Price Graph
Price
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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DELAWARE
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51-0317849
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(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
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(I.R.S. EMPLOYER
IDENTIFICATION NO.)
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311 ENTERPRISE DRIVE
PLAINSBORO, NEW JERSEY
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08536
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
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(ZIP CODE)
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Title of Each Class
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Name of Exchange on Which Registered
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Common Stock, Par Value $.01 Per Share
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The Nasdaq Stock Market LLC
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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general economic and business conditions, both nationally and in our international markets;
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our expectations and estimates concerning future financial performance, financing plans and the impact of competition;
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anticipated trends in our business;
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anticipated demand for our products, particularly capital equipment;
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our ability to produce regenerative-based products in sufficient quantities to meet sales demands;
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our expectations concerning our ongoing restructuring, integration and manufacturing transfer and expansion activities;
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existing and future regulations affecting our business, and enforcement of those regulations;
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our ability to obtain additional debt and equity financing to fund capital expenditures, working capital requirements and acquisitions;
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physicians' willingness to adopt our recently launched and planned products, third-party payors' willingness to provide or continue reimbursement for any of our products and our ability to secure regulatory approval for products in development;
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initiatives launched by our competitors;
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our ability to protect our intellectual property, including trade secrets;
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our ability to complete acquisitions, integrate operations post-acquisition and maintain relationships with customers of acquired entities;
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our ability to remediate all matters identified in FDA observations and warning letters that we received or may receive; and
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other risk factors described in the section entitled "Risk Factors" in this report.
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economic conditions worldwide, which could affect the ability of hospitals and other customers to purchase our products and could result in a reduction in elective and non-reimbursed operative procedures;
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the impact of acquisitions and our ability to integrate acquisitions;
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the impact of our restructuring activities;
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expenditures for major initiatives, including acquired businesses and integrations thereof and restructuring;
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the timing of significant customer orders, which tend to increase in the fourth quarter to coincide with the end of budget cycles for many hospitals;
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increased competition for a wide range of customers across all our product lines in the markets our products are sold;
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market acceptance of our existing products, as well as products in development;
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the timing of regulatory approvals as well as changes in country-specific regulatory requirements;
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changes in the rates of exchange between the U.S. dollar and other currencies of foreign countries in which we do business;
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changes in the variable interest rates of our debt instruments which could impact debt service requirements;
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potential backorders, lost sales and expenses incurred in connection with product recalls or field corrective actions;
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disruption of our operations and sales resulting from extreme weather conditions or natural disasters that damage our manufacturing or distribution facilities, the suppliers and service providers for those facilities, or the infrastructure in the locations of those facilities;
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our ability to manufacture and ship our products efficiently or in sufficient quantities to meet sales demands;
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changes in the cost or decreases in the supply of raw materials, including energy, steel, pyrocarbon and honey;
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the timing of our research and development expenditures;
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reimbursement for our products by third-party payors such as Medicare, Medicaid, private and public health insurers and foreign governmental health systems;
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the ability to maintain existing distribution rights to and from certain third parties;
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the ability to maintain business if or when we opt to convert such business from distributors to a direct sales model;
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the ability of our new commercial sales representatives to obtain sales targets in a reasonable time frame;
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the impact of changes to our sales organization, including channel expansion in the U.S. and increased specialization;
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peer-reviewed publications discussing the clinical effectiveness of the products we sell;
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inspections of our manufacturing facilities for compliance with Quality System Regulations (Good Manufacturing Practices) which could result in Form 483 observations, warning letters, injunctions or other adverse findings from the FDA or from equivalent regulatory bodies, and corrective actions, procedural changes and other actions that we determine are necessary or appropriate to address the results of those inspections, any of which may affect production and our ability to supply our customers with our products;
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changes in regulations or guidelines that impact the sales and marketing practices for products that we sell;
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the increased regulatory scrutiny of certain of our products, including products which we manufacture for others, could result in their being removed from the market or involve field corrective actions that could affect the marketability of our products;
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enforcement or defense of intellectual property rights;
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changes in tax laws, or their interpretations; and
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the impact of goodwill and intangible asset impairment charges if future operating results of the acquired businesses are significantly less than the results anticipated at the time of the acquisitions.
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third-party payors of hospital services and hospital outpatient services, including Medicare, Medicaid, private and public health insurers and foreign governmental health systems, annually revise their payment methodologies, which can result in stricter standards for reimbursement of hospital charges for certain medical procedures or the elimination of reimbursement;
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several foreign countries have implemented reforms of their respective healthcare sectors in an effort to reduce healthcare spending, including restricting funding to only those medical technologies and procedures with proven effectiveness, and increasing patient co-payments. Governmental health systems have revised and continue to consider revisions of healthcare budgets, which could result in stricter standards for implementing certain medical procedures, increased scrutiny of medical devices, and downward pricing pressure;
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Medicare, Medicaid, private and public health insurer and foreign governmental cutbacks could create downward pricing pressure on our products;
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in the U.S., Medicare and Medicaid coverage as well as commercial payor coverage determinations could reduce or eliminate reimbursement or coverage for certain of our wound matrix, amniotic, and advanced wound dressing products as well as other products in most regions, negatively affecting our market for these products, and future determinations could reduce or eliminate reimbursement or coverage for these products in other regions and could reduce or eliminate reimbursement or coverage for other products;
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there has been a consolidation among healthcare facilities and purchasers of medical devices in the U.S., some of whom prefer to limit the number of suppliers from whom they purchase medical products, and these entities may decide to stop purchasing our products or demand discounts on our prices;
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there has been a growing movement of physicians becoming employees of hospitals and other healthcare entities, which aligns surgeon product choices with his or her employers' purchasing decisions, and adds to pricing pressures;
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in the U.S., we are party to contracts with group purchasing organizations, which negotiate pricing for many member hospitals, require us to discount our prices for certain of our products and limit our ability to raise prices for certain of our products, particularly surgical instruments;
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there is economic pressure to contain healthcare costs in domestic and international markets, and, regardless of the consolidation discussed above, providers generally are exploring ways to cut costs by eliminating purchases or driving reductions in the prices that they pay for medical devices, or increasing clinical or economic evidence thresholds for product formularies;
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there are proposed and existing laws, regulations and industry policies in domestic and international markets regulating the sales and marketing practices and the pricing and profitability of companies in the healthcare industry;
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proposed laws or regulations may permit hospitals to provide financial incentives to doctors for reducing hospital costs, will award physician efficiency, and will encourage partnerships with healthcare service and goods providers to reduce prices; and
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there have been initiatives by third-party payors and foreign governmental health systems to challenge the prices charged for medical products that could affect our ability to sell products on a competitive basis.
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take a significant amount of time;
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require the expenditure of substantial financial and other resources;
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involve rigorous and expensive pre-clinical and clinical testing, as well as increased post-market surveillance;
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involve modifications, repairs or replacements of our products; and
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result in limitations on the indicated uses of our products.
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provide significantly more clinical evidence to get new products to market and even to keep existing products on the market;
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make changes to product labeling and make certain product data available to the public; and
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conduct product portfolio assessments to determine the impact of the EU MDR on the Company's margins.
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making it more difficult for us to satisfy our financial obligations;
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increasing our vulnerability to adverse economic, regulatory and industry conditions, and placing us at a disadvantage compared to our competitors that are less leveraged;
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limiting our ability to compete and our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and
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limiting our ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate or other purposes.
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our collagen-based products, such as the Integra Dermal Regeneration Template and wound matrix products, the DuraGen® family of products, our Absorbable Collagen Sponges, Primatrix and SurgiMend products;
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our products made from silicone, such as our neurosurgical shunts and drainage systems and hemodynamic shunts;
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products which use many different specialty parts from numerous suppliers, such as our intracranial monitors, catheters and headlights;
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products that use pyrolytic carbon (i.e., PyroCarbon) technology, such as certain of our reconstructive extremity orthopedic implants;
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products which are amniotic tissue based;
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products that use medical grade leptospermum honey, such as our Medihoney products; and
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our TCC-EZ
®
total contact cast system products.
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distracting management from day-to-day operations;
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potential incompatibility of corporate cultures;
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an inability to achieve synergies as planned;
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risks associated with the assumption of contingent or other liabilities of acquisition targets;
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adverse effects on existing business relationships with suppliers or customers, including failure to retain key customers and suppliers;
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failure to retain key employees of our company and of the acquired businesses;
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inheriting and uncovering previously unknown issues, problems and costs from the acquired company;
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delays between our expenditures to acquire new products, technologies or businesses and the generation of revenues from those acquired products, technologies or businesses;
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realization of assets and settlement of liabilities at amounts equal to estimated fair value as of the acquisition date of any acquisition or disposition;
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an inability to integrate information technology systems of acquired businesses in a secure and reliable manner;
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costs and delays in implementing common systems and procedures (including technology, compliance programs, financial systems, distribution and general business operations, among others);
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liabilities that are significantly larger than we currently anticipate and unforeseen increased expenses or delays associated with the acquisitions, including transition costs to integrate the businesses that may exceed the costs that we currently anticipate;
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challenges involved with the increased scale of our operations resulting from the acquisitions; and
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increased difficulties in managing our business due to the addition of international locations.
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government officials charged with responsibility for enforcing those laws will not assert that our sales and marketing practices or customer discount arrangements are in violation of those laws or regulations; or
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government regulators or courts will interpret those laws or regulations in a manner consistent with our interpretation.
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ITEM 2.
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PROPERTIES
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ITEM 3.
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LEGAL PROCEEDINGS
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ITEM 4.
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MINE SAFETY DISCLOSURES
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ITEM 5.
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MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
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2018
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2017
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||||||||||||
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High
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Low
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High
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Low
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Fourth Quarter
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$
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64.51
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$
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42.62
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$
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51.77
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$
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46.22
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Third Quarter
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$
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65.87
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$
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57.63
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$
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55.76
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$
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47.80
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Second Quarter
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$
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67.23
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$
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54.05
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$
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54.54
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$
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40.86
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First Quarter
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$
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57.38
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$
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46.55
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$
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44.90
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$
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41.09
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ITEM 6.
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SELECTED FINANCIAL DATA
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Years Ended December 31,
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2018
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2017
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2016
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2015
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2014
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(In thousands, except per share data)
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Operating Results:
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Total revenues, net
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$
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1,472,441
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$
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1,188,236
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$
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992,075
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$
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882,734
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$
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796,717
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Costs and expenses
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1,361,443
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1,143,432
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876,735
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803,147
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728,860
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Operating income (4)
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110,998
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44,804
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115,340
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79,587
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67,857
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Interest expense, net (1) (2)
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(61,883
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)
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(34,764
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)
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(25,779
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)
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(23,504
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)
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(21,799
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)
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Other income (expense), net (7)
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8,288
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1,345
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845
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4,588
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(492
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)
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Income from continuing operations before income taxes
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57,403
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11,385
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90,406
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60,671
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45,566
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(Benefit from) provision for income taxes (4) (6)
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(3,398
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)
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(53,358
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)
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15,842
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53,820
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9,271
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Net income from continuing operations
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$
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60,801
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$
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64,743
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$
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74,564
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$
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6,851
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$
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36,295
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Loss from discontinued operations (net of tax benefit)
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$
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—
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$
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—
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$
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—
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$
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(10,370
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)
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$
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(2,291
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)
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Net income (loss)
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$
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60,801
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$
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64,743
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$
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74,564
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$
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(3,519
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)
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$
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34,004
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Diluted net income per common share from continuing operations
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$
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0.72
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$
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0.82
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$
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0.94
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$
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0.10
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$
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0.55
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Diluted net loss per common share from discontinued operations
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$
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—
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$
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—
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$
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—
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$
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(0.15
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)
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$
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(0.03
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)
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Diluted net income (loss) per common share
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$
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0.72
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$
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0.82
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$
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0.94
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$
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(0.05
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)
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$
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0.52
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Weighted average common shares outstanding for diluted net income per share
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83,999
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79,121
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79,194
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71,354
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65,920
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As of December 31,
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2018
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2017
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2016
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2015
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2014
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||||||||||
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(In thousands)
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||||||||||||||||||
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Financial Position:
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Cash, cash equivalents
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$
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138,838
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$
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174,935
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|
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$
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102,055
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|
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$
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48,132
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|
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$
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71,734
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|
|
Total assets (5) (8)
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3,107,887
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3,211,257
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1,807,954
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1,774,224
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1,412,402
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Short-term borrowings under the term loan of the Senior Credit Facility
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22,500
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60,000
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—
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14,375
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3,750
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Long-term borrowings including the revolving portion of the Senior Credit Facility (1)
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1,210,513
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1,781,142
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|
665,000
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481,875
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|
|
413,125
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|||||
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Long-term debt (2) (5) (9)
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121,200
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|
|
—
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|
|
—
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|
|
218,240
|
|
|
211,623
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|
|||||
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Retained earnings (4)
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|
348,373
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|
|
285,186
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|
|
220,443
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|
|
145,879
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|
|
314,960
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|
|||||
|
Stockholders’ equity (3)
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|
1,375,796
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|
|
962,306
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|
|
839,667
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|
|
751,443
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|
|
704,322
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|||||
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(1)
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For the years ended December 31, 2018, 2017, 2016, 2015 and 2014, we reported the borrowings outstanding under the revolving portion of our Senior Credit Facility as long-term debt as well as the 1.625% convertible senior notes due in 2016 ("2016 Convertible Notes"). We also reported the term loan as long-term debt with the exception of current principal payments due within 12 months, which are classified as short-term. At December 31, 2018, we have a total of $1.2 billion outstanding under our Senior Credit Facility and $954.4 million available for future borrowings.
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|
(2
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)
|
In 2011, we issued $230.0 million of the 2016 Convertible Notes. The 2016 Convertible Notes were repaid in December 2016 in accordance with their terms.
|
|
|
|
|
|
(3
|
)
|
In 2018, we closed on a public offering of common stock. We issued 6.0 million shares of common stock and received total proceeds, net of underwriting fees and offering expenses, of approximately $349.6 million.
In 2015, we closed on a public offering of common stock. We issued 8.0 million shares of common stock and received total proceeds, net of underwriting fees and offering expenses, of approximately $219.7 million.
|
|
|
|
|
|
(4
|
)
|
On January 1, 2018, we adopted Topic 606 using the modified retrospective method. Results of operations for the reporting periods after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605,
Revenue Recognition
. The adoption of Topic 606 resulted in an increase to the opening retained earnings of $1.9 million, which was recorded net of taxes as of January 1, 2018 to reflect the change in timing of the recognition of revenue related to the Company's private label business from point in time to over time during the manufacturing process and goods in transit for which control was transferred to customers at the time of shipment. Total assets and liabilities increased by $7.1 million and $5.2 million, respectively, as of January 1, 2018.
In 2016, the Company elected to adopt Accounting Standard Update 2016-09
, Improvements to Employee Share-Based Payment Accounting (Topic 718).
The Company elected to account for forfeitures as they occur. The impact in retained earnings as of December 31, 2015 from this provision was not significant. Amendments related to accounting for excess tax benefits have been adopted prospectively, resulting in recognition of excess tax benefits against income tax expenses rather than additional paid-in capital of $3.8 million for the year ended December 31, 2016.
|
|
|
|
|
|
(5
|
)
|
In 2016, the Company adopted Accounting Standard Update 2015-03,
Simplifying the Presentation of Debt Issuance Costs
. The Company adopted this guidance effective January 1, 2016 on a retrospective basis. The Company reclassified a portion of the debt issuance costs from other assets to long-term debt as of December 31, 2015, 2014 and 2013.
|
|
|
|
|
|
(6
|
)
|
The benefit from income taxes in 2017 includes $43.4 million related to the re-measurement of our deferred taxes resulting from a reduction of the federal statutory rate from 35% to 21% from the Tax Cuts and Jobs Act (the "2017 Tax Act"), enacted in December 2017 (see Note 12,
Income Taxes
, of the consolidated financial statements).
|
|
|
|
|
|
(7
|
)
|
In 2017, other income (expense), net, includes gain on sale of business of $2.6 million related to the Divestiture to Natus (as defined in Item 7.
Management's Discussion and Analysis
).
|
|
|
|
|
|
(8
|
)
|
Presented for continuing operations only.
|
|
|
|
|
|
(9
|
)
|
During the fourth quarter of 2018, the Company entered into an accounts receivable securitization facility (the "Securitization Facility"). As of December 31, 2018, the Company had $121.2 million of outstanding borrowings under its Securitization Facility. Refer to Note 5,
Debt
, for further information on the Securitization Facility.
|
|
ITEM 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Acquisition and integration-related charges (1)
|
$
|
93,926
|
|
|
$
|
117,947
|
|
|
$
|
18,898
|
|
|
Structural optimization charges
|
19,598
|
|
|
7,461
|
|
|
9,240
|
|
|||
|
Impairment charges
|
4,941
|
|
|
3,290
|
|
|
—
|
|
|||
|
Litigation matters
|
4,598
|
|
|
—
|
|
|
—
|
|
|||
|
Global ERP implementation charges
|
—
|
|
|
2,780
|
|
|
15,585
|
|
|||
|
Hurricane Maria charges
|
—
|
|
|
2,758
|
|
|
—
|
|
|||
|
Discontinued product lines charges
|
—
|
|
|
1,156
|
|
|
—
|
|
|||
|
Convertible debt non-cash interest
|
—
|
|
|
—
|
|
|
8,075
|
|
|||
|
Total
|
$
|
123,063
|
|
|
$
|
135,392
|
|
|
$
|
51,798
|
|
|
(1)
|
The amounts have been reduced by $2.6 million in 2017, representing gain on sale of business to Natus. See Note 4,
Acquisitions and Pro Forma Results
, of our consolidated financial statements for more information.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Cost of goods sold
|
$
|
34,563
|
|
|
$
|
28,413
|
|
|
$
|
18,869
|
|
|
Research and development
|
—
|
|
|
—
|
|
|
200
|
|
|||
|
Selling, general and administrative
|
87,709
|
|
|
107,361
|
|
|
24,654
|
|
|||
|
Interest expense
|
—
|
|
|
—
|
|
|
8,075
|
|
|||
|
Other income
|
791
|
|
|
(382
|
)
|
|
—
|
|
|||
|
Total
|
$
|
123,063
|
|
|
$
|
135,392
|
|
|
$
|
51,798
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
Segment Net Sales
|
(In thousands)
|
||||||||||
|
Codman Specialty Surgical
|
$
|
963,929
|
|
|
$
|
720,301
|
|
|
$
|
632,524
|
|
|
Orthopedics and Tissue Technologies
|
508,512
|
|
|
467,935
|
|
|
359,551
|
|
|||
|
Total revenues
|
1,472,441
|
|
|
1,188,236
|
|
|
992,075
|
|
|||
|
Cost of goods sold
|
571,496
|
|
|
435,511
|
|
|
349,089
|
|
|||
|
Gross margin on total revenues
|
$
|
900,945
|
|
|
$
|
752,725
|
|
|
$
|
642,986
|
|
|
Gross margin as a percentage of total revenues
|
61.2
|
%
|
|
63.3
|
%
|
|
64.8
|
%
|
|||
|
|
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
Research and development
|
5.3
|
%
|
|
5.3
|
%
|
|
5.9
|
%
|
|
Selling, general and administrative
|
46.9
|
%
|
|
52.5
|
%
|
|
45.9
|
%
|
|
Intangible asset amortization
|
1.4
|
%
|
|
1.7
|
%
|
|
1.4
|
%
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Interest income
|
$
|
2,800
|
|
|
$
|
255
|
|
|
$
|
24
|
|
|
Interest expense
|
(64,683
|
)
|
|
(35,019
|
)
|
|
(25,803
|
)
|
|||
|
Other income, net
|
8,288
|
|
|
1,345
|
|
|
845
|
|
|||
|
Total non-operating income and expense
|
$
|
(53,595
|
)
|
|
$
|
(33,419
|
)
|
|
$
|
(24,934
|
)
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
United States
|
$
|
1,045,887
|
|
|
$
|
894,260
|
|
|
$
|
765,608
|
|
|
Europe
|
201,354
|
|
|
150,147
|
|
|
120,588
|
|
|||
|
Asia Pacific
|
144,253
|
|
|
80,636
|
|
|
59,985
|
|
|||
|
Rest of World
|
80,947
|
|
|
63,193
|
|
|
45,894
|
|
|||
|
Total Revenues
|
$
|
1,472,441
|
|
|
$
|
1,188,236
|
|
|
$
|
992,075
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
|
Net cash provided by operating activities
|
$
|
199,683
|
|
|
$
|
114,544
|
|
|
Net cash used in investing activities
|
(49,705
|
)
|
|
(1,221,335
|
)
|
||
|
Net cash provided (used in) by financing activities
|
(180,872
|
)
|
|
1,168,947
|
|
||
|
Effect of exchange rate fluctuations on cash
|
(5,203
|
)
|
|
10,724
|
|
||
|
Net increase (decrease) in cash and cash equivalents
|
$
|
(36,097
|
)
|
|
$
|
72,880
|
|
|
i.
|
a
$900.0 million
Term Loan facility; and
|
|
ii.
|
a
$1.3 billion
revolving credit facility, which includes a
$60.0 million
sublimit for the issuance of standby letters of credit and a
$60.0 million
sublimit for swingline loans.
|
|
Fiscal Quarter
|
|
Maximum Consolidated Total Leverage Ratio
|
|
|
|
|
|
Execution of May 2018 Amendment through March 31, 2019
|
|
5.50 : 1.00
|
|
June 30, 2019 through March 31, 2020
|
|
5.00 : 1.00
|
|
June 30, 2020 through March 31, 2021
|
|
4.50 : 1.00
|
|
June 30, 2021 and thereafter
|
|
4.00 : 1.00
|
|
i.
|
the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from
1.00%
to
1.75%
), or
|
|
ii.
|
the highest of:
|
|
1.
|
the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus
0.50%
, or plus the applicable rate (ranging from
0%
to
0.75%
),
|
|
2.
|
the prime lending rate of Bank of America, N.A. plus the applicable rate (ranging from
0%
to
0.75%
), and
|
|
3.
|
the one-month Eurodollar Rate plus
1.00%
plus the applicable rate (ranging from
0%
to
0.75%
).
|
|
|
|
|
Payments Due by Calendar Year
|
||||||||||||||||
|
|
Total
|
|
2019
|
|
2020-2021
|
|
2022-2023
|
|
Thereafter
|
||||||||||
|
|
(In millions)
|
||||||||||||||||||
|
Senior Credit Facility - Revolver (1)
|
$
|
345.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
345.0
|
|
|
$
|
—
|
|
|
Senior Credit Facility - Term Loan
|
900.0
|
|
|
22.5
|
|
|
101.2
|
|
|
776.3
|
|
|
—
|
|
|||||
|
Securitization Facility (1)
|
121.2
|
|
|
—
|
|
|
121.2
|
|
|
—
|
|
|
—
|
|
|||||
|
Interest (2)
|
136.8
|
|
|
34.7
|
|
|
64.3
|
|
|
37.8
|
|
|
—
|
|
|||||
|
Employment Agreements (3)
|
4.0
|
|
|
3.0
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|||||
|
Operating Leases (4)
|
169.8
|
|
|
16.8
|
|
|
26.3
|
|
|
24.2
|
|
|
102.5
|
|
|||||
|
Purchase Obligations
|
13.4
|
|
|
11.6
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|||||
|
Others
|
12.0
|
|
|
6.1
|
|
|
1.3
|
|
|
1.3
|
|
|
3.3
|
|
|||||
|
Total
|
$
|
1,702.2
|
|
|
$
|
94.7
|
|
|
$
|
317.1
|
|
|
$
|
1,184.6
|
|
|
$
|
105.8
|
|
|
(1)
|
The Company may borrow and make payments against the Revolving Credit Facility and Securitization Facility from time to time and considers all of the outstanding amounts to be long-term based on its current intent and ability to repay the borrowing outside the next twelve-month period.
|
|
(2)
|
As the Revolving Credit Facility and Securitization Facility can be repaid at any time, no interest has been included in the calculation.
|
|
(3)
|
Amounts shown under Employment Agreements do not include compensation resulting from a change in control.
|
|
(4)
|
During 2018, the Company entered into a lease for a new corporate headquarters in Princeton, NJ which will commence during the second quarter of 2019. The Company will make cumulative total payments of approximately $67.0 million over the term of the lease.
|
|
|
As of December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
Discount rate
|
1.00
|
%
|
|
0.74
|
%
|
|
Expected return on plan assets
|
3.40
|
%
|
|
3.08
|
%
|
|
Rate of compensation increase
|
1.70
|
%
|
|
1.70
|
%
|
|
Hedged Item
|
|
Current Notional Amount
|
|
Designation Date
|
|
Effective Date
|
|
Termination Date
|
|
Fixed Interest Rate
|
|
Floating Rate
|
|
Estimated Fair Value
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets (Liabilities)
|
|||||
|
3-month USD LIBOR Loan
|
|
$
|
50,000
|
|
|
June 22, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
1.062
|
%
|
|
3-month USD LIBOR
|
|
$
|
410
|
|
|
3-month USD LIBOR Loan
|
|
50,000
|
|
|
June 22, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
1.062
|
%
|
|
3-month USD LIBOR
|
|
415
|
|
||
|
1-month USD LIBOR Loan
|
|
50,000
|
|
|
July 12, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
0.825
|
%
|
|
1-month USD LIBOR
|
|
418
|
|
||
|
3-month USD LIBOR Loan
|
|
50,000
|
|
|
February 6, 2017
|
|
June 30, 2017
|
|
June 30, 2020
|
|
1.834
|
%
|
|
3-month USD LIBOR
|
|
619
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
February 6, 2017
|
|
June 30, 2017
|
|
June 30, 2020
|
|
1.652
|
%
|
|
1-month USD LIBOR
|
|
1,287
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
March 27, 2017
|
|
December 31, 2017
|
|
June 30, 2021
|
|
1.971
|
%
|
|
1-month USD LIBOR
|
|
1,246
|
|
||
|
1-month USD LIBOR Loan
|
|
150,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2022
|
|
2.201
|
%
|
|
1-month USD LIBOR
|
|
1,491
|
|
||
|
1-month USD LIBOR Loan
|
|
150,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2022
|
|
2.201
|
%
|
|
1-month USD LIBOR
|
|
1,460
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 13, 2017
|
|
July 1, 2019
|
|
June 30, 2024
|
|
2.423
|
%
|
|
1-month USD LIBOR
|
|
418
|
|
||
|
1-month USD LIBOR Loan
|
|
50,000
|
|
|
December 13, 2017
|
|
July 1, 2019
|
|
June 30, 2024
|
|
2.423
|
%
|
|
1-month USD LIBOR
|
|
162
|
|
||
|
1-month USD LIBOR Loan
|
|
200,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2024
|
|
2.313
|
%
|
|
1-month USD LIBOR
|
|
2,076
|
|
||
|
1-month USD LIBOR Loan
|
|
75,000
|
|
|
October 10, 2018
|
|
July 1, 2020
|
|
June 30, 2025
|
|
3.220
|
%
|
|
1-month USD LIBOR
|
|
(2,594
|
)
|
||
|
1-month USD LIBOR Loan
|
|
75,000
|
|
|
October 10, 2018
|
|
July 1, 2020
|
|
June 30, 2025
|
|
3.199
|
%
|
|
1-month USD LIBOR
|
|
(2,551
|
)
|
||
|
1-month USD LIBOR Loan
|
|
75,000
|
|
|
October 10, 2018
|
|
July 1, 2020
|
|
June 30, 2025
|
|
3.209
|
%
|
|
1-month USD LIBOR
|
|
(2,568
|
)
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 18, 2018
|
|
December 30, 2022
|
|
December 31, 2027
|
|
2.885
|
%
|
|
1-month USD LIBOR
|
|
(797
|
)
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 18, 2018
|
|
December 30, 2022
|
|
December 31, 2027
|
|
2.867
|
%
|
|
1-month USD LIBOR
|
|
(873
|
)
|
||
|
Total interested rate derivatives designated as cash flow hedge
|
|
$
|
1,475,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
619
|
|
|
|
ITEM 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
ITEM 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES
|
|
ITEM 9A.
|
CONTROLS AND PROCEDURES
|
|
ITEM 9B.
|
OTHER INFORMATION
|
|
ITEM 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULE
|
|
|
|
|
2. Financial Statement Schedule
|
|
|
|
|
|
2.1
|
|
|
|
|
|
|
|
2.2
|
|
|
|
|
|
|
|
2.3
|
|
|
|
|
|
|
|
2.4
|
|
|
|
|
|
|
|
2.5
|
|
|
|
|
|
|
|
2.6
|
|
|
|
|
|
|
|
2.7
|
|
|
|
2.7(a)
|
|
|
|
2.8
|
|
|
|
|
|
|
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3.1(a)
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3.1(b)
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3.1(c)
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3.1(d)
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3.2(a)
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3.2(b)
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4.1
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4.2
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4.3(a)
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4.3(b)
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4.3(c)
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4.3(d)
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4.3(e)
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4.3(f)
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4.3(g)
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4.3(h)
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4.3(i)
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4.3(j)
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4.3(k)
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4.3(l)
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4.3(m)
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4.3(n)
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4.3(o)
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4.4
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4.5
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4.6
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4.7
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4.8
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4.9
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4.10
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4.11
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4.12
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10.1(b)
|
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10.1(c)
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10.1(d)
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10.2 (a)
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10.2(b)
|
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10.3(b)
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10.3(c)
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10.4
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10.5
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10.6
|
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10.7(a)
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10.7(b)
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10.8(a)
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10.8(b)
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10.8(c)
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10.9(a)
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10.9(b)
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10.9(c)
|
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10.10(a)
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10.10(b)
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10.10(c)
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10.10(d)
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10.10(e)
|
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10.11(a)
|
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10.11(b)
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10.11(c)
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10.11(d)
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10.11(e)
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10.11(f)
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10.11(g)
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10.11(h)
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10.12
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10.13(a)
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10.13(b)
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10.13(c)
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10.14(a)
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10.14(b)
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10.14(c)
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10.14(d)
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10.14(e)
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10.14(f)
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10.14(g)
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10.15
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10.16
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10.17(a)
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10.17(b)
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10.17(c)
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10.18(a)
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10.18(b)
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10.18(c)
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10.18(d)
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10.19
|
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10.20
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10.21(a)
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10.21(b)
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10.21(c)
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10.22
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10.23
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10.24
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10.25(a)
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10.25(b)
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10.26
|
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10.27(a)
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10.27(b)
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10.27(c)
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10.27(d)
|
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10.28
|
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10.29
|
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10.30
|
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10.31(a)
|
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10.31(b)
|
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10.31(c)
|
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10.32
|
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10.33
|
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10.34(a)
|
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10.34(b)
|
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10.34(c)
|
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10.34(d)
|
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10.34(e)
|
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10.35
|
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10.35(a)
|
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10.35(b)
|
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10.36
|
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10.37
|
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10.38
|
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10.39
|
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10.40
|
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10.41
|
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10.42
|
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10.43(a)
|
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10.43(b)
|
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10.44(c)
|
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10.44(d)
|
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10.44(e)
|
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|
10.45(a)
|
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10.45(b)
|
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10.45(c)
|
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10.45(d)
|
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|
10.45(e)
|
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10.45(f)
|
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|
10.46(a)
|
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10.46(b)
|
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10.46(c)
|
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10.46(d)
|
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10.46(e)
|
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10.46(f)
|
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10.46(g)
|
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10.46(h)
|
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10.46(i)
|
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10.46(j)
|
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10.46(k)
|
|
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|
10.46(l)
|
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10.46(m)
|
|
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10.46(n)
|
|
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|
10.46(o)
|
|
|
|
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|
10.46(p)
|
|
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|
|
|
|
|
10.46(q)
|
|
|
|
|
|
|
|
10.47(a)
|
|
|
|
|
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|
10.47(b)
|
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|
10.48
|
|
|
|
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|
10.49
|
|
|
|
|
|
|
|
10.50
|
|
|
|
|
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|
|
10.51
|
|
|
|
|
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|
|
10.52
|
|
|
|
|
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|
|
10.53
|
|
|
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|
10.54
|
|
|
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|
10.55
|
|
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|
10.56
|
|
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|
10.57
|
|
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|
10.58
|
|
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|
10.59
|
|
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|
10.60
|
|
|
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|
10.61
|
|
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|
10.62
|
|
|
|
|
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|
10.63
|
|
|
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|
10.64
|
|
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|
10.65
|
|
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|
|
10.66
|
|
|
|
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|
10.67
|
|
|
|
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|
|
|
10.68
|
|
|
|
|
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|
|
10.69
|
|
|
|
|
|
|
|
10.70
|
|
|
|
|
|
|
|
10.71
|
|
|
|
|
|
|
|
10.72(a)
|
|
|
|
|
|
|
|
10.72(b)
|
|
|
|
|
|
|
|
10.72(c)
|
|
|
|
|
|
|
|
10.73
|
|
|
|
|
|
|
|
10.74(a)
|
|
|
|
|
|
|
|
10.74(b)
|
|
|
|
|
|
|
|
12.1
|
|
|
|
|
|
|
|
18.1
|
|
|
|
|
|
|
|
18.2
|
|
|
|
|
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|
|
21
|
|
|
|
|
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|
|
23
|
|
|
|
|
|
|
|
31.1
|
|
|
|
|
|
|
|
31.2
|
|
|
|
|
|
|
|
32.1
|
|
|
|
|
|
|
|
32.2
|
|
|
|
|
|
|
|
99.1
|
|
|
|
|
|
|
|
99.2
|
|
|
|
|
|
|
|
99.3
|
|
|
|
99.4
|
|
|
|
99.5
|
|
|
|
|
|
|
|
99.6
|
|
|
|
|
|
|
|
99.7
|
|
|
|
|
|
|
|
99.8
|
|
|
|
|
|
|
|
99.9
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document+#
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document+#
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document+#
|
|
|
|
|
|
101.DEF
|
|
XBRL Definition Linkbase Document
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Labels Linkbase Document+#
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document+#
|
|
*
|
Indicates a management contract or compensatory plan or arrangement.
|
|
+
|
Indicates this document is filed as an exhibit herewith.
|
|
#
|
The financial information of Integra LifeSciences Holdings Corporation Annual Report on Form 10-K for the year ended December 31, 2018 filed on February 26, 2019 formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statement of Comprehensive Income (Loss), (iii) the Consolidated Balance Sheets, (iv) Parenthetical Data to the Consolidated Balance Sheets, (v) the Consolidated Statements of Cash Flows, (vi) the Consolidated Statements of Changes in Stockholders’ Equity, and (vii) Notes to Consolidated Financial Statements, is furnished electronically herewith.
|
|
ITEM 16.
|
FORM 10-K SUMMARY
|
|
|
|
|
|
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
|
|
|
|
|
By:
|
/s/ Peter J. Arduini
|
|
|
Peter J. Arduini
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Peter J. Arduini
|
|
President and Chief Executive Officer,
|
|
February 26, 2019
|
|
Peter J. Arduini
|
|
and Director (Principal Executive Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Glenn G. Coleman
|
|
Corporate Vice President and
|
|
February 26, 2019
|
|
Glenn G. Coleman
|
|
Chief Financial Officer (Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Jeffrey A. Mosebrook
|
|
Vice President, Corporate Controller
|
|
February 26, 2019
|
|
Jeffrey A. Mosebrook
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
|
|
|
|
/s/ Stuart M. Essig, Ph.D.
|
|
Chairman of the Board
|
|
February 26, 2019
|
|
Stuart M. Essig, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Rhonda Germany Ballintyn
|
|
Director
|
|
February 26, 2019
|
|
Rhonda Germany Ballintyn
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Keith Bradley, Ph.D.
|
|
Director
|
|
February 26, 2019
|
|
Keith Bradley, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Barbara B. Hill
|
|
Director
|
|
February 26, 2019
|
|
Barbara B. Hill
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Lloyd W. Howell, Jr.
|
|
Director
|
|
February 26, 2019
|
|
Lloyd W. Howell, Jr.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Donald E. Morel, Jr., Ph.D.
|
|
Director
|
|
February 26, 2019
|
|
Donald E. Morel, Jr., Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Raymond G. Murphy
|
|
Director
|
|
February 26, 2019
|
|
Raymond G. Murphy
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Christian S. Schade
|
|
Director
|
|
February 26, 2019
|
|
Christian S. Schade
|
|
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands, except per share amounts)
|
||||||||||
|
Total revenue, net
|
$
|
1,472,441
|
|
|
$
|
1,188,236
|
|
|
$
|
992,075
|
|
|
Costs and Expenses:
|
|
|
|
|
|
||||||
|
Cost of goods sold
|
571,496
|
|
|
435,511
|
|
|
349,089
|
|
|||
|
Research and development
|
78,041
|
|
|
63,455
|
|
|
58,155
|
|
|||
|
Selling, general and administrative
|
690,746
|
|
|
624,096
|
|
|
455,629
|
|
|||
|
Intangible asset amortization
|
21,160
|
|
|
20,370
|
|
|
13,862
|
|
|||
|
Total costs and expenses
|
1,361,443
|
|
|
1,143,432
|
|
|
876,735
|
|
|||
|
Operating income
|
110,998
|
|
|
44,804
|
|
|
115,340
|
|
|||
|
Interest income
|
2,800
|
|
|
255
|
|
|
24
|
|
|||
|
Interest expense
|
(64,683
|
)
|
|
(35,019
|
)
|
|
(25,803
|
)
|
|||
|
Other income, net
|
8,288
|
|
|
1,345
|
|
|
845
|
|
|||
|
Income before income taxes
|
57,403
|
|
|
11,385
|
|
|
90,406
|
|
|||
|
(Benefit from) provision for income taxes
|
(3,398
|
)
|
|
(53,358
|
)
|
|
15,842
|
|
|||
|
Net income
|
$
|
60,801
|
|
|
$
|
64,743
|
|
|
$
|
74,564
|
|
|
Basic net income per common share
|
$
|
0.73
|
|
|
$
|
0.84
|
|
|
$
|
1.00
|
|
|
Diluted net income per common share
|
$
|
0.72
|
|
|
$
|
0.82
|
|
|
$
|
0.94
|
|
|
Weighted average common shares outstanding (See Note 13):
|
|
|
|
|
|
||||||
|
Basic
|
82,857
|
|
|
76,897
|
|
|
74,386
|
|
|||
|
Diluted
|
83,999
|
|
|
79,121
|
|
|
79,194
|
|
|||
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Net income
|
$
|
60,801
|
|
|
$
|
64,743
|
|
|
$
|
74,564
|
|
|
Other comprehensive income (loss), before tax:
|
|
|
|
|
|
||||||
|
Change in foreign currency translation adjustments
|
(19,159
|
)
|
|
37,454
|
|
|
(10,278
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
Unrealized gain (loss) on derivatives
|
|
|
|
|
|
||||||
|
Unrealized derivative (loss) gain arising during period
|
11,709
|
|
|
(3,425
|
)
|
|
1,871
|
|
|||
|
Less: Reclassification adjustments for gains included in net income
|
13,400
|
|
|
2,958
|
|
|
—
|
|
|||
|
Unrealized (loss) gain on derivatives
|
(1,691
|
)
|
|
(6,383
|
)
|
|
1,871
|
|
|||
|
|
|
|
|
|
|
||||||
|
Defined benefit pension plan - net (loss) gain arising during period
|
(643
|
)
|
|
(57
|
)
|
|
(45
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
Total other comprehensive income (loss), before tax
|
(21,493
|
)
|
|
31,014
|
|
|
(8,452
|
)
|
|||
|
Income tax benefit (expense) related to items in other comprehensive loss
|
(143
|
)
|
|
2,333
|
|
|
(800
|
)
|
|||
|
Total other comprehensive income (loss), net of tax
|
(21,636
|
)
|
|
33,347
|
|
|
(9,252
|
)
|
|||
|
|
|
|
|
|
|
||||||
|
Comprehensive income, net of tax
|
$
|
39,165
|
|
|
$
|
98,090
|
|
|
$
|
65,312
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
|
ASSETS
|
|
|
|
||||
|
Current Assets:
|
|
|
|
||||
|
Cash and cash equivalents
|
$
|
138,838
|
|
|
$
|
174,935
|
|
|
Trade accounts receivable, net of allowances of $3,719 and $8,882
|
265,737
|
|
|
251,799
|
|
||
|
Inventories, net
|
280,347
|
|
|
296,332
|
|
||
|
Prepaid expenses and other current assets
|
90,160
|
|
|
99,080
|
|
||
|
Total current assets
|
775,082
|
|
|
822,146
|
|
||
|
Property, plant and equipment, net
|
300,112
|
|
|
269,251
|
|
||
|
Intangible assets, net
|
1,079,496
|
|
|
1,159,627
|
|
||
|
Goodwill
|
926,475
|
|
|
937,905
|
|
||
|
Deferred tax assets
|
6,805
|
|
|
6,250
|
|
||
|
Other assets
|
19,917
|
|
|
16,078
|
|
||
|
Total assets
|
$
|
3,107,887
|
|
|
$
|
3,211,257
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
|
Current Liabilities:
|
|
|
|
||||
|
Borrowings under senior credit facility
|
$
|
22,500
|
|
|
$
|
60,000
|
|
|
Accounts payable, trade
|
76,050
|
|
|
93,967
|
|
||
|
Deferred revenue
|
3,764
|
|
|
11,051
|
|
||
|
Accrued compensation
|
75,693
|
|
|
73,392
|
|
||
|
Short-term portion of contingent consideration
|
—
|
|
|
22,793
|
|
||
|
Accrued expenses and other current liabilities
|
84,545
|
|
|
87,708
|
|
||
|
Total current liabilities
|
262,552
|
|
|
348,911
|
|
||
|
Long-term borrowings under senior credit facility
|
1,210,513
|
|
|
1,781,142
|
|
||
|
Long-term borrowings under securitization facility
|
121,200
|
|
|
—
|
|
||
|
Deferred tax liabilities
|
57,778
|
|
|
65,130
|
|
||
|
Other liabilities
|
80,048
|
|
|
53,768
|
|
||
|
Total liabilities
|
1,732,091
|
|
|
2,248,951
|
|
||
|
Commitments and contingencies (Refer to Note 15)
|
|
|
|
||||
|
Stockholders’ Equity:
|
|
|
|
||||
|
Preferred Stock; no par value; 15,000 authorized shares; none outstanding
|
—
|
|
|
—
|
|
||
|
Common stock; $0.01 par value; 240,000 authorized shares; 88,044 and 81,306 issued at December 31, 2018 and 2017, respectively
|
880
|
|
|
813
|
|
||
|
Additional paid-in capital
|
1,192,601
|
|
|
821,758
|
|
||
|
Treasury stock, at cost; 2,881 and 2,912 shares at December 31, 2018 and 2017, respectively
|
(120,615
|
)
|
|
(121,644
|
)
|
||
|
Accumulated other comprehensive loss
|
(45,443
|
)
|
|
(23,807
|
)
|
||
|
Retained earnings
|
348,373
|
|
|
285,186
|
|
||
|
Total stockholders’ equity
|
1,375,796
|
|
|
962,306
|
|
||
|
Total liabilities and stockholders’ equity
|
$
|
3,107,887
|
|
|
$
|
3,211,257
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
OPERATING ACTIVITIES:
|
|
|
|
|
|
||||||
|
Net income
|
$
|
60,801
|
|
|
$
|
64,743
|
|
|
$
|
74,564
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
|
Depreciation and amortization
|
110,730
|
|
|
88,945
|
|
|
72,665
|
|
|||
|
Non-cash impairment charges
|
4,941
|
|
|
3,290
|
|
|
—
|
|
|||
|
Deferred income tax benefit
|
(8,184
|
)
|
|
(67,304
|
)
|
|
(6,474
|
)
|
|||
|
Share-based compensation
|
20,779
|
|
|
21,550
|
|
|
17,310
|
|
|||
|
Amortization of debt issuance costs
|
6,270
|
|
|
2,722
|
|
|
2,529
|
|
|||
|
Non-cash interest expense
|
—
|
|
|
—
|
|
|
8,074
|
|
|||
|
Realized loss on sale of short-term investments
|
—
|
|
|
2,287
|
|
|
—
|
|
|||
|
Loss on disposal of property and equipment
|
1,385
|
|
|
6,989
|
|
|
1,765
|
|
|||
|
Gain on divestiture of business
|
—
|
|
|
(2,645
|
)
|
|
—
|
|
|||
|
Change in fair value of contingent consideration and others
|
1,214
|
|
|
(4,710
|
)
|
|
(13
|
)
|
|||
|
Payment of accreted interest
|
—
|
|
|
—
|
|
|
(42,786
|
)
|
|||
|
Changes in assets and liabilities, net of business acquisitions:
|
|
|
|
|
|
||||||
|
Accounts receivable
|
(17,021
|
)
|
|
(89,698
|
)
|
|
(17,518
|
)
|
|||
|
Inventories
|
8,300
|
|
|
99
|
|
|
(9,576
|
)
|
|||
|
Prepaid expenses and other current assets
|
3,933
|
|
|
(33,808
|
)
|
|
14,912
|
|
|||
|
Other non-current assets
|
1,052
|
|
|
(914
|
)
|
|
(475
|
)
|
|||
|
Accounts payable, accrued expenses and other current liabilities
|
3,588
|
|
|
95,321
|
|
|
(414
|
)
|
|||
|
Deferred revenue
|
1,504
|
|
|
3,874
|
|
|
1,251
|
|
|||
|
Other non-current liabilities
|
391
|
|
|
23,803
|
|
|
591
|
|
|||
|
Net cash provided by operating activities
|
199,683
|
|
|
114,544
|
|
|
116,405
|
|
|||
|
INVESTING ACTIVITIES:
|
|
|
|
|
|
||||||
|
Change in restricted cash
|
—
|
|
|
—
|
|
|
4,165
|
|
|||
|
Proceeds from sale of short-term investments
|
—
|
|
|
16,951
|
|
|
—
|
|
|||
|
Proceeds from note receivable
|
910
|
|
|
483
|
|
|
—
|
|
|||
|
Cash used in business acquisitions, net of cash acquired
|
26,704
|
|
|
(1,241,946
|
)
|
|
225
|
|
|||
|
Purchases of property and equipment
|
(77,741
|
)
|
|
(43,503
|
)
|
|
(47,328
|
)
|
|||
|
Proceeds from sales of property and equipment
|
422
|
|
|
293
|
|
|
316
|
|
|||
|
Proceeds from divestiture of business
|
—
|
|
|
46,387
|
|
|
—
|
|
|||
|
Net cash used in investing activities
|
(49,705
|
)
|
|
(1,221,335
|
)
|
|
(42,622
|
)
|
|||
|
FINANCING ACTIVITIES:
|
|
|
|
|
|
||||||
|
Proceeds from borrowings of long-term indebtedness
|
171,200
|
|
|
1,307,000
|
|
|
680,000
|
|
|||
|
Payments on debt
|
(660,000
|
)
|
|
(117,000
|
)
|
|
(511,250
|
)
|
|||
|
Net cash paid for contingent consideration
|
(38,196
|
)
|
|
(4,661
|
)
|
|
—
|
|
|||
|
Proceeds from the issuance of common stock, net of issuance costs
|
349,590
|
|
|
—
|
|
|
—
|
|
|||
|
Payment of liability component of convertible notes
|
—
|
|
|
—
|
|
|
(184,313
|
)
|
|||
|
Payment of capital lease obligation
|
—
|
|
|
—
|
|
|
(653
|
)
|
|||
|
Debt issuance costs
|
(5,037
|
)
|
|
(19,043
|
)
|
|
(4,530
|
)
|
|||
|
Proceeds from exercised stock options
|
9,392
|
|
|
9,774
|
|
|
10,481
|
|
|||
|
Cash taxes paid in net equity settlement
|
(7,821
|
)
|
|
(7,123
|
)
|
|
(4,851
|
)
|
|||
|
Net cash provided by (used in) financing activities
|
(180,872
|
)
|
|
1,168,947
|
|
|
(15,116
|
)
|
|||
|
Effect of exchange rate changes on cash and cash equivalents
|
(5,203
|
)
|
|
10,724
|
|
|
(4,744
|
)
|
|||
|
Net increase (decrease) in cash and cash equivalents
|
(36,097
|
)
|
|
72,880
|
|
|
53,923
|
|
|||
|
Cash and cash equivalents at beginning of period
|
174,935
|
|
|
102,055
|
|
|
48,132
|
|
|||
|
Cash and cash equivalents at end of period
|
$
|
138,838
|
|
|
$
|
174,935
|
|
|
$
|
102,055
|
|
|
|
Common Stock
|
|
Treasury Stock
|
|
Additional Paid-In Capital
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
Retained Earnings
|
|
Total Equity
|
||||||||||||||||||
|
Shares
|
|
Amount
|
Shares
|
|
Amount
|
||||||||||||||||||||||||
|
|
(In thousands)
|
||||||||||||||||||||||||||||
|
Balance, January 1, 2016
|
91,714
|
|
|
$
|
917
|
|
|
(17,830
|
)
|
|
$
|
(367,121
|
)
|
|
$
|
1,019,670
|
|
|
$
|
(47,902
|
)
|
|
$
|
145,879
|
|
|
$
|
751,443
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
74,564
|
|
|
74,564
|
|
||||||
|
Other comprehensive loss, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,252
|
)
|
|
—
|
|
|
(9,252
|
)
|
||||||
|
Treasury shares retirement
|
(17,830
|
)
|
|
(178
|
)
|
|
17,830
|
|
|
367,121
|
|
|
(366,943
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Settlement of convertible notes
|
2,946
|
|
|
29
|
|
|
—
|
|
|
—
|
|
|
(29
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Exercise of convertible note hedge
|
—
|
|
|
—
|
|
|
(2,946
|
)
|
|
(123,051
|
)
|
|
123,051
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Issuance of common stock through employee stock purchase plan
|
12
|
|
|
1
|
|
|
—
|
|
|
—
|
|
|
390
|
|
|
—
|
|
|
—
|
|
|
391
|
|
||||||
|
Issuance of common stock for vesting of share-based awards, net of shares withheld for taxes
|
824
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
5,203
|
|
|
—
|
|
|
—
|
|
|
5,211
|
|
||||||
|
Shared-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,310
|
|
|
—
|
|
|
—
|
|
|
17,310
|
|
||||||
|
Balance, December 31, 2016
|
77,666
|
|
|
$
|
777
|
|
|
(2,946
|
)
|
|
$
|
(123,051
|
)
|
|
$
|
798,652
|
|
|
$
|
(57,154
|
)
|
|
$
|
220,443
|
|
|
$
|
839,667
|
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64,743
|
|
|
64,743
|
|
||||||
|
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,347
|
|
|
—
|
|
|
33,347
|
|
||||||
|
Issuance of common stock through employee stock purchase plan
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
509
|
|
|
—
|
|
|
—
|
|
|
509
|
|
||||||
|
Issuance of common stock for vesting of share-based awards, net of shares withheld for taxes
|
788
|
|
|
8
|
|
|
19
|
|
|
1,407
|
|
|
723
|
|
|
—
|
|
|
—
|
|
|
2,138
|
|
||||||
|
Exercise of warrants
|
2,840
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
(28
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
Share-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21,902
|
|
|
—
|
|
|
—
|
|
|
21,902
|
|
||||||
|
Balance, December 31, 2017
|
81,306
|
|
|
$
|
813
|
|
|
(2,927
|
)
|
|
$
|
(121,644
|
)
|
|
$
|
821,758
|
|
|
$
|
(23,807
|
)
|
|
$
|
285,186
|
|
|
$
|
962,306
|
|
|
Adoption of Update No. 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,854
|
|
|
1,854
|
|
||||||
|
Adoption of Update No. 2018-02
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
532
|
|
|
532
|
|
||||||
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
60,801
|
|
|
60,801
|
|
||||||
|
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,636
|
)
|
|
—
|
|
|
(21,636
|
)
|
||||||
|
Issuance of common stock through employee stock purchase plan
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
553
|
|
|
—
|
|
|
—
|
|
|
553
|
|
||||||
|
Issuance of common stock for vesting of share-based awards, net of shares withheld for taxes
|
700
|
|
|
4
|
|
|
46
|
|
|
1,029
|
|
|
52
|
|
|
—
|
|
|
—
|
|
|
1,085
|
|
||||||
|
Equity offering
|
6,038
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
349,529
|
|
|
—
|
|
|
—
|
|
|
349,589
|
|
||||||
|
Share-based compensation
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
20,709
|
|
|
—
|
|
|
—
|
|
|
20,712
|
|
||||||
|
Balance, December 31, 2018
|
88,044
|
|
|
880
|
|
|
(2,881
|
)
|
|
(120,615
|
)
|
|
1,192,601
|
|
|
(45,443
|
)
|
|
348,373
|
|
|
1,375,796
|
|
||||||
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
|
Finished goods
|
$
|
179,885
|
|
|
$
|
190,100
|
|
|
Work in process
|
47,715
|
|
|
58,637
|
|
||
|
Raw materials
|
52,747
|
|
|
47,595
|
|
||
|
Total inventories, net
|
$
|
280,347
|
|
|
$
|
296,332
|
|
|
|
December 31,
|
|
|
||||||
|
|
2018
|
|
2017
|
|
Useful Lives
|
||||
|
|
(In thousands)
|
|
|
||||||
|
Land
|
$
|
1,837
|
|
|
$
|
1,881
|
|
|
|
|
Buildings and building improvements
|
20,472
|
|
|
20,243
|
|
|
5-40 years
|
||
|
Leasehold improvements
|
105,063
|
|
|
90,329
|
|
|
1-20 years
|
||
|
Machinery and production equipment
|
143,921
|
|
|
137,914
|
|
|
3-20 years
|
||
|
Surgical instrument kits
|
31,231
|
|
|
30,511
|
|
|
4-5 years
|
||
|
Information systems and hardware
|
129,962
|
|
|
127,946
|
|
|
1-7 years
|
||
|
Furniture, fixtures, and office equipment
|
17,731
|
|
|
17,394
|
|
|
1-15 years
|
||
|
Construction-in-progress
|
105,075
|
|
|
62,967
|
|
|
|
||
|
Total
|
555,292
|
|
|
489,185
|
|
|
|
||
|
Less: Accumulated depreciation
|
(255,180
|
)
|
|
(219,934
|
)
|
|
|
||
|
Property, plant and equipment, net
|
$
|
300,112
|
|
|
$
|
269,251
|
|
|
|
|
|
|
Total
|
||
|
|
(amounts in thousands)
|
|||
|
Contract Asset
|
|
|
||
|
Contract asset, January 1, 2018
|
|
$
|
3,552
|
|
|
Transferred to trade receivable of contract asset included
in beginning of the year contract asset
|
|
(3,552
|
)
|
|
|
Contract asset, net of transferred to trade receivables on contracts during the period
|
|
4,193
|
|
|
|
Contract asset, December 31, 2018
|
|
$
|
4,193
|
|
|
|
|
|
||
|
Contract Liability
|
|
|
||
|
Contract liability, January 1, 2018
|
|
$
|
11,059
|
|
|
Recognition of revenue included in beginning of year contract liability
|
|
(3,081
|
)
|
|
|
Contract liability, net of revenue recognized on contracts during the period
|
|
4,780
|
|
|
|
Foreign currency translation
|
|
(42
|
)
|
|
|
Contract liability, December 31, 2018
|
|
$
|
12,716
|
|
|
|
Year Ended December 31, 2018
|
Year Ended December 31, 2017
|
Year Ended December 31, 2016
|
||||||
|
|
(amounts in thousands)
|
|
|||||||
|
Neurosurgery
|
684,148
|
|
446,994
|
|
367,985
|
|
|||
|
Precision Tools and Instruments
|
279,781
|
|
$
|
273,307
|
|
$
|
264,539
|
|
|
|
Total Codman Specialty Surgical
|
963,929
|
|
720,301
|
|
632,524
|
|
|||
|
|
|
|
|
||||||
|
Wound Reconstruction
|
305,465
|
|
269,068
|
|
178,524
|
|
|||
|
Extremity Orthopedics
|
96,688
|
|
98,876
|
|
97,067
|
|
|||
|
Private Label
|
106,359
|
|
99,991
|
|
83,960
|
|
|||
|
Total Orthopedics and Tissue Technologies
|
508,512
|
|
467,935
|
|
359,551
|
|
|||
|
Total revenue
|
$
|
1,472,441
|
|
$
|
1,188,236
|
|
$
|
992,075
|
|
|
|
Year Ended December 31, 2018
|
|||||
|
|
As Reported
|
Excluding Impact of Topic 606
|
||||
|
|
(Amounts in thousands)
|
|||||
|
Statement of Operations
|
|
|
||||
|
Total revenue, net
|
$
|
1,472,441
|
|
$
|
1,468,075
|
|
|
Cost of goods sold
|
571,496
|
|
570,028
|
|
||
|
Income tax benefit
|
(3,398
|
)
|
(4,119
|
)
|
||
|
Net income
|
60,801
|
|
58,624
|
|
||
|
|
Final Valuation
|
|
Weighted Average Life
|
||
|
|
(Dollars in thousands)
|
|
|
||
|
Inventory
|
74,962
|
|
|
|
|
|
Assets held for sale
|
30,813
|
|
|
|
|
|
Other current assets
|
8,202
|
|
|
|
|
|
Property, plant and equipment
|
41,339
|
|
|
|
|
|
Intangible assets:
|
|
|
|
||
|
Codman corporate trade name
|
162,900
|
|
|
Indefinite
|
|
|
Completed technology
|
375,200
|
|
|
22 years
|
|
|
Goodwill
|
342,322
|
|
|
|
|
|
Total assets acquired
|
1,035,738
|
|
|
|
|
|
Accrued expenses
|
1,730
|
|
|
|
|
|
Pension liabilities
|
19,917
|
|
|
|
|
|
Net assets acquired
|
$
|
1,014,091
|
|
|
|
|
Inventories
|
$
|
8,348
|
|
|
Prepaid expenses and other current assets
|
36
|
|
|
|
Assets held for sale
|
30,813
|
|
|
|
Property, plant and equipment, net
|
1,122
|
|
|
|
Goodwill
|
2,861
|
|
|
|
Total assets divested
|
$
|
43,180
|
|
|
|
|
||
|
Deferred revenue
|
$
|
1,082
|
|
|
Accrued compensation
|
209
|
|
|
|
Total liabilities divested
|
$
|
1,291
|
|
|
|
Final Valuation
|
|
Weighted Average Life
|
||
|
|
(Dollars in thousands)
|
|
|
||
|
Cash and cash equivalents
|
$
|
16,512
|
|
|
|
|
Short-term investments
|
19,238
|
|
|
|
|
|
Accounts receivable
|
8,949
|
|
|
|
|
|
Inventory
|
17,977
|
|
|
|
|
|
Prepaid expenses and other current assets
|
4,369
|
|
|
|
|
|
Property, plant and equipment
|
4,311
|
|
|
|
|
|
Intangible assets:
|
|
|
|
||
|
Customer relationship
|
78,300
|
|
|
14 years
|
|
|
Trademarks/brand names
|
13,500
|
|
|
15 years
|
|
|
Completed technology
|
11,600
|
|
|
14 years
|
|
|
Non-compete agreement
|
280
|
|
|
1 year
|
|
|
Goodwill
|
73,765
|
|
|
|
|
|
Deferred tax assets
|
14,524
|
|
|
|
|
|
Other assets
|
101
|
|
|
|
|
|
Total assets acquired
|
263,426
|
|
|
|
|
|
Accounts payable
|
4,560
|
|
|
|
|
|
Accrued expenses and other current liabilities
|
7,409
|
|
|
|
|
|
Contingent liability
|
37,174
|
|
|
|
|
|
Other liabilities
|
3,805
|
|
|
|
|
|
Net assets acquired
|
$
|
210,478
|
|
|
|
|
i.
|
contractual incentive payments that could be made to former equity owners of BioD if net sales of BioD products exceed a certain amount for the twelve-month periods ending June 30, 2017 and 2018 ("BioD Earnout Payments");
|
|
ii.
|
a contractual incentive payment that could be made to the former equity owners if there has been no specific enforcement action or notice by the FDA against the specific BioD products as a result of the Untitled Letter for a certain period after closing as defined by the agreement ("Product Payment"); and
|
|
iii.
|
contractual incentive payments that could be made to the former owner of the intellectual property relating to the Medihoney product line, if net sales of Medihoney products exceed certain amounts defined in the agreement between Derma Sciences and the former owner of the intellectual property of Medihoney for any twelve-month period ("Medihoney Earnout Payments").
|
|
|
Year Ended December 31,
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Pro forma)
|
||||||
|
|
(In thousands except per share amounts)
|
||||||
|
Total revenue from continuing operations
|
$
|
1,428,491
|
|
|
$
|
1,446,903
|
|
|
Net income from continuing operations
|
$
|
81,730
|
|
|
$
|
27,520
|
|
|
|
|
|
|
||||
|
Basic earnings per share from continuing operations
|
$
|
1.06
|
|
|
$
|
0.37
|
|
|
i.
|
a
$900.0 million
Term Loan facility; and
|
|
ii.
|
a
$1.3 billion
revolving credit facility, which includes a
$60.0 million
sublimit for the issuance of standby letters of credit and a
$60.0 million
sublimit for swingline loans.
|
|
Fiscal Quarter
|
|
Maximum Consolidated Total Leverage Ratio
|
|
|
|
|
|
Execution of May 2018 Amendment through March 31, 2019
|
|
5.50 : 1.00
|
|
June 30, 2019 through March 31, 2020
|
|
5.00 : 1.00
|
|
June 30, 2020 through March 31, 2021
|
|
4.50 : 1.00
|
|
June 30, 2021 and thereafter
|
|
4.00 : 1.00
|
|
i.
|
the Eurodollar Rate (as defined in the amendment and restatement) in effect from time to time plus the applicable rate (ranging from
1.00%
to
1.75%
), or
|
|
ii.
|
the highest of:
|
|
1.
|
the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus
0.50%
, or plus the applicable rate (ranging from
0%
to
0.75%
),
|
|
2.
|
the prime lending rate of Bank of America, N.A. plus the applicable rate (ranging from
0%
to
0.75%
), and
|
|
3.
|
the one-month Eurodollar Rate plus
1.00%
plus the applicable rate (ranging from
0%
to
0.75%
).
|
|
Year Ended December 31,
|
Principal Repayment
|
||
|
|
(In thousands)
|
||
|
2019
|
$
|
22,500
|
|
|
2020
|
45,000
|
|
|
|
2021
|
56,250
|
|
|
|
2022
|
67,500
|
|
|
|
2023
|
708,750
|
|
|
|
|
$
|
900,000
|
|
|
Hedged Item
|
|
Current Notional Amount
|
|
Designation Date
|
|
Effective Date
|
|
Termination Date
|
|
Fixed Interest Rate
|
|
Floating Rate
|
|
Estimated Fair Value
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets (Liabilities)
|
|||||
|
3-month USD LIBOR Loan
|
|
$
|
50,000
|
|
|
June 22, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
1.062
|
%
|
|
3-month USD LIBOR
|
|
$
|
410
|
|
|
3-month USD LIBOR Loan
|
|
50,000
|
|
|
June 22, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
1.062
|
%
|
|
3-month USD LIBOR
|
|
415
|
|
||
|
1-month USD LIBOR Loan
|
|
50,000
|
|
|
July 12, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
0.825
|
%
|
|
1-month USD LIBOR
|
|
418
|
|
||
|
3-month USD LIBOR Loan
|
|
50,000
|
|
|
February 6, 2017
|
|
June 30, 2017
|
|
June 30, 2020
|
|
1.834
|
%
|
|
3-month USD LIBOR
|
|
619
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
February 6, 2017
|
|
June 30, 2017
|
|
June 30, 2020
|
|
1.652
|
%
|
|
1-month USD LIBOR
|
|
1,287
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
March 27, 2017
|
|
December 31, 2017
|
|
June 30, 2021
|
|
1.971
|
%
|
|
1-month USD LIBOR
|
|
1,246
|
|
||
|
1-month USD LIBOR Loan
|
|
150,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2022
|
|
2.201
|
%
|
|
1-month USD LIBOR
|
|
1,491
|
|
||
|
1-month USD LIBOR Loan
|
|
150,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2022
|
|
2.201
|
%
|
|
1-month USD LIBOR
|
|
1,460
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 13, 2017
|
|
July 1, 2019
|
|
June 30, 2024
|
|
2.423
|
%
|
|
1-month USD LIBOR
|
|
418
|
|
||
|
1-month USD LIBOR Loan
|
|
50,000
|
|
|
December 13, 2017
|
|
July 1, 2019
|
|
June 30, 2024
|
|
2.423
|
%
|
|
1-month USD LIBOR
|
|
162
|
|
||
|
1-month USD LIBOR Loan
|
|
200,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2024
|
|
2.313
|
%
|
|
1-month USD LIBOR
|
|
2,076
|
|
||
|
1-month USD LIBOR Loan
|
|
75,000
|
|
|
October 10, 2018
|
|
July 1, 2020
|
|
June 30, 2025
|
|
3.220
|
%
|
|
1-month USD LIBOR
|
|
(2,594
|
)
|
||
|
1-month USD LIBOR Loan
|
|
75,000
|
|
|
October 10, 2018
|
|
July 1, 2020
|
|
June 30, 2025
|
|
3.199
|
%
|
|
1-month USD LIBOR
|
|
(2,551
|
)
|
||
|
1-month USD LIBOR Loan
|
|
75,000
|
|
|
October 10, 2018
|
|
July 1, 2020
|
|
June 30, 2025
|
|
3.209
|
%
|
|
1-month USD LIBOR
|
|
(2,568
|
)
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 18, 2018
|
|
December 30, 2022
|
|
December 31, 2027
|
|
2.885
|
%
|
|
1-month USD LIBOR
|
|
(797
|
)
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 18, 2018
|
|
December 30, 2022
|
|
December 31, 2027
|
|
2.867
|
%
|
|
1-month USD LIBOR
|
|
(873
|
)
|
||
|
Total interest rate derivatives designated as cash flow hedges
|
|
$
|
1,475,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
619
|
|
|
|
Hedged Item
|
|
Current Notional Amount
|
|
Designation Date
|
|
Effective Date
|
|
Termination Date
|
|
Fixed Interest Rate
|
|
Floating Rate
|
|
Estimated Fair Value
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets (Liabilities)
|
|||||
|
3-month USD LIBOR Loan
|
|
$
|
50,000
|
|
|
June 22, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
1.062
|
%
|
|
3-month USD LIBOR
|
|
$
|
675
|
|
|
3-month USD LIBOR Loan
|
|
50,000
|
|
|
June 22, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
1.062
|
%
|
|
3-month USD LIBOR
|
|
672
|
|
||
|
1-month USD LIBOR Loan
|
|
50,000
|
|
|
July 12, 2016
|
|
December 31, 2016
|
|
June 30, 2019
|
|
0.825
|
%
|
|
1-month USD LIBOR
|
|
779
|
|
||
|
3-month USD LIBOR Loan
|
|
50,000
|
|
|
February 6, 2017
|
|
June 30, 2017
|
|
June 30, 2020
|
|
1.834
|
%
|
|
3-month USD LIBOR
|
|
318
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
February 6, 2017
|
|
June 30, 2017
|
|
June 30, 2020
|
|
1.652
|
%
|
|
1-month USD LIBOR
|
|
858
|
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
March 27, 2017
|
|
December 31, 2017
|
|
June 30, 2021
|
|
1.971
|
%
|
|
1-month USD LIBOR
|
|
337
|
|
||
|
1-month USD LIBOR Loan
|
|
150,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2022
|
|
2.201
|
%
|
|
1-month USD LIBOR
|
|
(455
|
)
|
||
|
1-month USD LIBOR Loan
|
|
150,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2022
|
|
2.201
|
%
|
|
1-month USD LIBOR
|
|
(434
|
)
|
||
|
1-month USD LIBOR Loan
|
|
100,000
|
|
|
December 13, 2017
|
|
July 1, 2019
|
|
June 30, 2024
|
|
2.423
|
%
|
|
1-month USD LIBOR
|
|
(684
|
)
|
||
|
1-month USD LIBOR Loan
|
|
50,000
|
|
|
December 13, 2017
|
|
July 1, 2019
|
|
June 30, 2024
|
|
2.423
|
%
|
|
1-month USD LIBOR
|
|
(255
|
)
|
||
|
1-month USD LIBOR Loan
|
|
200,000
|
|
|
December 13, 2017
|
|
January 1, 2018
|
|
December 31, 2024
|
|
2.313
|
%
|
|
1-month USD LIBOR
|
|
(1,219
|
)
|
||
|
Total interest rate derivatives designated as cash flow hedges
|
|
$
|
1,050,000
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
592
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
|
2017
|
|||||
|
|
|
Effective Date
|
|
Termination Date
|
|
Fixed Rate
|
|
Aggregate Notional Amount
|
|
Fair Value
Asset (Liability)
|
|
Fair Value
Asset (Liability)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
Pay CHF
|
|
October 2, 2017
|
|
October 2, 2020
|
|
1.75%
|
|
CHF
|
97,065
|
|
|
$
|
(215
|
)
|
|
$
|
(742
|
)
|
|
Receive U.S.$
|
|
|
4.38%
|
|
$
|
100,000
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Pay CHF
|
|
October 2, 2017
|
|
October 2, 2021
|
|
1.85%
|
|
CHF
|
48,533
|
|
|
(422
|
)
|
|
(610
|
)
|
||
|
Receive U.S.$
|
|
|
4.46%
|
|
$
|
50,000
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Pay CHF
|
|
October 2, 2017
|
|
October 2, 2022
|
|
1.95%
|
|
CHF
|
145,598
|
|
|
(2,193
|
)
|
|
(2,605
|
)
|
||
|
Receive U.S.$
|
|
|
4.52%
|
|
$
|
150,000
|
|
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
|
Total
|
|
|
|
|
|
|
|
|
|
|
$
|
(2,830
|
)
|
|
$
|
(3,957
|
)
|
|
|
|
|
Effective Date
|
|
Termination Date
|
|
Fixed Rate
|
|
Aggregate Notional Amount
|
|
Fair Value
Asset (Liability)
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Pay EUR
|
|
October 3, 2018
|
|
September 30, 2021
|
|
—
|
|
EUR
|
70,738
|
|
|
1,359
|
|
|
|
Receive U.S.$
|
|
|
|
3.01%
|
|
$
|
82,000
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pay EUR
|
|
October 3, 2018
|
|
September 30, 2023
|
|
—
|
|
EUR
|
51,760
|
|
|
(421
|
)
|
|
|
Receive U.S.$
|
|
|
|
2.57%
|
|
$
|
60,000
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pay EUR
|
|
October 3, 2018
|
|
September 30, 2025
|
|
—
|
|
EUR
|
38,820
|
|
|
(150
|
)
|
|
|
Receive U.S.$
|
|
|
|
2.19%
|
|
$
|
45,000
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pay GBP
|
|
October 3, 2018
|
|
September 30, 2025
|
|
1.67%
|
|
GBP
|
128,284
|
|
|
2,360
|
|
|
|
Receive U.S.$
|
|
|
|
2.71%
|
|
$
|
167,500
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Pay CHF
|
|
October 3, 2018
|
|
September 30, 2025
|
|
—
|
|
CHF
|
165,172
|
|
|
(3,780
|
)
|
|
|
Receive GBP
|
|
|
|
1.67%
|
|
GBP
|
128,284
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
Total
|
|
|
|
|
|
|
|
|
|
|
$
|
(632
|
)
|
|
|
|
Fair Value as of December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Location on Balance Sheet
(1)
:
|
(In thousands)
|
||||||
|
Derivatives designated as hedges — Assets:
|
|
|
|
||||
|
Prepaid expenses and other current assets
|
|
|
|
||||
|
Cash Flow Hedges
|
|
|
|
||||
|
Interest rate swap
(2)
|
$
|
4,654
|
|
|
$
|
1,521
|
|
|
Cross-currency swap
|
7,615
|
|
|
7,757
|
|
||
|
Net Investment Hedges
|
|
|
|
||||
|
Cross-currency swap
|
$
|
8,888
|
|
|
$
|
—
|
|
|
Other assets
|
|
|
|
||||
|
Cash Flow Hedges
|
|
|
|
||||
|
Interest rate swap
(2)
|
5,350
|
|
|
2,491
|
|
||
|
Net Investment Hedges
|
|
|
|
||||
|
Cross-currency swap
|
$
|
1,774
|
|
|
$
|
—
|
|
|
Total Derivatives designated as hedges — Assets
|
$
|
28,281
|
|
|
$
|
11,769
|
|
|
|
|
|
|
||||
|
Derivatives designated as hedge — Liabilities
|
|
|
|
||||
|
Accrued expenses and other current liabilities
|
|
|
|
||||
|
Cash Flow Hedges
|
|
|
|
||||
|
Interest rate swap
(2)
|
$
|
—
|
|
|
$
|
1,845
|
|
|
Other liabilities
|
|
|
|
||||
|
Cash Flow Hedges
|
|
|
|
||||
|
Interest rate swap
(2)
|
9,385
|
|
|
1,575
|
|
||
|
Cross-currency swap
|
10,445
|
|
|
11,714
|
|
||
|
Net Investment Hedges
|
|
|
|
||||
|
Cross-currency swap
|
$
|
11,294
|
|
|
$
|
—
|
|
|
Total Derivative designated as hedges — Liabilities
|
$
|
31,124
|
|
|
$
|
15,134
|
|
|
(1)
|
The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.
|
|
(2)
|
At
December 31, 2018
and
2017
, the total notional amounts related to the Company’s interest rate swaps were
$1.5 billion
and
$1.1 billion
, respectively.
|
|
|
Balance in AOCI
Beginning of
Year
|
|
Amount of
Gain (Loss)
Recognized in
AOCI
|
|
Amount of Gain (Loss)
Reclassified from
AOCI into
Earnings
|
|
Balance in AOCI
End of Year
|
|
Location in
Statements of
Operations
|
||||||||
|
|
(In thousands)
|
||||||||||||||||
|
Year Ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest rate swap
|
$
|
592
|
|
|
$
|
924
|
|
|
$
|
897
|
|
|
$
|
619
|
|
|
Interest income (expense)
|
|
Cross-currency swap
|
(5,104
|
)
|
|
9,062
|
|
|
10,148
|
|
|
(6,190
|
)
|
|
Other income (expense)
|
||||
|
Net Investment Hedges
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cross-currency swap
|
—
|
|
|
1,723
|
|
|
2,355
|
|
|
(632
|
)
|
|
Interest income (expense)
|
||||
|
|
$
|
(4,512
|
)
|
|
$
|
11,709
|
|
|
$
|
13,400
|
|
|
$
|
(6,203
|
)
|
|
|
|
Year Ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cash Flow Hedges
|
|
|
|
|
|
|
|
|
|
||||||||
|
Interest rate swap
|
$
|
1,871
|
|
|
$
|
(1,355
|
)
|
|
$
|
(76
|
)
|
|
$
|
592
|
|
|
Interest income (expense)
|
|
Cross-currency swap
|
—
|
|
|
(2,070
|
)
|
|
3,034
|
|
|
(5,104
|
)
|
|
Other income (expense)
|
||||
|
|
$
|
1,871
|
|
|
$
|
(3,425
|
)
|
|
$
|
2,958
|
|
|
$
|
(4,512
|
)
|
|
|
|
•
|
The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans.
|
|
•
|
The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans.
|
|
•
|
The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. In performing this test, the Company utilized a discount rate of
9.0%
.
|
|
|
Codman Specialty Surgical
|
|
Orthopedics and Tissue Technologies
|
|
Total
|
||||||
|
|
(In thousands)
|
||||||||||
|
Goodwill at January 1, 2017
|
$
|
284,358
|
|
|
$
|
226,213
|
|
|
$
|
510,571
|
|
|
Derma Sciences acquisition
|
—
|
|
|
73,765
|
|
|
73,765
|
|
|||
|
Codman acquisition
|
346,220
|
|
|
—
|
|
|
346,220
|
|
|||
|
Divestment to Natus
|
(2,861
|
)
|
|
—
|
|
|
(2,861
|
)
|
|||
|
Foreign currency translation and other
|
7,050
|
|
|
3,160
|
|
|
10,210
|
|
|||
|
Goodwill at December 31, 2017
|
$
|
634,767
|
|
|
$
|
303,138
|
|
|
$
|
937,905
|
|
|
Codman acquisition measurement period adjustments
|
(3,964
|
)
|
|
—
|
|
|
(3,964
|
)
|
|||
|
Foreign currency translation
|
(5,043
|
)
|
|
(2,423
|
)
|
|
(7,466
|
)
|
|||
|
Goodwill at December 31, 2018
|
$
|
625,760
|
|
|
$
|
300,715
|
|
|
$
|
926,475
|
|
|
|
Weighted
Average
Life
|
|
December 31, 2018
|
||||||||||
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
||||||||
|
|
(Dollars in Thousands)
|
||||||||||||
|
Completed technology
|
19 years
|
|
$
|
855,679
|
|
|
$
|
(167,384
|
)
|
|
$
|
688,295
|
|
|
Customer relationships
|
13 years
|
|
231,448
|
|
|
(106,859
|
)
|
|
124,589
|
|
|||
|
Trademarks/brand names
|
28 years
|
|
104,061
|
|
|
(24,764
|
)
|
|
79,297
|
|
|||
|
Codman trade name
|
Indefinite
|
|
162,054
|
|
|
—
|
|
|
162,054
|
|
|||
|
Supplier relationships
|
27 years
|
|
34,721
|
|
|
(16,519
|
)
|
|
18,202
|
|
|||
|
All other
(1)
|
4 years
|
|
10,958
|
|
|
(3,899
|
)
|
|
7,059
|
|
|||
|
|
|
|
$
|
1,398,921
|
|
|
$
|
(319,425
|
)
|
|
$
|
1,079,496
|
|
|
|
Weighted
Average
Life
|
|
December 31, 2017
|
||||||||||
|
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|||||||
|
|
(Dollars in Thousands)
|
||||||||||||
|
Completed technology
|
19 years
|
|
$
|
869,174
|
|
|
$
|
(124,096
|
)
|
|
$
|
745,078
|
|
|
Customer relationships
|
13 years
|
|
233,430
|
|
|
(91,961
|
)
|
|
141,469
|
|
|||
|
Trademarks/brand names
|
28 years
|
|
104,879
|
|
|
(22,293
|
)
|
|
82,586
|
|
|||
|
Codman trade name
|
Indefinite
|
|
162,900
|
|
|
—
|
|
|
162,900
|
|
|||
|
Supplier relationships
|
27 years
|
|
34,721
|
|
|
(15,092
|
)
|
|
19,629
|
|
|||
|
All other
(1)
|
4 years
|
|
11,511
|
|
|
(3,546
|
)
|
|
7,965
|
|
|||
|
|
|
|
$
|
1,416,615
|
|
|
$
|
(256,988
|
)
|
|
$
|
1,159,627
|
|
|
(1)
|
At
December 31, 2018
and
2017
, all other included IPR&D of
$1.0 million
, which was indefinite-lived.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Selling, general and administrative
|
$
|
18,721
|
|
|
$
|
19,785
|
|
|
$
|
15,829
|
|
|
Research and development
|
1,609
|
|
|
1,273
|
|
|
1,048
|
|
|||
|
Cost of goods sold
|
449
|
|
|
492
|
|
|
433
|
|
|||
|
Total stock-based compensation expense
|
20,779
|
|
|
21,550
|
|
|
17,310
|
|
|||
|
Total estimated tax benefit related to stock-based compensation expense
|
10,430
|
|
|
15,448
|
|
|
10,569
|
|
|||
|
Net effect on net income
|
$
|
10,349
|
|
|
$
|
6,102
|
|
|
$
|
6,741
|
|
|
|
Years Ended December 31,
|
||||
|
|
2018
|
|
2017
|
|
2016
|
|
Dividend yield
|
0%
|
|
0%
|
|
0%
|
|
Expected volatility
|
28%
|
|
30%
|
|
29%
|
|
Risk free interest rate
|
2.79%
|
|
2.18%
|
|
1.94%
|
|
Expected life of option from grant date
|
8 years
|
|
8 years
|
|
8 years
|
|
|
|
|
Weighted Average Exercise Price
|
|
Weighted Average Contractual Term in Years
|
|
Aggregate Intrinsic Value
|
|||||
|
|
|
|
|
|
||||||||
|
|
Shares
|
|
|
|
||||||||
|
Stock Options
|
(In thousands)
|
|
|
|
|
|
(In thousands)
|
|||||
|
Outstanding at January 1, 2018
|
1,739
|
|
|
$
|
23.84
|
|
|
|
|
|
||
|
Granted
|
140
|
|
|
56.23
|
|
|
|
|
|
|||
|
Exercised
|
(426
|
)
|
|
20.57
|
|
|
|
|
|
|||
|
Forfeited or Expired
|
(5
|
)
|
|
—
|
|
|
|
|
|
|||
|
Outstanding at December 31, 2018
|
1,448
|
|
|
$
|
27.91
|
|
|
3.79
|
|
$
|
26,451
|
|
|
Vested or expected to vest at December 31, 2018
|
1,448
|
|
|
$
|
27.91
|
|
|
3.79
|
|
$
|
26,451
|
|
|
Exercisable at December 31, 2018
|
1,117
|
|
|
$
|
22.47
|
|
|
3.01
|
|
$
|
25,278
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
Restricted Stock Awards
|
|
Performance Stock and Contract Stock Awards
|
||||||||||
|
|
Shares
|
|
Weighted Average Grant Date Fair Value Per Share
|
|
Shares
|
|
Weighted Average Grant Date Fair Value Per Share
|
||||||
|
|
|
|
|
||||||||||
|
|
|
|
|
||||||||||
|
|
(In thousands)
|
|
|
|
(In thousands)
|
|
|
||||||
|
Unvested, January 1, 2018
|
451
|
|
|
$
|
37.79
|
|
|
172
|
|
|
$
|
33.61
|
|
|
Granted
|
261
|
|
|
56.77
|
|
|
164
|
|
|
56.23
|
|
||
|
Adjustments for performance achievement related to award target
|
—
|
|
|
—
|
|
|
40
|
|
|
21.42
|
|
||
|
Cancellations
|
(56
|
)
|
|
45.51
|
|
|
(14
|
)
|
|
—
|
|
||
|
Released
|
(239
|
)
|
|
37.13
|
|
|
(203
|
)
|
|
55.81
|
|
||
|
Vested but not released
|
—
|
|
|
—
|
|
|
(74
|
)
|
|
42.94
|
|
||
|
Unvested, December 31, 2018
|
417
|
|
|
$
|
48.97
|
|
|
85
|
|
|
$
|
45.56
|
|
|
|
Year ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Service cost
|
$
|
2,704
|
|
|
$
|
565
|
|
|
Interest cost
|
351
|
|
|
95
|
|
||
|
Expected return on plan assets
|
(944
|
)
|
|
(224
|
)
|
||
|
Recognized net actuarial loss
|
8
|
|
|
8
|
|
||
|
Net period benefit cost
|
$
|
2,119
|
|
|
$
|
444
|
|
|
|
As of December 31,
|
||||
|
|
2018
|
|
2017
|
||
|
Discount rate
|
1.00
|
%
|
|
0.74
|
%
|
|
Expected return on plan assets
|
3.40
|
%
|
|
3.08
|
%
|
|
Rate of compensation increase
|
1.70
|
%
|
|
1.70
|
%
|
|
|
Year ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Change In Projected Benefit Obligations
|
|
|
|
||||
|
Projected benefit obligations, beginning of year
|
$
|
47,661
|
|
|
$
|
668
|
|
|
Interest cost
|
351
|
|
|
95
|
|
||
|
Service cost
|
2,704
|
|
|
565
|
|
||
|
Actuarial loss
|
762
|
|
|
(12
|
)
|
||
|
Employee contribution
|
641
|
|
|
180
|
|
||
|
Premiums paid
|
—
|
|
|
(89
|
)
|
||
|
Benefit payment
|
(1,483
|
)
|
|
(19
|
)
|
||
|
Plans transferred in
|
2,280
|
|
|
46,448
|
|
||
|
Effect of foreign currency exchange rates
|
(374
|
)
|
|
(175
|
)
|
||
|
Projected benefit obligations, end of year
|
$
|
52,542
|
|
|
$
|
47,661
|
|
|
|
|
|
|
||||
|
|
Year ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Change In Plan Assets
|
|
|
|
||||
|
Plan assets at fair value, beginning of year
|
$
|
26,943
|
|
|
$
|
—
|
|
|
Actual return on plan assets
|
1,802
|
|
|
82
|
|
||
|
Employer contributions
|
1,720
|
|
|
450
|
|
||
|
Employee contributions
|
641
|
|
|
180
|
|
||
|
Benefits paid
|
(1,463
|
)
|
|
—
|
|
||
|
Premiums paid
|
—
|
|
|
(89
|
)
|
||
|
Plans transferred in
|
1,589
|
|
|
26,477
|
|
||
|
Effect of foreign currency exchange rates
|
(129
|
)
|
|
(157
|
)
|
||
|
Plan assets at fair value, end of year
|
$
|
31,103
|
|
|
$
|
26,943
|
|
|
|
Year ended December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
Reconciliation Of Funded Status
|
|
|
|
||||
|
Fair value of plan assets
|
$
|
31,103
|
|
|
$
|
26,943
|
|
|
Benefit obligations
|
52,542
|
|
|
47,661
|
|
||
|
Unfunded benefit obligations
|
$
|
21,439
|
|
|
$
|
20,718
|
|
|
2019
|
$
|
1,410
|
|
|
2020
|
1,516
|
|
|
|
2021
|
1,317
|
|
|
|
2022
|
1,433
|
|
|
|
2023
|
1,878
|
|
|
|
Next five years
|
2,978
|
|
|
|
|
Related Parties
|
|
Third Parties
|
|
Total
|
||||||
|
|
(In thousands)
|
||||||||||
|
2019
|
$
|
296
|
|
|
$
|
16,472
|
|
|
$
|
16,768
|
|
|
2020
|
296
|
|
|
13,510
|
|
|
13,806
|
|
|||
|
2021
|
296
|
|
|
12,197
|
|
|
12,493
|
|
|||
|
2022
|
296
|
|
|
12,937
|
|
|
13,233
|
|
|||
|
2023
|
296
|
|
|
10,707
|
|
|
11,003
|
|
|||
|
Thereafter
|
1,724
|
|
|
100,675
|
|
|
102,399
|
|
|||
|
Total minimum lease payments
|
$
|
3,204
|
|
|
$
|
166,498
|
|
|
$
|
169,702
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
United States operations
|
$
|
(21,218
|
)
|
|
$
|
(32,640
|
)
|
|
$
|
51,351
|
|
|
Foreign operations
|
78,621
|
|
|
44,025
|
|
|
39,055
|
|
|||
|
Total
|
$
|
57,403
|
|
|
$
|
11,385
|
|
|
$
|
90,406
|
|
|
|
Years Ended December 31,
|
|||||||
|
|
2018
|
|
2017
|
|
2016
|
|||
|
Federal statutory rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
|
Increase (decrease) in income taxes resulting from:
|
|
|
|
|
|
|||
|
State income taxes, net of federal tax benefit
|
(0.4
|
)%
|
|
(17.0
|
)%
|
|
(0.2
|
)%
|
|
Foreign operations
|
(21.8
|
)%
|
|
(112.7
|
)%
|
|
(10.0
|
)%
|
|
Excess tax benefits from stock compensation
|
(7.8
|
)%
|
|
(57.9
|
)%
|
|
(3.9
|
)%
|
|
Charitable contributions
|
(1.2
|
)%
|
|
(10.6
|
)%
|
|
(0.4
|
)%
|
|
Nondeductible meals and entertainment
|
1.6
|
%
|
|
8.8
|
%
|
|
0.8
|
%
|
|
Domestic production activities deduction
|
—
|
%
|
|
—
|
%
|
|
(2.6
|
)%
|
|
Intercompany profit in inventory
|
6.2
|
%
|
|
11.6
|
%
|
|
1.0
|
%
|
|
Nondeductible facilitative costs
|
—
|
%
|
|
22.5
|
%
|
|
0.2
|
%
|
|
Changes in valuation allowances
|
0.2
|
%
|
|
8.0
|
%
|
|
0.4
|
%
|
|
Uncertain tax positions
|
0.4
|
%
|
|
(4.6
|
)%
|
|
(0.3
|
)%
|
|
Research and development credit
|
(2.6
|
)%
|
|
(13.2
|
)%
|
|
(1.2
|
)%
|
|
Return to provision
|
(2.9
|
)%
|
|
(4.3
|
)%
|
|
(1.5
|
)%
|
|
Reduction of book gain on sale of assets
|
—
|
%
|
|
(4.6
|
)%
|
|
—
|
%
|
|
Tax reform — Toll Tax
|
—
|
%
|
|
48.1
|
%
|
|
—
|
%
|
|
Tax reform — remeasurement of deferred tax assets and liabilities
|
—
|
%
|
|
(378.6
|
)%
|
|
—
|
%
|
|
Global intangible low-taxed income ("GILTI")
|
3.5
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Nondeductible executive compensation
|
1.6
|
%
|
|
—
|
%
|
|
—
|
%
|
|
Carryback of Federal net operating loss ("NOL")
|
(3.7
|
)%
|
|
—
|
%
|
|
—
|
%
|
|
Other
|
—
|
%
|
|
0.8
|
%
|
|
0.2
|
%
|
|
Effective tax rate
|
(5.9
|
)%
|
|
(468.7
|
)%
|
|
17.5
|
%
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Current:
|
|
|
|
|
|
||||||
|
Federal
|
$
|
(3,880
|
)
|
|
$
|
6,644
|
|
|
$
|
13,700
|
|
|
State
|
1,609
|
|
|
1,233
|
|
|
2,503
|
|
|||
|
Foreign
|
7,057
|
|
|
6,069
|
|
|
6,113
|
|
|||
|
Total current
|
$
|
4,786
|
|
|
$
|
13,946
|
|
|
$
|
22,316
|
|
|
Deferred:
|
|
|
|
|
|
||||||
|
Federal
|
(7,202
|
)
|
|
(66,466
|
)
|
|
(3,400
|
)
|
|||
|
State
|
(3,048
|
)
|
|
(758
|
)
|
|
(1,751
|
)
|
|||
|
Foreign
|
2,066
|
|
|
(80
|
)
|
|
(1,323
|
)
|
|||
|
Total deferred
|
$
|
(8,184
|
)
|
|
$
|
(67,304
|
)
|
|
$
|
(6,474
|
)
|
|
Provision for income taxes
|
$
|
(3,398
|
)
|
|
$
|
(53,358
|
)
|
|
$
|
15,842
|
|
|
|
December 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(In thousands)
|
||||||
|
Assets:
|
|
|
|
||||
|
Doubtful accounts
|
$
|
1,507
|
|
|
$
|
1,811
|
|
|
Inventory related items
|
28,245
|
|
|
29,266
|
|
||
|
Tax credits
|
9,072
|
|
|
6,015
|
|
||
|
Accrued vacation
|
2,761
|
|
|
2,556
|
|
||
|
Accrued bonus
|
5,515
|
|
|
997
|
|
||
|
Stock compensation
|
10,093
|
|
|
10,426
|
|
||
|
Deferred revenue
|
2,173
|
|
|
2,395
|
|
||
|
Net operating loss carryforwards
|
33,350
|
|
|
37,492
|
|
||
|
Unrealized foreign exchange loss
|
1,405
|
|
|
1,177
|
|
||
|
Charitable contributions carryforward
|
1,994
|
|
|
1,287
|
|
||
|
Others
|
8,835
|
|
|
3,077
|
|
||
|
Total deferred tax assets
|
104,950
|
|
|
96,499
|
|
||
|
Less valuation allowance
|
(6,973
|
)
|
|
(7,961
|
)
|
||
|
Deferred tax assets after valuation allowance
|
$
|
97,977
|
|
|
$
|
88,538
|
|
|
Liabilities:
|
|
|
|
||||
|
Intangible and fixed assets
|
(144,861
|
)
|
|
(146,327
|
)
|
||
|
Others
|
(4,089
|
)
|
|
(1,091
|
)
|
||
|
Total deferred tax liabilities
|
$
|
(148,950
|
)
|
|
$
|
(147,418
|
)
|
|
Total net deferred tax liabilities
|
$
|
(50,973
|
)
|
|
$
|
(58,880
|
)
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Balance, beginning of year
|
$
|
424
|
|
|
$
|
754
|
|
|
$
|
1,085
|
|
|
Gross increases:
|
|
|
|
|
|
||||||
|
Current year tax positions
|
273
|
|
|
402
|
|
|
—
|
|
|||
|
Prior years' tax positions
|
—
|
|
|
—
|
|
|
380
|
|
|||
|
Gross decreases:
|
|
|
|
|
|
||||||
|
Prior years' tax positions
|
—
|
|
|
(777
|
)
|
|
(546
|
)
|
|||
|
Statute of limitations lapses
|
(21
|
)
|
|
(17
|
)
|
|
(131
|
)
|
|||
|
Other
|
—
|
|
|
62
|
|
|
(34
|
)
|
|||
|
Balance, end of year
|
$
|
676
|
|
|
$
|
424
|
|
|
$
|
754
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands, except per share amounts)
|
||||||||||
|
Basic net income per share:
|
|
|
|
|
|
||||||
|
Net income
|
$
|
60,801
|
|
|
$
|
64,743
|
|
|
$
|
74,564
|
|
|
Weighted average common shares outstanding
|
82,857
|
|
|
76,897
|
|
|
74,386
|
|
|||
|
Basic net income per common share
|
$
|
0.73
|
|
|
$
|
0.84
|
|
|
$
|
1.00
|
|
|
|
|
|
|
|
|
||||||
|
Diluted net income per share:
|
|
|
|
|
|
||||||
|
Net income
|
$
|
60,801
|
|
|
$
|
64,743
|
|
|
$
|
74,564
|
|
|
|
|
|
|
|
|
||||||
|
Weighted average common shares outstanding — Basic
|
82,857
|
|
|
76,897
|
|
|
74,386
|
|
|||
|
Effect of dilutive securities:
|
|
|
|
|
|
||||||
|
2016 Convertible notes
|
—
|
|
|
—
|
|
|
2,296
|
|
|||
|
Warrants
|
—
|
|
|
971
|
|
|
1,166
|
|
|||
|
Stock options and restricted stock
|
1,142
|
|
|
1,253
|
|
|
1,346
|
|
|||
|
Weighted average common shares for diluted earnings per share
|
83,999
|
|
|
79,121
|
|
|
79,194
|
|
|||
|
Diluted net income per common share
|
$
|
0.72
|
|
|
$
|
0.82
|
|
|
$
|
0.94
|
|
|
|
|
Gains and Losses on Derivatives
|
|
Defined Benefit Pension Items
|
|
Foreign Currency Items
|
|
Total
|
||||||||
|
|
|
(In thousands)
|
||||||||||||||
|
Balance at December 31, 2017
|
|
$
|
(2,979
|
)
|
|
$
|
(93
|
)
|
|
$
|
(20,735
|
)
|
|
$
|
(23,807
|
)
|
|
Other comprehensive (loss) income, net
|
|
8,937
|
|
|
(643
|
)
|
|
(19,159
|
)
|
|
(10,865
|
)
|
||||
|
Less: Amounts reclassified from accumulated other comprehensive income, net
|
|
10,239
|
|
|
—
|
|
|
—
|
|
|
10,239
|
|
||||
|
Less: Reclassification of stranded tax effect
|
|
532
|
|
|
—
|
|
|
—
|
|
|
532
|
|
||||
|
Net current-period other comprehensive income (loss)
|
|
(1,834
|
)
|
|
(643
|
)
|
|
(19,159
|
)
|
|
(21,636
|
)
|
||||
|
Balance at December 31, 2018
|
|
$
|
(4,813
|
)
|
|
$
|
(736
|
)
|
|
$
|
(39,894
|
)
|
|
$
|
(45,443
|
)
|
|
|
|
Contingent Consideration Liabilities Related to Acquisition of Derma Sciences (See Note 4)
|
|
Contingent Consideration Liability Related to Acquisition of Confluent Surgical, Inc.
|
|
Location in Financial Statements
|
||||||||||||
|
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
|
|
||||||||
|
Balance as of January 1, 2017
|
|
—
|
|
|
—
|
|
|
—
|
|
|
22,036
|
|
|
|
||||
|
Additions from acquisition of Derma Sciences
|
|
33,707
|
|
|
3,467
|
|
|
—
|
|
|
—
|
|
|
|
||||
|
Transfers from long-term to current portion
|
|
2,193
|
|
|
(2,193
|
)
|
|
22,184
|
|
|
(22,184
|
)
|
|
|
||||
|
Payments
|
|
(31,346
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
|
(Gain)/Loss from change in fair value of contingent consideration liabilities
|
|
(4,239
|
)
|
|
113
|
|
|
294
|
|
|
148
|
|
|
Selling, general and administrative
|
||||
|
Balance as of December 31, 2017
|
|
$
|
315
|
|
|
$
|
1,387
|
|
|
$
|
22,478
|
|
|
$
|
—
|
|
|
|
|
Transfers from long-term to current portion
|
|
1,387
|
|
|
(1,387
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
||
|
Payments
|
|
(2,000
|
)
|
|
—
|
|
|
$
|
(24,000
|
)
|
|
$
|
—
|
|
|
|
||
|
Loss from change in fair value of contingent consideration liabilities
|
|
298
|
|
|
230
|
|
|
$
|
1,522
|
|
|
$
|
—
|
|
|
Selling, general and administrative
|
||
|
Balance as of December 31, 2018
|
|
$
|
—
|
|
|
$
|
230
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
Supply Agreement Liability
|
|
Above Market Supply Agreement Liability
|
|
Location in Statement of Operations
|
||||||||||||
|
|
Short-term
|
|
Long-term
|
|
Short-term
|
|
Long-term
|
|
|
||||||||
|
Balance as of January 1, 2017
|
166
|
|
|
—
|
|
|
—
|
|
|
2,648
|
|
|
|
||||
|
Payments
|
(166
|
)
|
|
—
|
|
|
(113
|
)
|
|
(415
|
)
|
|
|
||||
|
Transfer
|
—
|
|
|
—
|
|
|
3,273
|
|
|
(3,273
|
)
|
|
|
||||
|
(Gain)/loss from change in fair value
|
—
|
|
|
—
|
|
|
(519
|
)
|
|
1,040
|
|
|
Selling, general and administrative
|
||||
|
Balance as of December 31, 2017
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,641
|
|
|
$
|
—
|
|
|
|
|
Payments
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,817
|
)
|
|
$
|
—
|
|
|
|
|
(Gain)/loss from change in fair value
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(470
|
)
|
|
$
|
—
|
|
|
Selling, general and administrative
|
|
Transfer to accounts payable
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(159
|
)
|
|
$
|
—
|
|
|
|
|
Balance as of December 31, 2018
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
195
|
|
|
$
|
—
|
|
|
|
|
•
|
The Codman Specialty Surgical segment includes (i) the Neurosurgery business, which sells a full line of products for neurosurgery and neuro critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment and (ii) the precision tools and instruments business, which sells more than
60,000
instrument patterns and surgical and lighting products to hospitals, surgery centers, dental, podiatry, and veterinary offices.
|
|
•
|
The Orthopedics and Tissue Technologies segment includes such offerings as skin and wound repair, bone and joint fixation implants in the upper and lower extremities, bone grafts, and nerve and tendon repair products.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2018
|
|
2017
|
|
2016
|
||||||
|
|
(In thousands)
|
||||||||||
|
Segment Net Sales
|
|
|
|
|
|
||||||
|
Codman Specialty Surgical
|
$
|
963,929
|
|
|
$
|
720,301
|
|
|
$
|
632,524
|
|
|
Orthopedics and Tissue Technologies
|
508,512
|
|
|
467,935
|
|
|
359,551
|
|
|||
|
Total revenues
|
$
|
1,472,441
|
|
|
$
|
1,188,236
|
|
|
$
|
992,075
|
|
|
Segment Profit
|
|
|
|
|
|
||||||
|
Codman Specialty Surgical
|
$
|
363,336
|
|
|
$
|
292,971
|
|
|
$
|
256,629
|
|
|
Orthopedics and Tissue Technologies
|
149,510
|
|
|
129,697
|
|
|
103,852
|
|
|||
|
Segment profit
|
512,846
|
|
|
422,668
|
|
|
360,481
|
|
|||
|
Amortization
|
(21,160)
|
|
|
(20,370)
|
|
|
(13,862)
|
|
|||
|
Corporate and other
|
(380,688
|
)
|
|
(357,494
|
)
|
|
(231,279
|
)
|
|||
|
Operating income
|
$
|
110,998
|
|
|
$
|
44,804
|
|
|
$
|
115,340
|
|
|
|
United States*
|
|
Europe
|
|
Asia Pacific
|
|
Rest of the World
|
|
Consolidated
|
||||||||||
|
|
(In thousands)
|
||||||||||||||||||
|
Total revenue, net:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2018
|
$
|
1,045,887
|
|
|
$
|
201,354
|
|
|
$
|
144,253
|
|
|
$
|
80,947
|
|
|
$
|
1,472,441
|
|
|
2017
|
894,260
|
|
|
150,147
|
|
|
80,636
|
|
|
63,193
|
|
|
1,188,236
|
|
|||||
|
2016
|
765,608
|
|
|
120,588
|
|
|
59,985
|
|
|
45,894
|
|
|
992,075
|
|
|||||
|
Total long-lived assets:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
2018
|
$
|
280,382
|
|
|
$
|
32,679
|
|
|
$
|
3,765
|
|
|
$
|
3,203
|
|
|
$
|
320,029
|
|
|
2017
|
247,154
|
|
|
30,942
|
|
|
4,189
|
|
|
3,044
|
|
|
285,329
|
|
|||||
|
(In thousands, except per share data)
|
|
|
|
|
|
|
|||||||||||||
|
Quarter
|
Total revenue, net
|
|
Gross margin
|
|
Net income
|
|
Per Share - Basic (1)
|
|
Per Share - Diluted (1)
|
||||||||||
|
2018
|
|
|
|
|
|
|
|
|
|
||||||||||
|
First
|
357,082
|
|
|
212,860
|
|
|
10,992
|
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
|||
|
Second
|
366,190
|
|
|
228,625
|
|
|
11,376
|
|
|
0.14
|
|
|
0.14
|
|
|||||
|
Third
|
365,854
|
|
|
222,609
|
|
|
13,295
|
|
|
0.16
|
|
|
0.15
|
|
|||||
|
Fourth
|
383,315
|
|
|
236,851
|
|
|
25,138
|
|
|
0.29
|
|
|
0.29
|
|
|||||
|
|
1,472,441
|
|
|
900,945
|
|
|
60,801
|
|
|
|
|
|
|||||||
|
2017
|
|
|
|
|
|
|
|
|
|
||||||||||
|
First
|
$
|
258,636
|
|
|
$
|
172,051
|
|
|
$
|
6,394
|
|
|
$
|
0.09
|
|
|
$
|
0.08
|
|
|
Second
|
282,164
|
|
|
183,166
|
|
|
10,835
|
|
|
0.14
|
|
|
0.14
|
|
|||||
|
Third
|
278,834
|
|
|
177,077
|
|
|
3,159
|
|
|
0.04
|
|
|
0.04
|
|
|||||
|
Fourth (2)
|
368,602
|
|
|
220,431
|
|
|
44,355
|
|
|
0.57
|
|
|
0.56
|
|
|||||
|
|
$
|
1,188,236
|
|
|
$
|
752,725
|
|
|
$
|
64,743
|
|
|
|
|
|
||||
|
|
Balance at Beginning of Period
|
|
Charged to Costs and Expenses
|
|
Other
|
|
Deductions
|
|
Balance at End of Period
|
||||||||||
|
Description
|
|
|
|
|
|||||||||||||||
|
|
(In thousands)
|
|
|
||||||||||||||||
|
Year ended December 31, 2018
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Allowance for doubtful accounts
|
$
|
8,882
|
|
|
$
|
557
|
|
|
$
|
(4,649
|
)
|
(3)
|
$
|
(1,071
|
)
|
(2)
|
$
|
3,719
|
|
|
Deferred tax assets valuation allowance
|
7,961
|
|
|
(894
|
)
|
|
—
|
|
|
(94
|
)
|
|
6,973
|
|
|||||
|
Year ended December 31, 2017
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Allowance for doubtful accounts and sales returns and allowances
|
$
|
6,319
|
|
|
$
|
4,920
|
|
|
$
|
1,518
|
|
(1)
|
$
|
(3,875
|
)
|
(2)
|
$
|
8,882
|
|
|
Deferred tax assets valuation allowance
|
3,604
|
|
|
740
|
|
|
3,617
|
|
(1)
|
—
|
|
|
7,961
|
|
|||||
|
Year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Allowance for doubtful accounts and sales returns and allowances
|
$
|
5,572
|
|
|
$
|
2,009
|
|
|
$
|
—
|
|
|
$
|
(1,262
|
)
|
(2)
|
$
|
6,319
|
|
|
Deferred tax assets valuation allowance
|
4,887
|
|
|
(1,228
|
)
|
|
—
|
|
|
(55
|
)
|
|
3,604
|
|
|||||
|
(1)
|
The above amounts primarily relate to amounts acquired through acquisition of Derma Sciences and effect of foreign currency translations.
|
|
(2)
|
Deductions primarily relates to allowance for doubtful accounts written off during the year, net of recoveries and other adjustments.
|
|
(3)
|
The Company transferred sales returns and allowances from accounts receivable, net to accrued expenses and other current liabilities upon adopting Topic 606 on January 1, 2018 using the modified retrospective method.
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
| FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
|---|
| DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
|---|
No information found
No Customers Found
No Suppliers Found
Price
Yield
| Owner | Position | Direct Shares | Indirect Shares |
|---|