x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Maryland | 84-1507827 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |
100 Fordham Road Wilmington, Massachusetts | 01887 | |
(Address of registrant’s principal executive offices) | (Zip code) |
Large accelerated filer | ¨ | Accelerated filer | ¨ | |||
Non-accelerated filer | x (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
December 31, 2012 | June 30, 2013 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 59,902 | $ | 60,486 | |||
Accounts receivable, net of allowances of $2,106 and $2,241 as of December 31, 2012 and June 30, 2013, respectively | 49,403 | 56,505 | |||||
Inventory | 57,069 | 60,551 | |||||
Prepaid expenses and other current assets | 10,973 | 3,388 | |||||
Total current assets | 177,347 | 180,930 | |||||
Property, plant and equipment, net | 115,869 | 116,423 | |||||
Goodwill | 619,443 | 556,315 | |||||
Other intangible assets, net | 134,747 | 127,277 | |||||
Deferred financing costs and other assets, net | 13,766 | 12,385 | |||||
Total assets | $ | 1,061,172 | $ | 993,330 | |||
Liabilities and Stockholders' equity | |||||||
Current liabilities: | |||||||
Current portion of long-term debt | $ | 11 | $ | 7 | |||
Accounts payable | 20,044 | 23,766 | |||||
Accrued payroll and benefits | 6,829 | 9,803 | |||||
Accrued interest | 19,323 | 19,303 | |||||
Accrued expenses and other current liabilities | 17,359 | 16,378 | |||||
Total current liabilities | 63,566 | 69,257 | |||||
Long-term debt | 713,294 | 713,470 | |||||
Other liabilities | 39,905 | 40,678 | |||||
Total liabilities | 816,765 | 823,405 | |||||
Commitments and contingencies (Note 12) | |||||||
Stockholders' equity: | |||||||
Common stock, par value $0.01 per share, 50,000,000 shares authorized; 1,000 shares issued and outstanding at December 31, 2012 and June 30, 2013, respectively | — | — | |||||
Additional paid-in capital | 639,610 | 640,010 | |||||
Accumulated other comprehensive loss | (2,554 | ) | (2,696 | ) | |||
Accumulated deficit | (392,649 | ) | (467,389 | ) | |||
Total stockholders’ equity | 244,407 | 169,925 | |||||
Total liabilities and stockholders’ equity | $ | 1,061,172 | $ | 993,330 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Net sales | $ | 125,998 | $ | 130,733 | $ | 250,565 | $ | 251,531 | |||||||
Cost of sales (exclusive of amortization) | 93,014 | 95,330 | 188,120 | 190,258 | |||||||||||
Gross profit | 32,984 | 35,403 | 62,445 | 61,273 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 13,814 | 12,778 | 28,669 | 27,025 | |||||||||||
Research and development expenses | 472 | 547 | 945 | 999 | |||||||||||
Impairment of goodwill | — | 12,128 | — | 63,128 | |||||||||||
Restructuring expenses | 1,485 | (170 | ) | 1,838 | (181 | ) | |||||||||
(Gain) loss on disposal of assets | (32 | ) | 736 | (33 | ) | 692 | |||||||||
Amortization of intangible assets | 3,735 | 3,735 | 7,470 | 7,470 | |||||||||||
Total operating expenses | 19,474 | 29,754 | 38,889 | 99,133 | |||||||||||
Income (loss) from continuing operations | 13,510 | 5,649 | 23,556 | (37,860 | ) | ||||||||||
Other (expense) income, net: | |||||||||||||||
Interest expense, net | (17,258 | ) | (17,271 | ) | (34,500 | ) | (34,577 | ) | |||||||
Other expense, net | (858 | ) | (31 | ) | (682 | ) | (180 | ) | |||||||
Total other expense, net | (18,116 | ) | (17,302 | ) | (35,182 | ) | (34,757 | ) | |||||||
Loss from continuing operations before income taxes | (4,606 | ) | (11,653 | ) | (11,626 | ) | (72,617 | ) | |||||||
Provision for income taxes | 1,131 | 1,018 | 1,718 | 2,123 | |||||||||||
Net loss from continuing operations | (5,737 | ) | (12,671 | ) | (13,344 | ) | (74,740 | ) | |||||||
Net income from discontinued operations, net of tax of $69 and $404 for the three and six months ended June 30, 2012, respectively, and net of tax of $0 for the three and six months ended June 30, 2013, respectively | 129 | — | 750 | — | |||||||||||
Net loss | $ | (5,608 | ) | $ | (12,671 | ) | $ | (12,594 | ) | $ | (74,740 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Net loss | $ | (5,608 | ) | $ | (12,671 | ) | $ | (12,594 | ) | $ | (74,740 | ) | |||
Other comprehensive income (loss): | |||||||||||||||
Unrealized gain (loss) on available for sale security | 193 | (3 | ) | 193 | 32 | ||||||||||
Realized gain on available for sale security | — | (242 | ) | — | (242 | ) | |||||||||
Cumulative translation adjustment | (540 | ) | 325 | 14 | 68 | ||||||||||
Other comprehensive (loss) income | (347 | ) | 80 | 207 | (142 | ) | |||||||||
Comprehensive loss | $ | (5,955 | ) | $ | (12,591 | ) | $ | (12,387 | ) | $ | (74,882 | ) |
Six Months Ended | |||||||
June 30, 2012 | June 30, 2013 | ||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (12,594 | ) | $ | (74,740 | ) | |
Less net income from discontinued operations, net of tax | 750 | — | |||||
Net loss from continuing operations | (13,344 | ) | (74,740 | ) | |||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||
Depreciation and amortization | 19,488 | 16,228 | |||||
Amortization of debt discounts and non-cash interest accrued | 1,533 | 1,619 | |||||
Restructuring charges, net of payments | 1,031 | — | |||||
Impairment of goodwill | — | 63,128 | |||||
(Gain) Loss on disposal of assets | (33 | ) | 692 | ||||
Gain on sale of securities | — | (242 | ) | ||||
Deferred income tax expense | 1,479 | 1,104 | |||||
Non-cash compensation expense | 227 | 460 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (2,119 | ) | (7,237 | ) | |||
Inventory | (4,427 | ) | (3,559 | ) | |||
Prepaid expenses and other current assets | (630 | ) | (684 | ) | |||
Accounts payable, accrued expenses and other liabilities | 2,998 | 6,002 | |||||
Net cash provided by operating activities of continuing operations | 6,203 | 2,771 | |||||
Net cash provided by (used in) operating activities of discontinued operations | 2,017 | (108 | ) | ||||
Net cash provided by operating activities | 8,220 | 2,663 | |||||
Cash flows from investing activities: | |||||||
Capital expenditures | (7,477 | ) | (10,264 | ) | |||
Proceeds from sale of property and equipment | 24 | 63 | |||||
Proceeds from the sale of available for sale securities | — | 242 | |||||
Net cash used in investing activities of continuing operations | (7,453 | ) | (9,959 | ) | |||
Net cash provided by investing activities of discontinued operations | 7,528 | 7,987 | |||||
Net cash provided by (used in) investing activities | 75 | (1,972 | ) | ||||
Cash flows from financing activities: | |||||||
Repayments of long-term debt and capital lease obligations | (11 | ) | (7 | ) | |||
Repurchase of common stock | (43 | ) | — | ||||
Net cash used in financing activities | (54 | ) | (7 | ) | |||
Effect of exchange rate changes | (129 | ) | (100 | ) | |||
Net increase in cash | 8,112 | 584 | |||||
Cash, beginning of period | 38,858 | 59,902 | |||||
Cash, end of period | $ | 46,970 | $ | 60,486 | |||
Supplemental disclosure of cash flow information: | |||||||
Cash paid for interest | $ | 32,574 | $ | 32,910 | |||
Cash paid for income taxes | $ | 1,414 | $ | 816 | |||
Supplemental disclosure of non-cash investing and financing activities: | |||||||
Property and equipment purchases included in accrued expenses | $ | 1,853 | $ | 1,615 |
Three Months Ended | Six Months Ended | ||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||
Customer A | 13 | % | 17 | % | 13 | % | 16 | % | |||
Customer B | 16 | % | 14 | % | 17 | % | 14 | % | |||
Customer C | 11 | % | 11 | % | 11 | % | 11 | % | |||
Customer D | * | 10 | % | * | 10 | % |
December 31, 2012 | June 30, 2013 | ||||||
Raw materials | $ | 12,100 | $ | 15,999 | |||
Work-in-process | 27,779 | 28,850 | |||||
Finished goods | 17,190 | 15,702 | |||||
Total | $ | 57,069 | $ | 60,551 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Cost of sales | $ | 497 | $ | 497 | $ | 994 | $ | 994 | |||||||
Selling, general and administrative | 3,238 | 3,238 | 6,476 | 6,476 | |||||||||||
Total | $ | 3,735 | $ | 3,735 | $ | 7,470 | $ | 7,470 |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Developed technology and know how | $ | 16,991 | $ | (15,168 | ) | $ | 1,823 | ||||
Customer contracts and relationships | 197,575 | (101,521 | ) | 96,054 | |||||||
Trade names and trademarks | 29,400 | — | 29,400 | ||||||||
Total intangible assets | $ | 243,966 | $ | (116,689 | ) | $ | 127,277 |
Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||
Developed technology and know how | $ | 16,991 | $ | (14,174 | ) | $ | 2,817 | ||||
Customer contracts and relationships | 197,575 | (95,045 | ) | 102,530 | |||||||
Trade names and trademarks | 29,400 | — | 29,400 | ||||||||
Total intangible assets | $ | 243,966 | $ | (109,219 | ) | $ | 134,747 |
Remaining weighted - average amortization period | |||
December 31, 2012 | June 30, 2013 | ||
Developed technology and know how | 1.4 | 0.9 | |
Customer contracts and relationships | 7.9 | 7.4 | |
Total finite lived intangible asset | 7.7 | 7.3 |
December 31, 2012 | June 30, 2013 | ||||||
Senior secured notes maturing on February 1, 2017, interest at 8.375% ("Senior Secured Notes") | $ | 400,000 | $ | 400,000 | |||
Senior subordinated notes maturing on November 1, 2017, interest at 10.0% ("Senior Subordinated Notes") | 315,000 | 315,000 | |||||
Capital lease obligations | 20 | 13 | |||||
Total debt | 715,020 | 715,013 | |||||
Less—unamortized discount | (1,715 | ) | (1,536 | ) | |||
Less—current portion | (11 | ) | (7 | ) | |||
Long term debt, excluding current portion | $ | 713,294 | $ | 713,470 |
Employee costs | Other exit costs | Total | |||||||||
Balance, January 1, 2012 | $ | 340 | $ | — | $ | 340 | |||||
Restructuring expenses | 874 | 964 | 1,838 | ||||||||
Payments | (698 | ) | (108 | ) | (806 | ) | |||||
Balance, June 30, 2012 | $ | 516 | $ | 856 | $ | 1,372 |
Employee costs | Other exit costs | Total | |||||||||
Balance, January 1, 2013 | $ | 1,329 | 790 | $ | 2,119 | ||||||
Restructuring expenses | (170 | ) | (11 | ) | (181 | ) | |||||
Payments | (1,024 | ) | (121 | ) | (1,145 | ) | |||||
Balance, June 30, 2013 | $ | 135 | $ | 658 | $ | 793 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Sales | $ | 4,233 | $ | — | $ | 11,244 | $ | — | |||||||
Costs and expenses | 4,027 | — | 10,084 | — | |||||||||||
Operating income from discontinued operations | 206 | — | 1,160 | — | |||||||||||
Other expenses, net | (8 | ) | — | (6 | ) | — | |||||||||
Income from discontinued operations before income taxes | 198 | — | 1,154 | — | |||||||||||
Provision for income taxes | 69 | — | 404 | — | |||||||||||
Income from discontinued operations, net of tax | $ | 129 | $ | — | $ | 750 | $ | — |
Three Months Ended | |||||||||||||
June 30, 2012 | June 30, 2013 | ||||||||||||
Liability (in thousands) | Roll-Over Shares Outstanding | Liability (in thousands) | Roll-Over Shares Outstanding | ||||||||||
Balance at January 1 | $ | 143 | 80,727 | $ | 141 | 80,727 | |||||||
Shares repurchased | — | — | — | — | |||||||||
Options exercised | — | — | — | — | |||||||||
Options forfeited | — | — | — | — | |||||||||
Change in fair value | (2 | ) | — | — | — | ||||||||
Balance at end of period | $ | 141 | 80,727 | $ | 141 | 80,727 |
Six Months Ended | |||||||||||||
June 30, 2012 | June 30, 2013 | ||||||||||||
Liability (in thousands) | Roll-Over Shares Outstanding | Liability (in thousands) | Roll-Over Shares Outstanding | ||||||||||
Balance at January 1 | $ | 355 | 201,817 | $ | 141 | 80,727 | |||||||
Shares repurchased | (119 | ) | (67,607 | ) | — | — | |||||||
Options exercised | (58 | ) | (33,301 | ) | — | — | |||||||
Options forfeited | (35 | ) | (20,182 | ) | — | — | |||||||
Change in fair value | (2 | ) | — | — | — | ||||||||
Balance at end of period | $ | 141 | 80,727 | $ | 141 | 80,727 |
June 30, 2013 | ||
Expected term to exercise | 0.67 years | |
Expected volatility | 25.84 | % |
Risk-free rate | 0.36 | % |
Dividend yield | — | % |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Cost of sales | $ | 30 | $ | 49 | $ | 38 | $ | 111 | |||||||
Selling, general and administrative | 112 | 136 | 144 | 289 | |||||||||||
Total | $ | 142 | $ | 185 | $ | 182 | $ | 400 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Time-based vesting options | $ | 144 | $ | 79 | $ | 184 | $ | 192 | |||||||
Performance-based vesting options | — | — | — | — | |||||||||||
Restricted stock awards | — | 106 | — | 208 | |||||||||||
Roll-over options | (2 | ) | — | (2 | ) | — | |||||||||
Total expense | $ | 142 | $ | 185 | $ | 182 | $ | 400 |
Fair Value Measurements at December 31, 2012 determined using | |||||||||||||||
Total Carrying Value at December 31, 2012 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Investment in Available for Sale Security | $ | 210 | $ | 210 | $ | — | $ | — | |||||||
Liability for Roll-Over options | $ | 141 | $ | — | $ | — | $ | 141 |
Fair Value Measurements at June 30, 2013 determined using | |||||||||||||||
Total Carrying Value at June 30, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
Liability for Roll-Over options | $ | 141 | $ | — | $ | — | $ | 141 |
• | Accounts receivable and accounts payable—The carrying amounts of these items are a reasonable estimate of their fair values at December 31, 2012 and June 30, 2013 based on the short-term nature of these items. |
• | Borrowings under the Senior Secured Notes due 2017—Borrowings under the Senior Secured Notes have a fixed rate. The Company intends to carry the Senior Secured Notes until their maturity. At June 30, 2013, the fair value of the Senior Secured Notes, which is Level 2 in the fair value hierarchy, was approximately 103.5%, or $414 million, compared to their carrying value of $400 million. |
• | Borrowings under the Senior Subordinated Notes due 2017—Borrowings under the Senior Subordinated Notes due 2017 have a fixed rate. The Company intends to carry the Senior Subordinated Notes until their maturity. At June 30, 2013 the fair value of the Senior Subordinated Notes, which is Level 2 in the fair value hierarchy, was approximately 92%, or $289.8 million, compared to their carrying value of $315 million. |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 116,546 | $ | 10,208 | $ | (756 | ) | $ | 125,998 | ||||||||
Cost of sales (exclusive of amortization) | — | 86,723 | 7,047 | (756 | ) | 93,014 | |||||||||||||
Selling, general and administrative expenses | 23 | 12,877 | 914 | — | 13,814 | ||||||||||||||
Research and development expenses | — | 243 | 229 | — | 472 | ||||||||||||||
Restructuring expenses | — | 1,485 | — | — | 1,485 | ||||||||||||||
Amortization of intangible assets | 3,735 | — | — | — | 3,735 | ||||||||||||||
(Gain) loss on disposal of assets | — | (40 | ) | 8 | — | (32 | ) | ||||||||||||
(Loss) income from continuing operations | (3,758 | ) | 15,258 | 2,010 | — | 13,510 | |||||||||||||
Interest (expense) income, net | (17,232 | ) | 663 | (689 | ) | — | (17,258 | ) | |||||||||||
Other (expense) income, net | — | (2,116 | ) | 1,258 | — | (858 | ) | ||||||||||||
Equity in earnings (losses) of affiliates | 15,382 | 1,795 | — | (17,177 | ) | — | |||||||||||||
(Loss) income from continuing operations before income taxes | (5,608 | ) | 15,600 | 2,579 | (17,177 | ) | (4,606 | ) | |||||||||||
Provision for income taxes | — | 347 | 784 | — | 1,131 | ||||||||||||||
Net (loss) income from continuing operations | (5,608 | ) | 15,253 | 1,795 | (17,177 | ) | (5,737 | ) | |||||||||||
Net income from discontinued operations, net of tax | — | 129 | — | — | 129 | ||||||||||||||
Net (loss) income | $ | (5,608 | ) | $ | 15,382 | $ | 1,795 | $ | (17,177 | ) | $ | (5,608 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 120,112 | $ | 10,898 | $ | (277 | ) | $ | 130,733 | ||||||||
Cost of sales (exclusive of amortization) | — | 87,727 | 7,880 | (277 | ) | 95,330 | |||||||||||||
Selling, general and administrative expenses | 30 | 11,908 | 840 | — | 12,778 | ||||||||||||||
Research and development expenses | — | 327 | 220 | — | 547 | ||||||||||||||
Impairment of goodwill | 12,128 | — | — | — | 12,128 | ||||||||||||||
Restructuring expenses | — | (170 | ) | — | — | (170 | ) | ||||||||||||
Amortization of intangible assets | 3,735 | — | — | — | 3,735 | ||||||||||||||
Loss on disposal of assets | — | 708 | 28 | — | 736 | ||||||||||||||
(Loss) income from continuing operations | (15,893 | ) | 19,612 | 1,930 | — | 5,649 | |||||||||||||
Interest (expense) income, net | (17,277 | ) | 714 | (708 | ) | — | (17,271 | ) | |||||||||||
Other income (expense), net | 242 | 256 | (529 | ) | — | (31 | ) | ||||||||||||
Equity in earnings of affiliates | 20,257 | 415 | — | (20,672 | ) | — | |||||||||||||
(Loss) income from continuing operations before income taxes | (12,671 | ) | 20,997 | 693 | (20,672 | ) | (11,653 | ) | |||||||||||
Provision for income taxes | — | 740 | 278 | — | 1,018 | ||||||||||||||
Net (loss) income from continuing operations | (12,671 | ) | 20,257 | 415 | (20,672 | ) | (12,671 | ) | |||||||||||
Net income from discontinued operations, net of tax | — | — | — | — | — | ||||||||||||||
Net (loss) income | $ | (12,671 | ) | $ | 20,257 | $ | 415 | $ | (20,672 | ) | $ | (12,671 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 231,254 | $ | 20,458 | $ | (1,147 | ) | $ | 250,565 | ||||||||
Cost of sales (exclusive of amortization) | — | 175,089 | 14,178 | (1,147 | ) | 188,120 | |||||||||||||
Selling, general and administrative expenses | 48 | 26,782 | 1,839 | — | 28,669 | ||||||||||||||
Research and development expenses | — | 497 | 448 | — | 945 | ||||||||||||||
Restructuring expenses | — | 1,838 | — | — | 1,838 | ||||||||||||||
Amortization of intangible assets | 7,470 | — | — | — | 7,470 | ||||||||||||||
(Gain) loss on disposal of assets | — | (41 | ) | 8 | — | (33 | ) | ||||||||||||
(Loss) income from continuing operations | (7,518 | ) | 27,089 | 3,985 | — | 23,556 | |||||||||||||
Interest (expense) income, net | (34,448 | ) | 1,340 | (1,392 | ) | — | (34,500 | ) | |||||||||||
Other (expense) income, net | — | (1,321 | ) | 639 | — | (682 | ) | ||||||||||||
Equity in earnings (losses) of affiliates | 29,372 | 1,961 | — | (31,333 | ) | — | |||||||||||||
(Loss) income from continuing operations before income taxes | (12,594 | ) | 29,069 | 3,232 | (31,333 | ) | (11,626 | ) | |||||||||||
Provision for income taxes | — | 447 | 1,271 | — | 1,718 | ||||||||||||||
Net (loss) income from continuing operations | (12,594 | ) | 28,622 | 1,961 | (31,333 | ) | (13,344 | ) | |||||||||||
Net income from discontinued operations, net of tax | — | 750 | — | — | 750 | ||||||||||||||
Net (loss) income | $ | (12,594 | ) | $ | 29,372 | $ | 1,961 | $ | (31,333 | ) | $ | (12,594 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net sales | $ | — | $ | 231,211 | $ | 20,963 | $ | (643 | ) | $ | 251,531 | ||||||||
Cost of sales (exclusive of amortization) | — | 175,937 | 14,964 | (643 | ) | 190,258 | |||||||||||||
Selling, general and administrative expenses | 62 | 25,152 | 1,811 | — | 27,025 | ||||||||||||||
Research and development expenses | — | 625 | 374 | — | 999 | ||||||||||||||
Impairment of goodwill | 63,128 | — | — | — | 63,128 | ||||||||||||||
Restructuring expenses | — | (181 | ) | — | — | (181 | ) | ||||||||||||
Amortization of intangible assets | 7,470 | — | — | — | 7,470 | ||||||||||||||
Loss on disposal of assets | — | 666 | 26 | — | 692 | ||||||||||||||
(Loss) income from continuing operations | (70,660 | ) | 29,012 | 3,788 | — | (37,860 | ) | ||||||||||||
Interest (expense) income, net | (34,580 | ) | 1,408 | (1,405 | ) | — | (34,577 | ) | |||||||||||
Other income (expense), net | 923 | (854 | ) | (249 | ) | — | (180 | ) | |||||||||||
Equity in earnings of affiliates | 29,577 | 1,447 | — | (31,024 | ) | — | |||||||||||||
(Loss) income from continuing operations before income taxes | (74,740 | ) | 31,013 | 2,134 | (31,024 | ) | (72,617 | ) | |||||||||||
Provision for income taxes | — | 1,436 | 687 | — | 2,123 | ||||||||||||||
Net (loss) income from continuing operations | (74,740 | ) | 29,577 | 1,447 | (31,024 | ) | (74,740 | ) | |||||||||||
Net income from discontinued operations, net of tax | — | — | — | — | — | ||||||||||||||
Net (loss) income | $ | (74,740 | ) | $ | 29,577 | $ | 1,447 | $ | (31,024 | ) | $ | (74,740 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash | $ | — | $ | 53,812 | $ | 6,090 | $ | — | $ | 59,902 | |||||||||
Accounts receivable, net | — | 46,992 | 2,929 | (518 | ) | 49,403 | |||||||||||||
Inventories | — | 52,807 | 4,262 | — | 57,069 | ||||||||||||||
Prepaid expenses and other current assets | 215 | 10,399 | 359 | — | 10,973 | ||||||||||||||
Total current assets | 215 | 164,010 | 13,640 | (518 | ) | 177,347 | |||||||||||||
Property, plant and equipment, net | — | 90,473 | 25,396 | — | 115,869 | ||||||||||||||
Intercompany receivables, net | — | 365,713 | — | (365,713 | ) | — | |||||||||||||
Investment in subsidiaries | 554,794 | 9,143 | — | (563,937 | ) | — | |||||||||||||
Goodwill | 619,443 | — | — | — | 619,443 | ||||||||||||||
Other intangible assets, net | 134,747 | — | — | — | 134,747 | ||||||||||||||
Deferred financing costs and other assets, net | 13,269 | (8 | ) | 505 | — | 13,766 | |||||||||||||
Total assets | $ | 1,322,468 | $ | 629,331 | $ | 39,541 | $ | (930,168 | ) | $ | 1,061,172 | ||||||||
Current portion of long-term debt | $ | — | $ | 11 | $ | — | $ | — | $ | 11 | |||||||||
Accounts payable | 1 | 18,613 | 1,948 | (518 | ) | 20,044 | |||||||||||||
Accrued expenses and other current liabilities | 19,317 | 20,267 | 3,927 | — | 43,511 | ||||||||||||||
Total current liabilities | 19,318 | 38,891 | 5,875 | (518 | ) | 63,566 | |||||||||||||
Long-term debt | 1,057,832 | — | 21,175 | (365,713 | ) | 713,294 | |||||||||||||
Other long-term liabilities | 911 | 35,646 | 3,348 | — | 39,905 | ||||||||||||||
Total liabilities | 1,078,061 | 74,537 | 30,398 | (366,231 | ) | 816,765 | |||||||||||||
Equity | 244,407 | 554,794 | 9,143 | (563,937 | ) | 244,407 | |||||||||||||
Total liabilities and equity | $ | 1,322,468 | $ | 629,331 | $ | 39,541 | $ | (930,168 | ) | $ | 1,061,172 |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Cash | $ | — | $ | 52,397 | $ | 8,089 | $ | — | $ | 60,486 | |||||||||
Accounts receivable, net | — | 52,688 | 4,089 | (272 | ) | 56,505 | |||||||||||||
Inventories | — | 55,641 | 4,910 | — | 60,551 | ||||||||||||||
Prepaid expenses and other current assets | 44 | 3,078 | 266 | — | 3,388 | ||||||||||||||
Total current assets | 44 | 163,804 | 17,354 | (272 | ) | 180,930 | |||||||||||||
Property, plant and equipment, net | — | 89,488 | 26,935 | — | 116,423 | ||||||||||||||
Intercompany receivables, net | — | 398,943 | — | (398,943 | ) | — | |||||||||||||
Investment in subsidiaries | 584,438 | 10,934 | — | (595,372 | ) | — | |||||||||||||
Goodwill | 556,315 | — | — | — | 556,315 | ||||||||||||||
Other intangible assets, net | 127,277 | — | — | — | 127,277 | ||||||||||||||
Deferred financing costs and other assets, net | 11,828 | 70 | 487 | — | 12,385 | ||||||||||||||
Total assets | $ | 1,279,902 | $ | 663,239 | $ | 44,776 | $ | (994,587 | ) | $ | 993,330 | ||||||||
Current portion of long-term debt | $ | — | $ | 7 | $ | — | $ | — | $ | 7 | |||||||||
Accounts payable | — | 21,011 | 3,027 | (272 | ) | 23,766 | |||||||||||||
Accrued expenses and other current liabilities | 19,303 | 21,447 | 4,734 | — | 45,484 | ||||||||||||||
Total current liabilities | 19,303 | 42,465 | 7,761 | (272 | ) | 69,257 | |||||||||||||
Long-term debt | 1,089,703 | — | 22,710 | (398,943 | ) | 713,470 | |||||||||||||
Other long-term liabilities | 971 | 36,336 | 3,371 | — | 40,678 | ||||||||||||||
Total liabilities | 1,109,977 | 78,801 | 33,842 | (399,215 | ) | 823,405 | |||||||||||||
Equity | 169,925 | 584,438 | 10,934 | (595,372 | ) | 169,925 | |||||||||||||
Total liabilities and equity | $ | 1,279,902 | $ | 663,239 | $ | 44,776 | $ | (994,587 | ) | $ | 993,330 |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net (loss) income | $ | (5,608 | ) | $ | 15,382 | $ | 1,795 | $ | (17,177 | ) | $ | (5,608 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Unrealized gain on available for sale security | 193 | — | — | — | 193 | ||||||||||||||
Cumulative translation adjustment | (540 | ) | (139 | ) | (401 | ) | 540 | (540 | ) | ||||||||||
Comprehensive (loss) income | $ | (5,955 | ) | $ | 15,243 | $ | 1,394 | $ | (16,637 | ) | $ | (5,955 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net (loss) income | $ | (12,671 | ) | $ | 20,257 | $ | 415 | $ | (20,672 | ) | $ | (12,671 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Unrealized loss on available for sale security | (3 | ) | — | — | — | (3 | ) | ||||||||||||
Realized gain on available for sale security | (242 | ) | — | — | — | (242 | ) | ||||||||||||
Cumulative translation adjustment | 325 | 2 | 323 | (325 | ) | 325 | |||||||||||||
Comprehensive (loss) income | $ | (12,591 | ) | $ | 20,259 | $ | 738 | $ | (20,997 | ) | $ | (12,591 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net (loss) income | $ | (12,594 | ) | $ | 29,372 | $ | 1,961 | $ | (31,333 | ) | $ | (12,594 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Unrealized gain on available for sale security | 193 | — | — | — | 193 | ||||||||||||||
Cumulative translation adjustment | 14 | 55 | (41 | ) | (14 | ) | 14 | ||||||||||||
Comprehensive (loss) income | $ | (12,387 | ) | $ | 29,427 | $ | 1,920 | $ | (31,347 | ) | $ | (12,387 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net (loss) income | $ | (74,740 | ) | $ | 29,577 | $ | 1,447 | $ | (31,024 | ) | $ | (74,740 | ) | ||||||
Other comprehensive income (loss): | |||||||||||||||||||
Unrealized gain on available for sale security | 32 | — | — | — | 32 | ||||||||||||||
Realized gain on available for sale security | (242 | ) | — | — | — | (242 | ) | ||||||||||||
Cumulative translation adjustment | 68 | (277 | ) | 345 | (68 | ) | 68 | ||||||||||||
Comprehensive (loss) income | $ | (74,882 | ) | $ | 29,300 | $ | 1,792 | $ | (31,092 | ) | $ | (74,882 | ) |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net cash (used in) provided by operating activities of continuing operations | $ | (32,360 | ) | $ | 34,588 | $ | 3,975 | $ | — | $ | 6,203 | ||||||||
Net cash provided by operating activities of discontinued operations | — | 2,017 | — | — | 2,017 | ||||||||||||||
Net cash (used in) provided by operating activities | (32,360 | ) | 36,605 | 3,975 | — | 8,220 | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | — | (257 | ) | (7,220 | ) | — | (7,477 | ) | |||||||||||
Proceeds from disposition of assets | — | 24 | — | — | 24 | ||||||||||||||
Net cash used in investing activities of continuing operations | — | (233 | ) | (7,220 | ) | — | (7,453 | ) | |||||||||||
Net cash provided by investing activities of discontinued operations | — | 7,528 | — | — | 7,528 | ||||||||||||||
Net cash provided by (used in) investing activities | — | 7,295 | (7,220 | ) | — | 75 | |||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Repayments of long-term debt and capital lease obligations | — | (11 | ) | — | — | (11 | ) | ||||||||||||
Intercompany receipts (advances) | 32,403 | (35,097 | ) | 2,694 | — | — | |||||||||||||
Repurchase of parent company stock | (43 | ) | — | — | — | (43 | ) | ||||||||||||
Cash flows provided by (used in) financing activities | 32,360 | (35,108 | ) | 2,694 | — | (54 | ) | ||||||||||||
Effect of exchange rate changes in cash | — | 28 | (157 | ) | — | (129 | ) | ||||||||||||
Net increase (decrease) in cash | — | 8,820 | (708 | ) | — | 8,112 | |||||||||||||
Cash, beginning of period | — | 32,627 | 6,231 | — | 38,858 | ||||||||||||||
Cash, end of period | $ | — | $ | 41,447 | $ | 5,523 | $ | — | $ | 46,970 |
Parent | Subsidiary Guarantors | Non- Guarantor Subsidiaries | Eliminations | Consolidated | |||||||||||||||
Net cash (used in) provided by operating activities of continuing operations | $ | (32,424 | ) | $ | 30,583 | $ | 4,612 | $ | — | $ | 2,771 | ||||||||
Net cash used in operating activities of discontinued operations | — | (108 | ) | — | — | (108 | ) | ||||||||||||
Net cash (used in) provided by operating activities | (32,424 | ) | 30,475 | 4,612 | — | 2,663 | |||||||||||||
Cash flows from investing activities: | |||||||||||||||||||
Capital expenditures | — | (6,265 | ) | (3,999 | ) | — | (10,264 | ) | |||||||||||
Proceeds from sale of equipment | — | 56 | 7 | — | 63 | ||||||||||||||
Proceeds from the sale of available for sale securities | 242 | — | — | — | 242 | ||||||||||||||
Net cash provided by (used in) investing activities of continuing operations | 242 | (6,209 | ) | (3,992 | ) | — | (9,959 | ) | |||||||||||
Net cash provided by investing activities of discontinued operations | — | 7,987 | — | — | 7,987 | ||||||||||||||
Net cash provided by (used in) investing activities | 242 | 1,778 | (3,992 | ) | — | (1,972 | ) | ||||||||||||
Cash flows from financing activities: | |||||||||||||||||||
Repayments of long-term debt and capital lease obligations | — | (7 | ) | — | — | (7 | ) | ||||||||||||
Intercompany receipts (advances) | 32,182 | (33,633 | ) | 1,451 | — | — | |||||||||||||
Cash flows provided by (used in) financing activities | 32,182 | (33,640 | ) | 1,451 | — | (7 | ) | ||||||||||||
Effect of exchange rate changes in cash | — | (28 | ) | (72 | ) | — | (100 | ) | |||||||||||
Net (decrease) increase in cash | — | (1,415 | ) | 1,999 | — | 584 | |||||||||||||
Cash, beginning of period | — | 53,812 | 6,090 | — | 59,902 | ||||||||||||||
Cash, end of period | $ | — | $ | 52,397 | $ | 8,089 | $ | — | $ | 60,486 |
Common Stock | Additional Paid-In Capital | Accumulated other comprehensive income (loss) | Accumulated (deficit) | Total Equity | ||||||||||||||||||
Shares | Amount | |||||||||||||||||||||
Balance, January 1, 2013 | 1,000 | $ | — | $ | 639,610 | $ | (2,554 | ) | $ | (392,649 | ) | $ | 244,407 | |||||||||
Comprehensive loss: | ||||||||||||||||||||||
Net loss | — | — | — | (74,740 | ) | (74,740 | ) | |||||||||||||||
Unrealized gain on available for sale security | — | — | 32 | — | 32 | |||||||||||||||||
Realized gain on available for sale security | — | — | — | (242 | ) | — | (242 | ) | ||||||||||||||
Cumulative translation adjustment | — | — | 68 | — | 68 | |||||||||||||||||
Total comprehensive loss | (74,882 | ) | ||||||||||||||||||||
Stock-based compensation and other | — | 400 | — | — | 400 | |||||||||||||||||
Balance, June 30, 2013 | 1,000 | $ | — | $ | 640,010 | $ | (2,696 | ) | $ | (467,389 | ) | $ | 169,925 |
Defined Benefit Pension Items | Unrealized Gains and Losses on Available-for-Sale Securities | Foreign Currency Items | Total | ||||||||||||
Balance at April 1, 2012 | $ | (317 | ) | $ | 1,155 | $ | (1,550 | ) | $ | (712 | ) | ||||
Other comprehensive income before reclassifications | — | 193 | (540 | ) | (347 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | |||||||||||
Net current-period other comprehensive income | — | 193 | (540 | ) | (347 | ) | |||||||||
Balance at June 30, 2012 | $ | (317 | ) | $ | 1,348 | $ | (2,090 | ) | $ | (1,059 | ) |
Defined Benefit Pension Items | Unrealized Gains and Losses on Available-for-Sale Securities | Foreign Currency Items | Total | ||||||||||||
Balance at April 1, 2013 | $ | (1,159 | ) | $ | 245 | $ | (1,862 | ) | $ | (2,776 | ) | ||||
Other comprehensive (loss) income before reclassifications | — | (245 | ) | 325 | 80 | ||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | |||||||||||
Net current-period other comprehensive income | — | (245 | ) | 325 | 80 | ||||||||||
Balance at June 30, 2013 | $ | (1,159 | ) | $ | — | $ | (1,537 | ) | $ | (2,696 | ) |
Defined Benefit Pension Items | Unrealized Gains and Losses on Available-for-Sale Securities | Foreign Currency Items | Total | ||||||||||||
Balance at January 1, 2012 | $ | (317 | ) | $ | 1,155 | $ | (2,104 | ) | $ | (1,266 | ) | ||||
Other comprehensive income before reclassifications | — | 193 | 14 | 207 | |||||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | |||||||||||
Net current-period other comprehensive income | — | 193 | 14 | 207 | |||||||||||
Balance at June 30, 2012 | $ | (317 | ) | $ | 1,348 | $ | (2,090 | ) | $ | (1,059 | ) |
Defined Benefit Pension Items | Unrealized Gains and Losses on Available-for-Sale Securities | Foreign Currency Items | Total | ||||||||||||
Balance at January 1, 2013 | $ | (1,159 | ) | $ | 210 | $ | (1,605 | ) | $ | (2,554 | ) | ||||
Other comprehensive (loss) income before reclassifications | — | (210 | ) | 68 | (142 | ) | |||||||||
Amounts reclassified from accumulated other comprehensive income | — | — | — | — | |||||||||||
Net current-period other comprehensive income | — | (210 | ) | 68 | (142 | ) | |||||||||
Balance at June 30, 2013 | $ | (1,159 | ) | $ | — | $ | (1,537 | ) | $ | (2,696 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Net sales: | |||||||||||||||
Cardio & Vascular | $ | 79,497 | $ | 81,193 | $ | 156,685 | $ | 157,168 | |||||||
Advanced Surgical | 49,057 | 50,467 | 98,174 | 95,658 | |||||||||||
Intersegment | (2,556 | ) | (927 | ) | (4,294 | ) | (1,295 | ) | |||||||
Total net sales | $ | 125,998 | $ | 130,733 | $ | 250,565 | $ | 251,531 | |||||||
Adjusted EBITDA: | |||||||||||||||
Cardio & Vascular | $ | 23,515 | $ | 23,833 | $ | 47,451 | $ | 45,716 | |||||||
Advanced Surgical | 8,016 | 8,422 | 14,116 | 13,145 | |||||||||||
Corporate Services | (5,364 | ) | (4,716 | ) | (13,775 | ) | (12,808 | ) | |||||||
Total Adjusted EBITDA | $ | 26,167 | $ | 27,539 | $ | 47,792 | $ | 46,053 | |||||||
Reconciliation of Adjusted EBITDA to income from continuing operations before provision for income taxes | |||||||||||||||
Impairment of goodwill | $ | — | $ | (12,128 | ) | $ | — | $ | (63,128 | ) | |||||
Interest expense, net | (17,258 | ) | (17,271 | ) | (34,500 | ) | (34,577 | ) | |||||||
Depreciation and amortization | (9,838 | ) | (8,102 | ) | (19,488 | ) | (16,228 | ) | |||||||
Stock-based compensation - employees | (142 | ) | (185 | ) | (182 | ) | (400 | ) | |||||||
Stock-based compensation - non-employees | (22 | ) | (30 | ) | (45 | ) | (60 | ) | |||||||
Employee severance and relocation | (556 | ) | (417 | ) | (1,370 | ) | (819 | ) | |||||||
Restructuring expenses | (1,485 | ) | 170 | (1,838 | ) | 181 | |||||||||
Plant closure costs | (154 | ) | (47 | ) | (323 | ) | (1,217 | ) | |||||||
Currency (loss) | (905 | ) | (272 | ) | (720 | ) | (1,120 | ) | |||||||
Gain (loss) on disposal of property and equipment | 32 | (736 | ) | 33 | (692 | ) | |||||||||
Other taxes | (110 | ) | (64 | ) | (315 | ) | (148 | ) | |||||||
Management fees to stockholder | (335 | ) | (352 | ) | (670 | ) | (704 | ) | |||||||
Gain from the sale of available for sale securities | — | 242 | — | 242 | |||||||||||
Total adjustments | $ | (30,773 | ) | $ | (39,192 | ) | $ | (59,418 | ) | $ | (118,670 | ) | |||
Loss from continuing operations before provision for income taxes | $ | (4,606 | ) | $ | (11,653 | ) | $ | (11,626 | ) | $ | (72,617 | ) |
Six Months Ended | |||||||
June 30, 2012 | June 30, 2013 | ||||||
Capital expenditures: | |||||||
Cardio & Vascular | $ | 3,787 | $ | 5,590 | |||
Advanced Surgical | 2,467 | 4,659 | |||||
Corporate | 1,223 | 15 | |||||
Total capital expenditures | $ | 7,477 | $ | 10,264 |
December 31, 2012 | June 30, 2013 | ||||||
Assets: | |||||||
Cardio & Vascular | $ | 606,304 | $ | 620,850 | |||
Advanced Surgical | 245,619 | 177,671 | |||||
Corporate Services | 209,249 | 194,809 | |||||
Total assets | $ | 1,061,172 | $ | 993,330 |
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
Three Months Ended | Six Months Ended | ||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||
Customer A | 13 | % | 17 | % | 13 | % | 16 | % | |||
Customer B | 16 | % | 14 | % | 17 | % | 14 | % | |||
Customer C | 11 | % | 11 | % | 11 | % | 11 | % | |||
Customer D | * | 10 | % | * | 10 | % |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Loss on disposition of discontinued operations | $ | — | $ | — | $ | — | $ | — | |||||||
Income from discontinued operations | 129 | — | 750 | — | |||||||||||
Net income from discontinued operations, net of tax | $ | 129 | $ | — | $ | 750 | $ | — |
Three Months Ended | |||||
June 30, 2012 | June 30, 2013 | ||||
STATEMENT OF OPERATIONS DATA: | |||||
Net sales | 100.0 | % | 100.0 | % | |
Cost of sales | 73.8 | 72.9 | |||
Gross profit | 26.2 | 27.1 | |||
Selling, general and administrative expenses | 11.0 | 9.8 | |||
Research and development expenses | 0.4 | 0.4 | |||
Impairment of goodwill | — | 9.3 | |||
Restructuring expenses and other | 1.1 | 0.4 | |||
Amortization of intangible assets | 3.0 | 2.9 | |||
Income from continuing operations | 10.7 | % | 4.3 | % |
Three Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | Increase(Decrease) | % Change | |||||||||||
Net Sales: | ||||||||||||||
Cardio & Vascular segment | $ | 79,010 | $ | 80,726 | $ | 1,716 | 2.2 | % | ||||||
Advanced Surgical segment | 46,988 | 50,007 | 3,019 | 6.4 | % | |||||||||
Total Net Sales | $ | 125,998 | $ | 130,733 | $ | 4,735 | 3.8 | % |
Three Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | Increase (Decrease) | % Change | |||||||||||
Cost of Sales: | ||||||||||||||
Cardio & Vascular segment | $ | 55,043 | $ | 55,223 | $ | 180 | 0.3 | % | ||||||
Advanced Surgical segment | 37,971 | 40,107 | 2,136 | 5.6 | % | |||||||||
Total cost of sales | $ | 93,014 | $ | 95,330 | $ | 2,316 | 2.5 | % |
Three Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | Increase (Decrease) | % Change | |||||||||||
Gross Profit: | ||||||||||||||
Cardio & Vascular segment | $ | 23,967 | $ | 25,503 | $ | 1,536 | 6.4 | % | ||||||
Advanced Surgical segment | 9,017 | 9,900 | 883 | 9.8 | % | |||||||||
Total gross profit | $ | 32,984 | $ | 35,403 | $ | 2,419 | 7.3 | % |
Six Months Ended | |||||
June 30, 2012 | June 30, 2013 | ||||
STATEMENT OF OPERATIONS DATA: | |||||
Net sales | 100.0 | % | 100.0 | % | |
Cost of sales | 75.1 | 75.6 | |||
Gross profit | 24.9 | 24.4 | |||
Selling, general and administrative expenses | 11.4 | 10.7 | |||
Research and development expenses | 0.4 | 0.4 | |||
Impairment of goodwill | — | 25.1 | |||
Restructuring expenses and other | 0.7 | 0.2 | |||
Amortization of intangible assets | 3.0 | 3.0 | |||
Income from continuing operations | 9.4 | % | (15.0 | )% |
Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | Increase(Decrease) | % Change | |||||||||||
Net Sales: | ||||||||||||||
Cardio & Vascular segment | $ | 155,911 | $ | 156,579 | $ | 668 | 0.4 | % | ||||||
Advanced Surgical segment | 94,654 | 94,952 | 298 | 0.3 | % | |||||||||
Total Net Sales | $ | 250,565 | $ | 251,531 | $ | 966 | 0.4 | % |
Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | Increase (Decrease) | % Change | |||||||||||
Cost of Sales: | ||||||||||||||
Cardio & Vascular segment | $ | 108,433 | $ | 110,436 | $ | 2,003 | 1.8 | % | ||||||
Advanced Surgical segment | 79,687 | 79,822 | 135 | 0.2 | % | |||||||||
Total cost of sales | $ | 188,120 | $ | 190,258 | $ | 2,138 | 1.1 | % |
Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | Increase (Decrease) | % Change | |||||||||||
Gross Profit: | ||||||||||||||
Cardio & Vascular segment | $ | 47,478 | $ | 46,143 | $ | (1,335 | ) | (2.8 | )% | |||||
Advanced Surgical segment | 14,967 | 15,130 | 163 | 1.1 | % | |||||||||
Total gross profit | $ | 62,445 | $ | 61,273 | $ | (1,172 | ) | (1.9 | )% |
• | they do not reflect our cash expenditures for capital expenditure or contractual commitments; |
• | they do not reflect changes in, or cash requirements for, our working capital requirements; |
• | they do not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our indebtedness; |
• | although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA and Adjusted EBITDA do not reflect cash requirements for such replacements; |
• | Adjusted EBITDA does not reflect the impact of earnings or charges resulting from matters we consider not to be indicative of our ongoing operations, as discussed in our presentation of “Adjusted EBITDA” in this report; and |
• | other companies, including other companies in our industry, may calculate these measures differently than we do, limiting their usefulness as a comparative measure. |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
RECONCILIATION OF NET LOSS TO EBITDA: | |||||||||||||||
Net loss | $ | (5,608 | ) | $ | (12,671 | ) | $ | (12,594 | ) | $ | (74,740 | ) | |||
Interest expense, net | 17,258 | 17,271 | 34,500 | 34,577 | |||||||||||
Provision for income taxes | 1,131 | 1,018 | 1,718 | 2,123 | |||||||||||
Depreciation and amortization | 9,838 | 8,102 | 19,488 | 16,228 | |||||||||||
EBITDA | $ | 22,619 | $ | 13,720 | $ | 43,112 | $ | (21,812 | ) |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
EBITDA | $ | 22,619 | $ | 13,720 | $ | 43,112 | $ | (21,812 | ) | ||||||
Adjustments: | |||||||||||||||
Impairment of goodwill | — | 12,128 | — | 63,128 | |||||||||||
Stock-based compensation – employees | 142 | 185 | 182 | 400 | |||||||||||
Stock-based compensation - non-employees | 22 | 30 | 45 | 60 | |||||||||||
Employee severance and relocation | 556 | 417 | 1,370 | 819 | |||||||||||
Income from discontinued operations, net | (129 | ) | — | (750 | ) | — | |||||||||
Restructuring expenses | 1,485 | (170 | ) | 1,838 | (181 | ) | |||||||||
Plant closure costs | 154 | 47 | 323 | 1,217 | |||||||||||
Currency loss | 905 | 272 | 720 | 1,120 | |||||||||||
(Gain) loss on disposal of assets | (32 | ) | 736 | (33 | ) | 692 | |||||||||
Other taxes | 110 | 64 | 315 | 148 | |||||||||||
Management fees to stockholder | 335 | 352 | 670 | 704 | |||||||||||
Gain from the sale of available for sale securities | — | (242 | ) | — | (242 | ) | |||||||||
Adjusted EBITDA | $ | 26,167 | $ | 27,539 | $ | 47,792 | $ | 46,053 |
Three Months Ended | Six Months Ended | ||||||||||||||
June 30, 2012 | June 30, 2013 | June 30, 2012 | June 30, 2013 | ||||||||||||
Adjusted EBITDA | $ | 26,167 | $ | 27,539 | $ | 47,792 | $ | 46,053 | |||||||
Net changes in operating assets and liabilities | 1,411 | 884 | (4,178 | ) | (5,478 | ) | |||||||||
Interest expense, net | (17,258 | ) | (17,271 | ) | (34,500 | ) | (34,577 | ) | |||||||
Deferred tax provision | 741 | 682 | 1,479 | 1,104 | |||||||||||
Income tax (expense) | (1,131 | ) | (1,018 | ) | (1,718 | ) | (2,123 | ) | |||||||
Amortization of debt discount and non-cash interest | 777 | 819 | 1,533 | 1,619 | |||||||||||
Other items, net | (1,444 | ) | (1,031 | ) | (2,188 | ) | (3,935 | ) | |||||||
Net cash provided by operating activities | $ | 9,263 | $ | 10,604 | $ | 8,220 | $ | 2,663 | |||||||
Net cash provided by (used in) investing activities | $ | 2,949 | $ | (4,839 | ) | $ | 75 | $ | (1,972 | ) | |||||
Net cash used in financing activities | $ | (6 | ) | $ | (2 | ) | $ | (54 | ) | $ | (7 | ) |
Payment due by Period | |||||||||||||||||||
Contractual Obligations | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | ||||||||||||||
Senior Secured Notes (1) | $ | 534,000 | $ | 33,500 | $ | 67,000 | $ | 433,500 | $ | — | |||||||||
Senior Subordinated Notes (1) | 456,750 | 31,500 | 63,000 | 362,250 | — | ||||||||||||||
Capital leases (1) | 13 | 7 | 6 | — | — | ||||||||||||||
Operating leases | 19,179 | 5,852 | 8,502 | 4,461 | 364 | ||||||||||||||
Purchase obligations (2) | 64,159 | 56,975 | 7,184 | — | — | ||||||||||||||
Other obligations (3) | 41,265 | 693 | 1,041 | 989 | 38,542 | ||||||||||||||
Total | $ | 1,115,366 | $ | 128,527 | $ | 146,733 | $ | 801,200 | $ | 38,906 |
(1) | Includes interest and principal payments. Interest is determined using the instrument’s fixed rate of interest. |
(2) | Purchase obligations consist of commitments for materials, supplies, machinery and equipment. |
(3) | Other obligations include share based payment obligations of $0.1 million payable to employees and $0.9 million payable to non-employees, environmental remediation obligations of $1.4 million, accrued compensation and pension benefits of $5.0 million, deferred income taxes of $32.5 million, accrued restructuring fees of $0.8 million and other obligations of $0.6 million. |
• | Revenue recognition; |
• | Allowance for doubtful accounts; |
• | Valuation of goodwill, trade names and trademarks; |
• | Valuation of long-lived assets; |
• | Self Insurance reserves; |
• | Environmental reserves; |
• | Share Based Payments; and |
• | Income Taxes |
Exhibit Number | Description of Exhibits | |
31.1* | Rule 13a-14(a) Certification of Principal Executive Officer | |
31.2* | Rule 13a-14(a) Certification of Principal Financial Officer | |
32.1* | Section 1350 Certification of Principal Executive Officer | |
32.2* | Section 1350 Certification of Principal Financial Officer | |
Exhibit 101.INS | XBRL Instance Document. | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document. | |
Exhibit 101.CAL | XBRL Taxonomy Calculation Linkbase Document. | |
Exhibit 101.LAB | XBRL Taxonomy Label Linkbase Document. | |
Exhibit 101.PRE | XBRL Taxonomy Presentation Linkbase Document | |
Exhibit 101.DEF | Taxonomy Definition Linkbase Document |
Accellent Inc. | ||
August 14, 2013 | By: | /s/ Donald J. Spence |
Donald J. Spence | ||
President and Chief Executive Officer (Principal Executive Officer) |
Accellent Inc. | ||
August 14, 2013 | By: | /s/ Jeremy A. Friedman |
Jeremy A. Friedman | ||
Chief Financial Officer (Principal Financial Officer) |
Exhibit Number | Description of Exhibits | |
31.1* | Rule 13a-14(a) Certification of Principal Executive Officer | |
31.2* | Rule 13a-14(a) Certification of Principal Financial Officer | |
32.1* | Section 1350 Certification of Principal Executive Officer | |
32.2* | Section 1350 Certification of Principal Financial Officer | |
Exhibit 101.INS | XBRL Instance Document. | |
Exhibit 101.SCH | XBRL Taxonomy Extension Schema Document. | |
Exhibit 101.CAL | XBRL Taxonomy Calculation Linkbase Document. | |
Exhibit 101.LAB | XBRL Taxonomy Label Linkbase Document. | |
Exhibit 101.PRE | XBRL Taxonomy Presentation Linkbase Document | |
Exhibit 101.DEF | Taxonomy Definition Linkbase Document |
/s/ Donald J. Spence | |
Donald J. Spence Chief Executive Officer |
/s/ Jeremy A. Friedman | |
Jeremy A. Friedman Chief Financial Officer |
/s/ Donald J. Spence | |
Donald J. Spence Chief Executive Officer |
/s/ Jeremy A. Friedman | |
Jeremy A. Friedman Chief Financial Officer |
Related party transactions
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6 Months Ended |
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Jun. 30, 2013
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Related Party Transactions [Abstract] | |
Related party transactions | Related party transactions The Company maintains a management services agreement with its principal equity owner, Kohlberg, Kravis, Roberts & Co., (“KKR”) pursuant to which KKR provides certain structuring, consulting and management advisory services. During the three and six months ended June 30, 2012 and 2013, the Company incurred management fees and related expenses pursuant to this agreement of $0.3 million and $0.7 million, respectively. As of December 31, 2012 and June 30, 2013, the Company owed KKR $0.4 million for each period respectively for unpaid management fees which are included in “Accrued expenses and other current liabilities” in the accompanying unaudited condensed consolidated balance sheets. The Company has also historically utilized the services of Capstone Consulting LLC (“Capstone”), an entity affiliated with KKR. No fees or expenses related to Capstone were incurred during the three and six months ended June 30, 2012 and June 30, 2013. At December 31, 2012 the Company owed Capstone $0.3 million, and had no outstanding payables as of June 30, 2013. In addition to the above, entities affiliated with KKR Asset Management (“KKR-AM”), an affiliate of KKR, owned approximately $14.0 million principal amount of the Company’s Senior Secured Notes and approximately $23.4 million principal amount of the Company’s Senior Subordinated Notes at June 30, 2013. At December 31, 2012, entities affiliated with KKR-AM owned approximately $14.7 million principal amount of the Company’s Senior Secured Notes and approximately $23.4 million principal amount of the Company’s Senior Subordinated Notes. The Company sells products to Biomet, Inc., which is privately owned by a consortium of private equity sponsors, including KKR. Net sales resulting from product shipments to Biomet, Inc. during the three and six months ended June 30, 2012 totaled $0.1 million and $0.3 million, respectively. Net sales resulting from product shipments to Biomet, Inc. during the three and six months ended June 30, 2013 were approximately $0.1 million, respectively. At December 31, 2012, accounts receivable from Biomet, Inc. aggregated $0.1 million. At June 30, 2013, accounts receivable from Biomet were negligible. The Company utilizes the services of SunGard Data Systems, Inc. (“SunGard”), a provider of software and information processing solutions, which is privately owned by a consortium of private equity sponsors, including KKR and Bain Capital. The Company maintains an agreement with SunGard to provide information systems hosting services for the Company. The Company incurred approximately $0.2 million and $0.4 million in fees in connection with this agreement for the three and six month periods ended June 30, 2012 and June 30, 2013, respectively. At December 31, 2012 and June 30, 2013, the amount due to SunGard totaled approximately $0.1 million. |
Inventories
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Jun. 30, 2013
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventories | Inventories Inventories consisted of the following at December 31, 2012 and June 30, 2013 (in thousands):
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Segment Information
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment and geographical information | Segment Information Operating segments, as defined under GAAP, are components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and assess performance. From 2007 to 2012, the Company has operated centrally with separate and distinct functional leaders for operations, sales, engineering, quality and technology along with information systems, finance and human resources. Through December 31, 2012, the Company operated its facilities under common management reporting on a functional basis to various functional leaders with the Company's Chief Executive Officer with the role chief operating decision maker. During the first quarter of 2013, the Company reorganized its business into two segments: Advanced Surgical ("AS Segment") and Cardio & Vascular ("CV Segment"). The AS Segment is led by a vice president and general manager who reports to the Chief Executive Officer. This segment produces products for (1) orthopaedics that include joint, spinal, anthroscopy, and trauma products, and (2) endoscopy that include products for gastrointestinal, urology, and laparoscopy products. The CV Segment is also led by a vice president and general manager who reports to the Chief Executive Officer. This segment produces products for (1) cardiac rhythm management that includes pacemakers, implantable defribillators, tools and accessories, (2) cardiovascular that includes cardiac and peripheral stents, guide wires, catheters and delivery systems, and (3) cardiac surgery that includes heart valves, perfusion cannulae kits, vein grafting and bypass instruments. As a result, the Company's reportable segment information has been restated to reflect the current structure. The Company allocates resources based on revenues as well as earnings before interest, taxes, depreciation, amortization, and other specific and non-recurring items ("Adjusted EBITDA") of each segment. Those expenses not allocable to each segment include non-allocable overhead costs, selling, general and administrative expenses, including human resources, legal, finance, information technology, general and administrative expenses. Non-allocable expenses also include the amortization of intangible assets and certain restructuring expenses. Corporate services assets include intangible assets, deferred tax assets and liabilities, cash and cash equivalents, debt and other non-allocated assets. The Company's net sales and Adjusted EBITDA by segment as well as a reconciliation of Total Adjusted EBITDA to the consolidated loss from continuing operations before provision for income taxes is as follows (in thousands):
The Company's capital expenditures by segment at June 30, 2012 and June 30, 2013 are as follows (in thousands):
The Company's assets by segment at December 31, 2012 and June 30, 2013 are as follows (in thousands):
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Fair value measurements
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Jun. 30, 2013
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair value measurements | Fair value measurements The Company determines fair value utilizing a fair value hierarchy that ranks the quality and reliability of the information used to determine fair value. In general, fair values determined using Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Fair values determined using Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves. Level 3 inputs are unobservable data points for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. The Company uses the Black-Scholes option pricing model to value its liability for Roll-Over option awards. A roll-forward of the change in fair value of this financial instrument and information regarding the inputs used in the Black-Scholes model, that are determined by management, that is used to derive the Roll-Over options fair value, is included in Note 8. The following tables provide a summary of the financial assets and liabilities recorded at fair value at December 31, 2012 and June 30, 2013 (in thousands):
For other instruments, the estimated fair value has been determined by the Company using available market information; however, considerable judgment is required in interpreting market data to develop these estimates. The methods and assumptions used to estimate the fair value of each class of financial instruments is as set forth below:
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Long-term debt - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
Jun. 30, 2013
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Debt Disclosure [Abstract] | |
ABL Revolver credit financing borrowing capacity | $ 75.0 |
Amount outstanding under ABL revolver | 0 |
Aggregate borrowing capacity | 33.2 |
Outstanding letters of credit | $ 10.9 |
Income taxes - Additional Information (Detail) (USD $)
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3 Months Ended | 6 Months Ended | |||
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Jun. 30, 2013
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Jun. 30, 2012
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Jun. 30, 2013
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Jun. 30, 2012
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Dec. 31, 2012
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Income Tax Disclosure [Abstract] | |||||
Provision for income taxes | $ 1,018,000 | $ 1,131,000 | $ 2,123,000 | $ 1,718,000 | |
Deferred income tax expense for differences in the book and tax treatment of goodwill | 681,000 | 700,000 | 1,104,000 | 1,479,000 | |
Deferred income taxes related to Goodwill | 700,000 | 1,300,000 | |||
Other taxes | 300,000 | 800,000 | |||
State and foreign income tax expense | 300,000 | 400,000 | 600,000 | 200,000 | |
Net deferred tax assets | $ 31,200,000 | $ 31,200,000 | $ 29,900,000 |
Segment Information (Tables)
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Jun. 30, 2013
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment income (loss) from operations | The Company's net sales and Adjusted EBITDA by segment as well as a reconciliation of Total Adjusted EBITDA to the consolidated loss from continuing operations before provision for income taxes is as follows (in thousands):
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Reconciliation of capital expenditures | The Company's capital expenditures by segment at June 30, 2012 and June 30, 2013 are as follows (in thousands):
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Reconciliation of assets | The Company's assets by segment at December 31, 2012 and June 30, 2013 are as follows (in thousands):
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Summary of Significant Accounting Policies (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Actual Percentages of Net Sales from Customer Whose Sales Represented Ten Percentage or More | The actual percentage of net sales derived from each customer whose sales represented 10% or more of our consolidated net sales was as follows for the periods presented:
|
Summary of Significant Accounting Policies (Policies)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Accellent Inc. and its wholly owned subsidiaries (collectively, the “Company”). All intercompany transactions have been eliminated. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. The Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and in the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed with the SEC on April 1, 2013. |
Long-term debt - Schedule of Long-term Debt (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 715,013 | $ 715,020 |
Less-unamortized discount | (1,536) | (1,715) |
Less-current portion | (7) | (11) |
Long term debt, excluding current portion | 713,470 | 713,294 |
Senior Secured Notes | Senior Secured Notes Maturing on February 1, 2017, Interest at 8.375%
|
||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 400,000 | 400,000 |
Subordinated Debt | Senior Subordinated Notes Maturing on November 1, 2017, Interest at 10.0%
|
||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | 315,000 | 315,000 |
Capital Lease Obligations
|
||
Debt Instrument [Line Items] | ||
Long-term Debt, Gross | $ 13 | $ 20 |
Fair value measurements (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Financial Assets and Liabilities Recorded at Fair Value | The following tables provide a summary of the financial assets and liabilities recorded at fair value at December 31, 2012 and June 30, 2013 (in thousands):
|
Summary of significant accounting policies - Actual Percentages of Net Sales from Customer Whose Sales Represented Ten Percentage or More (Detail)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Customer A [Member]
|
||||
Revenue, Major Customer [Line Items] | ||||
Percentages of net sales | 17.00% | 13.00% | 16.00% | 13.00% |
Customer B [Member]
|
||||
Revenue, Major Customer [Line Items] | ||||
Percentages of net sales | 14.00% | 16.00% | 14.00% | 17.00% |
Customer C [Member]
|
||||
Revenue, Major Customer [Line Items] | ||||
Percentages of net sales | 11.00% | 11.00% | 11.00% | 11.00% |
Customer D [Member]
|
||||
Revenue, Major Customer [Line Items] | ||||
Percentages of net sales | 10.00% | 10.00% |
Restructuring - Additional Information (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | $ (170) | $ 1,485 | $ (181) | $ 1,838 |
Restructuring costs related to the facility closure [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | (170) | 1,485 | (181) | 1,838 |
Manchester, England Facility [Member] | Termination benefits [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | 600 | |||
Manchester, England Facility [Member] | Restructuring costs related to the facility closure [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | 1,300 | |||
Englewood, Colorado Facility [Member] | Termination benefits [Member]
|
||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring expenses | $ 200 | $ 200 |
Restructuring (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Restructuring and Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring | The following table summarizes the amounts recorded related to restructuring activities, which are included in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2012 (in thousands):
The following table summarizes the amounts recorded related to restructuring activities, which are included in the accompanying unaudited condensed consolidated balance sheet as of June 30, 2013 (in thousands):
|
Goodwill and intangible assets - Amortization Expense Related to Intangible Assets (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Amortization of intangible assets | $ 3,735 | $ 3,735 | $ 7,470 | $ 7,470 |
Cost of sales
|
||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Amortization of intangible assets | 497 | 497 | 994 | 994 |
Selling, general and administrative
|
||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Amortization of intangible assets | $ 3,238 | $ 3,238 | $ 6,476 | $ 6,476 |
Segment Information - Schedule of Segment Income (Loss) from Operations (Details) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | 12 Months Ended | |||
---|---|---|---|---|---|---|
Jun. 30, 2013
|
Mar. 31, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Dec. 31, 2012
|
|
Segment Reporting Information [Line Items] | ||||||
Revenue | $ 130,733 | $ 125,998 | $ 251,531 | $ 250,565 | ||
Adjusted EBITDA | 27,539 | 26,167 | 46,053 | 47,792 | ||
Impairment of goodwill | (12,128) | (51,000) | 0 | (63,128) | 0 | 0 |
Interest expense, net | (17,271) | (17,258) | (34,577) | (34,500) | ||
Depreciation and amortization | (8,102) | (9,838) | (16,228) | (19,488) | ||
Stock-based compensation | (460) | (227) | ||||
Restructuring | 170 | (1,485) | 181 | (1,838) | ||
Currency gain/loss | (272) | (905) | (1,120) | (720) | ||
Gain on disposal of property and equipment | (736) | 32 | (692) | 33 | ||
Other taxes | (64) | (110) | (148) | (315) | ||
Proceeds from the sale of available for sale securities | 242 | 0 | 242 | 0 | ||
Total adjustments | (39,192) | (30,773) | (118,670) | (59,418) | ||
Loss from continuing operations before income taxes | (11,653) | (4,606) | (72,617) | (11,626) | ||
KKR
|
||||||
Segment Reporting Information [Line Items] | ||||||
Management fees to stockholder | (352) | (335) | (704) | (670) | ||
Employee Severance and Relocation [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Restructuring | (417) | (556) | (819) | (1,370) | ||
Facility Closing [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Restructuring | 170 | (1,485) | 181 | (1,838) | ||
Other Restructuring [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Restructuring | (47) | (154) | (1,217) | (323) | ||
Employee [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Stock-based compensation | (185) | (142) | (400) | (182) | ||
Non-employee [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Stock-based compensation | (30) | (22) | (60) | (45) | ||
Cardio and Vascular [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 81,193 | 79,497 | 157,168 | 156,685 | ||
Adjusted EBITDA | 23,833 | 23,515 | 45,716 | 47,451 | ||
Advanced Surgical [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | 50,467 | 49,057 | 95,658 | 98,174 | ||
Adjusted EBITDA | 8,422 | 8,016 | 13,145 | 14,116 | ||
Impairment of goodwill | (16,000) | |||||
Intersegment Elimination [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Revenue | (927) | (2,556) | (1,295) | (4,294) | ||
Corporate [Member]
|
||||||
Segment Reporting Information [Line Items] | ||||||
Adjusted EBITDA | $ (4,716) | $ (5,364) | $ (12,808) | $ (13,775) |
Subsequent Events
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
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Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On July 19, 2013, Dean Schauer notified the Company that he will resign from his position as the Company's Executive Vice President, General Manager, Cardio & Vascular Segment, effective August 16, 2013. A search is underway to identify and hire a replacement. Until a replacement is found, Donald J. Spence, the Company's Chairman and Chief Executive Officer, will serve as interim General Manager of the Cardio & Vascular Group. |
Unaudited Condensed Consolidated Statements of Comprehensive Income (Loss) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Statement of Other Comprehensive Income [Abstract] | ||||
Net loss | $ (12,671) | $ (5,608) | $ (74,740) | $ (12,594) |
Other comprehensive income (loss): | ||||
Unrealized gain (loss) on available for sale security | (3) | 193 | 32 | 193 |
Realized gain on available for sale security | (242) | 0 | (242) | 0 |
Cumulative translation adjustment | 325 | (540) | 68 | 14 |
Other comprehensive (loss) income | 80 | (347) | (142) | 207 |
Comprehensive loss | $ (12,591) | $ (5,955) | $ (74,882) | $ (12,387) |
Summary of significant accounting policies
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of significant accounting policies | Summary of significant accounting policies Basis of Presentation The unaudited condensed consolidated financial statements include the accounts of Accellent Inc. and its wholly owned subsidiaries (collectively, the “Company”). All intercompany transactions have been eliminated. The Company has prepared the accompanying unaudited condensed consolidated financial statements pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America ("GAAP") for complete financial statements. The Company has prepared the accompanying unaudited condensed consolidated financial statements on the same basis as the audited financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and in the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the results of the interim periods presented. The operating results for the interim periods presented are not necessarily indicative of the results expected for the full fiscal year. These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2012 filed with the SEC on April 1, 2013. During the first quarter of 2013, the Company reorganized its business into two segments. The reorganization changed the reporting structure and changed the composition of the Company's reporting units. As a result, prior year amounts have been reclassified to conform to the current year’s presentation. (See Note 4 and Note 17) Customer Concentration During the three and six months ended June 30, 2012, the Company's ten largest customers accounted for approximately 66% of its consolidated net sales. During the three and six months ended June 30, 2013, the Company's ten largest customers accounted for approximately 68% and 67% of its consolidated net sales, respectively. The actual percentage of net sales derived from each customer whose sales represented 10% or more of our consolidated net sales was as follows for the periods presented:
At June 30, 2013, Customer A and B accounted for approximately 17% and 12%, respectively, and Customers C and D each accounted for approximately 10% of accounts receivable, net. At December 31, 2012, Customers A and B each accounted for approximately 13% and 12%, respectively, of accounts receivable, net. |
Goodwill and intangible assets
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and intangible assets | Goodwill and intangible assets Goodwill is the amount by which the cost of acquired net assets in a business combination exceeds the fair value of net identifiable assets acquired. Intangible assets include the value ascribed to trade names and trademarks, developed technology and know-how, as well as customer contracts and relationships obtained in connection with business combinations. During the first quarter of 2013, the Company reorganized its business into two segments: Advanced Surgical ("AS Segment") and Cardio & Vascular ("CV Segment"). The evaluation of the reporting units has also been reassessed and changed to reflect the current structure and operations. During the first quarter of fiscal 2013, goodwill was assigned to the new reporting units based on the relative fair values of the reporting units. This resulted in goodwill of $134 million being assigned to its Advanced Surgical reporting unit, and $485.4 million being assigned to its Cardio & Vascular reporting unit. After the preliminary allocation of the goodwill, the carrying amount of the Advanced Surgical reporting unit exceeded its fair value by approximately $16 million, which required the Company to perform an interim goodwill impairment test for the Advanced Surgical reporting unit. Pursuant to the next step of impairment testing, the Company calculated an implied fair value of goodwill based on a hypothetical purchase price allocation. During the first quarter of 2013, the Company had not finalized this step of its impairment testing due to the complexities involved in estimating fair value. In accordance with accounting guidance the Company recognized an estimated impairment charge and recorded a pre-tax goodwill impairment charge of $51.0 million in the first quarter of 2013. The Company finalized the second step of the analysis in the second quarter of 2013 and recorded an additional pre-tax goodwill impairment charge of $12.1 million for a total pre-tax goodwill impairment charge of $63.1 million as of June 30, 2013. The Company has elected October 31st as its annual impairment assessment date for goodwill and the indefinite lived intangible assets and performs additional impairment tests if triggering events occur. No impairment charges were recorded for goodwill and the indefinite lived intangible assets during the year ended December 31, 2012. The Company reports all amortization expense related to finite lived intangible assets separately within its unaudited condensed consolidated statement of operations. For the three and six months ended June 30, 2012 and 2013, the Company recorded amortization expense related to intangible assets as follows (in thousands):
Intangible assets consisted of the following at June 30, 2013 (in thousands):
Intangible assets consisted of the following at December 31, 2012 (in thousands):
Estimated intangible asset amortization expense for the remainder of 2013 is approximately $7.5 million. The estimated annual intangible asset amortization expense approximates $13.8 million in 2014, $13.0 million in each year in 2015, 2016, and 2017, and $37.8 million thereafter. At December 31, 2012 and June 30, 2013, the remaining weighted-average amortization periods for the Company’s finite lived intangible assets were as follows (in years):
|
New Accounting Pronouncements
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
New Accounting Pronouncements | New Accounting Pronouncements On February 5, 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income." This accounting update requires additional disclosure requirements about reclassification adjustments out of accumulated other comprehensive income ("AOCI"). These adjustments include (1) changes in AOCI balances by component and (2) significant items reclassified out of AOCI. The ASU does not change the current requirements for the reporting of comprehensive income. The Company adopted the provisions of this ASU on January 1, 2013 and the adoption did not have a significant impact on the Company’s consolidated financial position, results of operations or cash flows. On July 18, 2013, the FASB issued ASU No. 2013-11, “Presentation of a Liability for an Unrecognized Tax Benefit When a Net Operating Loss or Tax Credit Carryforward Exists." This accounting update requires that an unrecognized tax benefit should be presented as a reduction of a deferred tax asset for a net operating loss (“NOL”) carryforward or other tax credit carryforward when settlement in this manner is available under applicable tax law. This guidance will be effective for the Company’s interim and annual periods beginning January 1, 2014. The Company does not believe the adoption of this guidance will have a material impact on the Company’s consolidated financial position, results of operations or cash flows. |
Inventories - Schedule of Inventories (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Inventory Disclosure [Abstract] | ||
Raw materials | $ 15,999 | $ 12,100 |
Work-in-process | 28,850 | 27,779 |
Finished goods | 15,702 | 17,190 |
Total | $ 60,551 | $ 57,069 |
Inventories (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories | Inventories consisted of the following at December 31, 2012 and June 30, 2013 (in thousands):
|
Divestitures (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
|
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Text Block [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule Of Discontinued Operations | Summary results of the discontinued operations were as follows (in thousands):
|
Segment Information - Reconciliation of Assets (Details) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Segment Reporting Information [Line Items] | ||
Assets | $ 993,330 | $ 1,061,172 |
Cardio and Vascular [Member]
|
||
Segment Reporting Information [Line Items] | ||
Assets | 620,850 | 606,304 |
Advanced Surgical [Member]
|
||
Segment Reporting Information [Line Items] | ||
Assets | 177,671 | 245,619 |
Corporate [Member]
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Segment Reporting Information [Line Items] | ||
Assets | $ 194,809 | $ 209,249 |
Changes in Accumulated Other Comprehensive Loss (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2013
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Accumulated Other Comprehensive Income (Loss) | The following table summarizes the changes in accumulated other comprehensive loss for the six months ended June 30, 2012 (in thousands):
The following table summarizes the changes in accumulated other comprehensive income (loss) for the six months ended June 30, 2013 (in thousands):
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Segment Information - Reconciliation of Capital Expenditures (Details) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 10,264 | $ 7,477 |
Cardio and Vascular [Member]
|
||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 5,590 | 3,787 |
Advanced Surgical [Member]
|
||
Segment Reporting Information [Line Items] | ||
Capital expenditures | 4,659 | 2,467 |
Corporate [Member]
|
||
Segment Reporting Information [Line Items] | ||
Capital expenditures | $ 15 | $ 1,223 |
Stock-based compensation - Classification of Stock-Based Compensation (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 185 | $ 142 | $ 400 | $ 182 |
Cost of sales
|
||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | 49 | 30 | 111 | 38 |
Selling, general and administrative
|
||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Stock-based compensation expense | $ 136 | $ 112 | $ 289 | $ 144 |