_TAXES_Narrative_Details
INCOME TAXES - Narrative (Details) (USD $) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Income Tax [Line Items] | ||
Reported tax rate | 33.50% | 44.50% |
Minimum | ||
Income Tax [Line Items] | ||
Effective tax rate estimate | 29.00% | |
Maximum | ||
Income Tax [Line Items] | ||
Effective tax rate estimate | 30.00% | |
Foreign tax authority | ||
Income Tax [Line Items] | ||
Income tax reconciliation, settlements with tax authority | 0.8 |
INCOME_TAXES_Summary_of_Effect
INCOME TAXES - Summary of Effective Tax Rate (Detail) | 3 Months Ended | |
Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | ||
Reported tax rate | 33.50% | 44.50% |
NET_INCOME_PER_SHARE_Narrative
NET INCOME PER SHARE - Narrative (Detail) | 3 Months Ended | |
In Millions, unless otherwise specified | Mar. 31, 2014 | Mar. 31, 2015 |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Stock options, shares outstanding (in shares) | 1.4 | 1.3 |
Stock Compensation Plan | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Shares excluded from computation as their effect would be anti-dilutive | 0.2 |
NET_INCOME_PER_SHARE_Basic_and
NET INCOME PER SHARE - Basic and Diluted Net Income Per Share (Detail) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Basic net income per share: | ||
Net income | $8,384 | $2,206 |
Weighted average common shares outstanding (in shares) | 32,736 | 32,275 |
Basic net income per common share (in dollars per share) | $0.26 | $0.07 |
Diluted net income per share: | ||
Net income | $8,384 | $2,206 |
Weighted average common shares outstanding (in shares) | 32,736 | 32,275 |
Effect of dilutive securities: | ||
2016 Convertible notes (in shares) | 30 | 0 |
Stock options and restricted stock (in shares) | 576 | 493 |
Weighted average common shares for diluted earnings per share (in shares) | 33,342 | 32,768 |
Diluted net income per common share (in dollars per share) | $0.25 | $0.07 |
COMPREHENSIVE_LOSS_INCOME_Sche
COMPREHENSIVE (LOSS) INCOME - Schedule of Comprehensive Loss Income (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Equity [Abstract] | ||
Net income | $8,384 | $2,206 |
Foreign currency translation adjustment | -24,393 | 819 |
Change in unrealized gain on derivatives, net of tax | 211 | 195 |
Pension liability adjustment, net of tax | 54 | -14 |
Comprehensive (loss) income | ($15,744) | $3,206 |
COMPREHENSIVE_LOSS_INCOME_Sche1
COMPREHENSIVE (LOSS) INCOME (Schedule of Changes in Accumulated Other Comprehensive Income by Component (Details) (USD $) | 3 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Beginning balance | ($23,488) |
Other comprehensive income before reclassifications | -24,349 |
Amounts reclassified from accumulated other comprehensive income | 221 |
Net current-period other comprehensive income | -24,128 |
Ending balance | -47,616 |
Gains and Losses on Cash Flow Hedges | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Beginning balance | -512 |
Other comprehensive income before reclassifications | -10 |
Amounts reclassified from accumulated other comprehensive income | 221 |
Net current-period other comprehensive income | 211 |
Ending balance | -301 |
Defined Benefit Pension Items | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Beginning balance | -906 |
Other comprehensive income before reclassifications | 54 |
Amounts reclassified from accumulated other comprehensive income | 0 |
Net current-period other comprehensive income | 54 |
Ending balance | -852 |
Foreign Currency Items | |
Accumulated Other Comprehensive Income (Loss) [Roll Forward] | |
Beginning balance | -22,070 |
Other comprehensive income before reclassifications | -24,393 |
Amounts reclassified from accumulated other comprehensive income | 0 |
Net current-period other comprehensive income | -24,393 |
Ending balance | ($46,463) |
COMPREHENSIVE_LOSS_INCOME_Recl
COMPREHENSIVE (LOSS) INCOME (Reclassification Adjustment from AOCI) (Details) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest (expense) | ($5,492) | ($5,142) |
Tax (expense) or benefit | -4,233 | -1,769 |
Net income | 8,384 | 2,206 |
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Tax (expense) or benefit | 167 | |
Net income | -221 | |
Reclassification out of Accumulated Other Comprehensive Income | Gains and Losses on Cash Flow Hedges | Interest Rate Swap | ||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||
Interest (expense) | ($388) |
SEGMENT_AND_GEOGRAPHIC_INFORMA2
SEGMENT AND GEOGRAPHIC INFORMATION - Narrative (Detail) | 3 Months Ended |
Mar. 31, 2015 | |
Segment | |
Segment Reporting [Abstract] | |
Number of reportable segments | 3 |
Specialty Surgical Solutions | |
Segment Reporting Information [Line Items] | |
Number of products offered | 60,000 |
SEGMENT_AND_GEOGRAPHIC_INFORMA3
SEGMENT AND GEOGRAPHIC INFORMATION - Net Sales and Profit by Reportable Segment (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Revenues | $233,665 | $215,059 |
Operating income | 16,788 | 8,738 |
Intangible asset amortization | -3,535 | -3,033 |
Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Operating income | 83,039 | 68,046 |
Operating Segments | Specialty Surgical Solutions | ||
Segment Reporting Information [Line Items] | ||
Revenues | 140,058 | 127,195 |
Operating income | 60,332 | 48,297 |
Operating Segments | Orthopedics and Tissue Technologies | ||
Segment Reporting Information [Line Items] | ||
Revenues | 61,367 | 54,589 |
Operating income | 19,582 | 17,001 |
Operating Segments | Spine | ||
Segment Reporting Information [Line Items] | ||
Revenues | 32,240 | 33,275 |
Operating income | 3,125 | 2,748 |
Corporate, Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Operating income | ($62,716) | ($56,275) |
SEGMENT_AND_GEOGRAPHIC_INFORMA4
SEGMENT AND GEOGRAPHIC INFORMATION - Total Revenue by Major Geographic Area (Detail) (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Segment Reporting Information [Line Items] | ||
Revenues | $233,665 | $215,059 |
United States | ||
Segment Reporting Information [Line Items] | ||
Revenues | 180,960 | 163,382 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Revenues | 26,764 | 25,324 |
Rest of World | ||
Segment Reporting Information [Line Items] | ||
Revenues | $25,941 | $26,353 |