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The information in this prospectus supplement is not complete and may be changed. This prospectus supplement is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted. |
PRELIMINARY PROSPECTUS SUPPLEMENT | Subject to Completion | Dated May 1, 2009 |
Public offering | Underwriting | Proceeds, before | ||||||||||
price(1) | discount | expense, to us | ||||||||||
Per note | % | % | % | |||||||||
Total | $ | $ | $ | |||||||||
(1) | Plus accrued interest from , 2009 to the date of delivery. |
UBS Investment Bank |
Goldman, Sachs & Co. |
Banc of America Securities LLC |
Canaccord Adams | Leerink Swann | Stifel Nicolaus |
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For the three | ||||||||
months ended March 31, | ||||||||
Statement of operations data: | 2009 | 2008 | ||||||
(in thousands, | ||||||||
except per share data) | ||||||||
(unaudited) | ||||||||
Net product sales and services revenue | $ | 434,800 | $ | 361,361 | ||||
License and royalty revenue | 9,060 | 10,872 | ||||||
Net revenue | 443,860 | 372,233 | ||||||
Cost of net revenue | 209,658 | 191,843 | ||||||
Gross profit | 234,202 | 180,390 | ||||||
Operating expenses: | ||||||||
Research and development | 27,052 | 30,925 | ||||||
Selling, general and administrative | 178,996 | 134,687 | ||||||
Total operating expenses | 206,048 | 165,612 | ||||||
Operating income | 28,154 | 14,778 | ||||||
Interest and other income (expense), net | (20,671 | ) | (20,753 | ) | ||||
Income tax provision (benefit) | 3,689 | (880 | ) | |||||
Equity earnings of unconsolidated entities, net of tax | 2,497 | 921 | ||||||
Net income (loss) | 6,291 | (4,174 | ) | |||||
Balance sheet data: | March 31, 2009 | |||
(in thousands) | ||||
Cash and cash equivalents | $ | 205,181 | ||
Working capital | $ | 514,134 | ||
Total assets | $ | 5,902,506 | ||
Total debt | $ | 1,516,032 | ||
Total stockholders’ equity | $ | 3,257,677 |
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Issuer | Inverness Medical Innovations, Inc., a Delaware corporation. | |
Notes Offered | $200,000,000 aggregate principal amount of our % Senior Subordinated Notes due 2016. | |
Maturity Date | , 2016. | |
Interest | % per annum, payable semi-annually on and of each year, commencing , 2009. | |
Optional Redemption | We may, at our option, redeem the notes, in whole or part, at any time on or after , 2013, at the redemption prices described in “Description of Notes—Redemption—Optional Redemption” plus accrued and unpaid interest to (but excluding) the redemption date. | |
Optional Redemption After Certain Equity Offerings | At any time (which may be more than once) until , 2012, we can choose to redeem up to 35% of the notes (including any applicable notes issued after the issue date) with money that we raise in certain equity offerings, so long as: | |
Ø we pay % of the face amount of the notes, plus accrued and unpaid interest to (but excluding) the redemption date; | ||
Ø we redeem the notes within 90 days of completing such equity offering; and | ||
at least 65% of the aggregate principal amount of the notes (including any notes issued after the issue date) remains outstanding afterwards. See “Description of Notes—Redemption—Redemption with Proceeds from Equity Offerings.” | ||
Make-Whole Redemption | Prior to 2013, we may redeem some or all of the notes by the payment of a make-whole premium described under “Description of Notes—Redemption—Make-whole Redemption,” plus accrued and unpaid interest to (but excluding) the redemption date. | |
Change of Control | If a change of control occurs, subject to certain conditions, we must give holders of the notes an opportunity to sell the notes to us at a purchase price of 101% of the principal amount of the notes, plus accrued and unpaid interest to (but excluding) the date of the purchase. The credit agreements governing our secured credit facilities prohibit us from repurchasing any of the notes in connection with a change of control before the repayment in full of all amounts outstanding under the secured credit facilities. Therefore, if a change of control were to occur, we may be unable to repurchase any of the notes due to this or |
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similar prohibitions or because we do not have adequate funds. See “Description of Notes—Change of Control.” | ||
Guarantees | The payment of the principal, premium and interest on the notes is or will be fully and unconditionally guaranteed, jointly and severally, on a senior subordinated basis by, subject to certain exceptions, all of our current and future domestic subsidiaries that guarantee certain other of our indebtedness. A guarantee may be released if we dispose of the guarantor subsidiary or it ceases to guarantee certain other indebtedness of ours or any of our other subsidiaries. See “Description of Notes—Guarantees of the Notes.” | |
Ranking | The notes will be our general unsecured senior subordinated obligations and will be: | |
Ø junior in right of payment to all of our existing and future senior indebtedness, including indebtedness arising under our secured credit facilities; see “Description of Notes—Subordination of the Notes”; | ||
Ø pari passuin right of payment with all of our existing and future senior subordinated indebtedness, including indebtedness arising under our outstanding senior subordinated convertible notes; | ||
Ø senior in right of payment to any of our existing or future indebtedness that is, by its terms, subordinated in right of payment to the notes; | ||
Ø unconditionally guaranteed by the guarantor subsidiaries; see “Description of Notes—Guarantees of the Notes”; | ||
Ø effectively subordinated to all of our existing and future secured indebtedness, including indebtedness arising under our secured credit facilities, to the extent of the assets securing such indebtedness; and | ||
Ø structurally subordinated to all of the existing and future obligations of each of our subsidiaries that does not guarantee the notes; see “Description of Notes—Ranking of the Notes and the Guarantees.” | ||
The guarantees will be general unsecured obligations of the guarantor subsidiaries and will be: | ||
Ø junior in right of payment to all existing and future senior indebtedness of the guarantor subsidiaries, including indebtedness arising under our secured credit facilities; see “Description of Notes—Subordination of the Guarantees of the Notes”; | ||
Ø pari passuin right of payment with any existing or future senior subordinated indebtedness of the guarantor subsidiaries; | ||
Ø senior in right of payment to any existing or future indebtedness of guarantor subsidiaries that is, by its terms, subordinated to the guarantees; |
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Ø effectively subordinated to all existing and future secured indebtedness of the guarantor subsidiaries, including the indebtedness arising under our secured credit facilities, to the extent of the assets securing such indebtedness; and | ||
Ø structurally subordinated to all existing and future obligations of each of our subsidiaries that is not also a guarantor subsidiary; see “Description of Notes—Ranking of the Notes and the Guarantees.” | ||
As of December 31, 2008, we had approximately $1.37 billion in principal amount of senior debt outstanding, including approximately $1.35 billion in aggregate principal amount of debt outstanding under our secured credit facilities. | ||
Asset Sale Proceeds | If we or our subsidiaries engage in asset sales, we generally must either invest the net cash proceeds from such sales in our business within a period of time, prepay senior debt or make an offer to purchase a principal amount of the notes equal to the excess net cash proceeds, subject to certain exceptions. The purchase price of the notes will be 100% of their principal amount, plus accrued and unpaid interest. See “Description of Notes—Certain Covenants—Limitations on Asset Sales.” | |
Certain Covenants | We will issue the notes under an indenture with U.S. Bank National Association, as trustee. The indenture governing the notes contains covenants that limit our ability and our restricted subsidiaries’ ability to, among other things: | |
Ø incur additional debt; | ||
Ø pay dividends on our capital stock or redeem, repurchase or retire our capital stock or subordinated debt; | ||
Ø make certain investments; | ||
Ø create liens on our assets; | ||
Ø transfer or sell assets; | ||
Ø engage in transactions with our affiliates; | ||
Ø create restrictions on the ability of our subsidiaries to pay dividends or make loans, asset transfers or other payments to us; | ||
Ø issue capital stock of our subsidiaries; | ||
Ø engage in any business, other than our existing businesses and related businesses; | ||
Ø enter into sale and leaseback transactions; | ||
Ø incur layered indebtedness; and | ||
Ø consolidate, merge or transfer all or substantially all of our assets and the assets of our subsidiaries. | ||
These covenants are subject to important exceptions and qualifications, which are described under the caption “Description of Notes—Certain Covenants.” |
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Use of Proceeds | We expect to use the net proceeds from this offering for working capital and other general corporate purposes, including the financing of potential acquisitions or other investments, if and when suitable opportunities arise, and for capital expenditures, in our sole discretion. We may use a portion of the net proceeds from this offering to pay some or all of our remaining obligations relating to our recently completed acquisition of the second territory business from ACON. See “Use of Proceeds.” | |
Book-Entry Form | Initially, the notes will be represented by one or more global notes in definitive, fully registered form deposited with a custodian for, and registered in the name of, a nominee of The Depository Trust Company. | |
No Prior Market | The notes will be new securities for which there is currently no market. Although the underwriters have informed us that they intend to make a market in the notes, they are not obligated to do so and they may discontinue market making activities at any time without notice. Accordingly, we cannot assure you that a liquid market for the notes will develop or be maintained. | |
Listing | We have applied to list the notes on the New York Stock Exchange. |
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For the year ended December 31, | ||||||||||||
Statement of operations data: | 2008 | 2007 | 2006 | |||||||||
(in thousands, except per share data and ratios) | ||||||||||||
Net product sales and services revenue | $ | 1,645,600 | $ | 817,561 | $ | 552,130 | ||||||
License and royalty revenue | 25,826 | 21,979 | 17,324 | |||||||||
Net revenue | 1,671,426 | 839,540 | 569,454 | |||||||||
Cost of net revenue | 810,867 | 445,813 | 340,231 | |||||||||
Gross profit | 860,559 | 393,727 | 229,223 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 111,828 | 69,547 | 48,706 | |||||||||
Purchase of in-process research and development | — | 173,825 | 4,960 | |||||||||
Selling, general and administrative | 684,879 | 326,208 | 165,688 | |||||||||
Loss on dispositions, net | — | — | 3,498 | |||||||||
Operating income (loss) | 63,852 | (175,853 | ) | 6,371 | ||||||||
Interest expense and other expenses, net, including amortization of original issue discounts and write-off of deferred financing costs | (103,356 | ) | (74,251 | ) | (17,822 | ) | ||||||
Loss before (benefit) provision for income taxes | (39,504 | ) | (250,104 | ) | (11,451 | ) | ||||||
(Benefit) provision for income taxes | (16,686 | ) | (979 | ) | 5,727 | |||||||
Equity earnings of unconsolidated entities, net of tax | 1,050 | 4,372 | 336 | |||||||||
Net loss | (21,768 | ) | (244,753 | ) | (16,842 | ) | ||||||
Other financial data(1)(2): | ||||||||||||
Ratio of earnings to fixed charges | 0.7 | x | — | 0.6 | x | |||||||
Ratio of earnings to combined fixed charges and preference dividends | 0.5 | x | — | 0.6 | x | |||||||
(footnotes on following page) |
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December 31, | ||||||||||||
Balance sheet data: | 2008 | 2007 | 2006 | |||||||||
(in thousands) | ||||||||||||
Cash and cash equivalents | $ | 141,324 | $ | 414,732 | $ | 71,104 | ||||||
Working capital | $ | 457,198 | $ | 674,066 | $ | 133,313 | ||||||
Total assets | $ | 5,955,360 | $ | 4,880,759 | $ | 1,085,771 | ||||||
Total debt | $ | 1,520,534 | $ | 1,387,849 | $ | 202,976 | ||||||
Total stockholders’ equity | $ | 3,278,838 | $ | 2,586,667 | $ | 714,138 |
(1) | For the purpose of computing our ratio of earnings to fixed charges, “earnings” consist of pre-tax income before adjustment for income from equity investees plus fixed charges (excluding capitalized interest). “Fixed charges” consist of interest expensed and capitalized, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of the interest within rental expense. This ratio is adjusted to include preference dividends in the ratio of earnings to combined fixed charges and preference dividends. “Preference dividends” equal the amount of pre-tax earnings that is required to pay the dividends on outstanding preference securities. | |
(2) | Due to the net losses for the years ended December 31, 2008, 2007 and 2006, there were insufficient earnings of $38.1 million, $248.9 million and $11.8 million, respectively, to cover fixed charges and $61.4 million, $248.9 million and $11.8 million, respectively, to cover fixed charges and preference dividends. |
Ø | non-cash stock-based compensation; |
Ø | the amortization of inventorywrite-ups related to acquisitions; |
Ø | net realized non-cash foreign exchange losses on the settlement of certain inter-company transactions; and |
Ø | charges for purchased in-process research and development. |
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Twelve months | ||||||||||||
ended | ||||||||||||
Year ended December 31, | March 31, | |||||||||||
2007 | 2008 | 2009 | ||||||||||
(in thousands, except ratios) | ||||||||||||
Net cash provided by operating activities | $ | 88,755 | $ | 147,844 | $ | 170,979 | ||||||
Net cash used in investing activities | $ | (1,786,530 | ) | $ | (713,332 | ) | $ | (519,855 | ) | |||
Net cash provided by financing activities | $ | 2,032,384 | $ | 297,769 | $ | 153,464 | ||||||
Computation of Adjusted EBITDA: | ||||||||||||
Net loss (GAAP) | $ | (244,753 | ) | $ | (21,768 | ) | $ | (11,303 | ) | |||
Income tax benefit | (979 | ) | (16,686 | ) | (12,117 | ) | ||||||
Depreciation and amortization | 92,886 | 266,855 | 286,553 | |||||||||
Interest, net | 71,539 | 94,426 | 90,173 | |||||||||
Non-cash stock-based compensation | 57,463 | 26,405 | 26,724 | |||||||||
Amortization of inventorywrite-up related to acquisitions | 8,227 | 2,021 | 313 | |||||||||
Net realized non-cash foreign exchange loss | 1,999 | 1,691 | — | |||||||||
Charge for purchased in-process research and development | 173,825 | — | — | |||||||||
Adjusted EBITDA(1)(2) | $ | 160,207 | $ | 352,944 | $ | 380,343 | ||||||
(1) | Net loss (GAAP) includes non-interest related restructuring charges of $6.7 million, $43.7 million and $34.7 million for the years ended December 31, 2007 and 2008 and the twelve months ended March 31, 2009, respectively, which have not been added back for purposes of computing Adjusted EBITDA. Net loss (GAAP) for the twelve months ended March 31, 2009 also includes a charge of $4.7 million associated with the expensing of certain acquisition-related costs in connection with the adoption ofSFAS No. 141-R, effective January 1, 2009, which also has not been added back for purposes of computing Adjusted EBITDA. |
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(2) | The information in the foregoing table does not reflect any information for Matria Healthcare, Inc., or Matria, prior to the date of its acquisition on May 9, 2008. Matria is a provider of comprehensive, integrated health management services particularly in the areas of women’s and children’s health, cardiology and oncology. Adjusted EBITDA for Matria for certain periods ending on or before May 8, 2008 is computed as indicated in the following table. For the three months ended March 31, 2008, Matria’s net cash provided by operating activities was $7.3 million, its net cash used in investing activities was $3.4 million and its net cash used in financing activities was $319,000. |
Period from | Period from | |||||||||||
Three months | April 1, 2008 | January 1, 2008 | ||||||||||
ended March 31, | to May 8, | to May 8, | ||||||||||
Matria financial information: | 2008 | 2008 | 2008 | |||||||||
Matria net income from continuing operations (GAAP) | $ | 224 | $ | (22,334 | ) | $ | (22,110 | ) | ||||
Income tax provision | 162 | (10,195 | ) | (10,033 | ) | |||||||
Depreciation and amortization | 5,387 | 2,304 | 7,691 | |||||||||
Interest, net | 4,883 | 15,321 | 20,204 | |||||||||
Non-cash stock-based compensation | 1,839 | 7,749 | 9,588 | |||||||||
Matria Adjusted EBITDA(3) | $ | 12,495 | $ | (7,155 | ) | $ | 5,340 | |||||
(3) | Matria net income from continuing operations (GAAP) includes restructuring charges and expenses related to our acquisition of Matria of $3.5 million and $12.0 million for the three months ended March 31, 2008 and the period from April 1, 2008 to May 8, 2008, respectively, which have not been added back for purposes of computing Adjusted EBITDA for Matria. |
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Ø | make it more difficult to satisfy our obligations under the notes, the senior subordinated convertible notes, our secured credit facilities and our other debt-related instruments; |
Ø | require us to use a large portion of our cash flow from operations to pay principal and interest on our indebtedness, which would reduce the amount of cash available to finance our operations and service obligations, to delay or reduce capital expenditures or the introduction of new productsand/or forego business opportunities, including acquisitions, research and development projects or product design enhancements; |
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Ø | limit our flexibility to adjust to market conditions, leaving us vulnerable in a downturn in general economic conditions or in our business and less able to plan for, or react to, changes in our business and the industries in which we operate; |
Ø | impair our ability to obtain additional financing; |
Ø | place us at a competitive disadvantage compared to our competitors that have less debt; and |
Ø | expose us to fluctuations in the interest rate environment with respect to our indebtedness that bears interest at variable rates. |
Ø | incur additional debt; |
Ø | pay dividends or make distributions or repurchase or redeem our stock or subordinated debt; |
Ø | acquire other businesses; |
Ø | make investments; |
Ø | make loans to or extend credit for the benefit of third parties or their subsidiaries; |
Ø | prepay indebtedness; |
Ø | enter into transactions with affiliates; |
Ø | raise additional capital; |
Ø | make capital or finance lease expenditures; |
Ø | dispose of or encumber assets; and |
Ø | consolidate, merge or sell all or substantially all of our assets. |
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Ø | consolidating manufacturing, research and development operations and health management information technology platforms, where appropriate; |
Ø | integrating newly-acquired businesses or product lines into a uniform financial reporting system; |
Ø | coordinating sales, distribution and marketing functions and strategies, including the integration of our current health management products and services; |
Ø | establishing or expanding manufacturing, sales, distribution and marketing functions in order to accommodate newly-acquired businesses or product lines or rationalizing these functions to take advantage of synergies; |
Ø | preserving the important licensing, research and development, manufacturing and supply, distribution, marketing, customer and other relationships; |
Ø | minimizing the diversion of management’s attention from on-going business concerns; and |
Ø | coordinating geographically separate organizations. |
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Ø | the inability to complete the acquisition or investment; |
Ø | disruption of our on-going businesses and diversion of management attention; |
Ø | difficulties in integrating the acquired entities, products or technologies; |
Ø | difficulties in operating the acquired business profitably; |
Ø | difficulties in transitioning key customer, distributor and supplier relationships; |
Ø | risks associated with entering markets in which we have no, or limited, prior experience; and |
Ø | unanticipated costs. |
Ø | issuances of dilutive equity securities, which may be sold at a discount to market price; |
Ø | use of significant amounts of cash; |
Ø | the incurrence of debt; |
Ø | the assumption of significant liabilities, including litigation; |
Ø | unfavorable financing terms; |
Ø | large one-time expenses; and |
Ø | the creation of intangible assets, including goodwill, the write-down of which may result in significant charges to earnings. |
Ø | difficulties in integrating our corporate culture and business objectives with that of P&G into the joint venture; |
Ø | difficulties or delays in transitioning clinical studies; |
Ø | diversion of our management’s time and attention from other business concerns; |
Ø | higher than anticipated costs of integration at the joint venture; |
Ø | difficulties in retaining key employees who are necessary to manage the joint venture; or |
Ø | difficulties in working with an entity based in Switzerland and thus remote or inconvenient to our Waltham, Massachusetts headquarters. |
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Ø | any of the products or services under development will prove to be effective in clinical trials; |
Ø | any products or services under development will not infringe on intellectual property rights of others; |
Ø | we will be able to obtain, in a timely manner or at all, regulatory approval to market any of our products or services that are in development or contemplated; |
Ø | the products and services we develop can be manufactured or provided at acceptable cost and with appropriate quality; or |
Ø | these products and services, if and when approved, can be successfully marketed. |
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Ø | our ability to differentiate our health management services from those of our competitors; |
Ø | the extent and timing of the acceptance of our services as a replacement for, or supplement to, traditional managed care offerings; |
Ø | the effectiveness of our sales and marketing and engagement efforts with customers and their health plan participants; |
Ø | our ability to sell and implement new and additional services beneficial to health plans and employers and their respective participants or employees; |
Ø | our ability to achieve, measure and effectively communicate cost savings for health plans and employers through the use of our services; and |
Ø | our ability to retain health plan and employee accounts as competition increases. |
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Ø | increased costs or reduced revenue as a result of movements in foreign currency exchange rates; |
Ø | decreased liquidity resulting from longer accounts receivable collection cycles typical of foreign countries; |
Ø | lower productivity resulting from difficulties managing sales, support and research and development operations across many countries; |
Ø | lost revenues resulting from difficulties associated with enforcing agreements and collecting receivables through foreign legal systems; |
Ø | lost revenues resulting from the imposition by foreign governments of trade protection measures; |
Ø | higher cost of sales resulting from import or export licensing requirements; |
Ø | lost revenues or other adverse effects as a result of economic or political instability in or affecting foreign countries in which we sell our products or operate; and |
Ø | adverse effects resulting from changes in foreign regulatory or other laws affecting the sales of our products or our foreign operations. |
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Ø | develop technologies and products that are more effective than our products or that render our technologies or products obsolete or noncompetitive; |
Ø | obtain patent protection or other intellectual property rights that would prevent us from developing potential products; or |
Ø | obtain regulatory approval for the commercialization of our products more rapidly or effectively than we do. |
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Ø | the pending patent applications we have filed, or to which we have exclusive rights, may not result in issued patents or may take longer than we expect to result in issued patents; |
Ø | the claims of any patents which are issued may not provide meaningful protection; |
Ø | we may not be able to develop additional proprietary technologies that are patentable; |
Ø | the patents licensed or issued to us or our customers may not provide a competitive advantage; |
Ø | other parties may challenge patents or patent applications licensed or issued to us or our customers; |
Ø | patents issued to other companies may harm our ability to do business; and |
Ø | other companies may design around technologies we have patented, licensed or developed. |
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Ø | assert claims of infringement; |
Ø | enforce our patents; |
Ø | protect our trade secrets or know-how; or |
Ø | determine the enforceability, scope and validity of the proprietary rights of others. |
Ø | the timing of new product announcements and introductions by us and our competitors; |
Ø | market acceptance of new or enhanced versions of our products; |
Ø | the extent to which our current and future products rely on rights belonging to third parties; |
Ø | changes in manufacturing costs or other expenses; |
Ø | competitive pricing pressures; |
Ø | changes in healthcare reimbursement policies and amounts; |
Ø | regulatory changes; |
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Ø | the gain or loss of significant distribution outlets or customers; |
Ø | increased research and development expenses; |
Ø | liabilities and costs associated with litigation; |
Ø | length of sales cycle and implementation process for new health management customers; |
Ø | the costs and timing of any future acquisitions; |
Ø | general economic conditions; or |
Ø | general stock market conditions or other economic or external factors. |
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Ø | a default under our secured credit facilities, which prohibit the purchase of the notes by us in the event of certain changes of control, unless and until our indebtedness under the secured credit facilities is repaid in full; and |
Ø | a fundamental change under the indenture governing our senior subordinated convertible notes, which would give the holders of the senior subordinated convertible notes the right to require us to purchase all or any part of such notes at a price equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase. |
Ø | it was insolvent or rendered insolvent by reason of issuing the guarantee; |
Ø | it was engaged, or about to engage, in a business or transaction for which its remaining unencumbered assets constituted unreasonably small capital to carry on its business; |
Ø | it intended to incur, or believed that it would incur, debts beyond its ability to pay as they mature; or |
Ø | it was a defendant in an action for money damages, or had a judgment for money damages docketed against it if, in either case, after final judgment, the judgment is unsatisfied, |
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Ø | the original issue price for the notes; and |
Ø | that portion of the original issue discount that does not constitute “unmatured interest” for purposes of the U.S. Bankruptcy Code. |
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Ø | our inability to predict the effects of the current national and worldwide financial and economic crisis, including disruptions in the capital and credit markets; |
Ø | our inability to predict the effects of anticipated United States national healthcare reform legislation and similar initiatives in other countries; |
Ø | economic factors, including inflation and fluctuations in interest rates and foreign currency exchange rates, and the potential effect of such fluctuations on revenues, expenses and resulting margins; |
Ø | competitive factors, including technological advances achieved and patents attained by competitors and general competition; |
Ø | domestic and foreign healthcare changes resulting in pricing pressures, including the continued consolidation among healthcare providers, trends toward managed care and healthcare cost containment and government laws and regulations relating to sales and promotion, reimbursement and pricing generally; |
Ø | government laws and regulations affecting domestic and foreign operations, including those relating to trade, monetary and fiscal policies, taxes, price controls, regulatory approval of new products, licensing and environmental protection; |
Ø | manufacturing interruptions, delays or capacity constraints or lack of availability of alternative sources for components for our products, including our ability to successfully maintain relationships with suppliers, or to put in place alternative suppliers on terms that are acceptable to us; |
Ø | difficulties inherent in product development, including the potential inability to successfully continue technological innovation, complete clinical trials, obtain regulatory approvals or clearances in the United States and abroad and the possibility of encountering infringement claims by competitors with respect to patent or other intellectual property rights which can preclude or delay commercialization of a product; |
Ø | significant litigation adverse to us including product liability claims, patent infringement claims and antitrust claims; |
Ø | product efficacy or safety concerns resulting in product recalls or declining sales; |
Ø | the impact of business combinations and organizational restructurings consistent with evolving business strategies; |
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Ø | our ability to satisfy the financial covenants and other conditions contained in the agreements governing our indebtedness; |
Ø | our ability to effectively manage the integration of our acquisitions into our operations; |
Ø | our ability to obtain required financing on terms that are acceptable to us; and |
Ø | the issuance of new or revised accounting standards by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, the Public Company Accounting Oversight Board or the SEC. |
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Ø | on an actual basis; and |
Ø | on an as-adjusted basis to give effect to the receipt of the estimated net proceeds of this offering, after deducting the estimated underwriting discount and our estimated offering expenses, and assuming no original issue discount on the notes. |
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December 31, 2008 | ||||||||
Actual | As adjusted | |||||||
(In thousands) | ||||||||
Cash and cash equivalents | $ | 141,324 | $ | 336,324 | ||||
Debt: | ||||||||
Revolving credit facility(1) | $ | 142,000 | $ | 142,000 | ||||
First lien term loan | 960,750 | 960,750 | ||||||
Second lien term loan | 250,000 | 250,000 | ||||||
Capital lease obligations | 919 | 919 | ||||||
Other secured indebtedness | 16,865 | 16,865 | ||||||
Total secured debt | 1,370,534 | 1,370,534 | ||||||
3% convertible senior subordinated notes | 150,000 | 150,000 | ||||||
Notes offered hereby | — | 200,000 | ||||||
�� | ||||||||
Total debt | 1,520,534 | 1,720,534 | ||||||
Stockholders’ equity: | ||||||||
Series B preferred stock, $0.001 par value (liquidation preference, $751,479), 2,300 shares authorized, 1,879 shares issued and outstanding | 671,501 | 671,501 | ||||||
Common stock, $0.001 par value, 150,000 shares authorized, 78,431 shares issued and outstanding | 78 | 78 | ||||||
Additional paid-in capital | 3,029,694 | 3,029,694 | ||||||
Accumulated deficit | (393,590 | ) | (393,590 | ) | ||||
Accumulated other comprehensive (loss) income | (28,845 | ) | (28,845 | ) | ||||
Total stockholders’ equity | 3,278,838 | 3,278,838 | ||||||
Total capitalization | $ | 4,799,372 | $ | 4,999,372 | ||||
(1) | Our revolving credit facility provides for commitments of up to $150.0 million. As of December 31, 2008, we had outstanding borrowings under the revolving credit facility in the aggregate principal amount of $142.0 million. |
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For the year ended December 31, | ||||||||||||||||||||
Statement of Operations Data: | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Net product sales | $ | 1,240,138 | $ | 800,915 | $ | 552,130 | $ | 406,457 | $ | 365,432 | ||||||||||
Services revenue | 405,462 | 16,646 | — | — | — | |||||||||||||||
Net product sales and services revenue | 1,645,600 | 817,561 | 552,130 | 406,457 | 365,432 | |||||||||||||||
License and royalty revenue | 25,826 | 21,979 | 17,324 | 15,393 | 8,559 | |||||||||||||||
Net revenue | 1,671,426 | 839,540 | 569,454 | 421,850 | 373,991 | |||||||||||||||
Cost of net product sales | 624,654 | 431,403 | 334,799 | 264,999 | 223,669 | |||||||||||||||
Cost of services revenue | 177,098 | 5,261 | — | — | — | |||||||||||||||
Cost of license and royalty revenue | 9,115 | 9,149 | 5,432 | 4,539 | 3,318 | |||||||||||||||
Cost of net revenue | 810,867 | 445,813 | 340,231 | 269,538 | 226,987 | |||||||||||||||
Gross profit | 860,559 | 393,727 | 229,223 | 152,312 | 147,004 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 111,828 | 69,547 | 48,706 | 30,992 | 31,954 | |||||||||||||||
Purchase of in-process research and development | — | 173,825 | 4,960 | — | — | |||||||||||||||
Sales and marketing | 386,284 | 167,770 | 94,445 | 72,103 | 57,957 | |||||||||||||||
General and administrative | 298,595 | 158,438 | 71,243 | 59,990 | 52,707 | |||||||||||||||
Loss on dispositions, net | — | — | 3,498 | — | — | |||||||||||||||
Operating income (loss) | 63,852 | (175,853 | ) | 6,371 | (10,773 | ) | 4,386 | |||||||||||||
Interest expense and other expenses, net, including amortization of original issue discounts and write-off of deferred financing costs | (103,356 | ) | (74,251 | ) | (17,822 | ) | (1,617 | ) | (18,707 | ) | ||||||||||
Loss before (benefit) provision for income taxes | (39,504 | ) | (250,104 | ) | (11,451 | ) | (12,390 | ) | (14,321 | ) | ||||||||||
(Benefit) provision for income taxes | (16,686 | ) | (979 | ) | 5,727 | 6,819 | 2,275 | |||||||||||||
Equity earnings of unconsolidated entities, net of tax | 1,050 | 4,372 | 336 | — | — | |||||||||||||||
(footnotes on following page) |
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For the year ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
(in thousands, except per share data and ratios) | ||||||||||||||||||||
Net loss | (21,768 | ) | (244,753 | ) | (16,842 | ) | (19,209 | ) | (16,596 | ) | ||||||||||
Preferred stock dividends | (13,989 | ) | — | — | — | (749 | ) | |||||||||||||
Net loss available to common stockholders(1) | $ | (35,757 | ) | $ | (244,753 | ) | $ | (16,842 | ) | $ | (19,209 | ) | $ | (17,345 | ) | |||||
Net loss per common share—basic and diluted(1) | $ | (0.46 | ) | $ | (4.75 | ) | $ | (0.49 | ) | $ | (0.79 | ) | $ | (0.87 | ) | |||||
Other financial data: | ||||||||||||||||||||
Ratio of earnings to fixed charges(2)(3) | 0.7 | x | — | 0.6 | x | 0.5 | x | 0.4 | x | |||||||||||
Ratio of earnings to combined fixed charges and preference dividends(2)(3) | 0.5 | x | — | 0.6 | x | 0.5 | x | 0.4 | x |
December 31, | ||||||||||||||||||||
Balance Sheet Data: | 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash and cash equivalents | $ | 141,324 | $ | 414,732 | $ | 71,104 | $ | 34,270 | $ | 16,756 | ||||||||||
Working capital | $ | 457,198 | $ | 674,066 | $ | 133,313 | $ | 84,523 | $ | 62,615 | ||||||||||
Total assets | $ | 5,955,360 | $ | 4,880,759 | $ | 1,085,771 | $ | 791,166 | $ | 568,269 | ||||||||||
Total debt | $ | 1,520,534 | $ | 1,387,849 | $ | 202,976 | $ | 262,504 | $ | 191,224 | ||||||||||
Total stockholders’ equity | $ | 3,278,838 | $ | 2,586,667 | $ | 714,138 | $ | 397,308 | $ | 271,416 |
(1) | Net loss available to common stockholders and basic and diluted net loss per common share are computed as described in Notes 2(n) and 15 of our consolidated financial statements included elsewhere in this prospectus supplement. | |
(2) | For the purpose of computing our ratio of earnings to fixed charges, “earnings” consist of pre-tax income before adjustment for income from equity investees plus fixed charges (excluding capitalized interest). “Fixed charges” consist of interest expensed and capitalized, amortized premiums, discounts and capitalized expenses related to indebtedness and an estimate of the interest within rental expense. This ratio is adjusted to include preference dividends in the ratio of earnings to combined fixed charges and preference dividends. “Preference dividends” equal the amount of pre-tax earnings that is required to pay the dividends on outstanding preference securities. | |
(3) | Due to the net losses for the years ended December 31, 2008, 2007, 2006, 2005 and 2004, there were insufficient earnings of $38.1 million, $248.9 million, $11.8 million, $12.4 million and $14.3 million, respectively, to cover fixed charges, and $61.4 million, $248.9 million, $11.8 million, $12.4 million and $15.6 million, respectively, to cover fixed charges and preference dividends. |
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% increase | ||||||||||||
2008 | 2007 | (decrease) | ||||||||||
Professional diagnostics | $ | 1,000,190 | $ | 565,265 | 77 | % | ||||||
Health management | 18,632 | 9,210 | 102 | % | ||||||||
Consumer diagnostics | 132,443 | 153,616 | (14 | )% | ||||||||
Vitamins and nutritional supplements | 88,873 | 72,824 | 22 | % | ||||||||
Net product sales | $ | 1,240,138 | $ | 800,915 | 55 | % | ||||||
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2008 | 2007 | |||||||
Professional diagnostics | $ | 29,338 | $ | — | ||||
Health management | 373,767 | 14,164 | ||||||
Consumer diagnostics | 2,357 | 2,482 | ||||||
Total services revenue | $ | 405,462 | $ | 16,646 | ||||
% increase | ||||||||||||
2008 | 2007 | (decrease) | ||||||||||
United States | $ | 1,186,583 | $ | 511,941 | 132 | % | ||||||
Europe | 283,552 | 196,379 | 44 | % | ||||||||
Other | 175,465 | 109,241 | 61 | % | ||||||||
Net product sales and services revenue | $ | 1,645,600 | $ | 817,561 | 101 | % | ||||||
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% increase | ||||||||||||
2008 | 2007 | (decrease) | ||||||||||
Professional diagnostics | $ | 581,806 | $ | 306,710 | 90 | % | ||||||
Health management | 2,729 | 3,076 | (11 | )% | ||||||||
Consumer diagnostics | 23,413 | 52,760 | (56 | )% | ||||||||
Vitamins and nutritional supplements | 7,536 | 6,966 | 8 | % | ||||||||
Gross profit from net product sales | $ | 615,484 | $ | 369,512 | 67 | % | ||||||
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2008 | 2007 | |||||||
Professional diagnostics | $ | 14,380 | $ | — | ||||
Health management | 211,627 | 8,903 | ||||||
Consumer diagnostics | 2,357 | 2,482 | ||||||
Gross profit from services revenue | $ | 228,364 | $ | 11,385 | ||||
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Discount rate | ||||||||||||||||||||||
used in | ||||||||||||||||||||||
Company/ | estimating | Year of | Estimated | |||||||||||||||||||
year assets | Purchase | Programs | cash | expected | cost to | |||||||||||||||||
acquired | price | IPR&D(1) | acquired | flows(1) | launch | complete | ||||||||||||||||
Diamics/2007 | $ | 4,000 | $ | 682 | PapMap (Pap Screening Methods) | 63 | % | 2009-2010 | ||||||||||||||
1,049 | C-Map (Automated Pap Screening) | 63 | % | 2009-2010 | ||||||||||||||||||
3,094 | POC (Point of Care Systems) | 63 | % | 2009-2010 | ||||||||||||||||||
$ | 4,825 | $ | 7,476 | |||||||||||||||||||
Biosite/2007 | $ | 1,800,000 | $ | 13,000 | Triage Sepsis Panel | 15 | % | 2008-2010 | ||||||||||||||
156,000 | Triage NGAL | 15 | % | 2008-2010 | ||||||||||||||||||
$ | 169,000 | $ | 6,000 | |||||||||||||||||||
(1) | Management assumes responsibility for determining the valuation of the acquired IPR&D projects. The fair value assigned to IPR&D for each acquisition is estimated by discounting, to present value, the cash flows expected once the acquired projects have reached technological feasibility. The cash flows are probability adjusted to reflect the risks of advancement through the product approval process. In estimating the future cash flows, we also considered the tangible and intangible assets required for successful exploitation of the technology resulting from the purchased IPR&D projects and adjusted future cash flows for a charge reflecting the contribution to value of these assets. |
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2008 | 2007 | Change | ||||||||||
Interest income | $ | 6,718 | $ | 11,486 | $ | (4,768 | ) | |||||
Foreign exchange gains (losses), net | (897 | ) | (1,609 | ) | 712 | |||||||
Other | (8,033 | ) | (1,103 | ) | (6,930 | ) | ||||||
Other income (expense), net | $ | (2,212 | ) | $ | 8,774 | $ | (10,986 | ) | ||||
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% increase | ||||||||||||
2007 | 2006 | (decrease) | ||||||||||
Professional diagnostics | $ | 565,265 | $ | 298,472 | 89 | % | ||||||
Health management | 9,210 | — | — | % | ||||||||
Consumer diagnostics | 153,616 | 171,607 | (11 | )% | ||||||||
Vitamins and nutritional supplements | 72,824 | 82,051 | (11 | )% | ||||||||
Net product sales | $ | 800,915 | $ | 552,130 | 45 | % | ||||||
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% Increase | ||||||||||||
2007 | 2006 | (decrease) | ||||||||||
United States | $ | 511,941 | $ | 323,046 | 58 | % | ||||||
Europe | 196,379 | 134,528 | 46 | % | ||||||||
Other | 109,241 | 94,556 | 16 | % | ||||||||
Net product sales and services revenue | $ | 817,561 | $ | 552,130 | 48 | % | ||||||
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% Increase | ||||||||||||
2007 | 2006 | (decrease) | ||||||||||
Professional diagnostics | $ | 306,710 | $ | 129,636 | 137 | % | ||||||
Health management | 3,076 | — | — | % | ||||||||
Consumer diagnostics | 52,760 | 82,658 | (36 | )% | ||||||||
Vitamins and nutritional supplements | 6,966 | 5,037 | 38 | % | ||||||||
Gross profit from net product sales | $ | 369,512 | $ | 217,331 | 70 | % | ||||||
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Discount rate | ||||||||||||||||||||||
used in | ||||||||||||||||||||||
Company/ | estimating | Year of | Estimated | |||||||||||||||||||
year assets | Purchase | cash | expected | cost to | ||||||||||||||||||
acquired | price | IPR&D(1) | Programs acquired | flows(1) | launch | complete | ||||||||||||||||
Diamics/2007 | $ | 4,000 | $ | 682 | PapMap (Pap Screening Methods) | 63 | % | 2009-2010 | ||||||||||||||
1,049 | C-Map (Automated Pap Screening) | 63 | % | 2009-2010 | ||||||||||||||||||
3,094 | POC (Point of Care Systems) | 63 | % | 2009-2010 | ||||||||||||||||||
$ | 4,825 | $ | 7,476 | |||||||||||||||||||
Biosite/2007 | $ | 1,800,000 | $ | 13,000 | Triage Sepsis Panel | 15 | % | 2008-2010 | ||||||||||||||
156,000 | Triage NGAL | 15 | % | 2008-2010 | ||||||||||||||||||
$ | 169,000 | $ | 6,000 | |||||||||||||||||||
Clondiag/2006 | $ | 24,000 | $ | 1,800 | CHF (Congestive Heart Failure) | 37 | % | 2008-2009 | ||||||||||||||
2,500 | ACS (Acute Coronary Syndrome) | 37 | % | 2009-2010 | ||||||||||||||||||
660 | HIV (Human Immuno-deficiency Virus) | 37 | % | 2008-2009 | ||||||||||||||||||
$ | 4,960 | $ | 9,500 | |||||||||||||||||||
(1) | Management assumes responsibility for determining the valuation of the acquired IPR&D projects. The fair value assigned to IPR&D for each acquisition is estimated by discounting, to present value, the cash flows expected once the acquired projects have reached technological feasibility. The cash flows are probability adjusted to reflect the risks of advancement through the product approval process. In estimating the future cash flows, we also considered the tangible and intangible assets required for successful exploitation of the technology resulting from the purchased IPR&D projects and adjusted future cash flows for a charge reflecting the contribution to value of these assets. |
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2007 | 2006 | Change | ||||||||||
Interest income | $ | 11,486 | $ | 1,693 | $ | 9,793 | ||||||
Foreign exchange gains (losses), net | (1,609 | ) | 2,643 | (4,252 | ) | |||||||
Other | (1,103 | ) | 4,412 | (5,515 | ) | |||||||
Other income (expense), net | $ | 8,774 | $ | 8,748 | $ | 26 | ||||||
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Payments due by period | ||||||||||||||||||||
Contractual obligations | Total | 2009 | 2010-2011 | 2012-2013 | Thereafter | |||||||||||||||
Long-term debt obligations(1) | $ | 1,519,615 | $ | 19,058 | $ | 26,530 | $ | 20,027 | $ | 1,454,000 | ||||||||||
Capital lease obligations(2) | 973 | 495 | 446 | 32 | — | |||||||||||||||
Operating lease obligations(3) | 94,382 | 25,377 | 34,539 | 20,996 | 13,470 | |||||||||||||||
Long-term and other liabilities(4) | 3,403 | 469 | 938 | 938 | 1,058 | |||||||||||||||
Minimum royalty obligations | 220 | 220 | — | — | — | |||||||||||||||
Acquisition-related obligations(5) | 6,473 | 5,428 | 1,045 | — | — | |||||||||||||||
Purchase obligations—capital expenditure | 17,492 | 17,492 | — | — | — | |||||||||||||||
Purchase obligations—other(6) | 69,763 | 68,996 | 767 | — | — | |||||||||||||||
Interest on debt(7) | 33,177 | 4,500 | 9,000 | 9,000 | 10,677 | |||||||||||||||
Total | $ | 1,745,498 | $ | 142,035 | $ | 73,265 | $ | 50,993 | $ | 1,479,205 | ||||||||||
(1) | See description of various financing arrangements in this section and Note 6 of our consolidated financial statements included elsewhere in this prospectus supplement. | |
(2) | See Note 8 of our consolidated financial statements included elsewhere in this prospectus supplement. | |
(3) | See Note 11(a) of our consolidated financial statements included elsewhere in this prospectus supplement. | |
(4) | Included in long-term and other liabilities are $0.2 million in technology license payment obligations and $3.4 million in pension obligations. Our liability associated with Financial Accounting Standards Board, or FASB, Interpretation No. 48, or FIN 48, Accounting for Uncertainty in Income Taxes—an interpretation of FASB Statement 109, has not been included in the table above, as we estimate payments annually. | |
(5) | Amounts represent obligations associated with our acquisitions which are discussed in more detail below. | |
(6) | Other purchase obligations relate to inventory purchases and other operating expense commitments. | |
(7) | Amounts are based on $150.0 million senior subordinated notes. Amounts exclude interest on all other debt due to variable interest rates. See Note 6 of our consolidated financial statements included elsewhere in this prospectus supplement. |
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Ø | Triage BNP Test. An immunoassay that measures B-type Natriuretic Peptide, or BNP, in whole blood or plasma, used as an aid in the diagnosis and assessment of severity of heart failure. The test is also used for the risk stratification of patients with acute coronary syndrome and heart failure. We also offer a version of the Triage BNP Test for use on Beckman Coulter lab analyzers. |
Ø | Triage Cardiac Panel. An immunoassay for the quantitative determination of CK-MB, myoglobin and troponin I in whole blood or plasma, used as an aid in the diagnosis of acute myocardial infarction. |
Ø | Triage CardioProfilER Panel. An immunoassay for use as an aid in the diagnosis of acute myocardial infarction, the diagnosis and assessment of severity of congestive heart failure, risk stratification of patients with acute coronary syndromes and risk stratification of patients with heart failure. This panel combines troponin I, CK-MB, myoglobin and BNP to provide rapid, accurate results in whole blood and plasma. |
Ø | Triage Profiler Shortness of Breath (S.O.B.) Panel. An immunoassay for use as an aid in the diagnosis of myocardial infarction, the diagnosis and assessment of severity of congestive heart failure, the assessment and evaluation of patients suspected of having disseminated intravascular coagulation and thromboembolic events, including pulmonary embolism and deep vein thrombosis, and the risk stratification of patients with acute coronary syndromes. This panel combines troponin I, CK-MB, myoglobin, BNP and d-dimer to provide rapid, accurate results in whole blood and plasma. |
Ø | Triage D-Dimer Test. An immunoassay for use as an aid in the assessment and evaluation of patients suspected of having disseminated intravascular coagulation or thromboembolic events, including pulmonary embolism and deep vein thrombosis. |
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Ø | Embrace the entire lifespan, from pre-cradle to end-of-life, and targeted health states, from wellness to prevention to complex care; |
Ø | Target high-cost chronic conditions with programs designed to improve outcomes and reduce expenditures; |
Ø | Provide health coaches who engage and motivate participants during teachable moments; |
Ø | Help participants improve their health by supporting their individual health goals; |
Ø | Bring greater clarity to healthcare with empowering technologies that lead to better outcomes; |
Ø | Offer 2,200+ healthcare professionals who share a passion for excellence in everything we do. |
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Name | Age | Position | ||||
Ron Zwanziger | 55 | Chairman of the Board, Chief Executive Officer and President | ||||
David Scott, Ph.D. | 52 | Director, Chief Scientific Officer | ||||
Jerry McAleer, Ph.D. | 53 | Director, Vice President, Research and Development and Vice President, Cardiology | ||||
Hilde Eylenbosch, M.D. | 45 | Vice President, Marketing | ||||
David Toohey | 52 | President, Europe/Middle East | ||||
John Yonkin | 49 | President, Inverness Medical Innovations North America, Inc., and President, Nutritionals | ||||
John Bridgen, Ph.D. | 62 | Vice President, Strategic Business Development | ||||
David Teitel | 45 | Chief Financial Officer | ||||
Jon Russell | 44 | Vice President, Finance | ||||
Michael K. Bresson | 51 | Vice President, Mergers & Acquisitions | ||||
Paul T. Hempel | 60 | Senior Vice President, Leadership Development and Special Counsel and Secretary | ||||
Ellen Chiniara | 50 | General Counsel and Assistant Secretary | ||||
Ron Geraty, M.D. | 62 | Chief Executive Officer, Alere LLC | ||||
Emanuel Hart | 59 | Vice President, International Business, LAmARCIS | ||||
David Walton | 55 | Vice President, Asia Pacific | ||||
Eli Y. Adashi, M.D. | 64 | Director | ||||
Carol R. Goldberg | 78 | Director | ||||
Robert P. Khederian | 57 | Director | ||||
John F. Levy | 62 | Director | ||||
John A. Quelch | 57 | Director | ||||
James Roosevelt, Jr. | 63 | Director | ||||
Peter Townsend | �� | 74 | Director |
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Ø | general unsecured senior subordinated obligations of the Issuer; |
Ø | junior in right of payment to all existing and future senior indebtedness of the Issuer, including indebtedness arising under the Credit Facilities; see “—Subordination of the Notes” below; |
Ø | pari passuin right of payment with all existing and future senior subordinated indebtedness of the Issuer, including indebtedness arising under the Issuer’s outstanding 2007 Convertible Notes and any indebtedness of the Issuer that rankspari passuin right of payment with the 2007 Convertible Notes; |
Ø | senior in right of payment to any existing or future indebtedness of the Issuer that is, by its terms, subordinated in right of payment to the Notes; |
Ø | unconditionally guaranteed by the Guarantors; see “—Guarantees of the Notes” below; |
Ø | effectively subordinated to all existing and future secured indebtedness of the Issuer, including indebtedness arising under the secured Credit Facilities, to the extent of the assets securing such indebtedness; and |
Ø | structurally subordinated to all existing and future obligations of each of the Issuer’s Subsidiaries that is not a Guarantor. |
Ø | a general unsecured senior subordinated obligation of the Guarantor thereunder; |
Ø | junior in right of payment to all existing and future senior indebtedness of that Guarantor, including indebtedness arising under the Credit Facilities; see “—Subordination of the Guarantees of the Notes” below; |
Ø | pari passuin right of payment with any existing or future senior subordinated indebtedness of that Guarantor; |
Ø | senior in right of payment to any existing or future indebtedness of that Guarantor that is, by its terms, subordinated in right of payment to the Guarantee of that Guarantor; |
Ø | effectively subordinated to all existing and future secured indebtedness of that Guarantor, including indebtedness arising under the secured Credit Facilities, to the extent of the assets securing such obligations; and |
Ø | structurally subordinated to all existing and future obligations of each Subsidiary of that Guarantor that is not also a Guarantor. |
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Ø | in any total or partial liquidation, dissolution orwinding-up of the Issuer; |
Ø | in a bankruptcy, reorganization, insolvency, receivership or other similar proceeding relating to the Issuer or its assets (whether voluntary or involuntary); |
Ø | in any assignment for the benefit of creditors; or |
Ø | in any marshalling of the Issuer’s assets and liabilities. |
Ø | any payment default on any Designated Senior Debt occurs and is continuing; or |
Ø | any other event of default occurs and is continuing on any Designated Senior Debt that permits the holders of such Designated Senior Debt to accelerate its maturity (a “non-payment default”) and the Trustee receives a notice of such default (a “Payment Blockage Notice”) from the Representative of such Designated Senior Debt (including, as applicable, the administrative agent under any Credit Facility (including any Credit Agreement)). |
Ø | in the case of a payment default, upon the date on which all payment defaults are cured or waived (so long as no other event of default exists); and |
Ø | in case of a non-payment default, on the earliest of (1) the date on which all such non-payment defaults are cured or waived, (2) 179 days after the date on which the applicable Payment Blockage Notice is received or (3) the date on which the Trustee receives notice from the Representative for such Designated Senior Debt rescinding the Payment Blockage Notice, unless in each case the maturity of any Designated Senior Debt has been accelerated. |
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Ø | an Unrestricted Subsidiary will not be subject to many of the restrictive covenants in the Indenture; |
Ø | a Subsidiary that has previously been a Guarantor and that is designated an Unrestricted Subsidiary will be released from its Guarantee; and |
Ø | the assets, income, cash flow and other financial results of an Unrestricted Subsidiary will not be consolidated with those of the Issuer for purposes of calculating compliance with the restrictive covenants |
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Optional | ||||
Redemption | ||||
Year | Price | |||
2013 | % | |||
2014 | % | |||
2015 and thereafter | % |
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Table of Contents
S-141
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S-142
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Principal | ||||
amount | ||||
Underwriters | of notes | |||
UBS Securities LLC | $ | |||
Goldman, Sachs & Co. | ||||
Banc of America Securities LLC | ||||
Canaccord Adams Inc. | ||||
Leerink Swann LLC | ||||
Stifel, Nicolaus & Company, Incorporated | ||||
Total | $ | 200,000,000 | ||
Public offering | Underwriting | Proceeds, before | ||||||||||
price(1) | discount | expense, to us | ||||||||||
Per note | % | % | % | |||||||||
Total | $ | $ | $ |
(1) | Plus accrued interest from , 2009 to the date of delivery. |
S-143
Table of Contents
Ø | to legal entities which are authorized or regulated to operate in the financial markets or, if not so authorized or regulated, whose corporate purpose is solely to invest in securities; |
Ø | to any legal entity which has two or more of (1) an average of at least 250 employees during the last financial year; (2) a total balance sheet of more than €43,000,000 and (3) an annual net turnover of more than €50,000,000, as shown in its last annual or consolidated accounts; |
Ø | to fewer than 100 natural or legal persons (other than qualified investors as defined in the Prospectus Directive); or |
Ø | in any other circumstances which do not require the publication by the issuer of a prospectus pursuant to Article 3 of the Prospectus Directive. |
Ø | it has only communicated or caused to be communicated and will only communicate or cause to be communicated an invitation or inducement to engage in investment activity (within the meaning of Section 21 of the Financial Services and Markets Act, or FSMA) received by it in connection with the issue or sale of the notes in circumstances in which Section 21(1) of the FSMA does not apply to the issuer; and |
Ø | it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the notes in, from or otherwise involving the United Kingdom. |
S-144
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S-145
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S-146
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S-147
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Ø | an individual citizen or resident of the United States; |
Ø | a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; |
Ø | an estate the income of which is includible in gross income for U.S. federal income tax purposes, regardless of its source; or |
Ø | a trust if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or that has a valid election in effect under applicable Treasury regulations to be treated as a U.S. person. |
S-148
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S-149
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Ø | thenon-U.S. holder is a nonresident alien individual who is present in the United States for a period or periods aggregating 183 or more days in the taxable year of the disposition and certain other conditions are met, in which case thenon-U.S. Holder will be subject to a flat 30% U.S. federal income tax on any gain recognized (except to the extent otherwise provided by an applicable income tax treaty), which may be offset by certain U.S. losses; or |
Ø | such gain is effectively connected with the conduct of a U.S. trade or business by anon-U.S. holder and, to the extent an applicable treaty so provides, is attributable to a permanent establishment (or, in the case of an individual, a fixed base) in the United States, in which case such gain will be taxable in the same manner as effectively connected interest as discussed above. |
S-150
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S-151
Page | ||
SF-2 | ||
SF-3 | ||
SF-4 | ||
SF-5 | ||
SF-8 | ||
SF-9 |
SF-1
Table of Contents
(Except for Note 26, which is dated April 10, 2009)
SF-2
Table of Contents
2008 | 2007 | 2006 | ||||||||||
(in thousands, except per share amounts) | ||||||||||||
Net product sales | $ | 1,240,138 | $ | 800,915 | $ | 552,130 | ||||||
Services revenue | 405,462 | 16,646 | — | |||||||||
Net product sales and services revenue | 1,645,600 | 817,561 | 552,130 | |||||||||
License and royalty revenue | 25,826 | 21,979 | 17,324 | |||||||||
Net revenue | 1,671,426 | 839,540 | 569,454 | |||||||||
Cost of net product sales | 624,654 | 431,403 | 334,799 | |||||||||
Cost of services revenue | 177,098 | 5,261 | — | |||||||||
Cost of license and royalty revenue | 9,115 | 9,149 | 5,432 | |||||||||
Cost of net revenue | 810,867 | 445,813 | 340,231 | |||||||||
Gross profit | 860,559 | 393,727 | 229,223 | |||||||||
Operating expenses: | ||||||||||||
Research and development | 111,828 | 69,547 | 48,706 | |||||||||
Purchase of in-process research and development | — | 173,825 | 4,960 | |||||||||
Sales and marketing | 386,284 | 167,770 | 94,445 | |||||||||
General and administrative | 298,595 | 158,438 | 71,243 | |||||||||
Loss on dispositions, net | — | — | 3,498 | |||||||||
Operating income (loss) | 63,852 | (175,853 | ) | 6,371 | ||||||||
Interest expense, including amortization of original issue discounts and write-off of deferred financing costs | (101,144 | ) | (83,025 | ) | (26,570 | ) | ||||||
Other (expense) income, net | (2,212 | ) | 8,774 | 8,748 | ||||||||
Loss before (benefit) provision for income taxes | (39,504 | ) | (250,104 | ) | (11,451 | ) | ||||||
(Benefit) provision for income taxes | (16,686 | ) | (979 | ) | 5,727 | |||||||
Equity earnings of unconsolidated entities, net of tax | 1,050 | 4,372 | 336 | |||||||||
Net loss | (21,768 | ) | (244,753 | ) | (16,842 | ) | ||||||
Preferred stock dividends | (13,989 | ) | — | — | ||||||||
Net loss available to common stockholders | $ | (35,757 | ) | $ | (244,753 | ) | $ | (16,842 | ) | |||
Net loss per common share—basic and diluted | $ | (0.46 | ) | $ | (4.75 | ) | $ | (0.49 | ) | |||
Weighted average shares—basic and diluted | 77,778 | 51,510 | 34,109 | |||||||||
SF-3
Table of Contents
December 31, | ||||||||
2008 | 2007 | |||||||
(in thousands, except par value amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 141,324 | $ | 414,732 | ||||
Restricted cash | 2,748 | 141,869 | ||||||
Marketable securities | 1,763 | 2,551 | ||||||
Accounts receivable, net of allowances of $12,835 and $12,167 at December 31, 2008 and 2007, respectively | 280,608 | 163,380 | ||||||
Inventories, net | 199,131 | 148,231 | ||||||
Deferred tax assets | 104,311 | 18,170 | ||||||
Income tax receivable | 6,406 | 5,256 | ||||||
Receivable from joint venture, net | 12,018 | — | ||||||
Prepaid expenses and other current assets | 74,234 | 58,785 | ||||||
Total current assets | 822,543 | 952,974 | ||||||
Property, plant and equipment, net | 284,483 | 267,880 | ||||||
Goodwill | 3,046,083 | 2,148,850 | ||||||
Other intangible assets with indefinite lives | 42,984 | 43,097 | ||||||
Core technology and patents, net | 459,307 | 432,583 | ||||||
Other intangible assets, net | 1,169,330 | 869,644 | ||||||
Deferred financing costs, net, and other non-current assets | 46,884 | 51,747 | ||||||
Investments in unconsolidated entities | 68,832 | 77,753 | ||||||
Marketable securities | 591 | 20,432 | ||||||
Deferred tax assets | 14,323 | 15,799 | ||||||
Total assets | $ | 5,955,360 | $ | 4,880,759 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Current portion of long-term debt | $ | 19,058 | $ | 20,320 | ||||
Current portion of capital lease obligations | 451 | 776 | ||||||
Accounts payable | 112,704 | 72,061 | ||||||
Accrued expenses and other current liabilities | 233,132 | 174,935 | ||||||
Payable to joint venture, net | — | 10,816 | ||||||
Total current liabilities | 365,345 | 278,908 | ||||||
Long-term liabilities: | ||||||||
Long-term debt, net of current portion | 1,500,557 | 1,366,395 | ||||||
Capital lease obligations, net of current portion | 468 | 358 | ||||||
Deferred tax liabilities | 462,787 | 326,128 | ||||||
Deferred gain on joint venture | 287,030 | 293,078 | ||||||
Other long-term liabilities | 60,335 | 29,225 | ||||||
Total long-term liabilities | 2,311,177 | 2,015,184 | ||||||
Commitments and contingencies(Notes 8, 9 and 11) | ||||||||
Stockholders’ equity: | ||||||||
Series B preferred stock, $0.001 par value (liquidation preference, $751,479) | ||||||||
Authorized: 2,300 shares | ||||||||
Issued and outstanding: 1,879 shares | 671,501 | — | ||||||
Common stock, $0.001 par value | ||||||||
Authorized: 150,000 shares | ||||||||
Issued and outstanding: 78,431 shares at December 31, 2008 and 76,789 shares at December 31, 2007 | 78 | 77 | ||||||
Additional paid-in capital | 3,029,694 | 2,937,143 | ||||||
Accumulated deficit | (393,590 | ) | (371,822 | ) | ||||
Accumulated other comprehensive (loss) income | (28,845 | ) | 21,269 | |||||
Total stockholders’ equity | 3,278,838 | 2,586,667 | ||||||
Total liabilities and stockholders’ equity | $ | 5,955,360 | $ | 4,880,759 | ||||
SF-4
Table of Contents
Preferred stock | Common stock | Notes | Accumulated | |||||||||||||||||||||||||||||||||||||
$0.001 | $0.001 | Additional | receivable | other | Total | Total | ||||||||||||||||||||||||||||||||||
Number of | par | Number of | par | paid-in | from | Accumulated | comprehensive | stockholders’ | comprehensive | |||||||||||||||||||||||||||||||
shares | value | shares | value | capital | stockholders | deficit | income | equity | loss | |||||||||||||||||||||||||||||||
(in thousands, except par value amounts) | ||||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2005 | — | $ | — | 27,497 | $ | 27 | $ | 515,147 | $ | (14,691 | ) | $ | (110,227 | ) | $ | 7,052 | $ | 397,308 | ||||||||||||||||||||||
Issuance of common stock in connection with acquisitions and equity offering, net of issuance costs of $9,617 | — | — | 10,893 | 11 | 295,488 | — | — | — | 295,499 | |||||||||||||||||||||||||||||||
Exercise of common stock options and warrants and shares issued under employee stock purchase plan | — | — | 825 | 1 | 10,330 | — | — | — | 10,331 | |||||||||||||||||||||||||||||||
Stock-based compensation related to grants of common stock options | — | — | — | — | 5,455 | — | — | — | 5,455 | |||||||||||||||||||||||||||||||
Stock option income tax benefits | — | — | — | — | 567 | — | — | — | 567 | |||||||||||||||||||||||||||||||
Repayment of notes receivable from stockholder options | — | — | — | — | — | 14,691 | — | — | 14,691 | |||||||||||||||||||||||||||||||
Effect of adoption of SFAS No. 158 | — | — | — | — | — | — | — | (3,738 | ) | (3,738 | ) | |||||||||||||||||||||||||||||
Changes in cumulative translation adjustment | — | — | — | — | — | — | — | 10,823 | 10,823 | $ | 10,823 | |||||||||||||||||||||||||||||
Unrealized gain on available-for-sale securities | — | — | — | — | — | — | — | 44 | 44 | 44 | ||||||||||||||||||||||||||||||
Net loss | — | — | — | — | — | — | (16,842 | ) | — | (16,842 | ) | (16,842 | ) | |||||||||||||||||||||||||||
Total comprehensive loss | $ | (5,975 | ) | |||||||||||||||||||||||||||||||||||||
Balance, December 31, 2006 | — | $ | — | 39,215 | $ | 39 | $ | 826,987 | $ | — | $ | (127,069 | ) | $ | 14,181 | $ | 714,138 | |||||||||||||||||||||||
SF-5
Table of Contents
Preferred stock | Common stock | Accumulated | ||||||||||||||||||||||||||||||||||
$0.001 | $0.001 | Additional | other | Total | Total | |||||||||||||||||||||||||||||||
Number of | par | Number of | par | paid-in | Accumulated | comprehensive | stockholders’ | comprehensive | ||||||||||||||||||||||||||||
shares | value | shares | value | capital | deficit | income | equity | loss | ||||||||||||||||||||||||||||
(in thousands, except par value amounts) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2006 | — | $ | — | 39,215 | $ | 39 | $ | 826,987 | $ | (127,069 | ) | $ | 14,181 | $ | 714,138 | |||||||||||||||||||||
Issuance of common stock in connection with acquisitions and equity offerings, net of issuance costs of $44,204 | — | — | 35,204 | 35 | 1,859,985 | — | — | 1,860,020 | ||||||||||||||||||||||||||||
Exercise of common stock options and warrants and shares issued under employee stock purchase plan | — | — | 2,370 | 3 | 55,095 | — | — | 55,098 | ||||||||||||||||||||||||||||
Stock-based compensation related to grants of common stock options | — | — | — | — | 57,480 | — | — | 57,480 | ||||||||||||||||||||||||||||
Fair value associated with options exchanged in acquisitions | — | — | — | — | 135,022 | — | — | 135,022 | ||||||||||||||||||||||||||||
Stock option income tax benefits | — | — | — | — | 2,574 | — | — | 2,574 | ||||||||||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | — | — | — | 341 | 341 | $ | 341 | ||||||||||||||||||||||||||
Changes in cumulative translation adjustment | — | — | — | — | — | — | 12,758 | 12,758 | 12,758 | |||||||||||||||||||||||||||
Unrealized loss on interest rate swap (Note 10) | — | — | — | — | — | — | (9,518 | ) | (9,518 | ) | (9,518 | ) | ||||||||||||||||||||||||
Unrealized gain on available-for-sale securities | — | — | — | — | — | — | 3,507 | 3,507 | 3,507 | |||||||||||||||||||||||||||
Net loss | — | — | — | — | — | (244,753 | ) | — | (244,753 | ) | (244,753 | ) | ||||||||||||||||||||||||
Total comprehensive loss | $ | (237,665 | ) | |||||||||||||||||||||||||||||||||
Balance, December 31, 2007 | — | $ | — | 76,789 | $ | 77 | $ | 2,937,143 | $ | (371,822 | ) | $ | 21,269 | $ | 2,586,667 | |||||||||||||||||||||
SF-6
Table of Contents
Common stock | Accumulated | |||||||||||||||||||||||||||||||||||
Preferred stock | $0.001 | Additional | other | Total | Total | |||||||||||||||||||||||||||||||
Number of | Number of | par | paid-in | Accumulated | comprehensive | stockholders’ | comprehensive | |||||||||||||||||||||||||||||
shares | Amount | shares | value | capital | deficit | income (loss) | equity | loss | ||||||||||||||||||||||||||||
(in thousands, except par value amounts) | ||||||||||||||||||||||||||||||||||||
Balance, December 31, 2007 | — | $ | — | 76,789 | $ | 77 | $ | 2,937,143 | $ | (371,822 | ) | $ | 21,269 | $ | 2,586,667 | |||||||||||||||||||||
Issuance of Series B preferred stock in connection with acquisition of Matria Healthcare, Inc., net of issuance costs of $350 | 1,788 | 657,573 | — | — | — | — | — | 657,573 | ||||||||||||||||||||||||||||
Issuance of common stock in connection with acquisitions, net of issuance costs of $219 | — | — | 580 | — | 20,945 | — | — | 20,945 | ||||||||||||||||||||||||||||
Exercise of common stock options and warrants and shares issued under employee stock purchase plan | — | — | 1,062 | 1 | 20,712 | — | — | 20,713 | ||||||||||||||||||||||||||||
Preferred stock dividends (Note 16) | 91 | 13,928 | — | — | (14,026 | ) | — | — | (98 | ) | ||||||||||||||||||||||||||
Fair value associated with options exchanged in acquisitions | — | — | — | — | 20,973 | — | — | 20,973 | ||||||||||||||||||||||||||||
Stock-based compensation related to grants of common stock options | — | — | — | — | 26,405 | — | — | 26,405 | ||||||||||||||||||||||||||||
Stock option income tax benefits | — | — | — | — | 17,542 | — | — | 17,542 | ||||||||||||||||||||||||||||
Minimum pension liability adjustment | — | — | — | — | — | — | (562 | ) | (562 | ) | $ | (562 | ) | |||||||||||||||||||||||
Changes in cumulative translation adjustment | — | — | — | — | — | — | (32,889 | ) | (32,889 | ) | (32,889 | ) | ||||||||||||||||||||||||
Unrealized loss on interest rate swap (Note 10) | — | — | — | — | — | — | (11,614 | ) | (11,614 | ) | (11,614 | ) | ||||||||||||||||||||||||
Unrealized loss on available-for-sale securities | — | — | — | — | — | — | (5,049 | ) | (5,049 | ) | (5,049 | ) | ||||||||||||||||||||||||
Net loss | — | — | — | — | — | (21,768 | ) | — | (21,768 | ) | (21,768 | ) | ||||||||||||||||||||||||
Total comprehensive loss | $ | (71,882 | ) | |||||||||||||||||||||||||||||||||
Balance, December 31, 2008 | 1,879 | $ | 671,501 | 78,431 | $ | 78 | $ | 3,029,694 | $ | (393,590 | ) | $ | (28,845 | ) | $ | 3,278,838 | ||||||||||||||||||||
SF-7
Table of Contents
2008 | 2007 | 2006 | ||||||||||
(in thousands) | ||||||||||||
Cash Flows from Operating Activities: | ||||||||||||
Net loss | $ | (21,768 | ) | $ | (244,753 | ) | $ | (16,842 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||||||
Interest expense related to amortization of original issue discounts and write-off of deferred financing costs | 5,930 | 10,963 | 4,158 | |||||||||
Non-cash income related to currency hedge | — | — | (217 | ) | ||||||||
Non-cash stock-based compensation expense | 26,405 | 52,210 | 5,455 | |||||||||
Charge for in-process research and development | — | 173,825 | 4,960 | |||||||||
Impairment of inventory | 4,193 | — | 707 | |||||||||
Impairment of long-lived assets | 20,031 | 3,872 | 8,866 | |||||||||
Loss (gain) on sale of fixed assets | 777 | 59 | (1,528 | ) | ||||||||
Equity earnings of unconsolidated entities | (1,050 | ) | (4,372 | ) | (336 | ) | ||||||
Interest in minority investments | 167 | 1,401 | (299 | ) | ||||||||
Depreciation and amortization | 267,927 | 101,113 | 39,362 | |||||||||
Deferred and other non-cash income taxes | (41,756 | ) | (27,892 | ) | (409 | ) | ||||||
Other non-cash items | 4,378 | 197 | 714 | |||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||
Accounts receivable, net | (48,650 | ) | 47,018 | (13,846 | ) | |||||||
Inventories, net | (49,226 | ) | (1,463 | ) | 167 | |||||||
Prepaid expenses and other current assets | (7,373 | ) | 15,432 | (86 | ) | |||||||
Accounts payable | 16,467 | (6,745 | ) | 210 | ||||||||
Accrued expenses and other current liabilities | (32,008 | ) | (33,893 | ) | 3,294 | |||||||
Other non-current liabilities | 3,400 | 1,783 | (60 | ) | ||||||||
Net cash provided by operating activities | 147,844 | 88,755 | 34,270 | |||||||||
Cash Flows from Investing Activities: | ||||||||||||
Purchases of property, plant and equipment | (66,061 | ) | (36,398 | ) | (19,717 | ) | ||||||
Proceeds from sale of property, plant and equipment | 1,070 | 264 | 2,244 | |||||||||
Cash paid for acquisitions and transactional costs, net of cash acquired | (649,899 | ) | (2,036,116 | ) | (131,465 | ) | ||||||
Cash received, net of cash paid, from formation of joint venture | — | 324,170 | — | |||||||||
Cash received from (paid for) investments in minority interests and marketable securities | 12,133 | (10,177 | ) | (25,817 | ) | |||||||
Increase in other assets | (10,575 | ) | (28,273 | ) | (4,077 | ) | ||||||
Net cash used in investing activities | (713,332 | ) | (1,786,530 | ) | (178,832 | ) | ||||||
Cash Flows from Financing Activities: | ||||||||||||
Decrease (increase) in restricted cash | 139,204 | (141,869 | ) | — | ||||||||
Issuance costs associated with preferred stock | (350 | ) | — | — | ||||||||
Cash paid for financing costs | (1,401 | ) | (40,675 | ) | (2,787 | ) | ||||||
Dividends to preferred stockholders | (56 | ) | — | — | ||||||||
Proceeds from issuance of common stock, net of issuance costs | 20,675 | 1,122,852 | 234,961 | |||||||||
Net repayments on long-term debt | (13,787 | ) | (22,326 | ) | (20,000 | ) | ||||||
Net proceeds (repayments) from revolving lines-of-credit | 137,242 | 1,114,171 | (47,879 | ) | ||||||||
Repayments of notes receivable | — | — | 14,691 | |||||||||
Tax benefit on exercised stock options | 17,542 | 867 | 567 | |||||||||
Principal payments of capital lease obligations | (1,300 | ) | (636 | ) | (546 | ) | ||||||
Net cash provided by financing activities | 297,769 | 2,032,384 | 179,007 | |||||||||
Foreign exchange effect on cash and cash equivalents | (5,689 | ) | 9,019 | 2,389 | ||||||||
Net (decrease) increase in cash and cash equivalents | (273,408 | ) | 343,628 | 36,834 | ||||||||
Cash and cash equivalents, beginning of period | 414,732 | 71,104 | 34,270 | |||||||||
Cash and cash equivalents, end of period | $ | 141,324 | $ | 414,732 | $ | 71,104 | ||||||
SF-8
Table of Contents
1. | DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION |
SF-9
Table of Contents
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
SF-10
Table of Contents
SF-11
Table of Contents
SF-12
Table of Contents
SF-13
Table of Contents
SF-14
Table of Contents
SF-15
Table of Contents
SF-16
Table of Contents
SF-17
Table of Contents
3. | OTHER BALANCE SHEET INFORMATION |
December 31, | ||||||||
2008 | 2007 | |||||||
Inventories, net: | ||||||||
Raw materials | $ | 45,161 | $ | 45,111 | ||||
Work-in-process | 41,651 | 40,184 | ||||||
Finished goods | 112,319 | 62,936 | ||||||
$ | 199,131 | $ | 148,231 | |||||
Property, plant and equipment, net: | ||||||||
Machinery, laboratory equipment and tooling | $ | 152,760 | $ | 134,776 | ||||
Land and buildings | 139,186 | 132,512 | ||||||
Leasehold improvements | 22,158 | 29,032 | ||||||
Computer software and equipment | 60,135 | 34,857 | ||||||
Furniture and fixtures | 15,449 | 16,301 | ||||||
389,688 | 347,478 | |||||||
Less: Accumulated depreciation and amortization | (105,205 | ) | (79,598 | ) | ||||
$ | 284,483 | $ | 267,880 | |||||
Accrued expenses and other current liabilities: | ||||||||
Compensation and compensation-related | $ | 60,495 | $ | 55,397 | ||||
Advertising and marketing | 7,433 | 6,308 | ||||||
Professional fees | 8,517 | 23,436 | ||||||
Interest payable | 4,459 | 2,436 | ||||||
Royalty obligations | 13,821 | 8,221 | ||||||
Deferred revenue | 21,977 | 5,337 | ||||||
Taxes payable | 47,658 | 39,778 | ||||||
Acquisition-related obligations | 29,107 | 22,375 | ||||||
Other | 39,665 | 11,647 | ||||||
$ | 233,132 | $ | 174,935 | |||||
4. | BUSINESS COMBINATIONS |
SF-18
Table of Contents
Current assets | $ | 109,106 | ||
Property, plant and equipment | 24,460 | |||
Goodwill | 836,178 | |||
Intangible assets | 325,385 | |||
Other non-current assets | 27,184 | |||
Total assets acquired | 1,322,313 | |||
Current liabilities | 358,270 | |||
Non-current liabilities | 129,486 | |||
Total liabilities assumed | 487,756 | |||
Net assets acquired | 834,557 | |||
Less: | ||||
Acquisition costs | 17,961 | |||
Fair value of Series B convertible preferred stock issued (1,787,834 shares) | 657,923 | |||
Fair value of stock options exchanged (1,490,655 options) | 17,334 | |||
Cash consideration | $ | 141,339 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 31,000 | 3 years | |||||
Database | 25,000 | 10 years | ||||||
Trade names | 1,185 | 5 months | ||||||
Customer relationships | 253,000 | 13 years | ||||||
Non-compete agreements | 15,200 | 0.75-3 years | ||||||
Total intangible assets with finite lives | $ | 325,385 | ||||||
SF-19
Table of Contents
Current assets | $ | 22,421 | ||
Property, plant and equipment | 7,603 | |||
Goodwill | 87,713 | |||
Intangible assets | 90,201 | |||
Other non-current assets | 3,001 | |||
Total assets acquired | 210,939 | |||
Current liabilities | 15,587 | |||
Non-current liabilities | 32,141 | |||
Total liabilities assumed | 47,728 | |||
Net assets acquired | 163,211 | |||
Less: | ||||
Acquisition costs | 6,581 | |||
Fair value of common stock issued (251,085 shares) | 14,397 | |||
Fair value of stock options/awards exchanged (329,612 options/25,626 awards) | 3,639 | |||
Cash consideration | $ | 138,594 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 28,043 | 15-20 years | |||||
Trade names and other intangible assets | 16,180 | 10-25 years | ||||||
Customer relationships | 45,978 | 7-25 years | ||||||
Total intangible assets with finite lives | $ | 90,201 | ||||||
SF-20
Table of Contents
Current assets | $ | 12,835 | ||
Property, plant and equipment | 2,080 | |||
Goodwill | 13,556 | |||
Intangible assets | 17,717 | |||
Other non-current assets | 246 | |||
Total assets acquired | 46,434 | |||
Current liabilities | 3,115 | |||
Non-current liabilities | 6,810 | |||
Total liabilities assumed | 9,925 | |||
Net assets acquired | 36,509 | |||
Less: | ||||
Acquisition costs | 566 | |||
Cash consideration | $ | 35,943 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 4,154 | 5-7 years | |||||
Trade name | 2,382 | 10 years | ||||||
Customer relationships | 11,181 | 17-25 years | ||||||
Total intangible assets with finite lives | $ | 17,717 | ||||||
iv. | Other acquisitions in 2008 |
Ø | Certain assets from Mochida Pharmaceutical Co., Ltd, or Mochida. As part of the acquisition of certain assets, Mochida transferred the exclusive distribution rights in Japan for certain Osteomark products (Acquired April 2008) |
Ø | Privately-owned provider of care and health management services (Acquired July 2008) |
Ø | Vision Biotech Pty Ltd, or Vision, located in Cape Town, South Africa, a privately-owned distributor of rapid diagnostic products predominantly to the South African marketplace (Acquired September 2008) |
Ø | Global Diagnostics CC, or Global, located in Johannesburg, South Africa, a privately-owned contract manufacturer and distributor of high quality rapid diagnostic tests predominantly to the South African marketplace (Acquired September 2008) |
Ø | DiaTeam Diagnostika und Arzneimittel Großhandel GmbH, or DiaTeam, located in Linz, Austria, a privately-owned distributor of high quality rapid diagnostic tests predominantly to the Austrian marketplace (Acquired September 2008) |
Ø | Prodimol Biotecnologia S.A., or Prodimol, located in Brazil, a privately-owned distributor of high quality rapid diagnostic tests predominantly to the Brazilian marketplace (Acquired October 2008) |
SF-21
Table of Contents
Ø | Ameditech, Inc., or Ameditech, located in San Diego, California, a leading manufacturer of high quality drugs of abuse diagnostic tests (Acquired December 2008) |
Current assets | $ | 10,966 | ||
Property, plant and equipment | 655 | |||
Goodwill | 16,238 | |||
Other non-current assets | 173 | |||
Intangible assets | 36,938 | |||
Total assets acquired | 64,970 | |||
Current liabilities | 5,838 | |||
Non-current liabilities | 9,955 | |||
Total liabilities assumed | 15,793 | |||
Net assets acquired | 49,177 | |||
Less: | ||||
Acquisition costs | 1,725 | |||
Accrued earned milestone and contingent consideration | 5,466 | |||
Cash consideration | $ | 41,986 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 2,866 | 6-10 years | |||||
Trade names | 2,690 | 10 years | ||||||
Customer relationships | 29,477 | 3.5-14 years | ||||||
Non-compete agreements | 1,063 | 2-5 years | ||||||
Manufacturing know-how | 842 | 5 years | ||||||
Total intangible assets | $ | 36,938 | ||||||
SF-22
Table of Contents
Current assets | $ | 34,498 | ||
Property, plant and equipment | 2,163 | |||
Goodwill | 168,172 | |||
Intangible assets | 61,449 | |||
Total assets acquired | 266,282 | |||
Current liabilities | 1,094 | |||
Non-current liabilities | 28,397 | |||
Total liabilities assumed | 29,491 | |||
Net assets acquired | 236,791 | |||
Less: | ||||
Acquisition costs | 844 | |||
Cash consideration | $ | 235,947 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 6,900 | 5-10 years | |||||
Trademarks | 249 | 9 months | ||||||
Software | 5,100 | 8 years | ||||||
Non-compete agreements | 2,700 | 2 years | ||||||
Customer relationships | 46,500 | 6-21 years | ||||||
Total intangible assets with finite lives | $ | 61,449 | ||||||
SF-23
Table of Contents
Current assets | $ | 11,234 | ||
Property, plant and equipment | 5,653 | |||
Goodwill | 21,471 | |||
Intangible assets | 66,020 | |||
Other non-current assets | 84 | |||
Total assets acquired | 104,462 | |||
Current liabilities | 2,947 | |||
Non-current liabilities | 47,708 | |||
Total liabilities assumed | 50,655 | |||
Net assets acquired | 53,807 | |||
Less: | ||||
Acquisition costs | 546 | |||
Cash consideration | $ | 53,261 | ||
Amount | Amortizable life | |||||||
Trademarks | $ | 5,970 | 10 years | |||||
Non-compete agreements | 2,800 | 2-5 years | ||||||
Customer relationships | 57,250 | 11-12.5 years | ||||||
Total intangible assets with finite lives | $ | 66,020 | ||||||
SF-24
Table of Contents
Current assets | $ | 13,332 | ||
Property, plant and equipment | 8,897 | |||
Goodwill | 262,565 | |||
Intangible assets | 55,500 | |||
Other non-current assets | 5,523 | |||
Total assets acquired | 345,817 | |||
Current liabilities | 10,651 | |||
Non-current liabilities | 23,880 | |||
Total liabilities assumed | 34,531 | |||
Net assets acquired | 311,286 | |||
Less: | ||||
Acquisition costs | 959 | |||
Fair value of common stock issued (2,762,182 shares) | 161,086 | |||
Fair value of stock options exchanged (380,894 options) | 20,614 | |||
Cash consideration | $ | 128,627 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 6,100 | 3-6 years | |||||
Trademarks | 1,500 | 10 years | ||||||
Customer relationships | 46,300 | 9 years | ||||||
Non-compete agreements | 1,600 | 0.5-1 year | ||||||
Total intangible assets with finite lives | $ | 55,500 | ||||||
SF-25
Table of Contents
Current assets | $ | 23,399 | ||
Property, plant and equipment | 1,936 | |||
Goodwill | 137,791 | |||
Intangible assets | 100,670 | |||
Other non-current assets | 232 | |||
Total assets acquired | 264,028 | |||
Current liabilities | 15,232 | |||
Non-current liabilities | 4,747 | |||
Total liabilities assumed | 19,979 | |||
Net assets acquired | 244,049 | |||
Less: | ||||
Acquisition costs | 939 | |||
Fair value of common stock issued (3,691,369 shares) | 226,415 | |||
Fair value of stock options exchanged (380,732 options) | 16,695 | |||
Cash consideration | $ | — | ||
Amount | Amortizable life | |||||||
Core technology | $ | 24,130 | 1-10 years | |||||
Trademarks | 7,100 | 10 years | ||||||
Customer relationships | 69,100 | 20 years | ||||||
Non-compete agreements | 300 | 1 year | ||||||
Internally-developed software | 40 | 10 years | ||||||
Total intangible assets with finite lives | $ | 100,670 | ||||||
SF-26
Table of Contents
Current assets | $ | 83,377 | ||
Property, plant and equipment | 6,643 | |||
Goodwill | 143,611 | |||
Intangible assets | 209,078 | |||
Other non-current assets | 669 | |||
Total assets acquired | 443,378 | |||
Current liabilities | 17,685 | |||
Non-current liabilities | 71,032 | |||
Total liabilities assumed | 88,717 | |||
Net assets acquired | 354,661 | |||
Less: | ||||
Acquisition costs | 4,556 | |||
Fair value of common stock issued (6,840,361 shares) | 329,774 | |||
Fair value of stock options/awards exchanged (733,077 options/awards) | 20,331 | |||
Cash consideration | $ | — | ||
Amount | Amortizable life | |||||||
Core technology | $ | 83,833 | 13 years | |||||
Trademarks | 20,590 | 10 years | ||||||
Customer relationships | 99,060 | 26 years | ||||||
License agreement | 355 | 7 years | ||||||
Non-compete agreements | 5,040 | 1.5-2 years | ||||||
Internally-developed software | 200 | 7 years | ||||||
Total intangible assets with finite lives | $ | 209,078 | ||||||
SF-27
Table of Contents
Current assets | $ | 325,804 | ||
Property, plant and equipment | 145,144 | |||
Goodwill | 778,734 | |||
Intangible assets | 663,891 | |||
In-process research and development | 169,000 | |||
Other non-current assets | 102,343 | |||
Total assets acquired | 2,184,916 | |||
Current liabilities | 128,971 | |||
Non-current liabilities | 266,621 | |||
Total liabilities assumed | 395,592 | |||
Net assets acquired | 1,789,324 | |||
Less: | ||||
Acquisition costs | 68,897 | |||
Cash settlement of vested stock options | 51,503 | |||
Non-cash income tax benefits on stock options | 2,574 | |||
Fair value of stock options exchanged (753,863 options) | 25,879 | |||
Cash consideration | $ | 1,640,471 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 237,691 | 5-19.5 years | |||||
Trademarks | 78,100 | 10.5 years | ||||||
Customer relationships | 348,100 | 1.5-22.5 years | ||||||
Total intangible assets with finite lives | $ | 663,891 | ||||||
SF-28
Table of Contents
Current assets | $ | 9,012 | ||
Property, plant and equipment | 141 | |||
Goodwill | 43,708 | |||
Intangible assets | 28,520 | |||
Total assets acquired | 81,381 | |||
Current liabilities | 4,273 | |||
Non-current liabilities | 16,334 | |||
Total liabilities assumed | 20,607 | |||
Net assets acquired | 60,774 | |||
Less: | ||||
Acquisition costs | 348 | |||
Fair value of common stock issued (463,399 shares) | 21,530 | |||
Cash consideration | $ | 38,896 | ||
Amount | Amortizable life | |||||||
Trademarks | $ | 3,170 | 5 years | |||||
Customer relationships | 25,350 | 12 years | ||||||
Total intangible assets with finite lives | $ | 28,520 | ||||||
Ø | Matritech, Inc., or Matritech, located in Newton, Massachusetts and Freiburg, Germany, a biotechnology company principally engaged in the development, manufacturing, marketing, distribution and licensing of cancer diagnostic technologies and products (Acquired December 2007) |
Ø | Aska Diagnostic, Inc., or Aska, located in Tokyo, Japan, a distributor of professional diagnostics in Japan (Acquired December 2007) |
Ø | 90.91% share in Biosystems S.A., or Biosystems, located in Cali and Bogota, Colombia, a distributor of diagnostics tests, instruments and reagents throughout Colombia (Acquired December 2007). In October 2008, we acquired the remaining 9.09% interest in Biosystems |
Ø | the assets of Akubio, a research company located in Cambridge, England (Acquired October 2007) |
Ø | Bio-Stat Healthcare Group, or Bio-Stat, located in Cheshire, United Kingdom, a privately-owned distributor of core laboratory and point-of-care diagnostic testing products to the U.K. marketplace (Acquired October 2007) |
SF-29
Table of Contents
Ø | 52.45% share in Diamics, Inc., or Diamics, located in Novato, California, a developer of molecular-based cancer screening and diagnostic systems (Acquired July 2007) |
Ø | Quality Assured Services, Inc., or QAS, located in Orlando, Florida, a privately-owned provider of diagnostic home tests and services in the U.S. marketplace (Acquired June 2007) |
Ø | Orange Medical, or Orange, located in Tilburg, The Netherlands, a manufacturer and marketer of rapid diagnostic products to the Benelux marketplace (Acquired May 2007) |
Ø | Promesan S.r.l., or Promesan, located in Milan, Italy, a distributor of point-of-care diagnostic testing products to the Italian marketplace (Acquired January 2007) |
Ø | First Check Diagnostics LLC, or First Check, located in Lake Forrest, California, a privately-held diagnostics company in the field of home testing for drugs of abuse, including marijuana, cocaine, methamphetamines and opiates (Acquired January 2007) |
Ø | the assets of Nihon Schering K.K., or NSKK, located in Japan, a diagnostic distribution business (Acquired January 2007) |
Ø | Gabmed GmbH, or Gabmed, located in Nettetal, Germany, a distributor of point-of-care diagnostic testing products in the German marketplace (Acquired January 2007) |
Ø | Med-Ox Chemicals Limited, or Med-Ox, located in Ottawa, Canada, a distributor of professional diagnostic testing products in the Canadian marketplace (Acquired January 2007) |
Current assets | $ | 38,518 | ||
Property, plant and equipment | 4,145 | |||
Goodwill | 110,255 | |||
Intangible assets | 74,557 | |||
In-process research and development | 4,826 | |||
Other non-current assets | 838 | |||
Total assets acquired | 233,139 | |||
Current liabilities | 29,100 | |||
Non-current liabilities | 19,584 | |||
Total liabilities assumed | 48,684 | |||
Net assets acquired | 184,455 | |||
Less: | ||||
Acquisition costs | 4,488 | |||
Notes payable | 9,551 | |||
Accrued earned milestones | 259 | |||
Fair value of common stock issued (1,017,244 shares) | 54,111 | |||
Cash consideration | $ | 116,046 | ||
SF-30
Table of Contents
Amount | Amortizable life | |||||||
Core technology | $ | 4,234 | 7.0-13.5 years | |||||
Supplier relationships | 3,882 | 15 years | ||||||
Trademarks | 9,278 | 2-10 years | ||||||
License agreements | 920 | 15 years | ||||||
Customer relationships | 53,294 | 10-20 years | ||||||
Non-compete agreements | 801 | 3-4 years | ||||||
Internally-developed software | 1,910 | 7 years | ||||||
Total intangible assets with finite lives | 74,319 | |||||||
Trademark | 238 | N/A | ||||||
Total intangible assets with indefinite lives | 238 | |||||||
Total intangible assets | $ | 74,557 | ||||||
SF-31
Table of Contents
Current assets | $ | 25,914 | ||
Property, plant and equipment | 10,274 | |||
Goodwill | 120,920 | |||
Intangible assets | 48,000 | |||
Total assets acquired | 205,108 | |||
Current liabilities | 4,081 | |||
Non-current liabilities | 8,125 | |||
Total liabilities assumed | 12,206 | |||
Net assets acquired | 192,902 | |||
Less: | ||||
Acquisition costs | 12,962 | |||
Fair value of common stock issued (1,871,250 shares) | 53,052 | |||
Cash consideration | $ | 126,888 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 16,200 | 7 years | |||||
Supplier relationships | 3,300 | 1.8 years | ||||||
Trademarks | 800 | 10 years | ||||||
Customer relationships | 27,700 | 16.8-17.8 years | ||||||
Total intangible assets with finite lives | $ | 48,000 | ||||||
SF-32
Table of Contents
Current assets | $ | 1,191 | ||
Property, plant and equipment | 1,783 | |||
Goodwill | 16,937 | |||
Intangible assets | 11,310 | |||
In-process research and development | 4,960 | |||
Other non-current assets | 20 | |||
Total assets acquired | 36,201 | |||
Current liabilities | 1,296 | |||
Non-current liabilities | 850 | |||
Total liabilities assumed | 2,146 | |||
Net assets acquired | 34,055 | |||
Less: | ||||
Acquisition costs | 92 | |||
Realized foreign currency exchange gain | 221 | |||
Accrued obligation cost | 55 | |||
Fair value of common stock issued (467,415 shares) | 12,457 | |||
Cash consideration | $ | 21,230 | ||
Amount | Amortizable life | |||||||
Core technology | $ | 11,310 | 20 years | |||||
Total intangible assets with finite lives | $ | 11,310 | ||||||
SF-33
Table of Contents
Severance | Facility | Total exit | ||||||||||
related | and other | activities | ||||||||||
Balance at December 31, 2005 | $ | 1,489 | $ | 939 | $ | 2,428 | ||||||
Payments | (172 | ) | (150 | ) | (322 | ) | ||||||
Currency adjustments | 177 | — | 177 | |||||||||
Balance at December 31, 2006 | 1,494 | 789 | 2,283 | |||||||||
Acquisitions | 19,823 | 1,327 | 21,150 | |||||||||
Payments | (6,763 | ) | (218 | ) | (6,981 | ) | ||||||
Currency adjustments | 25 | — | 25 | |||||||||
Balance at December 31, 2007 | 14,579 | 1,898 | 16,477 | |||||||||
Acquisitions | 19,561 | 3,897 | 23,458 | |||||||||
Payments | (23,407 | ) | (854 | ) | (24,261 | ) | ||||||
Currency adjustments | (385 | ) | (15 | ) | (400 | ) | ||||||
Balance at December 31, 2008 | $ | 10,348 | $ | 4,926 | $ | 15,274 | ||||||
SF-34
Table of Contents
SF-35
Table of Contents
2008 | 2007 | |||||||
(unaudited) | ||||||||
Pro forma net revenue | $ | 1,783,801 | $ | 1,362,196 | ||||
Pro forma net loss available to common shareholders | $ | (47,793 | ) | $ | (131,732 | ) | ||
Pro forma net loss per common share—basic and diluted(1) | $ | (0.61 | ) | $ | (2.34 | ) | ||
(1) | Net loss per common share amounts are computed as described in Note 15. |
5. | GOODWILL AND OTHER INTANGIBLE ASSETS |
Gross | Net | |||||||||||||||
carrying | Accumulated | carrying | ||||||||||||||
amount | amortization | value | Useful life | |||||||||||||
Amortized intangible assets: | ||||||||||||||||
Core technology and patents | $ | 547,816 | $ | 88,509 | $ | 459,307 | 1-20 years | |||||||||
Other intangible assets: | ||||||||||||||||
Supplier relationships | 17,167 | 10,477 | 6,690 | 1.8-15 years | ||||||||||||
Trademarks and trade names | 151,245 | 27,612 | 123,633 | 2-25 years | ||||||||||||
License agreements | 10,445 | 9,655 | 790 | 5-8.5 years | ||||||||||||
Customer relationships | 1,151,893 | 175,150 | 976,743 | 1.5-26 years | ||||||||||||
Manufacturing know-how | 7,208 | 3,825 | 3,383 | 5-15 years | ||||||||||||
Other | 78,469 | 20,378 | 58,091 | 0.5-11 years | ||||||||||||
Total other intangible assets | 1,416,427 | 247,097 | 1,169,330 | |||||||||||||
Total intangible assets with finite lives | $ | 1,964,243 | $ | 335,606 | $ | 1,628,637 | ||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||
Goodwill | $ | 3,046,083 | $ | — | $ | 3,046,083 | ||||||||||
Other intangible assets | 42,984 | — | 42,984 | |||||||||||||
Total intangible assets with indefinite lives | $ | 3,089,067 | $ | — | $ | 3,089,067 | ||||||||||
SF-36
Table of Contents
Gross | Net | |||||||||||||||
carrying | Accumulated | carrying | ||||||||||||||
amount | amortization | value | Useful life | |||||||||||||
Amortized intangible assets: | ||||||||||||||||
Core technology and patents | $ | 476,609 | $ | 44,026 | $ | 432,583 | 1-20 years | |||||||||
Other intangible assets: | ||||||||||||||||
Supplier relationships | 18,307 | 9,101 | 9,206 | 1.8-15 years | ||||||||||||
Trademarks and trade names | 137,352 | 11,964 | 125,388 | 5-25 years | ||||||||||||
License agreements | 10,105 | 8,167 | 1,938 | 5-8.5 years | ||||||||||||
Customer relationships | 770,230 | 46,516 | 723,714 | 1.5-26 years | ||||||||||||
Manufacturing know-how | 3,616 | 3,558 | 58 | 1-15 years | ||||||||||||
Other | 10,938 | 1,598 | 9,340 | 0.5-10 years | ||||||||||||
Total other intangible assets | 950,548 | 80,904 | 869,644 | |||||||||||||
Total intangible assets with finite lives | $ | 1,427,157 | $ | 124,930 | $ | 1,302,227 | ||||||||||
Intangible assets with indefinite lives: | ||||||||||||||||
Goodwill | $ | 2,148,850 | $ | — | $ | 2,148,850 | ||||||||||
Other intangible assets | 43,097 | — | 43,097 | |||||||||||||
Total intangible assets with indefinite lives | $ | 2,191,947 | $ | — | $ | 2,191,947 | ||||||||||
2009 | $ | 233,399 | ||
2010 | $ | 207,012 | ||
2011 | $ | 182,741 | ||
2012 | $ | 159,117 | ||
2013 | $ | 139,607 |
SF-37
Table of Contents
Professional | Health | Consumer | ||||||||||||||
diagnostics | management | diagnostics | Total | |||||||||||||
Goodwill at December 31, 2006 | $ | 353,361 | $ | — | $ | 86,008 | $ | 439,369 | ||||||||
Acquisitions(1) | 1,267,985 | 463,066 | 8,940 | 1,739,991 | ||||||||||||
Other(2)(3) | 13,254 | — | (43,764 | ) | (30,510 | ) | ||||||||||
Goodwill at December 31, 2007 | 1,634,600 | 463,066 | 51,184 | 2,148,850 | ||||||||||||
Acquisitions(1) | 93,473 | 817,113 | 1,497 | 912,083 | ||||||||||||
Other(2) | (14,850 | ) | — | — | (14,850 | ) | ||||||||||
Goodwill at December 31, 2008 | $ | 1,713,223 | $ | 1,280,179 | $ | 52,681 | $ | 3,046,083 | ||||||||
(1) | Includes purchase accounting adjustments recorded to the acquired entities’ opening balance sheet and additional payments made for earn-outs and milestones achieved. | |
(2) | These amounts relate primarily to adjustments resulting from fluctuations in foreign currency exchange rates. | |
(3) | Includes amounts written off in connection with the formation of our 50/50 joint venture with P&G. |
6. | LONG-TERM DEBT |
December 31, | ||||||||
2008 | 2007 | |||||||
First Lien Credit Agreement—Term loan | $ | 960,750 | $ | 970,500 | ||||
First Lien Credit Agreement—Revolving line-of-credit | 142,000 | — | ||||||
Second Lien Credit Agreement | 250,000 | 250,000 | ||||||
3% Senior subordinated convertible notes | 150,000 | 150,000 | ||||||
Lines-of-credit | 3,503 | 3,730 | ||||||
Other | 13,362 | 12,485 | ||||||
1,519,615 | 1,386,715 | |||||||
Less: Current portion | (19,058 | ) | (20,320 | ) | ||||
$ | 1,500,557 | $ | 1,366,395 | |||||
SF-38
Table of Contents
b. | 3% Senior subordinated convertible notes, principal amount $150.0 million |
SF-39
Table of Contents
c. | Prior senior credit facility |
d. | Senior subordinated notes, 8.75%, principal amount $150.0 million |
e. | Lines-of-credit |
f. | Other debt |
SF-40
Table of Contents
g. | Maturities of long-term debt |
2009 | $ | 19,058 | ||
2010 | 15,372 | |||
2011 | 11,158 | |||
2012 | 10,177 | |||
2013 | 9,850 | |||
Thereafter | 1,454,000 | |||
$ | 1,519,615 | |||
7. | FAIR VALUE MEASUREMENTS |
Ø | Quoted prices for identical or similar assets or liabilities in non-active markets (examples include corporate and municipal bonds which trade infrequently); |
Ø | Inputs other than quoted prices that are observable for substantially the full term of the asset or liability (examples include interest rate and currency swaps); and |
Ø | Inputs that are derived principally from or corroborated by observable market data for substantially the full term of the asset or liability (examples include certain securities and derivatives). |
SF-41
Table of Contents
Quoted prices in | Significant other | |||||||||||
December 31, | active markets | observable inputs | ||||||||||
Description | 2008 | (Level 1) | (Level 2) | |||||||||
Assets: | ||||||||||||
Marketable securities | $ | 2,354 | $ | 2,354 | $ | — | ||||||
Strategic investments(1) | 229 | 229 | — | |||||||||
Total assets | $ | 2,583 | $ | 2,583 | $ | — | ||||||
Liabilities: | ||||||||||||
Interest rate swap liability(2) | $ | 21,132 | $ | — | $ | 21,132 | ||||||
Total liabilities | $ | 21,132 | $ | — | $ | 21,132 | ||||||
(1) | Represents our investment in StatSure which is included in investments in unconsolidated entities on our accompanying consolidated balance sheets. | |
(2) | Included in other long-term liabilities in our accompanying consolidated balances sheets. |
8. | CAPITAL LEASES |
2009 | $ | 495 | ||
2010 | 362 | |||
2011 | 84 | |||
2012 | 10 | |||
2013 | 22 | |||
Total future minimum lease payments | 973 | |||
Less: Imputed interest | (54 | ) | ||
Present value of future minimum lease payments | 919 | |||
Less: Current portion | (451 | ) | ||
$ | 468 | |||
Machinery, laboratory equipment and tooling | $ | 1,077 | ||
Computer equipment | 269 | |||
Furniture and fixtures | 141 | |||
1,487 | ||||
Less: Accumulated amortization | (514 | ) | ||
$ | 973 | |||
SF-42
Table of Contents
9. | POSTRETIREMENT BENEFIT PLANS |
2008 | 2007 | |||||||
Change in projected benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 12,627 | $ | 12,370 | ||||
Interest cost | 677 | 660 | ||||||
Actuarial loss (gain) | 534 | (470 | ) | |||||
Benefits paid | (182 | ) | (140 | ) | ||||
Curtailment gain | (1,113 | ) | — | |||||
Foreign exchange impact | (3,465 | ) | 207 | |||||
Benefit obligation at end of year | $ | 9,078 | $ | 12,627 | ||||
Change in accumulated benefit obligation | ||||||||
Benefit obligation at beginning of year | $ | 9,159 | $ | 8,959 | ||||
Interest cost | 677 | 660 | ||||||
Actuarial loss (gain) | 534 | (470 | ) | |||||
Benefits paid | (182 | ) | (140 | ) | ||||
Curtailment gain | (1,113 | ) | — | |||||
Foreign exchange impact | (2,508 | ) | 150 | |||||
Benefit obligation at end of year | $ | 6,567 | $ | 9,159 | ||||
Change in plan assets | ||||||||
Fair value of plan assets at beginning of year | $ | 9,143 | $ | 8,189 | ||||
Actual return on plan assets | (1,543 | ) | 220 | |||||
Employer contribution | 835 | 750 | ||||||
Benefits paid | (182 | ) | (150 | ) | ||||
Foreign exchange impact | (2,325 | ) | 134 | |||||
Fair value of plan assets at end of year | $ | 5,928 | $ | 9,143 | ||||
Funded status at end of year | $ | (3,150 | ) | $ | (3,484 | ) | ||
2008 | 2007 | |||||||
Accrued benefit asset (liability) | $ | (603 | ) | $ | 34 | |||
Long-term benefit liability | (5,498 | ) | (4,594 | ) | ||||
Intangible asset | 2,951 | 1,076 | ||||||
Net amount recognized | $ | (3,150 | ) | $ | (3,484 | ) | ||
SF-43
Table of Contents
2008 | 2007 | |||||||
Assumptions used to determine benefit obligations: | ||||||||
Discount rate | 6.10% | 5.80% | ||||||
Rate of compensation increase | 3.85% | 4.15% | ||||||
Assumptions used to determine net periodic benefit cost: | ||||||||
Discount rate | 5.80% | 5.25% | ||||||
Expected return on plan assets | 7.20% | 7.30% | ||||||
Rate of compensation increase | 4.15% | 3.80% |
2008 | 2007 | 2006 | ||||||||||
Interest cost | $ | 677 | $ | 660 | $ | 586 | ||||||
Expected return on plan assets | (634 | ) | (620 | ) | (461 | ) | ||||||
Amortization of net loss | (80 | ) | (90 | ) | (26 | ) | ||||||
Curtailment gain | (1,113 | ) | — | — | ||||||||
Net periodic benefit cost (benefit) | $ | (1,150 | ) | $ | (50 | ) | $ | 99 | ||||
10. | DERIVATIVE FINANCIAL INSTRUMENTS |
SF-44
Table of Contents
11. | COMMITMENTS AND CONTINGENCIES |
2009 | $ | 25,377 | ||
2010 | 19,159 | |||
2011 | 15,380 | |||
2012 | 11,011 | |||
2013 | 9,985 | |||
Thereafter | 13,470 | |||
$ | 94,382 | |||
SF-45
Table of Contents
SF-46
Table of Contents
SF-47
Table of Contents
SF-48
Table of Contents
13. | INVESTMENT IN UNCONSOLIDATED ENTITIES AND MARKETABLE SECURITIES |
SF-49
Table of Contents
SF-50
Table of Contents
SF-51
Table of Contents
Discount Rate | ||||||||||||||||||
Company/ | Used in | Year of | ||||||||||||||||
Year Assets | Estimating | Expected | ||||||||||||||||
Acquired | Purchase Price | IPR&D(1) | Programs Acquired | Cash Flows(1) | Launch | |||||||||||||
Diamics/2007 | $ | 4,000 | $ | 682 | PapMap (Pap Screening Methods) | 63% | 2009-2010 | |||||||||||
1,049 | C-Map (Automated Pap Screening) | 63% | 2009-2010 | |||||||||||||||
3,094 | POC (Point of Care Systems) | 63% | 2009-2010 | |||||||||||||||
$ | 4,825 | |||||||||||||||||
Biosite/2007 | $ | 1,800,000 | $ | 13,000 | Triage Sepsis Panel | 15% | 2008-2010 | |||||||||||
156,000 | Triage NGAL | 15% | 2008-2010 | |||||||||||||||
$ | 169,000 | |||||||||||||||||
Clondiag/2006 | $ | 24,000 | $ | 1,800 | CHF (Congestive Heart Failure) | 37% | 2008-2009 | |||||||||||
2,500 | ACS (Acute Coronary Syndrome) | 37% | 2009-2010 | |||||||||||||||
660 | HIV (Human Immuno-deficiency Virus) | 37% | 2008-2009 | |||||||||||||||
$ | 4,960 | |||||||||||||||||
(1) | Management assumes responsibility for determining the valuation of the acquired IPR&D projects. The fair value assigned to IPR&D for each acquisition is estimated by discounting, to present value, the cash flows expected once the acquired projects have reached technological feasibility. The cash flows are probability adjusted to reflect the risks of advancement through the product approval process. In estimating the future cash flows, we also considered the tangible and intangible assets required for successful exploitation of the technology resulting from the purchased IPR&D projects and adjusted future cash flows for a charge reflecting the contribution to value of these assets. |
2008 | 2007 | 2006 | ||||||||||
Net loss per common share—basic and diluted: | ||||||||||||
Numerator: | ||||||||||||
Net loss | $ | (21,768 | ) | $ | (244,753 | ) | $ | (16,842 | ) | |||
Less: Preferred stock dividends | (13,989 | ) | — | — | ||||||||
Net loss available to common stockholders | $ | (35,757 | ) | $ | (244,753 | ) | $ | (16,842 | ) | |||
Denominator: | ||||||||||||
Weighted average shares outstanding | 77,778 | 51,510 | 34,109 | |||||||||
Net loss per common share—basic and diluted | $ | (0.46 | ) | $ | (4.75 | ) | $ | (0.49 | ) | |||
SF-52
Table of Contents
SF-53
Table of Contents
SF-54
Table of Contents
SF-55
Table of Contents
2008 | 2007 | 2006 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
average | average | average | ||||||||||||||||||||||
Options | exercise price | Options | exercise price | Options | exercise price | |||||||||||||||||||
Outstanding at January 1 | 7,836 | $ | 31.42 | 3,775 | $ | 21.11 | 3,902 | $ | 18.82 | |||||||||||||||
Exchanged | 1,820 | $ | 30.52 | 3,606 | $ | 23.48 | — | $ | — | |||||||||||||||
Granted | 1,787 | $ | 34.13 | 2,807 | $ | 49.53 | 666 | $ | 31.88 | |||||||||||||||
Exercised | (836 | ) | $ | 16.84 | (2,204 | ) | $ | 23.70 | (510 | ) | $ | 17.30 | ||||||||||||
Canceled/expired/forfeited | (452 | ) | $ | 37.75 | (148 | ) | $ | 33.33 | (283 | ) | $ | 21.81 | ||||||||||||
Outstanding at December 31 | 10,155 | $ | 32.65 | 7,836 | $ | 31.42 | 3,775 | $ | 21.11 | |||||||||||||||
Exercisable at December 31 | 5,866 | $ | 27.08 | 3,887 | $ | 20.03 | 2,408 | $ | 17.16 | |||||||||||||||
Weighted | ||||||||||||
Number of | average | |||||||||||
shares | Exercise price | exercise price | ||||||||||
(in thousands) | ||||||||||||
Warrants outstanding and exercisable, December 31, 2005 | 758 | $ | 3.81-$24.00 | $ | 16.47 | |||||||
Exercised | (452 | ) | $ | 3.88-$18.12 | $ | 16.51 | ||||||
Warrants outstanding and exercisable, December 31, 2006 | 306 | $ | 3.81-$24.00 | $ | 16.42 | |||||||
Exchanged | 285 | $ | 14.52-$29.78 | $ | 28.98 | |||||||
Exercised | (122 | ) | $ | 13.54-$29.78 | $ | 19.31 | ||||||
Warrants outstanding and exercisable, December 31, 2007 | 469 | $ | 3.81-$29.78 | $ | 20.80 | |||||||
Exercised | (12 | ) | $ | 13.54-$20.06 | $ | 19.64 | ||||||
Warrants outstanding and exercisable, December 31, 2008 | 457 | $ | 3.81-$29.78 | $ | 20.83 | |||||||
SF-56
Table of Contents
Outstanding and exercisable | ||||||||||||
Weighted | ||||||||||||
average | Weighted | |||||||||||
Number of | remaining | average | ||||||||||
Exercise Price | shares | contract life | exercise price | |||||||||
(in thousands) | (in years) | |||||||||||
$3.81-$3.93 | 4 | 1.48 | $ | 3.87 | ||||||||
$4.48-$4.57 | 1 | 1.54 | $ | 4.54 | ||||||||
$5.44-$5.57 | 4 | 1.58 | $ | 5.53 | ||||||||
$7.37-$7.55 | 2 | 1.66 | $ | 7.48 | ||||||||
$13.54-$18.12 | 219 | 2.97-3.72 | $ | 14.41 | ||||||||
$20.06-$29.78 | 152 | 6.78 | $ | 29.66 | ||||||||
$24.00 | 75 | 6.25 | $ | 24.00 | ||||||||
457 | 5.03 | $ | 20.83 | |||||||||
17. | STOCK-BASED COMPENSATION |
SF-57
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Cost of net revenue | $ | 1,504 | $ | 608 | $ | 391 | ||||||
Research and development | 4,627 | 2,215 | 1,390 | |||||||||
Sales and marketing | 4,264 | 1,699 | 682 | |||||||||
General and administrative | 16,010 | 52,958 | 2,992 | |||||||||
$ | 26,405 | $ | 57,480 | $ | 5,455 | |||||||
2008 | 2007 | 2006 | ||||||||||
Risk-free interest rate | 2.39-3.14 | % | 3.15-5.00 | % | 4.00-4.67 | % | ||||||
Expected dividend yield | — | — | — | |||||||||
Expected life | 5.19 years | 6.25 years | 6.25 years | |||||||||
Expected volatility | 37-43 | % | 44 | % | 41 | % |
SF-58
Table of Contents
Cumulative | Pension | Accumulated | ||||||||||||||
translation | liability | other | ||||||||||||||
adjustment | adjustment | comprehensive | ||||||||||||||
(note 2(b)) | (note 9(b)) | Other(1) | income (loss)(2) | |||||||||||||
Balance at December 31, 2005 | $ | 7,052 | $ | — | $ | — | $ | 7,052 | ||||||||
Period change | 10,823 | (3,738 | ) | 44 | 7,129 | |||||||||||
Balance at December 31, 2006 | 17,875 | (3,738 | ) | 44 | 14,181 | |||||||||||
Period change | 12,758 | 341 | (6,011 | ) | 7,088 | |||||||||||
Balance at December 31, 2007 | 30,633 | (3,397 | ) | (5,967 | ) | 21,269 | ||||||||||
Period change | (32,889 | ) | (562 | ) | (16,663 | ) | (50,114 | ) | ||||||||
Balance at December 31, 2008 | $ | (2,256 | ) | $ | (3,959 | ) | $ | (22,630 | ) | $ | (28,845 | ) | ||||
(1) | Other represents (realization of) unrealized gains on available-for-sale securities and interest rate swap. | |
(2) | All of the components of accumulated other comprehensive income relate to our foreign subsidiaries, except item (1) above. No adjustments for income taxes were recorded against other comprehensive income, as we intend to permanently invest in our foreign subsidiaries in the foreseeable future. |
2008 | 2007 | 2006 | ||||||||||
United States | $ | (52,935 | ) | $ | (235,862 | ) | $ | (5,089 | ) | |||
Foreign | 13,431 | (14,242 | ) | (6,362 | ) | |||||||
$ | (39,504 | ) | $ | (250,104 | ) | $ | (11,451 | ) | ||||
2008 | 2007 | |||||||
NOL and capital loss carryforwards | $ | 102,484 | $ | 141,620 | ||||
Tax credit carryforwards | 15,884 | 18,236 | ||||||
Nondeductible reserves | 9,488 | 5,327 | ||||||
Nondeductible accruals | 67,142 | 41,318 | ||||||
Difference between book and tax bases of tangible assets | 3,133 | 2,328 | ||||||
Difference between book and tax bases of intangible assets | 35,986 | 35,042 |
SF-59
Table of Contents
2008 | 2007 | |||||||
Gain on joint venture | $ | 33,264 | $ | 37,300 | ||||
All other | 1,162 | 26 | ||||||
Gross deferred tax asset | 268,543 | 281,197 | ||||||
Less: Valuation allowance | (12,740 | ) | (18,899 | ) | ||||
Total deferred tax assets | 255,803 | 262,298 | ||||||
Deferred tax liabilities: | ||||||||
Difference between book and tax bases of tangible assets | 10,824 | 6,249 | ||||||
Difference between book and tax bases of intangible assets | 588,766 | 524,603 | ||||||
Other | 366 | 23,973 | ||||||
Total deferred tax liability | 599,956 | 554,825 | ||||||
Net deferred tax liability | $ | 344,153 | $ | 292,527 | ||||
Reported as: | ||||||||
Deferred tax assets, current portion | $ | 104,311 | $ | 18,170 | ||||
Deferred tax assets, long-term | 14,323 | 15,799 | ||||||
Deferred tax liabilities, current portion | — | (368 | ) | |||||
Deferred tax liabilities, long-term | (462,787 | ) | (326,128 | ) | ||||
Net deferred tax liability | $ | (344,153 | ) | $ | (292,527 | ) | ||
SF-60
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Current: | ||||||||||||
Federal | $ | 7,433 | $ | 2,434 | $ | — | ||||||
State | 7,250 | 2,073 | 423 | |||||||||
Foreign | 10,387 | 22,406 | 5,315 | |||||||||
25,070 | 26,913 | 5,738 | ||||||||||
Deferred: | ||||||||||||
Federal | (5,897 | ) | (4,961 | ) | 3,152 | |||||||
State | (4,237 | ) | (1,523 | ) | 289 | |||||||
Foreign | (31,622 | ) | (21,408 | ) | (3,452 | ) | ||||||
(41,756 | ) | (27,892 | ) | (11 | ) | |||||||
Total tax (benefit) provision | $ | (16,686 | ) | $ | (979 | ) | $ | 5,727 | ||||
SF-61
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Statutory rate | 35 | % | 35 | % | 35 | % | ||||||
Effect of Biosite in-process R&D write-off | — | (24 | ) | — | ||||||||
Effect of Diamics in-process R&D write-off | — | (1 | ) | — | ||||||||
Effect of Biosite compensation charges and other non-cash compensation | — | (6 | ) | — | ||||||||
Effect of losses and expenses not benefited | — | — | (28 | ) | ||||||||
Stock-based compensation | (10 | ) | — | — | ||||||||
Rate differential on foreign earnings | 3 | — | (2 | ) | ||||||||
Research and development benefit | 6 | 1 | 14 | |||||||||
State income taxes, net of federal benefit | 2 | (1 | ) | (4 | ) | |||||||
Deferred tax on indefinite-lived assets | — | — | (31 | ) | ||||||||
Accrual to return reconciliation | — | — | (9 | ) | ||||||||
Other permanent items and FIN 48 | (4 | ) | 1 | — | ||||||||
Change in valuation allowance | 11 | (4 | ) | (27 | ) | |||||||
Effective tax rate | 43 | % | 1 | % | (52 | )% | ||||||
Amount | ||||
Balances as of January 1, 2007 | $ | 2,248 | ||
Additions for tax positions taken during prior years | 53 | |||
Additions for tax positions in current year acquisitions | 6,229 | |||
Additions for tax positions taken during current year | 235 | |||
Expiration of statutes of limitations or closure of tax audits | — | |||
Balances as of December 31, 2007 | 8,765 | |||
Additions for tax positions taken during prior years | 63 | |||
Additions for tax positions in current and prior year acquisitions | 2,296 | |||
Additions for tax positions taken during current year | 143 | |||
Expiration of statutes of limitations or closure of tax audits | (134 | ) | ||
Balance as of December 31, 2008 | $ | 11,133 | ||
SF-62
Table of Contents
20. | FINANCIAL INFORMATION BY SEGMENT |
SF-63
Table of Contents
Vitamins and | Corporate | |||||||||||||||||||||||
Professional | Health | Consumer | nutritional | and | ||||||||||||||||||||
2008 | diagnostics | management | diagnostics | supplements | other | Total | ||||||||||||||||||
Net revenue to external customers | $ | 1,051,301 | $ | 392,399 | $ | 138,853 | $ | 88,873 | $ | — | $ | 1,671,426 | ||||||||||||
Operating income (loss) | $ | 97,994 | $ | 11,241 | $ | 9,505 | $ | (840 | ) | $ | (54,048 | ) | $ | 63,852 | ||||||||||
Depreciation and amortization | $ | 171,980 | $ | 85,990 | $ | 6,809 | $ | 2,286 | $ | 862 | $ | 267,927 | ||||||||||||
Restructuring charge | $ | 36,196 | $ | — | $ | 238 | $ | — | $ | — | $ | 36,434 | ||||||||||||
Stock-based compensation | $ | — | $ | — | $ | — | $ | — | $ | 26,405 | $ | 26,405 | ||||||||||||
Assets | $ | 3,687,685 | $ | 1,850,236 | $ | 223,383 | $ | 65.263 | $ | 128,793 | $ | 5,955,360 | ||||||||||||
Expenditures for property, plant and equipment | $ | 46,859 | $ | 7,935 | $ | 1,917 | $ | 362 | $ | 8,988 | $ | 66,061 |
Vitamins and | Corporate | |||||||||||||||||||||||
Professional | Health | Consumer | nutritional | and | ||||||||||||||||||||
2007 | diagnostics | management | diagnostics | supplements | other | Total | ||||||||||||||||||
Net revenue to external customers | $ | 582,250 | $ | 23,374 | $ | 161,092 | $ | 72,824 | $ | — | $ | 839,540 | ||||||||||||
Operating income (loss) | $ | 61,067 | $ | (498 | ) | $ | 15,332 | $ | (1,061 | ) | $ | (250,693 | ) | $ | (175,853 | ) | ||||||||
Depreciation and amortization | $ | 82,797 | $ | 4,487 | $ | 9,106 | $ | 2,917 | $ | 1,806 | $ | 101,113 | ||||||||||||
Restructuring charge | $ | 3,965 | $ | — | $ | 2,737 | $ | — | $ | — | $ | 6,702 | ||||||||||||
Stock-based compensation | $ | — | $ | — | $ | — | $ | — | $ | 57,480 | $ | 57,480 | ||||||||||||
Assets | $ | 3,748,931 | $ | 635,415 | $ | 309,175 | $ | 49,655 | $ | 137,583 | $ | 4,880,759 | ||||||||||||
Expenditures for property, plant and equipment | $ | 30,581 | $ | 2,257 | $ | 1,366 | $ | 872 | $ | 1,559 | $ | 36,635 |
Vitamins and | Corporate | |||||||||||||||||||||||
Professional | Health | Consumer | nutritional | and | ||||||||||||||||||||
2006 | diagnostics | management | diagnostics | supplements | other | Total | ||||||||||||||||||
Net revenue to external customers | $ | 310,632 | $ | — | $ | 176,771 | $ | 82,051 | $ | — | $ | 569,454 | ||||||||||||
Operating income (loss) | $ | 42,554 | $ | — | $ | 26,975 | $ | (3,013 | ) | $ | (60,145 | ) | $ | 6,371 | ||||||||||
Depreciation and amortization | $ | 27,030 | $ | — | $ | 5,062 | $ | 3,270 | $ | 4,000 | $ | 39,362 | ||||||||||||
Restructuring charge | $ | 7,625 | $ | — | $ | 2,921 | $ | — | $ | 2,587 | $ | 13,133 | ||||||||||||
Stock-based compensation | $ | — | $ | — | $ | — | $ | — | $ | 5,455 | $ | 5,455 | ||||||||||||
Assets | $ | 625,560 | $ | — | $ | 314,815 | $ | 49,896 | $ | 95,500 | $ | 1,085,771 | ||||||||||||
Expenditures for property, plant and equipment | $ | 9,905 | $ | — | $ | 1,807 | $ | 475 | $ | 7,530 | $ | 19,717 |
SF-64
Table of Contents
2008 | 2007 | 2006 | ||||||||||
Revenue by Geographic Area: | ||||||||||||
United States | $ | 1,209,166 | $ | 529,870 | $ | 335,405 | ||||||
Europe | 285,696 | 198,525 | 136,971 | |||||||||
Other | 176,564 | 111,145 | 97,078 | |||||||||
$ | 1,671,426 | $ | 839,540 | $ | 569,454 | |||||||
2008 | 2007 | |||||||
Long-lived Tangible Assets by Geographic Area: | ||||||||
United States | $ | 222,450 | $ | 198,225 | ||||
United Kingdom | 12,113 | 36,204 | ||||||
China | 19,491 | 17,975 | ||||||
Other | 30,429 | 15,476 | ||||||
$ | 284,483 | $ | 267,880 | |||||
21. | RELATED PARTY TRANSACTIONS |
SF-65
Table of Contents
22. | VALUATION AND QUALIFYING ACCOUNTS |
Amounts | ||||||||||||||||
Balance at | charged | Balance at | ||||||||||||||
beginning of | against | end of | ||||||||||||||
period | Provision | reserves | period | |||||||||||||
Year ended December 31, 2006 | $ | 9,748 | $ | 22,914 | $ | (24,261 | ) | $ | 8,401 | |||||||
Year ended December 31, 2007 | $ | 8,401 | $ | 28,352 | $ | (24,586 | ) | $ | 12,167 | |||||||
Year ended December 31, 2008 | $ | 12,167 | $ | 20,810 | $ | (20,142 | ) | $ | 12,835 |
SF-66
Table of Contents
Amounts | ||||||||||||||||
Balance at | charged | Balance at | ||||||||||||||
beginning of | against | end of | ||||||||||||||
period | Provision | reserves | period | |||||||||||||
Year ended December 31, 2006 | $ | 7,742 | $ | 6,661 | $ | (6,184 | ) | $ | 8,219 | |||||||
Year ended December 31, 2007 | $ | 8,219 | $ | 8,067 | $ | (8,164 | ) | $ | 8,122 | |||||||
Year ended December 31, 2008 | $ | 8,122 | $ | 9,194 | $ | (6,478 | ) | $ | 10,838 |
23. | RESTRUCTURING ACTIVITIES |
2008 | 2007 | 2006 | ||||||||||
Fixed asset and inventory write-off | $ | 18,837 | $ | 3,870 | $ | 6,989 | ||||||
Severance | 8,357 | 1,989 | 2,886 | |||||||||
Intangible asset write-off | 5,103 | — | 2,722 | |||||||||
Facility and other exit costs | 4,137 | 843 | 536 | |||||||||
$ | 36,434 | $ | 6,702 | $ | 13,133 | |||||||
SF-67
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SF-68
Table of Contents
SF-69
Table of Contents
SF-70
Table of Contents
Balance at | Additions | Balance at | ||||||||||||||||||
beginning | to the | Amounts | end of | |||||||||||||||||
of period | reserve | paid | Other(1) | period | ||||||||||||||||
Year ended December 31, 2006 | $ | 949 | $ | 3,422 | $ | (2,820 | ) | $ | 14 | $ | 1,565 | |||||||||
Year ended December 31, 2007 | $ | 1,565 | $ | 2,828 | $ | (3,264 | ) | $ | (6 | ) | $ | 1,123 | ||||||||
Year ended December 31, 2008 | $ | 1,123 | $ | 25,642 | $ | (9,148 | ) | $ | (2,823 | ) | $ | 14,794 |
(1) | Represents foreign currency translation adjustment. |
24 | SUPPLEMENTAL CASH FLOW INFORMATION |
Employee stock options/ | ||||||||||||||||||
restricted stock awards | ||||||||||||||||||
Common stock issued | exchanged | |||||||||||||||||
Number of | Fair value of | Number of | Fair value of | |||||||||||||||
Company acquired | Date of acquisition | shares | shares | shares | shares | |||||||||||||
Matria Healthcare, Inc. | May 9, 2008 | — | $ | — | 1,490,655 | $ | 17,334 | |||||||||||
BBI Holdings Plc | February 12, 2008 | 251,085 | $ | 14,397 | 355,238 | $ | 3,639 | |||||||||||
Matritech, Inc. | December 12, 2007 | 616,671 | $ | 35,592 | — | $ | — | |||||||||||
Biosystems S.A. | December 11, 2007 | 33,373 | $ | 1,948 | — | $ | — | |||||||||||
Alere Medical, Inc. | November 16, 2007 | 2,762,182 | $ | 161,086 | 380,894 | $ | 20,614 | |||||||||||
HemoSense, Inc. | November 6, 2007 | 3,691,369 | $ | 226,415 | 380,732 | $ | 16,695 | |||||||||||
Cholestech Corporation | September 12, 2007 | 6,840,361 | $ | 329,774 | 733,077 | $ | 20,331 | |||||||||||
Spectral Diagnostics Private Limited(1) | July 27, 2007 | 93,558 | $ | 3,737 | — | $ | — | |||||||||||
Biosite Incorporated(2) | June 29, 2007 | — | $ | — | 753,863 | $ | 28,453 | |||||||||||
Quality Assured Services, Inc. | June 7, 2007 | 273,642 | $ | 12,834 | — | $ | — | |||||||||||
Instant Technologies, Inc. | December 28, 2007 | 463,399 | $ | 21,530 | — | $ | — | |||||||||||
ABON BioPharm (Hangzhou) Co. Ltd. and ACON Laboratories | May 15, 2006 | 1,871,250 | $ | 53,052 | — | $ | — | |||||||||||
CLONDIAG chip technologies GmbH | February 28, 2006 | 467,715 | $ | 12,457 | — | $ | — |
SF-71
Table of Contents
(1) | The acquisition of Spectral Diagnostics Private Limited also included its affiliate Source Diagnostics (India) Private Limited. | |
(2) | The value includes $2.6 million associated with net operating loss, or NOL, carryforwards related to stock options issued to Biosite Incorporated employees. |
25. | LOSS ON DISPOSITIONS, NET |
SF-72
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net product sales | $ | — | $ | 869,774 | $ | 486,275 | $ | (115,911 | ) | $ | 1,240,138 | |||||||||
Services revenue | — | 402,758 | 2,704 | — | 405,462 | |||||||||||||||
Net product sales and services revenue | — | 1,272,532 | 488,979 | (115,911 | ) | 1,645,600 | ||||||||||||||
License and royalty revenue | — | 15,536 | 10,290 | — | 25,826 | |||||||||||||||
Net revenue | — | 1,288,068 | 499,269 | (115,911 | ) | 1,671,426 | ||||||||||||||
Cost of net product sales | 2,541 | 447,914 | 286,739 | (112,540 | ) | 624,654 | ||||||||||||||
Cost of services revenue | 77 | 176,421 | 600 | — | 177,098 | |||||||||||||||
Cost of license and royalty revenue | — | 4,978 | 6,438 | (2,301 | ) | 9,115 | ||||||||||||||
Cost of net revenue | 2,618 | 629,313 | 293,777 | (114,841 | ) | 810,867 | ||||||||||||||
Gross profit | (2,618 | ) | 658,755 | 205,492 | (1,070 | ) | 860,559 | |||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 27,709 | 50,631 | 33,488 | — | 111,828 | |||||||||||||||
Sales and marketing | 37,183 | 258,580 | 90,389 | 132 | 386,284 | |||||||||||||||
General and administrative | 59,784 | 170,401 | 68,410 | — | 298,595 | |||||||||||||||
Total operating expenses | 124,676 | 479,612 | 192,287 | 132 | 796,707 | |||||||||||||||
Operating (loss) income | (127,294 | ) | 179,143 | 13,205 | (1,202 | ) | 63,852 | |||||||||||||
Interest expense, including amortization of deferred financing costs | (90,328 | ) | (72,447 | ) | (15,986 | ) | 77,617 | (101,144 | ) | |||||||||||
Other income (expense), net | 78,604 | (15,854 | ) | 12,655 | (77,617 | ) | (2,212 | ) | ||||||||||||
(Loss) income before (benefit) provision for income taxes | (139,018 | ) | 90,842 | 9,874 | (1,202 | ) | (39,504 | ) | ||||||||||||
(Benefit) provision for income taxes | (63,152 | ) | 46,759 | (293 | ) | — | (16,686 | ) | ||||||||||||
Equity in earnings of subsidiaries, net of tax | 52,576 | — | — | (52,576 | ) | — | ||||||||||||||
Equity earnings of unconsolidated entities, net of tax | 1,522 | (23 | ) | (379 | ) | (70 | ) | 1,050 | ||||||||||||
Net (loss) income | (21,768 | ) | 44,060 | 9,788 | (53,848 | ) | (21,768 | ) | ||||||||||||
Preferred stock dividends | (13,989 | ) | — | — | — | (13,989 | ) | |||||||||||||
Net (loss) income available to common stockholders | $ | (35,757 | ) | $ | 44,060 | $ | 9,788 | $ | (53,848 | ) | $ | (35,757 | ) | |||||||
SF-73
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net product sales | $ | 10,494 | $ | 552,754 | $ | 320,831 | $ | (83,164 | ) | $ | 800,915 | |||||||||
Services revenue | — | 14,164 | 2,482 | — | 16,646 | |||||||||||||||
Net product sales and services revenue | 10,494 | 566,918 | 323,313 | (83,164 | ) | 817,561 | ||||||||||||||
License and royalty revenue | — | 14,047 | 17,962 | (10,030 | ) | 21,979 | ||||||||||||||
Net revenue | 10,494 | 580,965 | 341,275 | (93,194 | ) | 839,540 | ||||||||||||||
Cost of net product sales | 27,208 | 294,317 | 203,196 | (93,318 | ) | 431,403 | ||||||||||||||
Cost of services revenue | — | 5,261 | — | — | 5,261 | |||||||||||||||
Cost of license and royalty revenue | — | 1,380 | 7,769 | — | 9,149 | |||||||||||||||
Cost of net revenue | 27,208 | 300,958 | 210,965 | (93,318 | ) | 445,813 | ||||||||||||||
Gross profit | (16,714 | ) | 280,007 | 130,310 | 124 | 393,727 | ||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 6,614 | 27,910 | 35,023 | — | 69,547 | |||||||||||||||
Purchase of in-process research and development | 169,000 | — | 4,825 | — | 173,825 | |||||||||||||||
Sales and marketing | 25,395 | 98,116 | 44,259 | — | 167,770 | |||||||||||||||
General and administrative | 78,499 | 42,518 | 37,421 | — | 158,438 | |||||||||||||||
Total operating expenses | 279,508 | 168,544 | 121,528 | — | 569,580 | |||||||||||||||
Operating (loss) income | (296,222 | ) | 111,463 | 8,782 | 124 | (175,853 | ) | |||||||||||||
Interest expense, including amortization and write-off of deferred financing costs | (77,201 | ) | (49,960 | ) | (21,069 | ) | 65,205 | (83,025 | ) | |||||||||||
Other income (expense), net | 71,426 | 4,461 | (695 | ) | (66,418 | ) | 8,774 | |||||||||||||
(Loss) income before (benefit) provision for income taxes | (301,997 | ) | 65,964 | (12,982 | ) | (1,089 | ) | (250,104 | ) | |||||||||||
(Benefit) provision for income taxes | (12,949 | ) | 9,701 | 2,269 | — | (979 | ) | |||||||||||||
Equity in earnings of subsidiaries, net of tax | 43,226 | — | — | (43,226 | ) | — | ||||||||||||||
Equity earnings of unconsolidated entities, net of tax | 1,069 | — | 3,348 | (45 | ) | 4,372 | ||||||||||||||
Net (loss) income | $ | (244,753 | ) | $ | 56,263 | $ | (11,903 | ) | $ | (44,360 | ) | $ | (244,753 | ) | ||||||
SF-74
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Net product sales | $ | 23,100 | $ | 334,471 | $ | 272,028 | $ | (77,469 | ) | $ | 552,130 | |||||||||
Services revenue | — | — | — | — | — | |||||||||||||||
Net product sales and services revenue | 23,100 | 334,471 | 272,028 | (77,469 | ) | 552,130 | ||||||||||||||
License and royalty revenue | — | 306 | 17,018 | — | 17,324 | |||||||||||||||
Net revenue | 23,100 | 334,777 | 289,046 | (77,469 | ) | 569,454 | ||||||||||||||
Cost of net product sales | 22,395 | 231,948 | 160,564 | (80,108 | ) | 334,799 | ||||||||||||||
Cost of license and royalty revenue | — | 481 | 4,951 | — | 5,432 | |||||||||||||||
Cost of net revenue | 22,395 | 232,429 | 165,515 | (80,108 | ) | 340,231 | ||||||||||||||
Gross profit | 705 | 102,348 | 123,531 | 2,639 | 229,223 | |||||||||||||||
Operating expenses: | ||||||||||||||||||||
Research and development | 1,750 | 7,705 | 39,251 | — | 48,706 | |||||||||||||||
Purchase of in-process research and development | — | — | 4,960 | — | 4,960 | |||||||||||||||
Sales and marketing | 4,096 | 48,684 | 41,665 | — | 94,445 | |||||||||||||||
General and administrative | 21,345 | 18,999 | 30,899 | — | 71,243 | |||||||||||||||
Loss on dispositions, net | — | — | 3,498 | — | 3,498 | |||||||||||||||
Operating (loss) income | (26,486 | ) | 26,960 | 3,258 | 2,639 | 6,371 | ||||||||||||||
Interest expense, including amortization of original issue discounts and write-off of deferred financing costs | (16,895 | ) | (6,206 | ) | (20,461 | ) | 16,992 | (26,570 | ) | |||||||||||
Other income (expense), net | 12,852 | 4,686 | 8,323 | (17,113 | ) | 8,748 | ||||||||||||||
(Loss) income before provision for income taxes | (30,529 | ) | 25,440 | (8,880 | ) | 2,518 | (11,451 | ) | ||||||||||||
Provision for income taxes | 1,390 | 2,012 | 1,935 | 390 | 5,727 | |||||||||||||||
Equity in earnings of subsidiaries, net of tax | 14,716 | — | — | (14,716 | ) | — | ||||||||||||||
Equity earnings of unconsolidated entities, net of tax | 361 | — | (25 | ) | — | 336 | ||||||||||||||
Net (loss) income | $ | (16,842 | ) | $ | 23,428 | $ | (10,840 | ) | $ | (12,588 | ) | $ | (16,842 | ) | ||||||
SF-75
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 1,743 | $ | 69,798 | $ | 69,783 | $ | — | $ | 141,324 | ||||||||||
Restricted cash | — | 1,160 | 1,588 | — | 2,748 | |||||||||||||||
Marketable securities | — | 1,347 | 416 | — | 1,763 | |||||||||||||||
Accounts receivable, net of allowances | — | 199,385 | 97,459 | (16,236 | ) | 280,608 | ||||||||||||||
Inventories, net | — | 131,918 | 71,478 | (4,265 | ) | 199,131 | ||||||||||||||
Deferred tax assets | 80,926 | 22,334 | 1,051 | — | 104,311 | |||||||||||||||
Income tax receivable | — | 2,792 | 3,614 | — | 6,406 | |||||||||||||||
Receivable from joint venture, net | — | — | 15,227 | (3,209 | ) | 12,018 | ||||||||||||||
Prepaid expenses and other current assets | 10,887 | 20,181 | 26,930 | 16,236 | 74,234 | |||||||||||||||
Intercompany receivables | 455,746 | 248,177 | 75,686 | (779,609 | ) | — | ||||||||||||||
Total current assets | 549,302 | 697,092 | 363,232 | (787,083 | ) | 822,543 | ||||||||||||||
Property, plant and equipment, net | 2,395 | 221,345 | 62,422 | (1,679 | ) | 284,483 | ||||||||||||||
Goodwill | 2,020,528 | 599,517 | 427,251 | (1,213 | ) | 3,046,083 | ||||||||||||||
Other intangible assets with indefinite lives | — | 21,195 | 21,789 | — | 42,984 | |||||||||||||||
Core technology and patents, net | 43,700 | 331,892 | 83,715 | — | 459,307 | |||||||||||||||
Other intangible assets, net | 277,389 | 772,457 | 119,484 | — | 1,169,330 | |||||||||||||||
Deferred financing costs, net, and other non-current assets | 36,876 | 6,872 | 3,136 | — | 46,884 | |||||||||||||||
Investments in unconsolidated entities | 872,848 | 751 | 57,681 | (862,448 | ) | 68,832 | ||||||||||||||
Marketable securities | 591 | — | — | — | 591 | |||||||||||||||
Deferred tax assets | (1,742 | ) | — | 16,065 | — | 14,323 | ||||||||||||||
Intercompany notes receivable | 1,633,174 | (50,660 | ) | 2,454 | (1,584,968 | ) | — | |||||||||||||
Total assets | $ | 5,435,061 | $ | 2,600,461 | $ | 1,157,229 | $ | (3,237,391 | ) | $ | 5,955,360 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Current portion of long-term debt | $ | 9,750 | $ | 2,870 | $ | 6,438 | $ | — | $ | 19,058 | ||||||||||
Current portion of capital lease obligations | — | 265 | 186 | — | 451 | |||||||||||||||
Accounts payable | 4,173 | 72,627 | 35,904 | — | 112,704 | |||||||||||||||
Accrued expenses and other current liabilities | (120,656 | ) | 263,380 | 93,617 | (3,209 | ) | 233,132 | |||||||||||||
Intercompany payables | 155,443 | 198,939 | 425,229 | (779,611 | ) | — | ||||||||||||||
Total current liabilities | 48,710 | 538,081 | 561,374 | (782,820 | ) | 365,345 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt, net of current portion | 1,493,000 | 2,302 | 5,255 | — | 1,500,557 | |||||||||||||||
Capital lease obligations, net of current portion | — | 66 | 402 | — | 468 | |||||||||||||||
Deferred tax liabilities | (36,399 | ) | 459,501 | 39,685 | — | 462,787 | ||||||||||||||
Deferred gain on joint venture | 16,310 | — | 270,720 | — | 287,030 | |||||||||||||||
Other long-term liabilities | 26,830 | 17,864 | 15,641 | — | 60,335 | |||||||||||||||
Intercompany notes payable | 607,772 | 853,470 | 119,594 | (1,580,836 | ) | — | ||||||||||||||
Total long-term liabilities | 2,107,513 | 1,333,203 | 451,297 | (1,580,836 | ) | 2,311,177 | ||||||||||||||
Stockholders’ equity | 3,278,838 | 729,177 | 144,558 | (873,735 | ) | 3,278,838 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 5,435,061 | $ | 2,600,461 | $ | 1,157,229 | $ | (3,237,391 | ) | $ | 5,955,360 | |||||||||
SF-76
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets: | ||||||||||||||||||||
Cash and cash equivalents | $ | 228,178 | $ | 127,626 | $ | 58,928 | $ | — | $ | 414,732 | ||||||||||
Restricted cash | — | 15 | 141,854 | — | 141,869 | |||||||||||||||
Marketable securities | — | 2,551 | — | — | 2,551 | |||||||||||||||
Accounts receivable, net of allowances | — | 123,951 | 68,880 | (29,451 | ) | 163,380 | ||||||||||||||
Inventories, net | 59 | 96,046 | 55,629 | (3,503 | ) | 148,231 | ||||||||||||||
Deferred tax assets | 7,725 | 4,496 | 5,949 | — | 18,170 | |||||||||||||||
Income tax receivable | — | 2,302 | 2,954 | — | 5,256 | |||||||||||||||
Receivable from joint venture, net | — | — | 1,856 | (1,856 | ) | — | ||||||||||||||
Prepaid expenses and other current assets | 4,864 | 11,046 | 13,424 | 29,451 | 58,785 | |||||||||||||||
Intercompany receivables | 170,353 | 22,815 | 64,500 | (257,668 | ) | — | ||||||||||||||
Total current assets | 411,179 | 390,848 | 413,974 | (263,027 | ) | 952,974 | ||||||||||||||
Property, plant and equipment, net | 2,028 | 197,237 | 68,615 | — | 267,880 | |||||||||||||||
Goodwill | 1,721,706 | 132,849 | 298,943 | (4,648 | ) | 2,148,850 | ||||||||||||||
Other intangible assets with indefinite lives | — | 21,120 | 21,977 | — | 43,097 | |||||||||||||||
Core technology and patents, net | 356,355 | 19,531 | 56,697 | — | 432,583 | |||||||||||||||
Other intangible assets, net | 747,300 | 63,211 | 59,133 | — | 869,644 | |||||||||||||||
Deferred financing costs, net, and other non-current assets | 40,111 | 6,850 | 4,786 | — | 51,747 | |||||||||||||||
Investments in unconsolidated entities | (327,854 | ) | (615 | ) | 53,070 | 353,152 | 77,753 | |||||||||||||
Marketable securities | 1,389 | — | 19,043 | — | 20,432 | |||||||||||||||
Deferred tax assets | 509 | (546 | ) | 15,836 | — | 15,799 | ||||||||||||||
Intercompany notes receivable | 2,096,757 | (286,692 | ) | — | (1,810,065 | ) | — | |||||||||||||
Total assets | $ | 5,049,480 | $ | 543,793 | $ | 1,012,074 | $ | (1,724,588 | ) | $ | 4,880,759 | |||||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||||||||||||||
Current liabilities: | ||||||||||||||||||||
Current portion of long-term debt | $ | 9,750 | $ | 6,526 | $ | 4,044 | $ | — | $ | 20,320 | ||||||||||
Current portion of capital lease obligations | — | 680 | 96 | — | 776 | |||||||||||||||
Accounts payable | 4,257 | 33,316 | 31,991 | 2,497 | 72,061 | |||||||||||||||
Accrued expenses and other current liabilities | 37,196 | 74,455 | 65,781 | (2,497 | ) | 174,935 | ||||||||||||||
Payable to joint venture, net | — | 6,476 | 6,196 | (1,856 | ) | 10,816 | ||||||||||||||
Intercompany payables | 46,647 | 82,455 | 128,567 | (257,669 | ) | — | ||||||||||||||
Total current liabilities | 97,850 | 203,908 | 236,675 | (259,525 | ) | 278,908 | ||||||||||||||
Long-term liabilities: | ||||||||||||||||||||
Long-term debt, net of current portion | 1,360,750 | 5,175 | 470 | — | 1,366,395 | |||||||||||||||
Capital lease obligations, net of current portion | — | 184 | 174 | — | 358 | |||||||||||||||
Deferred tax liabilities | 287,015 | 23,524 | 15,589 | — | 326,128 | |||||||||||||||
Deferred gain on joint venture | 16,311 | — | 276,767 | — | 293,078 | |||||||||||||||
Other long-term liabilities | 10,057 | 6,439 | 12,729 | — | 29,225 | |||||||||||||||
Intercompany notes payable | 690,830 | 794,968 | 324,264 | (1,810,062 | ) | — | ||||||||||||||
Total long-term liabilities | 2,364,963 | 830,290 | 629,993 | (1,810,062 | ) | 2,015,184 | ||||||||||||||
Stockholders’ equity | 2,586,667 | (490,405 | ) | 145,406 | 344,999 | 2,586,667 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 5,049,480 | $ | 543,793 | $ | 1,012,074 | $ | (1,724,588 | ) | $ | 4,880,759 | |||||||||
SF-77
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||
Net (loss) income | $ | (21,768 | ) | $ | 89,569 | $ | 9,755 | $ | (99,324 | ) | $ | (21,768 | ) | |||||||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of subsidiaries, net of tax | (53,576 | ) | — | — | 53,576 | — | ||||||||||||||
Interest expense related to amortization of deferred financing costs | 5,930 | — | — | — | 5,930 | |||||||||||||||
Non-cash stock-based compensation expense | 26,405 | — | — | — | 26,405 | |||||||||||||||
Impairment of inventory | — | 2,300 | 1,893 | — | 4,193 | |||||||||||||||
Impairment of long-lived assets | — | 6,117 | 13,914 | — | 20,031 | |||||||||||||||
(Gain) loss on sale of fixed assets | (1 | ) | 255 | 523 | — | 777 | ||||||||||||||
Equity earnings of unconsolidated entities, net of tax | (1,522 | ) | 23 | 379 | 70 | (1,050 | ) | |||||||||||||
Interest in minority investments | — | — | 167 | — | 167 | |||||||||||||||
Depreciation and amortization | 48,754 | 176,236 | 42,937 | — | 267,927 | |||||||||||||||
Deferred and other non-cash income taxes | (957 | ) | (25,497 | ) | (15,302 | ) | — | (41,756 | ) | |||||||||||
Other non-cash items | 2,714 | 1,680 | (16 | ) | — | 4,378 | ||||||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||||||
Accounts receivable, net | 1,000 | (37,182 | ) | (12,468 | ) | — | (48,650 | ) | ||||||||||||
Inventories, net | — | (80,371 | ) | (12,854 | ) | 43,999 | (49,226 | ) | ||||||||||||
Prepaid expenses and other current assets | 616 | 11,659 | (24,759 | ) | 5,111 | (7,373 | ) | |||||||||||||
Accounts payable | (84 | ) | 18,958 | (2,407 | ) | — | 16,467 | |||||||||||||
Accrued expenses and other current liabilities | (154,680 | ) | 112,386 | 15,397 | (5,111 | ) | (32,008 | ) | ||||||||||||
Other non-current liabilities | (1,104 | ) | 139 | 4,365 | — | 3,400 | ||||||||||||||
Intercompany payable (receivable) | 224,207 | (282,185 | ) | 54,037 | 3,941 | — | ||||||||||||||
Net cash provided by (used in) operating activities | 75,934 | (5,913 | ) | 75,561 | 2,262 | 147,844 | ||||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Purchases of property, plant and equipment | (1,009 | ) | (42,511 | ) | (24,220 | ) | 1,679 | (66,061 | ) | |||||||||||
Proceeds from sale of property, plant and equipment | — | 96 | 974 | — | 1,070 | |||||||||||||||
Cash paid for acquisitions and transactional costs, net of cash acquired | (470,393 | ) | 10,185 | (189,691 | ) | — | (649,899 | ) | ||||||||||||
Cash received from (paid for) investments in minority interests and marketable securities | 1,372 | (1,113 | ) | 11,874 | — | 12,133 | ||||||||||||||
Increase in other assets | (1,000 | ) | (5,007 | ) | (4,568 | ) | — | (10,575 | ) | |||||||||||
Net cash (used in) provided by investing activities | (471,030 | ) | (38,350 | ) | (205,631 | ) | 1,679 | (713,332 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
(Increase) decrease in restricted cash | — | (1,145 | ) | 140,349 | — | 139,204 | ||||||||||||||
Issuance costs associated with preferred stock | (350 | ) | — | — | — | (350 | ) | |||||||||||||
Cash paid for financing costs | (1,401 | ) | — | — | — | (1,401 | ) | |||||||||||||
Dividends to preferred stockholders | (56 | ) | — | — | — | (56 | ) | |||||||||||||
Proceeds from issuance of common stock, net of issuance costs | 20,675 | — | — | — | 20,675 | |||||||||||||||
Net repayments on long-term debt | (9,750 | ) | (4,037 | ) | — | — | (13,787 | ) | ||||||||||||
Net proceeds (repayments) from revolvinglines-of-credit | 142,000 | (2,320 | ) | (2,438 | ) | — | 137,242 | |||||||||||||
Tax benefit on exercised stock options | 17,542 | — | — | — | 17,542 | |||||||||||||||
Principal payments of capital lease obligations | — | (704 | ) | (596 | ) | — | (1,300 | ) | ||||||||||||
Net cash provided by (used in) financing activities | 168,660 | (8,206 | ) | 137,315 | — | 297,769 | ||||||||||||||
Foreign exchange effect on cash and cash equivalents | — | (866 | ) | (882 | ) | (3,941 | ) | (5,689 | ) | |||||||||||
Net (decrease) increase in cash and cash equivalents | (226,436 | ) | (53,335 | ) | 6,363 | — | (273,408 | ) | ||||||||||||
Cash and cash equivalents, beginning of period | 228,178 | 123,133 | 63,421 | — | 414,732 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 1,742 | $ | 69,798 | $ | 69,784 | $ | — | $ | 141,324 | ||||||||||
SF-78
Table of Contents
Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||
Net (loss) income | $ | (244,753 | ) | $ | 58,237 | $ | (12,222 | ) | $ | (46,015 | ) | $ | (244,753 | ) | ||||||
Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities: | ||||||||||||||||||||
Equity in earnings of subsidiaries, net of tax | (44,881 | ) | — | — | 44,881 | — | ||||||||||||||
Interest expense related to amortization and write-off of deferred financing costs | 6,884 | 2,122 | 1,957 | — | 10,963 | |||||||||||||||
Non-cash stock-based compensation expense | 52,210 | — | — | — | 52,210 | |||||||||||||||
Charge for in-process research and development | 4,825 | 169,000 | — | — | 173,825 | |||||||||||||||
Impairment of long-lived assets | — | 108 | 3,764 | — | 3,872 | |||||||||||||||
Loss (gain) on sale of fixed assets | — | 116 | (57 | ) | — | 59 | ||||||||||||||
Equity earnings of unconsolidated entities, net of tax | (1,069 | ) | — | (3,348 | ) | 45 | (4,372 | ) | ||||||||||||
Interest in minority investments | (243 | ) | — | 476 | 1,168 | 1,401 | ||||||||||||||
Depreciation and amortization | 43,718 | 31,305 | 26,090 | — | 101,113 | |||||||||||||||
Deferred and other non-cash income taxes | (34,636 | ) | 3,050 | 3,694 | — | (27,892 | ) | |||||||||||||
Other non-cash items | 197 | — | — | — | 197 | |||||||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||||||
Accounts receivable, net | — | 23,988 | (6,421 | ) | 29,451 | 47,018 | ||||||||||||||
Inventories, net | — | 7,588 | (8,972 | ) | (79 | ) | (1,463 | ) | ||||||||||||
Prepaid expenses and other current assets | (2,669 | ) | 45,520 | 176 | (27,595 | ) | 15,432 | |||||||||||||
Accounts payable | 2,198 | (13,290 | ) | 4,347 | — | (6,745 | ) | |||||||||||||
Accrued expenses and other current liabilities | 16,714 | (34,805 | ) | (13,946 | ) | (1,856 | ) | (33,893 | ) | |||||||||||
Other non-current liabilities | 407 | 220 | 1,156 | — | 1,783 | |||||||||||||||
Intercompany payable (receivable) | 1,385,254 | (1,385,378 | ) | 5,391 | (5,267 | ) | — | |||||||||||||
Net cash provided by (used in) operating activities | 1,184,156 | (1,092,219 | ) | 2,085 | (5,267 | ) | 88,755 | |||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Purchases of property, plant and equipment | (1,538 | ) | (12,845 | ) | (22,015 | ) | — | (36,398 | ) | |||||||||||
Proceeds from sale of property, plant and equipment | — | 171 | 93 | — | 264 | |||||||||||||||
Cash paid for acquisitions and transactional costs, net of cash acquired | (2,147,492 | ) | 179,154 | (67,778 | ) | — | (2,036,116 | ) | ||||||||||||
Cash received, net of cash paid, from formation of joint venture | 30,881 | ��� | 293,289 | — | 324,170 | |||||||||||||||
Cash (paid for) received from investments in minority interests and marketable securities | (1,471 | ) | 1,550 | (10,256 | ) | — | (10,177 | ) | ||||||||||||
(Increase) decrease in other assets | (26,362 | ) | 3,416 | (5,327 | ) | — | (28,273 | ) | ||||||||||||
Net cash (used in) provided by investing activities | (2,145,982 | ) | 171,446 | 188,006 | — | (1,786,530 | ) | |||||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Increase in restricted cash | — | (15 | ) | (141,854 | ) | — | (141,869 | ) | ||||||||||||
Cash paid for financing costs | (40,347 | ) | (164 | ) | (164 | ) | — | (40,675 | ) | |||||||||||
Proceeds from issuance of common stock, net of issuance costs | 1,122,852 | — | — | — | 1,122,852 | |||||||||||||||
Net repayments on long-term debt | — | — | (22,326 | ) | — | (22,326 | ) | |||||||||||||
Net proceeds (repayments) from revolvinglines-of-credit | 1,166,601 | (47,703 | ) | (4,727 | ) | — | 1,114,171 | |||||||||||||
Tax benefit on exercised stock options | 867 | — | — | — | 867 | |||||||||||||||
Principal payments of capital lease obligations | — | (554 | ) | (82 | ) | — | (636 | ) | ||||||||||||
Intercompany notes (receivable) payable | (1,245,000 | ) | 1,245,000 | — | — | — | ||||||||||||||
Net cash provided by (used in) financing activities | 1,004,973 | 1,196,564 | (169,153 | ) | — | 2,032,384 | ||||||||||||||
Foreign exchange effect on cash and cash equivalents | — | 761 | 2,991 | 5,267 | 9,019 | |||||||||||||||
Net increase in cash and cash equivalents | 43,147 | 276,552 | 23,929 | — | 343,628 | |||||||||||||||
Cash and cash equivalents, beginning of period | 16,031 | 20,074 | 34,999 | — | 71,104 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 59,178 | $ | 296,626 | $ | 58,928 | $ | — | $ | 414,732 | ||||||||||
SF-79
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Guarantor | Non-guarantor | |||||||||||||||||||
Issuer | subsidiaries | subsidiaries | Eliminations | Consolidated | ||||||||||||||||
(in thousands) | ||||||||||||||||||||
Cash Flows from Operating Activities: | ||||||||||||||||||||
Net (loss) income | $ | (16,842 | ) | $ | 23,428 | $ | (10,840 | ) | $ | (12,588 | ) | $ | (16,842 | ) | ||||||
Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities: | ||||||||||||||||||||
Equity in earnings of subsidiaries, net of tax | (14,716 | ) | — | — | 14,716 | — | ||||||||||||||
Interest expense related to amortization of original issue discounts and write-off of deferred financing costs | 1,937 | 1,213 | 1,008 | — | 4,158 | |||||||||||||||
Non-cash income related to currency hedge | (217 | ) | — | — | — | (217 | ) | |||||||||||||
Non-cash stock-based compensation expense | 5,455 | — | — | — | 5,455 | |||||||||||||||
Charge for in-process research and development | — | — | 4,960 | — | 4,960 | |||||||||||||||
Impairment of inventory | — | 707 | — | — | 707 | |||||||||||||||
Impairment of long-lived assets | — | 4,939 | 3,927 | — | 8,866 | |||||||||||||||
Loss (gain) on sale of fixed assets | — | 9 | (1,537 | ) | — | (1,528 | ) | |||||||||||||
Equity earnings of unconsolidated entities, net of tax | (361 | ) | — | 25 | — | (336 | ) | |||||||||||||
Interest in minority investments | (274 | ) | — | (25 | ) | — | (299 | ) | ||||||||||||
Depreciation and amortization | 4,989 | 13,378 | 20,995 | — | 39,362 | |||||||||||||||
Deferred and other non-cash income taxes | 84 | 2,186 | (2,551 | ) | (128 | ) | (409 | ) | ||||||||||||
Other non-cash items | 159 | — | 555 | — | 714 | |||||||||||||||
Changes in assets and liabilities, net of acquisitions: | ||||||||||||||||||||
Accounts receivable, net | (194 | ) | (8,931 | ) | (4,721 | ) | — | (13,846 | ) | |||||||||||
Inventories, net | 1,534 | 5,533 | (4,382 | ) | (2,518 | ) | 167 | |||||||||||||
Prepaid expenses and other current assets | (10 | ) | 740 | (816 | ) | — | (86 | ) | ||||||||||||
Accounts payable | 3,757 | (5,652 | ) | 2,105 | — | 210 | ||||||||||||||
Accrued expenses and other current liabilities | 2,510 | (4,962 | ) | 5,228 | 518 | 3,294 | ||||||||||||||
Other non-current liabilities | — | 28 | (88 | ) | — | (60 | ) | |||||||||||||
Intercompany (receivable) payable | (12,998 | ) | (15,288 | ) | 28,409 | (123 | ) | — | ||||||||||||
Net cash (used in) provided by operating activities | (25,187 | ) | 17,328 | 42,252 | (123 | ) | 34,270 | |||||||||||||
Cash Flows from Investing Activities: | ||||||||||||||||||||
Purchases of property, plant and equipment | (558 | ) | (3,332 | ) | (15,827 | ) | — | (19,717 | ) | |||||||||||
Proceeds from sale of property, plant and equipment | — | 15 | 2,229 | — | 2,244 | |||||||||||||||
Cash paid for acquisitions and transactional costs, net of cash acquired | (70,603 | ) | (109 | ) | (60,753 | ) | — | (131,465 | ) | |||||||||||
Cash paid for investments in minority interests and marketable securities | (14,455 | ) | — | (11,362 | ) | — | (25,817 | ) | ||||||||||||
Increase in other assets | (933 | ) | (133 | ) | (3,011 | ) | — | (4,077 | ) | |||||||||||
Net cash used in investing activities | (86,549 | ) | (3,559 | ) | (88,724 | ) | — | (178,832 | ) | |||||||||||
Cash Flows from Financing Activities: | ||||||||||||||||||||
Cash paid for financing costs | (79 | ) | (1,358 | ) | (1,350 | ) | — | (2,787 | ) | |||||||||||
Proceeds from issuance of common stock, net of issuance costs | 234,961 | — | — | — | 234,961 | |||||||||||||||
Net repayments on long-term debt | (20,000 | ) | — | — | — | (20,000 | ) | |||||||||||||
Net repayments from revolvinglines-of-credit | — | (15,225 | ) | (32,654 | ) | — | (47,879 | ) | ||||||||||||
Repayments of notes receivable | 14,691 | — | — | — | 14,691 | |||||||||||||||
Tax benefit on exercised stock options | 567 | — | — | — | 567 | |||||||||||||||
Principal payments of capital lease obligations | — | (511 | ) | (35 | ) | — | (546 | ) | ||||||||||||
Intercompany notes (receivable) payable | (103,247 | ) | 15,000 | 88,247 | — | — | ||||||||||||||
Net cash provided by (used in) financing activities | 126,893 | (2,094 | ) | 54,208 | — | 179,007 | ||||||||||||||
Foreign exchange effect on cash and cash equivalents | (3 | ) | — | 2,269 | 123 | 2,389 | ||||||||||||||
Net increase in cash and cash equivalents | 15,154 | 11,675 | 10,005 | — | 36,834 | |||||||||||||||
Cash and cash equivalents, beginning of period | 1,196 | 8,080 | 24,994 | — | 34,270 | |||||||||||||||
Cash and cash equivalents, end of period | $ | 16,350 | $ | 19,755 | $ | 34,999 | $ | — | $ | 71,104 | ||||||||||
SF-80
Table of Contents
Preferred Stock
Warrants
Stock Purchase Contracts
Depositary Shares
Debt Securities
Subsidiary Guarantees of Debt Securities
Units
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Year Ended December 31, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
Ratio of earnings to fixed charges | 0.7 | x | — | 0.6 | x | 0.5 | x | 0.4 | x | |||||||||||
Ratio of earnings to combined fixed charges and preference dividends | 0.5 | x | — | 0.6 | x | 0.5 | x | 0.4 | x |
• | our inability to predict the effects of the current national and worldwide financial and economic crisis, including disruptions in the capital and credit markets; |
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• | our inability to predict the effects of anticipated United States national healthcare reform legislation and similar initiatives in other countries; | |
• | economic factors, including inflation and fluctuations in interest rates and foreign currency exchange rates, and the potential effect of such fluctuations on revenues, expenses and resulting margins; | |
• | competitive factors, including technological advances achieved and patents attained by competitors and general competition; | |
• | domestic and foreign healthcare changes resulting in pricing pressures, including the continued consolidation among healthcare providers, trends toward managed care and healthcare cost containment and government laws and regulations relating to sales and promotion, reimbursement and pricing generally; | |
• | government laws and regulations affecting domestic and foreign operations, including those relating to trade, monetary and fiscal policies, taxes, price controls, regulatory approval of new products and licensing; | |
• | manufacturing interruptions, delays or capacity constraints or lack of availability of alternative sources for components for our products, including our ability to successfully maintain relationships with suppliers, or to put in place alternative suppliers on terms that are acceptable to us; | |
• | difficulties inherent in product development, including the potential inability to successfully continue technological innovation, complete clinical trials, obtain regulatory approvals or clearances in the United States and abroad and the possibility of encountering infringement claims by competitors with respect to patent or other intellectual property rights that can preclude or delay commercialization of a product; | |
• | significant litigation adverse to us including product liability claims, patent infringement claims and antitrust claims; | |
• | product efficacy or safety concerns resulting in product recalls or declining sales; | |
• | the impact of business combinations and organizational restructurings consistent with evolving business strategies; | |
• | our ability to satisfy the financial covenants and other conditions contained in the agreements governing our indebtedness; | |
• | our ability to effectively manage the integration of our acquisitions into our operations; | |
• | our ability to obtain required financing on terms that are acceptable to us; and | |
• | the issuance of new or revised accounting standards by the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, the Public Company Accounting Oversight Board or the SEC. |
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• | the repayment of debt; | |
• | the repurchase of our capital stock; | |
• | the financing of potential acquisitions and investments; | |
• | working capital; and | |
• | other purposes described in any prospectus supplement. |
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• | before such person became an interested stockholder, the board of directors of the corporation approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination; | |
• | upon the closing of the transaction that resulted in the interested stockholder becoming such, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding shares held by directors who are also officers of the corporation and shares held by employee stock plans; or | |
• | following the transaction in which such person became an interested stockholder, the business combination is approved by the board of directors of the corporation and authorized at a meeting of stockholders by the affirmative vote of the holders of at least two-thirds of the outstanding voting stock of the corporation not owned by the interested stockholder. |
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• | the offering price; | |
• | the designation and terms of any securities with which the warrants are issued and in that event the number of warrants issued with each security or each principal amount of security; | |
• | the dates on which the right to exercise the warrants will commence and expire, and the price at which the warrants are exercisable; | |
• | the amount of warrants then outstanding; | |
• | material U.S. federal income tax consequences of holding or exercising these securities; and | |
• | any other terms of the warrants. |
• | cure any ambiguity; | |
• | correct or supplement any defective or inconsistent provision; or | |
• | make any other change that we believe is necessary or desirable and will not adversely affect the interests of the affected holders in any material respect. |
• | increases the exercise price of such warrant; | |
• | shortens the time period during which any such warrant may be exercised; | |
• | reduces the number of securities the consent of holders of which is required for amending the agreement or the related warrants; or | |
• | otherwise adversely affects the exercise rights of warrant holders in any material respect; |
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• | we redeemed or reacquired all outstanding depositary shares relating to the deposit agreement; | |
• | all outstanding depositary shares have been converted (if convertible) into shares of common stock or another series of preferred stock; or | |
• | there has been a final distribution in respect of the preferred stock of any series in connection with our liquidation, dissolution or winding up and such distribution has been made to the related depositary shareholders. |
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• | the price or prices (expressed as a percentage of the principal amount) at which we will issue the debt securities; | |
• | any limit on the aggregate principal amount of the debt securities; | |
• | the date or dates on which we will pay the principal on the debt securities; | |
• | the rate or rates (which may be fixed or variable) per annum or, if applicable, the method used to determine the rate or rates (including any rate or rates determined by reference to any commodity, commodity index, stock exchange index or financial index) at which the debt securities will bear interest, the date or dates from which interest will accrue, the date or dates on which interest will commence and be payable and any regular record date for the interest payable on any interest payment date; | |
• | the place or places where principal of and interest on the debt securities will be payable, where the debt securities may be surrendered for registration of transfer or exchange and where notices and demands to or upon us in respect of the debt securities and the indenture may be served, and the method of such payment, if by wire transfer, mail or other means; | |
• | the terms and conditions on which we may redeem the debt securities; | |
• | any obligations we have to redeem or purchase the debt securities pursuant to any sinking fund or analogous provisions or at the option of a holder of debt securities and the date or dates on which or period or periods within which, the price or prices at which and the other detailed terms and provisions upon which the debt securities will be redeemed or purchased pursuant to such obligations; |
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• | the denominations in which the debt securities will be issued, if other than denominations of $1,000 and integral multiples thereof; | |
• | whether the debt securities will be issued as bearer or fully registered securities and, if they are to be issued as fully registered securities, whether they will be in the form of certificated debt securities or global debt securities; | |
• | the portion of principal amount of the debt securities payable upon acceleration or declaration of acceleration of the maturity date, if other than the principal amount; | |
• | the currency of denomination of the debt securities; | |
• | the designation of the currency, currencies or currency units in which payment of principal of and interest on the debt securities will be made; | |
• | if payments of principal of or interest on the debt securities will be made in one or more currencies or currency units other than that or those in which the debt securities are denominated, the manner in which the exchange rate with respect to these payments will be determined; | |
• | the terms, if any, of subordination of the debt securities; | |
• | the terms, if any, of any guarantee of the payment of principal of and interest on the debt securities by any of our subsidiaries (including the identity of any guarantor), whether any such guarantee shall be made on a senior or subordinated basis and, if applicable, a description of the subordination terms of any such guarantee; | |
• | any provisions relating to any security provided for the debt securities or any subsidiary guarantees (including any security to be provided by any subsidiary guarantor); | |
• | any addition to or change in the events of default described in this prospectus or in the indenture with respect to the debt securities and any change in the acceleration provisions described in this prospectus or in the indenture with respect to the debt securities; | |
• | any addition to or change in the covenants described in this prospectus or in the indenture with respect to the debt securities; | |
• | any provisions relating to conversion of any debt securities into equity interests, including the conversion price and the conversion period, whether conversion will be mandatory, at the option of the holders of the debt securities or at our option, events requiring an adjustment of the conversion price, and provisions affecting conversion if the debt securities are redeemed; | |
• | any exchange features of the debt securities; | |
• | whether any underwriter(s) will act as market maker(s) for the debt securities; | |
• | the extent to which a secondary market for the debt securities is expected to develop; | |
• | any addition to or change in the provisions relating to satisfaction and discharge of the indenture described in this prospectus with respect to the debt securities, or in the provisions relating to legal defeasance or covenant defeasance under the indenture described in this prospectus with respect to the debt securities; | |
• | any addition to or change in the provisions relating to modification of the indenture both with and without the consent of holders of debt securities issued under the indenture; | |
• | any other terms or provisions of the debt securities, which may supplement, modify or delete any provision of the indenture as it applies to that series; and | |
• | any registrars, paying agents, service agents, depositaries, interest rate calculation agents, exchange rate calculation agents or other agents with respect to the debt securities. (Section 2.02) |
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• | we are the resulting or surviving corporation in such consolidation or merger or the successor entity in the transaction (if other than us)(or, in the case of a plan of liquidation, any entity to which our properties or assets are transferred), is a corporation organized and validly existing under the laws of any U.S. domestic jurisdiction and expressly assumes, by supplemental indenture, our obligations on the debt securities and under the indenture; and | |
• | immediately after giving effect to the transaction, no event of default under the indenture, and no event which, after notice or lapse of time, or both, would become an event of default under the indenture, shall have occurred and be continuing. |
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• | default in the payment of any interest upon any debt security of that series when it becomes due and payable, and continuance of that default for a period of 30 consecutive days; | |
• | default in the payment of principal of any debt security of that series when and as due and payable; | |
• | default on any obligation to deposit any sinking fund payment when and due and payable in respect of any debt security of that series; | |
• | default in the performance or breach of any other covenant or warranty by us in the indenture or any debt security (other than a covenant or warranty that has been included in the indenture solely for the benefit of a series of debt securities other than that series), which default continues uncured for a period of 60 days after we receive written notice from the trustee or we and the trustee receive written notice from the holders of not less than 25% in principal amount of the outstanding debt securities of that series as provided in the indenture; | |
• | certain events of bankruptcy, insolvency or reorganization with respect to us; and | |
• | any other event of default provided with respect to debt securities of that series that is described in the applicable prospectus supplement. (Section 6.01) |
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• | has failed to act for a period of 60 days after receiving notice of a continuing event of default with respect to such debt securities from such holder and a request to act by holders of not less than 25% in principal amount of the outstanding debt securities of that series; | |
• | has been offered indemnity satisfactory to it in its reasonable judgment; and | |
• | has not received from the holders of a majority in principal amount of the outstanding debt securities of that series a direction inconsistent with that request. (Section 6.06) |
• | reduce the principal of or change the fixed maturity of any debt security or reduce the amount of, or postpone the date fixed for, the payment of any sinking fund or analogous obligation with respect to any series of debt securities; | |
• | reduce the rate of or extend the time for payment of interest (including default interest) on any debt security; | |
• | reduce the principal amount of discount securities payable upon acceleration of maturity; | |
• | waive a redemption payment, or change any of the other redemption provisions, with respect to any debt security, except as specifically set forth in the applicable resolution of our board of directors, the officers’ certificate or the supplemental indenture establishing the terms and conditions of such debt securities; | |
• | make the principal of or interest on any debt security payable in a currency other than that stated in the debt security; | |
• | waive a default in the payment of the principal of or interest on any debt security (except a rescission of acceleration of the debt securities of any series by the holders of a majority in aggregate principal amount of the then outstanding debt securities of that series and a waiver of the payment default that resulted from such acceleration); |
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• | make any change to certain provisions of the indenture relating to, among other things, the right of holders of debt securities to receive payment of the principal of and interest on those debt securities and to institute suit for the enforcement of any such payment, and certain waivers or amendments; | |
• | if the debt securities of that series are entitled to the benefit of any guarantee, release any guarantor of such series other than as provided in the indenture or modify the guarantee in any manner adverse to the holders; or | |
• | reduce the amount of debt securities whose holders must consent to an amendment, supplement or waiver. (Section 9.02) |
• | all of the debt securities of that series that have not been delivered for cancellation have become due and payable, whether by reason of the mailing of a notice of redemption or otherwise, or will become due and payable within one year; | |
• | we have deposited with the trustee in trust for the benefit of the holders of such debt securities funds in an amount sufficient to pay all of our indebtedness owing on such debt securities; and | |
• | we or any guarantor of such debt securities have paid all other amounts due and payable by us under the indenture; | |
• | we have instructed the trustee to apply the deposited money toward the payment of such debt securities at maturity or on the date of redemption, as the case may be. (Section 8.01) |
• | we and each guarantor, if any, may be discharged from any and all obligations in respect of the debt securities of any series (except for certain obligations to register the transfer or exchange of debt securities of such series, to replace stolen, lost or mutilated debt securities of such series, and to maintain paying agencies and certain provisions relating to the treatment of funds held by paying agents) (we refer to this below as “legal defeasance”); or | |
• | we and each guarantor, if any, may omit to comply with the covenants set forth in the indenture, as well as any additional covenants which may be set forth in the applicable prospectus supplement, and any omission to comply with those covenants will not constitute a default with respect to the debt securities of that series (we refer to this below as “covenant defeasance”). (Section 8.02) |
• | depositing with the trustee moneyand/or non-callable obligations guaranteed by the U.S. government (which we refer to below as “U.S. government obligations”) that, through the payment of interest and principal in accordance with their terms, will provide money in an amount sufficient in the opinion of a nationally recognized firm of independent public accountants to pay and discharge each installment of principal of and interest on, and any mandatory sinking fund payments in respect of, the debt securities of that series on the stated |
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maturity of those payments in accordance with the terms of the indenture and those debt securities; |
• | in the case of legal defeasance, delivering to the trustee an opinion of counsel confirming that we have received an Internal Revenue Service tax ruling or that there has been a change in applicable United States federal income tax law, in either case to the effect that, and based thereon, the holders of the debt securities of that series will not recognize income, gain or loss for United States federal income tax purposes as a result of the deposit and related legal defeasance and will be subject to United States federal income tax on the same amounts and in the same manner and at the same times as would have been in the case if the deposit and related legal defeasance had not occurred; | |
• | in the case of covenant defeasance, delivering to the trustee an opinion of counsel to the effect that the holders of the debt securities of that series will not recognize income, gain or loss for United States federal income tax purposes as a result of the deposit and related covenant defeasance and will be subject to United States federal income tax on the same amounts and in the same manner and at the same times as would have been the case if the deposit and related covenant defeasance had not occurred; | |
• | there being no continuing default with respect to the debt securities of that series on the date of deposit of the moneyand/or U.S. government obligations referred to above (other than a default resulting from the borrowing of funds to be applied to that deposit); | |
• | the defeasance not resulting in a breach or violation of, or default under, any of our or our subsidiaries’ material agreements (other than any such default resulting solely from the borrowing of funds to be applied to the deposit referred to above and the grant of any lien on that deposit in favor of the trusteeand/or the holders of the debt securities of that series); and | |
• | delivering to the trustee a certificate stating that the deposit was not made with the intent of preferring the holders of the debt securities of that series over any other of our creditors or with the intent of defeating, hindering, delaying or defrauding any other of our creditors. (Section 8.03) |
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• | the designation and terms of the units and of the securities comprising the units, including whether and under what circumstances those securities may be held or transferred separately; | |
• | any provisions of the governing unit agreement; | |
• | the price or prices at which such units will be issued; | |
• | the applicable U.S. federal income tax considerations relating to the units; | |
• | any provisions for the issuance, payment, settlement, transfer or exchange of the units or of the securities comprising the units; and | |
• | any other terms of the units and of the securities comprising the units. |
• | to cure any ambiguity; any provisions of the governing unit agreement that differ from those described below; |
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• | to correct or supplement any defective or inconsistent provision; or | |
• | to make any other change that we believe is necessary or desirable and will not adversely affect the interests of the affected holders in any material respect. |
• | impair any right of the holder to exercise or enforce any right under a security included in the unit if the terms of that security require the consent of the holder to any changes that would impair the exercise or enforcement of that right; or | |
• | reduce the percentage of outstanding units or any series or class the consent of whose holders is required to amend that series or class, or the applicable unit agreement with respect to that series or class, as described below. |
• | If the change affects only the units of a particular series issued under that agreement, the change must be approved by the holders of a majority of the outstanding units of that series; or | |
• | If the change affects the units of more than one series issued under that agreement, it must be approved by the holders of a majority of all outstanding units of all series affected by the change, with the units of all the affected series voting together as one class for this purpose. |
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• | The units will be issued in the denominations stated in the applicable prospectus supplement. Holders may exchange their units for units of smaller denominations or combined into fewer units of larger denominations, as long as the total amount is not changed. | |
• | Holders may exchange or transfer their units at the office of the unit agent. Holders may also replace lost, stolen, destroyed or mutilated units at that office. We may appoint another entity to perform these functions or perform them ourselves. | |
• | Holders will not be required to pay a service charge to transfer or exchange their units, but they may be required to pay for any tax or other governmental charge associated with the transfer or exchange. The transfer or exchange, and any replacement, will be made only if our transfer agent is satisfied with the holder’s proof of legal ownership. The transfer agent may also require an indemnity before replacing any units. | |
• | If we have the right to redeem, accelerate or settle any units before their maturity, and we exercise our right as to less than all those units or other securities, we may block the exchange or transfer of those units during the period beginning 15 days before the day we mail the notice of exercise and ending on the day of that mailing, in order to freeze the list of holders to prepare the mailing. We may also refuse to register transfers of or exchange any unit selected for early settlement, except that we will continue to permit transfers and exchanges of the unsettled portion of any unit being partially settled. We may also block the transfer or exchange of any unit in this manner if the unit includes securities that are or may be selected for early settlement. | |
• | Only the depositary will be entitled to transfer or exchange a unit in global form, since it will be the sole holder of the unit. |
• | directly to investors; | |
• | to investors through agents; | |
• | to dealers; | |
• | through a special offering, an exchange distribution or a secondary distribution in accordance with applicable New York Stock Exchange or other stock exchange rules; | |
• | through underwriting syndicates led by one or more managing underwriters; and | |
• | through one or more underwriters acting alone. |
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• | at a fixed price or prices, which may be changed; | |
• | at market prices prevailing at the time of sale; | |
• | at prices related to such prevailing market prices; or | |
• | at negotiated prices. |
• | identify any such underwriter or agent; | |
• | describe any compensation in the form of discounts, concessions, commissions or otherwise received from us by each such underwriter or agent and in the aggregate to all underwriters and agents; | |
• | identify the amounts underwritten; | |
• | identify the nature of the underwriter’s obligation to take the securities; | |
• | and any other material terms of the offering, including any over-allotment option. |
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• | Our annual report onForm 10-K/A for the fiscal year ended December 31, 2008, filed with the SEC on April 10, 2009; | |
• | Our current report onForm 8-K dated February 6, 2009, filed with the SEC on February 9, 2009; | |
• | Our current report onForm 8-K dated March 16, 2009, filed with the SEC on March 20, 2009; | |
• | Our current report onForm 8-K dated April 1, 2009, filed with the SEC on April 1, 2009; | |
• | Our current report onForm 8-K dated April 30, 2009, filed with the SEC on April 30, 2009; | |
• | Our definitive proxy statement filed with the SEC on April 30, 2009; | |
• | The description of our common stock contained in the Registration Statement on Form8-A, which was filed on January 5, 2009, and all amendments and reports updating such description; and | |
• | The description of our Series B convertible perpetual preferred stock contained in the Registration Statement onForm 8-A, which was filed on January 5, 2009, and all amendments and reports updating such description. |
• | Reports of independent registered public accounting firm on consolidated financial statements dated February 29, 2008; | |
• | Consolidated balance sheet as of December 31, 2007; | |
• | Consolidated statement of operations for the year ended December 31, 2007; | |
• | Consolidated statement of shareholders’ equity and comprehensive earnings (loss) for the year ended December 31, 2007; | |
• | Consolidated statement of cash flows for the year ended December 31, 2007; and | |
• | Notes to consolidated financial statements. |
• | Consolidated condensed balance sheets as of March 31, 2008 and December 31, 2007; | |
• | Consolidated condensed statements of operations for the three months ended March 31, 2008 and 2007; | |
• | Consolidated condensed statements of cash flows for the three months ended March 31, 2008 and 2007; and | |
• | Notes to consolidated condensed financial statements. |
• | Report of independent registered public accounting firm dated February 23, 2007; | |
• | Consolidated balance sheets as of December 31, 2006 and 2005; | |
• | Consolidated statements of income for the years ended December 31, 2006, 2005 and 2004; |
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• | Consolidated statements of stockholders’ equity for the years ended December 31, 2006, 2005 and 2004; | |
• | Consolidated statements of cash flows for the years ended December 31, 2006, 2005 and 2004; and | |
• | Notes to consolidated financial statements. |
• | Condensed consolidated balance sheets as of March 31, 2007 and December 31, 2006; | |
• | Condensed consolidated statements of income for the three months ended March 31, 2007 and 2006; | |
• | Condensed consolidated statements of cash flows for the three months ended March 31, 2007 and 2006; and | |
• | Notes to condensed consolidated financial statements. |
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