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Acquisition, Quality Remediation and Other
3 Months Ended
Mar. 31, 2018
Accounting Policies [Abstract]  
Acquisition, Quality Remediation and Other

4.  Acquisition, Quality Remediation and Other

 

In 2015, we completed our merger with LVB Acquisition, Inc. (“LVB”), the parent company of Biomet, Inc. (“Biomet”) (which merger is sometimes referred to herein as the “Biomet merger”).  The Biomet merger was a transformational event for our company due to its size and complexity.  We developed detailed, three-year integration plans to combine numerous aspects of the businesses.  These integration plans are expected to last through mid-2018.  In 2016, we acquired LDR Holding Corporation and other individually immaterial companies.  We also developed integration plans for these businesses.  We have incurred significant expenses related to the integration plans of the Biomet merger and other business combinations, particularly relating to the integration of these businesses.  

 

In recent years, we have dedicated significant resources to our ongoing quality and operational excellence journey and we will continue to take the necessary actions to demonstrate our commitment to quality excellence, patient safety and regulatory compliance at our sites around the world.  Further, as discussed in Note 16, we are addressing inspectional observations on Form 483 issued by the U.S. Food and Drug Administration (“FDA”) following its inspection of the Warsaw North Campus facility that we acquired as part of the Biomet merger, among other matters.  As part of our quality and operational excellence journey, and in connection with addressing these and other inspectional observations, we have incurred significant expenses, including external consultants and temporary labor.

 

Due to the significance and different nature of the expenses incurred in connection with the Biomet merger, other acquisitions and our quality enhancement and remediation efforts and operational excellence initiatives, we recognize expenses resulting directly from our business combinations, employee termination benefits, certain contract terminations, consulting and professional fees connected with global restructuring, quality enhancement and remediation efforts, operational excellence initiatives, and other items as Acquisition, quality remediation and other in our consolidated statement of earnings.  Acquisition, quality remediation and other expenses included (in millions):

 

 

 

Three Months Ended

 

 

 

March 31,

 

 

 

2018

 

 

2017

 

Biomet merger-related

 

 

 

 

 

 

 

 

Consulting and professional fees

 

$

10.0

 

 

$

18.7

 

Employee termination benefits

 

 

1.8

 

 

 

(3.0

)

Dedicated project personnel

 

 

2.2

 

 

 

8.7

 

Relocated facilities

 

 

0.7

 

 

 

2.8

 

Information technology integration

 

 

0.1

 

 

 

2.3

 

Other

 

 

1.8

 

 

 

7.5

 

Total Biomet merger-related

 

 

16.6

 

 

 

37.0

 

Other

 

 

 

 

 

 

 

 

Consulting and professional fees

 

$

63.8

 

 

$

50.4

 

Employee termination benefits

 

 

1.6

 

 

 

1.2

 

Dedicated project personnel

 

 

9.3

 

 

 

12.8

 

Relocated facilities

 

 

0.7

 

 

 

2.4

 

Certain litigation matters

 

 

5.7

 

 

 

7.0

 

Contract terminations

 

 

2.6

 

 

 

-

 

Information technology integration

 

 

1.2

 

 

 

0.5

 

Contingent consideration adjustments

 

 

0.5

 

 

 

(3.6

)

Other

 

 

3.2

 

 

 

2.4

 

Total Other

 

 

88.6

 

 

 

73.1

 

Acquisition, quality remediation and other

 

$

105.2

 

 

$

110.1

 

 

Consulting and professional fees include expenditures related to third-party integration consulting performed in a variety of areas such as tax, compliance, logistics and human resources for our business combinations including the Biomet merger; legal fees related to the consummation of mergers and acquisitions and certain litigation and compliance matters; other consulting and professional fees and contract labor related to our quality enhancement and remediation efforts and operational excellence initiatives; third-party fees related to severance and termination benefits matters; costs of complying with our deferred prosecution agreement including the cost of the independent compliance monitor and external legal counsel; and consulting fees related to certain information system integrations.  

Dedicated project personnel expenses include the salary, benefits, travel expenses and other costs directly associated with employees who are 100 percent dedicated to our integration of acquired businesses, employees who have been notified of termination, but are continuing to work on transferring their responsibilities and employees working on our quality enhancement and remediation efforts and operational excellence initiatives.  

A further detailed description of expenses included in Acquisition, quality remediation and other can be found in Note 2 to our Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017.