x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
DELAWARE | 51-0317849 | |
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION) | (I.R.S. EMPLOYER IDENTIFICATION NO.) | |
311 ENTERPRISE DRIVE PLAINSBORO, NEW JERSEY | 08536 | |
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) | (ZIP CODE) | |
Title of Each Class | Name of Exchange on Which Registered | |
Common Stock, Par Value $.01 Per Share | The Nasdaq Stock Market LLC | |
Large accelerated filer | x | Accelerated filer | o |
Non-accelerated filer | o (Do not check if a smaller reporting company) | Smaller reporting company | o |
Emerging growth company | o | ||
Page | |
• | general economic and business conditions, both nationally and in our international markets; |
• | our expectations and estimates concerning future financial performance, financing plans and the impact of competition; |
• | anticipated trends in our business; |
• | anticipated demand for our products, particularly capital equipment; |
• | our ability to produce collagen-based products in sufficient quantities to meet sales demands; |
• | our expectations concerning our ongoing restructuring, integration and manufacturing transfer and expansion activities; |
• | existing and future regulations affecting our business, and enforcement of those regulations; |
• | our ability to obtain additional debt and equity financing to fund capital expenditures and working capital requirements and acquisitions; |
• | 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; |
• | initiatives launched by our competitors; |
• | our ability to protect our intellectual property, including trade secrets; |
• | our ability to complete acquisitions, integrate operations post-acquisition and maintain relationships with customers of acquired entities; |
• | our ability to remediate all matters identified in FDA observations and warning letters that we received or may receive; and |
• | other risk factors described in the section entitled "Risk Factors" in this report. |
• | 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; |
• | the impact of acquisitions and our ability to integrate acquisitions; |
• | the impact of our restructuring activities; |
• | expenditures for major initiatives, including acquired businesses and integrations thereof and restructuring; |
• | 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; |
• | market acceptance of our existing products, as well as products in development; |
• | the timing of regulatory approvals as well as changes in country-specific regulatory requirements; |
• | changes in the rates of exchange between the U.S. dollar and other currencies of foreign countries in which we do business; |
• | potential backorders, lost sales and expenses incurred in connection with product recalls or field corrective actions; |
• | 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; |
• | our ability to manufacture and ship our products efficiently or in sufficient quantities to meet sales demands; |
• | changes in the cost or decreases in the supply of raw materials, including energy, steel and honey; |
• | the timing of our research and development expenditures; |
• | reimbursement for our products by third-party payors such as Medicare, Medicaid, private and public health insurers and foreign governmental health systems; |
• | the ability to maintain existing distribution rights to and from certain third parties; |
• | the ability to maintain business if or when we opt to convert such business from distributors to a direct sales model; |
• | the ability of our new commercial sales representatives to obtain sales targets in a reasonable time frame; |
• | the impact of changes to our sales organization, including channel expansion in the U.S. and increased specialization; |
• | peer-reviewed publications discussing the clinical effectiveness of the products we sell; |
• | 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; |
• | changes in regulations or guidelines that impact the sales and marketing practices for products that we sell; |
• | 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; |
• | enforcement or defense of intellectual property rights; |
• | changes in tax laws, or their interpretations; and |
• | 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. |
• | 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; |
• | 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; |
• | Medicare, Medicaid, private and public health insurer and foreign governmental cutbacks could create downward pricing pressure on our products; |
• | in the U.S., local Medicare coverage as well as commercial carrier coverage determinations could reduce or eliminate reimbursement or coverage for certain of our wound matrix products as well as other collagen 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; |
• | 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; |
• | 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; |
• | 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; |
• | 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; |
• | 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; |
• | 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 |
• | 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. |
• | take a significant amount of time; |
• | require the expenditure of substantial financial and other resources; |
• | involve rigorous and expensive pre-clinical and clinical testing, as well as increased post-market surveillance; |
• | involve modifications, repairs or replacements of our products; and |
• | result in limitations on the indicated uses of our products. |
• | provide significantly more clinical evidence to get new products to market and even to keep existing products on the market; |
• | make changes to product labeling and make certain product data available to the public; and |
• | conduct product portfolio assessments to determine the impact of the EU MDR on the Company's margins. |
• | making it more difficult for us to satisfy our financial obligations; |
• | increasing our vulnerability to adverse economic, regulatory and industry conditions, and placing us at a disadvantage compared to our competitors that are less leveraged; |
• | 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 |
• | limiting our ability to borrow additional funds for working capital, capital expenditures, acquisitions and general corporate or other purposes. |
• | 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; |
• | our products made from silicone, such as our neurosurgical shunts and drainage systems and hemodynamic shunts; |
• | products which use many different specialty parts from numerous suppliers, such as our intracranial monitors, catheters and headlights; |
• | products that use pyrolytic carbon (i.e., PyroCarbon) technology, such as certain of our reconstructive extremity orthopedic implants; |
• | products that use medical grade leptospermum honey, such as our Medihoney products; and |
• | our TCC-EZ® total contact cast system products. |
• | distracting management from day-to-day operations; |
• | potential incompatibility of corporate cultures; |
• | an inability to achieve synergies as planned; |
• | risks associated with the assumption of contingent or other liabilities of acquisition targets; |
• | adverse effects on existing business relationships with suppliers or customers, including failure to retain key customers and suppliers; |
• | failure to retain key employees of our company and of the acquired businesses; |
• | inheriting and uncovering previously unknown issues, problems and costs from the acquired company; |
• | delays between our expenditures to acquire new products, technologies or businesses and the generation of revenues from those acquired products, technologies or businesses; |
• | realization of assets and settlement of liabilities at amounts equal to estimated fair value as of the acquisition date of any acquisition or disposition; |
• | an inability to integrate information technology systems of acquired businesses in a secure and reliable manner; |
• | costs and delays in implementing common systems and procedures (including technology, compliance programs, financial systems, distribution and general business operations, among others); |
• | 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; |
• | challenges involved with the increased scale of our operations resulting from the acquisitions; and |
• | increased difficulties in managing our business due to the addition of international locations. |
• | 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 |
• | government regulators or courts will interpret those laws or regulations in a manner consistent with our interpretation. |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
2017 | 2016 | |||||||||||||||
High | Low | High | Low | |||||||||||||
Fourth Quarter | $ | 51.77 | $ | 46.22 | $ | 43.22 | $ | 37.89 | ||||||||
Third Quarter (1) | $ | 55.76 | $ | 47.80 | $ | 43.70 | $ | 39.37 | ||||||||
Second Quarter (1) | $ | 54.54 | $ | 40.86 | $ | 39.89 | $ | 32.58 | ||||||||
First Quarter (1) | $ | 44.90 | $ | 41.09 | $ | 33.78 | $ | 27.75 | ||||||||
ITEM 6. | SELECTED FINANCIAL DATA |
Years Ended December 31, | |||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | |||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||
Operating Results: | |||||||||||||||||||
Total revenues, net | $ | 1,188,236 | $ | 992,075 | $ | 882,734 | $ | 796,717 | $ | 696,832 | |||||||||
Costs and expenses | 1,143,432 | 876,735 | 803,147 | 728,860 | 661,459 | ||||||||||||||
Operating income (4) | 44,804 | 115,340 | 79,587 | 67,857 | 35,373 | ||||||||||||||
Interest expense, net (1) (2) | (34,764 | ) | (25,779 | ) | (23,504 | ) | (21,799 | ) | (14,792 | ) | |||||||||
Other income (expense), net (7) | 1,345 | 845 | 4,588 | (492 | ) | (1,795 | ) | ||||||||||||
Income from continuing operations before income taxes | 11,385 | 90,406 | 60,671 | 45,566 | 18,786 | ||||||||||||||
(Benefit from) provision for income taxes (4) (6) | (53,358 | ) | 15,842 | 53,820 | 9,271 | (3,241 | ) | ||||||||||||
Net income from continuing operations | $ | 64,743 | $ | 74,564 | $ | 6,851 | $ | 36,295 | $ | 22,027 | |||||||||
Loss from discontinued operations (net of tax benefit) | $ | — | $ | — | $ | (10,370 | ) | $ | (2,291 | ) | $ | (43,094 | ) | ||||||
Net income (loss) | $ | 64,743 | $ | 74,564 | $ | (3,519 | ) | $ | 34,004 | $ | (21,067 | ) | |||||||
Diluted net income per common share from continuing operations | $ | 0.82 | $ | 0.94 | $ | 0.10 | $ | 0.55 | $ | 0.38 | |||||||||
Diluted net loss per common share from discontinued operations | $ | — | $ | — | $ | (0.15 | ) | $ | (0.03 | ) | $ | (0.75 | ) | ||||||
Diluted net income (loss) per common share | $ | 0.82 | $ | 0.94 | $ | (0.05 | ) | $ | 0.52 | $ | (0.37 | ) | |||||||
Weighted average common shares outstanding for diluted net income per share | 79,121 | 79,194 | 71,354 | 65,920 | 57,604 | ||||||||||||||
As of December 31, | ||||||||||||||||||||
2017 | 2016 | 2015 | 2014 | 2013 | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Financial Position: | ||||||||||||||||||||
Cash, cash equivalents | $ | 174,935 | $ | 102,055 | $ | 48,132 | $ | 71,734 | $ | 120,692 | ||||||||||
Total assets (5) (8) | 3,211,257 | 1,807,954 | 1,774,224 | 1,412,402 | 1,007,272 | |||||||||||||||
Short-term borrowings under the term loan of the senior credit facility | 60,000 | — | 14,375 | 3,750 | — | |||||||||||||||
Long-term borrowings under the revolving portion of the senior credit facility (1) | 1,781,142 | 665,000 | 481,875 | 413,125 | 186,875 | |||||||||||||||
Long-term debt (2) (5) | — | — | 218,240 | 211,623 | 202,658 | |||||||||||||||
Retained earnings (4) | 285,186 | 220,443 | 145,879 | 314,960 | 280,956 | |||||||||||||||
Stockholders’ equity (3) | 962,306 | 839,667 | 751,443 | 704,322 | 666,090 | |||||||||||||||
(1) | For the years ended December 31, 2017, 2016, 2015, 2014 and 2013, we report 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 report 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, 2017, we have a total of $1.9 billion outstanding under our Senior Credit Facility and $345.0 million available for future borrowings. |
(2 | ) | 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 2015, we sold 7.590 million shares of our common stock at a price of $30.50 per share. The aggregate offering proceeds were $231.5 million. The net proceeds of the offering were $219.7 million after deducting the underwriters' discounts and commissions and all other estimated offering expenses. In 2013, we sold 8.050 million shares of our common stock at a price of $20.00 per share. The aggregate gross offering proceeds were $161.0 million. The net proceeds of the offering were $152.5 million after deducting the underwriters' discounts and commissions and all other estimated offering expenses. |
(4 | ) | 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 11, 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. |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
• | Regenerative Technology Platform. We have developed numerous product lines through our proprietary collagen and polyethylene glycol technologies that we sell through every one of our sales channels. |
• | Diversification and Platform Synergies. The selling platforms of Codman Specialty Surgical and Orthopedics and Tissue Technologies each contribute a different strength to our core business. Codman Specialty Surgical provides us with a strong presence in the hospital, with market-leading products and comprehensive solutions for surgical specialties, such as neurosurgery, as well as a strong capacity to generate cash flows. Orthopedics and Tissue Technologies enables us to grow our top line by continuing to introduce new, differentiated products in fast-growing markets, such as small joint replacement and advanced wound care, as well as to increase gross margins. We have unique synergies between these platforms, such as our regenerative technology, instrument sourcing capabilities, and enterprise contract management. |
• | Specialized Sales Footprint. Our medical technology investment and manufacturing strategy provides us with a specialized set of customer call-points and synergies. We have market-leading products across our portfolio providing both scale and depth in solutions for a broad set of clinical needs across many departments in the healthcare system. We also have clinical expertise across all our channels in the U.S., and an opportunity to expand and leverage this expertise in markets worldwide. In response to our customers’ needs for clinical and technical solutions across multiple departments and clinical areas, we have developed and deployed our enterprise selling team to bring unique clinical solutions for the most difficult healthcare issues in our key accounts across multiple clinical sites and multi-hospital integrated delivery networks. |
• | Ability to Change and Adapt. Our corporate culture is what enables us to adapt and evolve. We have demonstrated that we can quickly and profitably integrate new products and businesses. This core strength has made it possible for us to grow over the years, and is key to our ability to grow into a multi-billion dollar company. |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Acquisition-related charges (1) | $ | 117,947 | $ | 18,898 | $ | 15,703 | |||||
Global ERP implementation charges | 2,780 | 15,585 | 16,375 | ||||||||
Structural optimization charges | 7,336 | 7,794 | 16,752 | ||||||||
Certain employee termination charges | 125 | 1,446 | 2,642 | ||||||||
Discontinued product lines charges | 1,156 | — | — | ||||||||
Spine spin-off charges | — | — | 3,801 | ||||||||
Convertible debt non-cash interest | — | 8,075 | 7,871 | ||||||||
Hurricane Maria charges | 2,758 | — | — | ||||||||
Total | $ | 132,102 | $ | 51,798 | $ | 63,144 | |||||
(1) | The amounts have been reduced by $2.6 million in 2017, representing gain on sale of business to Natus. See Note 4, Acquisitions, Divestiture and Pro Forma Result, of our consolidated financial statements for more information. |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Cost of goods sold | $ | 25,123 | $ | 18,869 | $ | 17,421 | |||||
Research and development | — | 200 | 580 | ||||||||
Selling, general and administrative | 107,361 | 24,654 | 38,761 | ||||||||
Interest expense | — | 8,075 | 7,871 | ||||||||
Other income | (382 | ) | — | (1,489 | ) | ||||||
Total | $ | 132,102 | $ | 51,798 | $ | 63,144 | |||||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
Segment Net Sales | (In thousands) | ||||||||||
Codman Specialty Surgical | $ | 720,301 | $ | 632,524 | $ | 586,918 | |||||
Orthopedics and Tissue Technologies | 467,935 | 359,551 | 295,816 | ||||||||
Total revenues | 1,188,236 | 992,075 | 882,734 | ||||||||
Cost of goods sold | 435,511 | 349,089 | 326,542 | ||||||||
Gross margin on total revenues | $ | 752,725 | $ | 642,986 | $ | 556,192 | |||||
Gross margin as a percentage of total revenues | 63.3 | % | 64.8 | % | 63.0 | % | |||||
Years Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Research and development | 5.3 | % | 5.9 | % | 5.8 | % | ||
Selling, general and administrative | 52.5 | % | 45.9 | % | 47.1 | % | ||
Intangible asset amortization | 1.7 | % | 1.4 | % | 1.1 | % | ||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Interest income | $ | 255 | $ | 24 | $ | 30 | |||||
Interest expense | (35,019 | ) | (25,803 | ) | (23,534 | ) | |||||
Other income (expense) | 1,345 | 845 | 4,588 | ||||||||
Total non-operating income and expense | $ | (33,419 | ) | $ | (24,934 | ) | $ | (18,916 | ) | ||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
United States | $ | 894,260 | $ | 765,608 | $ | 680,824 | |||||
Europe | 150,147 | 120,588 | 103,057 | ||||||||
Rest of World | 143,829 | 105,879 | 98,853 | ||||||||
Total Revenues | $ | 1,188,236 | $ | 992,075 | $ | 882,734 | |||||
Year Ended December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Net cash provided by operating activities | $ | 114,544 | $ | 116,405 | |||
Net cash used in investing activities | (1,221,335 | ) | (42,622 | ) | |||
Net cash provided (used in) by financing activities | 1,168,947 | (15,116 | ) | ||||
Effect of exchange rate fluctuations on cash | 10,724 | (4,744 | ) | ||||
Net increase in cash and cash equivalents | $ | 72,880 | $ | 53,923 | |||
i. | a $500.0 million Term A facility; |
ii. | a $700.0 million Term Loan A-1, which was available in a single drawing on a delayed basis at the time of closing of the Codman Acquisition (see Note 4 - Acquisitions and Pro forma Results); and |
iii. | a $1.0 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 | |
December 31, 2016 through before the first fiscal quarter after the delayed draw date of Term Loan A-1 | 4.50 : 1.00 | |
First fiscal quarter ended after the delayed draw date of Term Loan A-1 through September 30, 2018 | 5.50 : 1.00 | |
October 1, 2018 through September 30, 2019 | 5.00 : 1.00 | |
October 1, 2019 through September 30, 2020 | 4.50 : 1.00 | |
October 1, 2020 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 2.00%), or |
ii. | the highest of: |
1. | the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%, or |
2. | the prime lending rate of Bank of America, N.A., or |
3. | the one-month Eurodollar Rate plus 1.00%. |
Total | Less than 1 Year | 1-3 Years | 3-5 Years | More than 5 Years | |||||||||||||||
(In millions) | |||||||||||||||||||
Senior Credit Facility - Revolver(1) | $ | 655.0 | $ | — | $ | — | $ | 655.0 | $ | — | |||||||||
Senior Credit Facility - Term Loan A | 500.0 | 25.0 | 62.5 | 412.5 | — | ||||||||||||||
Senior Credit Facility - Term Loan A-1 | 700.0 | 35.0 | 87.5 | 577.5 | — | ||||||||||||||
Interest(2) | 164.8 | 42.7 | 79.1 | 43.0 | — | ||||||||||||||
Employment Agreements(3) | 2.7 | 0.9 | 1.8 | — | — | ||||||||||||||
Operating Leases | 97.3 | 13.7 | 22.4 | 13.5 | 47.7 | ||||||||||||||
Contingent Consideration | 24.0 | 24.0 | — | — | — | ||||||||||||||
Purchase Obligations | 12.2 | 10.9 | 1.3 | — | — | ||||||||||||||
Others | 7.3 | 1.2 | 1.2 | 1.2 | 3.7 | ||||||||||||||
Total | $ | 2,163.3 | $ | 153.4 | $ | 255.8 | $ | 1,702.7 | $ | 51.4 | |||||||||
(1) | The Company may borrow and make payments against the credit 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 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) | Amounts shown under Others include the Toll Tax of $5.5 million. |
• | The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and our 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 our 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 our specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is our estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. |
Discount rate | 0.74 | % |
Expected return on plan assets | 3.08 | % |
Rate of compensation increase | 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 | $ | 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 interested rate derivatives designated as cash flow hedge | $ | 1,050,000 | $ | 592 | |||||||||||||||
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 SCHEDULES |
Report of Independent Registered Public Accounting Firm | F-1 |
Consolidated Statements of Operations for the years ended December 31, 2017, 2016 and 2015 | F-2 |
Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2017, 2016 and 2015 | F-3 |
Consolidated Balance Sheets as of December 31, 2017 and 2016 | F-4 |
Consolidated Statements of Cash Flows for the years ended December 31, 2017, 2016 and 2015 | F-5 |
Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2017, 2016 and 2015 | F-6 |
Notes to Consolidated Financial Statements | F-7 |
2. Financial Statement Schedules | |
Schedule II — Valuation and Qualifying Accounts for the years ended December 31, 2017, 2016 and 2015 | F-50 |
2.1 | ||
2.2 | ||
2.3 | ||
2.4 | ||
2.5 | ||
2.6 | ||
2.7 | ||
2.7(a) | ||
2.8 | ||
3.1(a) | ||
3.1(b) | ||
3.1(c) | ||
3.1(d) | ||
3.2 | ||
4.1 | ||
4.2 | ||
4.3(a) | ||
4.3(b) | ||
4.3(c) | ||
4.3(d) | ||
4.3(e) | ||
4.3(f) | ||
4.3(g) | ||
4.3(h) | ||
4.3(i) | ||
4.3(j) | ||
4.3(k) | ||
4.3(l) | ||
4.3(m) | ||
4.3(n) | ||
4.4 | ||
4.5 | ||
4.6 | ||
4.7 | ||
4.8 | ||
4.9 | ||
4.10 | ||
4.11 | ||
4.12 | ||
10.1(a) | Lease between Plainsboro Associates and American Biomaterials Corporation dated as of April 16, 1985, as assigned to Colla-Tec, Inc. on September 30, 1988 and as amended on November 1, 1992 as Lease Modification #1 (Incorporated by reference to Exhibit 10.30 to the Company’s Registration Statement on Form 10/A (File No. 0-26224) which became effective on August 8, 1995) | |
10.1(b) | ||
10.1(c) | ||
10.1(d) | ||
10.2 (a) | ||
10.2(b) | ||
10.3(a) | Form of Indemnification Agreement between the Company and [ ] dated August 16, 1995, including a schedule identifying the individuals that are a party to such Indemnification Agreements (Incorporated by reference to Exhibit 10.37 to the Company’s Registration Statement on Form S-1 (File No. 33-98698) which became effective on January 24, 1996)* | |
10.3(b) | ||
10.4 | ||
10.5 | ||
10.6 | ||
10.7(a) | ||
10.7(b) | ||
10.8(a) | ||
10.8(b) | ||
10.8(c) | ||
10.9(a) | ||
10.9(b) | ||
10.9(c) | ||
10.10(a) | ||
10.10(b) | ||
10.10(c) | ||
10.10(d) | ||
10.10(e) | ||
10.11(a) | ||
10.11(b) | ||
10.11(c) | ||
10.11(d) | ||
10.11(e) | ||
10.11(f) | ||
10.11(g) | ||
10.11(h) | ||
10.12 | ||
10.13(a) | ||
10.13(b) | ||
10.13(c) | ||
10.14(a) | ||
10.14(b) | ||
10.14(c) | ||
10.14(d) | ||
10.14(e) | ||
10.14(f) | ||
10.14(g) | ||
10.15 | ||
10.16 | ||
10.17(a) | ||
10.17(b) | ||
10.17(c) | ||
10.18(a) | ||
10.18(b) | ||
10.18(c) | ||
10.18(d) | ||
10.19 | ||
10.20 | ||
10.21(a) | ||
10.21(b) | ||
10.21(c) | ||
10.22 | ||
10.23 | ||
10.24 | ||
10.25(a) | ||
10.25(b) | ||
10.26 | ||
10.27(a) | ||
10.27(b) | ||
10.27(c) | ||
10.27(d) | ||
10.28 | ||
10.29 | ||
10.30 | ||
10.31(a) | ||
10.31(b) | ||
10.31(c) | ||
10.32 | ||
10.33 | ||
10.34(a) | ||
10.34(b) | ||
10.34(c) | ||
10.35 | ||
10.35(a) | ||
10.35(b) | ||
10.36 | ||
10.37 | ||
10.38 | ||
10.39 | ||
10.40 | ||
10.41 | ||
10.42 | ||
10.43 | ||
10.44(c) | ||
10.44(d) | ||
10.45(a) | ||
10.45(b) | ||
10.45(c) | ||
10.45(d) | ||
10.45(e) | ||
10.45(f) | ||
10.46(a) | ||
10.46(b) | ||
10.46(c) | ||
10.46(d) | ||
10.46(e) | ||
10.46(f) | ||
10.46(g) | ||
10.46(h) | ||
10.46(i) | ||
10.46(j) | ||
10.46(k) | ||
10.46(l) | ||
10.46(m) | ||
10.46(n) | ||
10.46(o) | ||
10.46(p) | ||
10.46(q) | ||
10.47(a) | ||
10.47(b) | ||
10.48 | ||
10.49 | ||
10.50 | ||
10.51 | ||
10.52 | ||
10.53 | ||
10.54 | ||
10.55 | ||
10.56 | ||
10.57 | ||
10.58 | ||
10.59 | ||
10.60 | ||
10.61 | ||
10.62 | ||
10.63 | ||
10.64 | ||
10.65 | ||
10.66 | ||
10.67 | ||
10.68 | ||
10.69 | ||
10.70 | ||
10.71 | ||
10.72(a) | ||
10.72(b) | ||
10.72(c) | ||
10.73 | ||
12.1 | ||
18.1 | ||
18.2 | ||
21 | ||
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, 2017 filed on March 1, 2018 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, | March 1, 2018 | ||
Peter J. Arduini | and Director (Principal Executive Officer) | |||
/s/ Glenn G. Coleman | Corporate Vice President and | March 1, 2018 | ||
Glenn G. Coleman | Chief Financial Officer (Principal Financial Officer) | |||
/s/ Jeffrey A. Mosebrook | Vice President, Corporate Controller | March 1, 2018 | ||
Jeffrey A. Mosebrook | (Principal Accounting Officer) | |||
/s/ Stuart M. Essig, Ph.D. | Chairman of the Board | March 1, 2018 | ||
Stuart M. Essig, Ph.D. | ||||
/s/ Keith Bradley, Ph.D. | Director | March 1, 2018 | ||
Keith Bradley, Ph.D. | ||||
/s/ Barbara B. Hill | Director | March 1, 2018 | ||
Barbara B. Hill | ||||
/s/ Lloyd W. Howell, Jr. | Director | March 1, 2018 | ||
Lloyd W. Howell, Jr. | ||||
/s/ Donald E. Morel, Jr., Ph.D. | Director | March 1, 2018 | ||
Donald E. Morel, Jr., Ph.D. | ||||
/s/ Raymond G. Murphy | Director | March 1, 2018 | ||
Raymond G. Murphy | ||||
/s/ Christian S. Schade | Director | March 1, 2018 | ||
Christian S. Schade | ||||
/s/ James M. Sullivan | Director | March 1, 2018 | ||
James M. Sullivan | ||||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands, except per share amounts) | |||||||||||
Total revenue, net | $ | 1,188,236 | $ | 992,075 | $ | 882,734 | |||||
Costs and Expenses: | |||||||||||
Cost of goods sold | 435,511 | 349,089 | 326,542 | ||||||||
Research and development | 63,455 | 58,155 | 50,895 | ||||||||
Selling, general and administrative | 624,096 | 455,629 | 415,757 | ||||||||
Intangible asset amortization | 20,370 | 13,862 | 9,953 | ||||||||
Total costs and expenses | 1,143,432 | 876,735 | 803,147 | ||||||||
Operating income | 44,804 | 115,340 | 79,587 | ||||||||
Interest income | 255 | 24 | 30 | ||||||||
Interest expense | (35,019 | ) | (25,803 | ) | (23,534 | ) | |||||
Other income, net | 1,345 | 845 | 4,588 | ||||||||
Income from continuing operations before income taxes | 11,385 | 90,406 | 60,671 | ||||||||
(Benefit from) provision for income taxes | (53,358 | ) | 15,842 | 53,820 | |||||||
Net income from continuing operations | $ | 64,743 | $ | 74,564 | $ | 6,851 | |||||
Loss from discontinued operations (net of tax benefit) | $ | — | $ | — | $ | (10,370 | ) | ||||
Net income (loss) | $ | 64,743 | $ | 74,564 | $ | (3,519 | ) | ||||
Net income (loss) per share - basic: | |||||||||||
Income from continuing operations | $ | 0.84 | $ | 1.00 | $ | 0.10 | |||||
Loss from discontinued operations | $ | — | $ | — | $ | (0.15 | ) | ||||
Net income (loss) per share - basic | $ | 0.84 | $ | 1.00 | $ | (0.05 | ) | ||||
Net income (loss) per share - diluted: | |||||||||||
Income from continuing operations | $ | 0.82 | $ | 0.94 | $ | 0.10 | |||||
Loss from discontinued operations | $ | — | $ | — | $ | (0.15 | ) | ||||
Net income (loss) per share - diluted | $ | 0.82 | $ | 0.94 | $ | (0.05 | ) | ||||
Weighted average common shares outstanding (See Note 12): | |||||||||||
Basic | 76,897 | 74,386 | 68,990 | ||||||||
Diluted | 79,121 | 79,194 | 71,354 | ||||||||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Net income (loss) | $ | 64,743 | $ | 74,564 | $ | (3,519 | ) | ||||
Other comprehensive income (loss), before tax: | |||||||||||
Change in foreign currency translation adjustments | 37,454 | (10,278 | ) | (25,841 | ) | ||||||
Unrealized gain (loss) on derivatives | |||||||||||
Unrealized derivative (loss) gain arising during period | (3,425 | ) | 1,871 | (25 | ) | ||||||
Less: Reclassification adjustments for losses included in net loss | 2,958 | — | (923 | ) | |||||||
Unrealized (loss) gain on derivatives | (6,383 | ) | 1,871 | 898 | |||||||
Defined benefit pension plan - net (loss) gain arising during period | (57 | ) | (45 | ) | 904 | ||||||
Total other comprehensive income (loss), before tax | 31,014 | (8,452 | ) | (24,039 | ) | ||||||
Income tax expense (benefit) related to items in other comprehensive loss | 2,333 | (800 | ) | (375 | ) | ||||||
Total other comprehensive income (loss), net of tax | 33,347 | (9,252 | ) | (24,414 | ) | ||||||
Comprehensive income (loss), net of tax | $ | 98,090 | $ | 65,312 | $ | (27,933 | ) | ||||
December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
ASSETS | |||||||
Current Assets: | |||||||
Cash and cash equivalents | $ | 174,935 | $ | 102,055 | |||
Trade accounts receivable, net of allowances of $8,882 and $6,319 | 251,799 | 148,186 | |||||
Inventories, net | 296,332 | 217,263 | |||||
Prepaid expenses and other current assets | 99,080 | 27,666 | |||||
Total current assets | 822,146 | 495,170 | |||||
Property, plant and equipment, net | 269,251 | 222,369 | |||||
Intangible assets, net | 1,159,627 | 561,175 | |||||
Goodwill | 937,905 | 510,571 | |||||
Deferred tax assets | 6,250 | 6,935 | |||||
Other assets | 16,078 | 11,734 | |||||
Total assets | $ | 3,211,257 | $ | 1,807,954 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current Liabilities: | |||||||
Borrowings under senior credit facility | $ | 60,000 | $ | — | |||
Accounts payable, trade | 93,967 | 29,057 | |||||
Deferred revenue | 11,051 | 6,812 | |||||
Accrued compensation | 73,392 | 52,762 | |||||
Short-term portion of contingent consideration | 22,793 | — | |||||
Accrued expenses and other current liabilities | 87,708 | 34,970 | |||||
Total current liabilities | 348,911 | 123,601 | |||||
Long-term borrowings under senior credit facility | 1,781,142 | 665,000 | |||||
Deferred tax liabilities | 65,130 | 148,941 | |||||
Other liabilities | 53,768 | 30,745 | |||||
Total liabilities | 2,248,951 | 968,287 | |||||
Commitments and contingencies | |||||||
Stockholders’ Equity: | |||||||
Preferred Stock; no par value; 15,000 authorized shares; none outstanding | — | — | |||||
Common stock; $0.01 par value; 240,000 authorized shares; 81,306 and 77,666 issued at December 31, 2017 and 2016, respectively | 813 | 777 | |||||
Additional paid-in capital | 821,758 | 798,652 | |||||
Treasury stock, at cost; 2,912 and 2,946 shares at December 31, 2017 and 2016, respectively | (121,644 | ) | (123,051 | ) | |||
Accumulated other comprehensive loss | (23,807 | ) | (57,154 | ) | |||
Retained earnings | 285,186 | 220,443 | |||||
Total stockholders’ equity | 962,306 | 839,667 | |||||
Total liabilities and stockholders’ equity | $ | 3,211,257 | $ | 1,807,954 | |||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
OPERATING ACTIVITIES: | |||||||||||
Net income (loss) | $ | 64,743 | $ | 74,564 | $ | (3,519 | ) | ||||
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | |||||||||||
Loss from discontinued operations, net of tax | — | — | 10,370 | ||||||||
Depreciation and amortization | 88,945 | 72,665 | 58,863 | ||||||||
Non-cash impairment charges | 3,290 | — | 380 | ||||||||
Deferred income tax benefit | (67,304 | ) | (6,474 | ) | (351 | ) | |||||
Non-cash valuation allowance | — | — | 37,210 | ||||||||
Share-based compensation | 21,550 | 17,310 | 15,450 | ||||||||
Amortization of debt issuance costs | 2,722 | 2,529 | 2,264 | ||||||||
Non-cash interest expense | — | 8,074 | 7,911 | ||||||||
Realized loss on sale of sale of short-term investment | 2,287 | — | — | ||||||||
Loss on disposal of property and equipment | 6,989 | 1,765 | 481 | ||||||||
Gain on divestiture of business | (2,645 | ) | — | — | |||||||
Change in fair value of contingent consideration and others | (4,710 | ) | (13 | ) | (177 | ) | |||||
Gain on bargain purchase | — | — | (1,111 | ) | |||||||
Payment of accreted interest | — | (42,786 | ) | (384 | ) | ||||||
Changes in assets and liabilities, net of business acquisitions: | |||||||||||
Accounts receivable | (89,698 | ) | (17,518 | ) | (16,231 | ) | |||||
Inventories | 99 | (9,576 | ) | (3,759 | ) | ||||||
Prepaid expenses and other current assets | (33,808 | ) | 14,912 | (233 | ) | ||||||
Other non-current assets | (914 | ) | (475 | ) | 610 | ||||||
Accounts payable, accrued expenses and other current liabilities | 95,321 | (414 | ) | 8,208 | |||||||
Deferred revenue | 3,874 | 1,251 | 136 | ||||||||
Other non-current liabilities | 23,803 | 591 | 945 | ||||||||
Net cash provided by operating activities of continuing operations | 114,544 | 116,405 | 117,063 | ||||||||
Net cash used in operating activities of discontinued operations | — | — | (12,209 | ) | |||||||
Net cash provided by operating activities | 114,544 | 116,405 | 104,854 | ||||||||
INVESTING ACTIVITIES: | |||||||||||
Change in restricted cash | — | 4,165 | (4,087 | ) | |||||||
Proceeds from sale of short-term investments | 16,951 | — | — | ||||||||
Proceeds from note receivable | 483 | — | — | ||||||||
Cash used in business acquisitions, net of cash acquired | (1,241,946 | ) | 225 | (328,888 | ) | ||||||
Purchases of property and equipment | (43,503 | ) | (47,328 | ) | (33,413 | ) | |||||
Proceeds from sales of property and equipment | 293 | 316 | 1,438 | ||||||||
Proceeds from divestiture of business | 46,387 | — | — | ||||||||
Net cash used in investing activities of continuing operations | (1,221,335 | ) | (42,622 | ) | (364,950 | ) | |||||
Net cash used in investing activities of discontinued operations | — | — | (7,060 | ) | |||||||
Net cash used in investing activities | (1,221,335 | ) | (42,622 | ) | (372,010 | ) | |||||
FINANCING ACTIVITIES: | |||||||||||
Borrowings under senior credit facility | 1,307,000 | 680,000 | 545,000 | ||||||||
Repayments under senior credit facility | (117,000 | ) | (511,250 | ) | (465,625 | ) | |||||
Net cash paid for contingent consideration | (4,661 | ) | — | — | |||||||
Proceeds from the issuance of common stock, net of issuance costs | — | — | 219,669 | ||||||||
Distribution to SeaSpine | — | — | (47,013 | ) | |||||||
Payment of liability component of convertible notes | — | (184,313 | ) | (2,519 | ) | ||||||
Payment of capital lease obligation | — | (653 | ) | (709 | ) | ||||||
Debt issuance costs | (19,043 | ) | (4,530 | ) | (1,426 | ) | |||||
Proceeds from exercised stock options | 9,774 | 10,481 | 7,345 | ||||||||
Cash taxes paid in net equity settlement | (7,123 | ) | (4,851 | ) | (6,580 | ) | |||||
Net cash provided by (used in) financing activities | 1,168,947 | (15,116 | ) | 248,142 | |||||||
Effect of exchange rate changes on cash and cash equivalents | 10,724 | (4,744 | ) | (4,848 | ) | ||||||
Net increase (decrease) in cash and cash equivalents | 72,880 | 53,923 | (23,862 | ) | |||||||
Cash and cash equivalents at beginning of period | 102,055 | 48,132 | 71,994 | ||||||||
Cash and cash equivalents at end of period | $ | 174,935 | $ | 102,055 | $ | 48,132 | |||||
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, 2015 | 83,288 | $ | 833 | (17,814 | ) | $ | (367,121 | ) | $ | 779,138 | $ | (23,488 | ) | $ | 314,960 | $ | 704,322 | ||||||||||||
Net loss | — | — | — | — | — | — | (3,519 | ) | (3,519 | ) | |||||||||||||||||||
Separation of SeaSpine | — | — | — | — | — | (1,667 | ) | (165,562 | ) | (167,229 | ) | ||||||||||||||||||
Other comprehensive loss, net of tax | — | — | — | — | — | (22,747 | ) | — | (22,747 | ) | |||||||||||||||||||
Treasury Share purchases | — | — | (16 | ) | — | — | — | — | — | ||||||||||||||||||||
Issuance of common stock | 8,006 | 80 | — | — | 219,600 | — | — | 219,680 | |||||||||||||||||||||
Issuance of common stock through employee stock purchase plan | 8 | — | — | — | 231 | — | — | 231 | |||||||||||||||||||||
Issuance of common stock for vesting of share based awards, net of shares withheld for taxes | 412 | 4 | — | — | 5,251 | — | — | 5,255 | |||||||||||||||||||||
Share-based compensation | — | — | 15,450 | — | — | 15,450 | |||||||||||||||||||||||
Balance, December 31, 2015 | 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 | |||||||||||||||||||||
Share-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, net of tax | — | — | — | — | — | 33,347 | — | 33,347 | |||||||||||||||||||||
Treasury shares retirement | — | — | — | — | — | — | — | — | |||||||||||||||||||||
Issuance of common stock | 135 | 1 | — | — | — | — | — | 1 | |||||||||||||||||||||
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 | 653 | 7 | 19 | 1,407 | 723 | — | — | 2,137 | |||||||||||||||||||||
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 | ||||||||||||
December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Finished goods | $ | 190,100 | $ | 127,973 | |||
Work in process | 58,637 | 50,043 | |||||
Raw materials | 47,595 | 39,247 | |||||
Total inventories, net | $ | 296,332 | $ | 217,263 | |||
December 31, | |||||||||
2017 | 2016 | Useful Lives | |||||||
(In thousands) | |||||||||
Land | $ | 1,881 | $ | 2,147 | |||||
Buildings and building improvements | 20,243 | 17,677 | 5-40 years | ||||||
Leasehold improvements | 90,329 | 82,432 | 1-20 years | ||||||
Machinery and production equipment | 137,914 | 103,818 | 3-20 years | ||||||
Surgical instrument kits | 30,511 | 19,871 | 4-5 years | ||||||
Information systems and hardware | 127,946 | 111,145 | 1-7 years | ||||||
Furniture, fixtures, and office equipment | 17,394 | 16,896 | 1-15 years | ||||||
Construction-in-progress | 62,967 | 59,222 | |||||||
Total | 489,185 | 413,208 | |||||||
Less: Accumulated depreciation | (219,934 | ) | (190,839 | ) | |||||
Property, plant and equipment, net | $ | 269,251 | $ | 222,369 | |||||
• | 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. |
Codman Specialty Surgical | Orthopedics and Tissue Technologies | Total | |||||||||
(In thousands) | |||||||||||
Goodwill at January 1, 2016 | $ | 284,976 | $ | 227,413 | $ | 512,389 | |||||
TEI acquisition working capital adjustment | — | (174 | ) | (174 | ) | ||||||
Foreign currency translation and other | (618 | ) | (1,026 | ) | (1,644 | ) | |||||
Goodwill at December 31, 2016 | $ | 284,358 | $ | 226,213 | $ | 510,571 | |||||
Derma Sciences acquisition | — | 73,765 | 73,765 | ||||||||
TGX Medical acquisition | 641 | — | 641 | ||||||||
Codman acquisition | 346,220 | — | 346,220 | ||||||||
Divestment to Natus | (2,861 | ) | — | (2,861 | ) | ||||||
Foreign currency translation and other | 6,409 | 3,160 | 9,569 | ||||||||
Goodwill at December 31, 2017 | $ | 634,767 | $ | 303,138 | $ | 937,905 | |||||
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 | |||||||
Weighted Average Life | December 31, 2016 | ||||||||||||
Cost | Accumulated Amortization | Net | |||||||||||
(Dollars in Thousands) | |||||||||||||
Completed technology | 17 years | $ | 479,964 | $ | (94,991 | ) | $ | 384,973 | |||||
Customer relationships | 12 years | 152,335 | (77,005 | ) | 75,330 | ||||||||
Trademarks/brand names | 30 years | 90,507 | (19,158 | ) | 71,349 | ||||||||
Supplier relationships | 27 years | 34,721 | (13,664 | ) | 21,057 | ||||||||
All other (1) | 5 years | 10,806 | (2,340 | ) | 8,466 | ||||||||
$ | 768,333 | $ | (207,158 | ) | $ | 561,175 | |||||||
(1) | At December 31, 2017 and 2016, all other included IPR&D of $1.0 million, which was indefinite-lived. |
Total revenue | $ | 65,775 | |
Costs and expenses | 80,618 | ||
Operating loss | (14,843 | ) | |
Other expense, net | (766 | ) | |
Loss from discontinued operations before tax | (15,609 | ) | |
Benefit for income taxes | (5,239 | ) | |
Loss from discontinued operations | $ | (10,370 | ) |
Assets: | |||
Cash | $ | 47,178 | |
Accounts receivable | 20,856 | ||
Inventory | 49,425 | ||
Other current assets | 13,411 | ||
Current assets of discontinued operations | 130,870 | ||
Property, plant, and equipment, net | 21,093 | ||
Intangible assets, net | 43,122 | ||
Other assets | 4,465 | ||
Non-current assets of discontinued operations | 68,680 | ||
Total assets of discontinued operations | $ | 199,550 | |
Liabilities: | |||
Accounts payable | $ | 7,072 | |
Accrued compensation | 5,964 | ||
Accrued expenses and other current liabilities | 3,361 | ||
Current liabilities of discontinued operations | 16,397 | ||
Deferred tax liabilities | 13,331 | ||
Other liabilities | 2,593 | ||
Long-term liabilities of discontinued operations | 15,924 | ||
Total liabilities of discontinued operations | $ | 32,321 | |
Preliminary Purchase Price Allocation | Weighted Average Life | ||||
(Dollars in thousands) | |||||
Inventory | 77,921 | ||||
Assets held for sale | 30,813 | ||||
Other current assets | 2,036 | ||||
Property, plant and equipment | 35,949 | ||||
Intangible assets: | |||||
Codman corporate trade name | 162,900 | Indefinite | |||
Completed technology | 379,900 | 22 years | |||
Goodwill | 346,219 | ||||
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 | |
Purchase Price Allocation | Weighted Average Life | ||||
(Dollars in thousands) | |||||
Cash and cash equivalents | $ | 49 | |||
Accounts receivables | 279 | ||||
Property, plant and equipment | 3 | ||||
Intangible assets: | |||||
Completed technology | 4,707 | 13 Years | |||
Goodwill | 641 | ||||
Total assets acquired | 5,679 | ||||
Accounts payable | 13 | ||||
Accrued expenses and other current liabilities | 65 | ||||
Other liabilities | 234 | ||||
Net assets acquired | $ | 5,367 | |||
Purchase Price Allocation | 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"). |
Purchase Price Allocation | Weighted Average Life | ||||
(Dollars in thousands) | |||||
Inventory | $ | 1,143 | |||
Property, plant and equipment | 669 | ||||
Other current assets | 11 | ||||
Intangible assets: | |||||
Supplier Contracts | 4,981 | 2 - 13 Years | |||
Goodwill | 9,665 | ||||
Total assets acquired | 16,469 | ||||
Accrued expenses and other liabilities acquired | 802 | ||||
Deferred tax liability | 1,564 | ||||
Net assets acquired | $ | 14,103 | |||
Purchase Price Allocation | Weighted Average Life | ||||
(Dollars in thousands) | |||||
Inventory | $ | 2,688 | |||
Property, plant, and equipment | 1,453 | ||||
Intangible assets: | |||||
Ankle product family | 3,210 | 11 years | |||
Toe product family | 460 | 10 years | |||
Total assets acquired | 7,811 | ||||
Deferred tax liability | 700 | ||||
Net assets acquired | $ | 7,111 | |||
Purchase Price Allocation | Weighted Average Life | ||||
(Dollars in thousands) | |||||
Cash | $ | 1,241 | |||
Accounts receivable, net | 9,011 | ||||
Inventory | 23,223 | ||||
Property, plant, and equipment | 2,027 | ||||
Income tax receivable | 5,135 | ||||
Other current assets | 2,670 | ||||
Intangible assets: | |||||
Developed technology | 167,400 | 14 - 16 Years | |||
Contractual relationships | 51,345 | 11 - 14 Years | |||
Leasehold interest | 69 | ||||
Goodwill | 147,704 | ||||
Total assets acquired | 409,825 | ||||
Accrued expenses and other liabilities | 9,732 | ||||
Deferred tax liabilities | 87,908 | ||||
Net assets acquired | $ | 312,185 | |||
Year Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(Pro forma) | |||||||||||
(In thousands except per share amounts) | |||||||||||
Total revenue from continuing operations | $ | 1,428,491 | $ | 1,446,903 | $ | 940,005 | |||||
Net income from continuing operations | $ | 81,730 | $ | 27,520 | $ | 10,694 | |||||
Basic earnings per share from continuing operations | $ | 1.06 | $ | 0.37 | $ | 0.31 | |||||
i. | a $500.0 million Term Loan A facility; |
ii. | a $700.0 million Term Loan A-1, which was available in a single drawing on a delayed basis at the time of closing of the Codman Acquisition (see Note 4 - Acquisitions, Divestitures and Pro forma Results); and |
iii. | a $1.0 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 | |
December 31, 2016 through before the first fiscal quarter after the delayed draw date of Term Loan A-1 | 4.50 : 1.00 | |
First fiscal quarter ended after the delayed draw date of Term Loan A-1 through September 30, 2018 | 5.50 : 1.00 | |
October 1, 2018 through September 30, 2019 | 5.00 : 1.00 | |
October 1, 2019 through September 30, 2020 | 4.50 : 1.00 | |
October 1, 2020 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 2.00%), or |
ii. | the highest of: |
1. | the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.50%, or |
2. | the prime lending rate of Bank of America, N.A., or |
3. | the one-month Eurodollar Rate plus 1.00%. |
Year Ended December 31, | Principal Repayment | ||
(In thousands) | |||
2018 | $ | 60,000 | |
2019 | 60,000 | ||
2020 | 90,000 | ||
2021 | 990,000 | ||
Years Ended December 31, | |||||||
2016 | 2015 | ||||||
(In thousands) | |||||||
2016 Convertible Notes: | |||||||
Amortization of the discount on the liability component (1) | $ | 8,073 | $ | 7,917 | |||
Cash interest related to the contractual interest coupon (2) | 3,407 | 3,430 | |||||
Total | $ | 11,480 | $ | 11,347 | |||
(1) | The amortization of the discount on the liability component of the 2016 Convertible Notes is presented net of capitalized interest of $0.3 million and $0.6 million for the years ended December 31, 2016 and 2015, respectively. |
(2) | The cash interest related to the contractual interest coupon on the 2016 Convertible Notes is presented net of capitalized interest of $0.1 million and $0.3 million for the years ended December 31, 2016 and 2015. |
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 interested rate derivatives designated as cash flow hedge | $ | 1,050,000 | $ | 592 | |||||||||||||||
Effective Date | Termination Date | Fixed Rate | Aggregate Notional Amount | Fair Value Asset (Liability) | ||||||||||
Pay CHF | October 2, 2017 | October 2, 2020 | 1.75% | CHF | 97,065 | $ | (742 | ) | ||||||
Receive U.S.$ | 4.38% | $ | 100,000 | |||||||||||
Pay CHF | October 2, 2017 | October 2, 2021 | 1.85% | CHF | 48,533 | (610 | ) | |||||||
Receive U.S.$ | 4.46% | $ | 50,000 | |||||||||||
Pay CHF | October 2, 2017 | October 2, 2022 | 1.95% | CHF | 145,598 | (2,605 | ) | |||||||
Receive U.S.$ | 4.52% | $ | 150,000 | |||||||||||
Total | $ | (3,957 | ) | |||||||||||
Fair Value as of December 31, | |||||||
2017 | 2016 | ||||||
Location on Balance Sheet (1): | (In thousands) | ||||||
Derivatives designated as hedges — Assets: | |||||||
Prepaid expenses and other current assets | |||||||
Interest rate swap(2) | $ | 1,521 | $ | 242 | |||
Cross-currency swap | 7,757 | — | |||||
Other assets | |||||||
Interest rate swap(2) | 2,491 | 1,629 | |||||
Total Derivatives designated as hedges — Assets | $ | 11,769 | $ | 1,871 | |||
Derivatives designated as hedge — Liabilities | |||||||
Accrued expenses and other current liabilities | |||||||
Interest rate swap(2) | $ | 1,845 | $ | — | |||
Other liabilities | |||||||
Interest rate swap(2) | 1,575 | — | |||||
Cross-currency swap | 11,714 | — | |||||
Total Derivative designated as hedges — Liabilities | $ | 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, 2017 and 2016, the total notional amounts related to the Company’s interest rate swaps were $1.1 billion and $150.0 million, 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, 2017 | |||||||||||||||||
Interest rate swap | $ | 1,871 | $ | (1,355 | ) | $ | (76 | ) | $ | 592 | Interest (expense) | ||||||
Cross-currency swap | — | (2,070 | ) | 3,034 | (5,104 | ) | Other income (expense) | ||||||||||
$ | 1,871 | $ | (3,425 | ) | $ | 2,958 | $ | (4,512 | ) | ||||||||
Year Ended December 31, 2016 | |||||||||||||||||
Interest rate swap | $ | — | $ | 1,871 | $ | — | $ | 1,871 | Interest (expense) | ||||||||
$ | — | $ | 1,871 | $ | — | $ | 1,871 | ||||||||||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Selling, general and administrative | $ | 19,785 | $ | 15,829 | $ | 14,461 | |||||
Research and development | 1,273 | 1,048 | 714 | ||||||||
Cost of goods sold | 492 | 433 | 275 | ||||||||
Total stock-based compensation expense | 21,550 | 17,310 | 15,450 | ||||||||
Total estimated tax benefit related to stock-based compensation expense | 15,448 | 10,569 | 5,792 | ||||||||
Net effect on net income | $ | 6,102 | $ | 6,741 | $ | 9,658 | |||||
Years Ended December 31, | |||||
2017 | 2016 | 2015 | |||
Dividend yield | 0% | 0% | 0% | ||
Expected volatility | 30% | 29% | 29% | ||
Risk free interest rate | 2.18% | 1.94% | 1.96% | ||
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, 2017 | 2,083 | $ | 20.65 | |||||||||
Granted | 187 | 41.72 | ||||||||||
Exercised | (531 | ) | 17.60 | |||||||||
Forfeited or Expired | — | — | ||||||||||
Outstanding at December 31, 2017 | 1,739 | $ | 23.84 | 3.54 | $ | 41,753 | ||||||
Vested or expected to vest at December 31, 2017 | 1,739 | $ | 23.84 | 3.54 | $ | 41,753 | ||||||
Exercisable at December 31, 2017 | 1,333 | $ | 19.95 | 2.63 | $ | 37,208 | ||||||
Performance Stock and Contract Stock Awards | |||||||||||||
Restricted 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, 2017 | 512 | $ | 28.49 | 345 | $ | 21.62 | |||||||
Granted | 286 | 44.15 | 213 | 43.75 | |||||||||
Adjustments for performance achievement related to award target | — | — | 25 | 36.90 | |||||||||
Cancellations | (61 | ) | 36.00 | (12 | ) | 30.52 | |||||||
Released | (286 | ) | 27.89 | (225 | ) | 43.11 | |||||||
Vested but not released | — | — | (174 | ) | 32.40 | ||||||||
Unvested, December 31, 2017 | 451 | $ | 37.79 | 172 | $ | 33.61 | |||||||
Service cost | $ | 565 | |
Interest cost | 95 | ||
Expected return on plan assets | (224 | ) | |
Recognized net actuarial loss | 8 | ||
Net period benefit cost | $ | 444 | |
Discount rate | 0.74 | % |
Expected return on plan assets | 3.08 | % |
Rate of compensation increase | 1.70 | % |
Change In Projected Benefit Obligations | |||
Projected benefit obligation, beginning of year | $ | 668 | |
Interest cost | 95 | ||
Service cost | 565 | ||
Actuarial loss | (12 | ) | |
Employee contribution | 180 | ||
Premiums paid | (89 | ) | |
Benefit payment | (19 | ) | |
Transfer from Codman Neurosurgery acquisition | 46,448 | ||
Effect of foreign currency exchange rates | (175 | ) | |
Projected benefit obligation, end of year | $ | 47,661 | |
Change In Plan Assets | |||
Plan assets at fair value, beginning of year | $ | — | |
Actual return on plan assets | 82 | ||
Employer contributions | 450 | ||
Employee contributions | 180 | ||
Premiums paid | (89 | ) | |
Transfer from Codman Neurosurgery acquisition | 26,477 | ||
Effect of foreign currency exchange rates | (157 | ) | |
Plan assets at fair value, end of year | $ | 26,943 | |
Reconciliation Of Funded Status | |||
Fair value of plan assets | $ | 26,943 | |
Benefit obligations | 47,661 | ||
Unfunded benefit obligation | $ | 20,718 | |
2018 | $ | 158 | |
2019 | 225 | ||
2020 | 296 | ||
2021 | 454 | ||
2022 | 466 | ||
Next five years | 5,380 | ||
Related Parties | Third Parties | Total | |||||||||
(In thousands) | |||||||||||
2018 | $ | 296 | $ | 13,449 | $ | 13,745 | |||||
2019 | 296 | 12,245 | 12,541 | ||||||||
2020 | 296 | 9,534 | 9,830 | ||||||||
2021 | 296 | 7,058 | 7,354 | ||||||||
2022 | 296 | 5,849 | 6,145 | ||||||||
Thereafter | 2,019 | 45,714 | 47,733 | ||||||||
Total minimum lease payments | $ | 3,499 | $ | 93,849 | $ | 97,348 | |||||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
United States operations | $ | (32,640 | ) | $ | 51,351 | $ | 37,450 | ||||
Foreign operations | 44,025 | 39,055 | 23,221 | ||||||||
Total | $ | 11,385 | $ | 90,406 | $ | 60,671 | |||||
Years Ended December 31, | ||||||||
2017 | 2016 | 2015 | ||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||
Increase (decrease) in income taxes resulting from: | ||||||||
State income taxes, net of federal tax benefit | (17.0 | )% | (0.2 | )% | 1.3 | % | ||
Foreign operations | (112.7 | )% | (10.0 | )% | (12.5 | )% | ||
Spine valuation allowance | — | % | — | % | 61.1 | % | ||
Excess tax benefits from stock compensation | (57.9 | )% | (3.9 | )% | — | % | ||
Charitable contributions | (10.6 | )% | (0.4 | )% | (1.0 | )% | ||
Nondeductible meals and entertainment | 8.8 | % | 0.8 | % | 0.9 | % | ||
Domestic production activities deduction | — | % | (2.6 | )% | (2.4 | )% | ||
Intercompany profit in inventory | 11.6 | % | 1.0 | % | 3.1 | % | ||
Nondeductible facilitative costs | 22.5 | % | 0.2 | % | 3.1 | % | ||
Changes in valuation allowances | 8.0 | % | 0.4 | % | 0.3 | % | ||
Uncertain tax positions | (4.6 | )% | (0.3 | )% | 0.2 | % | ||
Research and development credit | (13.2 | )% | (1.2 | )% | (1.9 | )% | ||
Return to provision | (4.3 | )% | (1.5 | )% | 1.7 | % | ||
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 | )% | — | % | — | % | ||
Other | 0.8 | % | 0.2 | % | (0.2 | )% | ||
Effective tax rate | (468.7 | )% | 17.5 | % | 88.7 | % | ||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Current: | |||||||||||
Federal | $ | 6,644 | $ | 13,700 | $ | 46,665 | |||||
State | 1,233 | 2,503 | 2,301 | ||||||||
Foreign | 6,069 | 6,113 | 5,205 | ||||||||
Total current | $ | 13,946 | $ | 22,316 | $ | 54,171 | |||||
Deferred: | |||||||||||
Federal | (66,466 | ) | (3,400 | ) | 1,282 | ||||||
State | (758 | ) | (1,751 | ) | (394 | ) | |||||
Foreign | (80 | ) | (1,323 | ) | (1,239 | ) | |||||
Total deferred | $ | (67,304 | ) | $ | (6,474 | ) | $ | (351 | ) | ||
Provision for income taxes | $ | (53,358 | ) | $ | 15,842 | $ | 53,820 | ||||
December 31, | |||||||
2017 | 2016 | ||||||
(In thousands) | |||||||
Assets: | |||||||
Doubtful accounts | $ | 1,811 | $ | 2,344 | |||
Inventory related items | 29,266 | 30,074 | |||||
Tax credits | 6,015 | 1,040 | |||||
Accrued vacation | 2,556 | 3,264 | |||||
Accrued bonus | 997 | 7,842 | |||||
Stock compensation | 10,426 | 16,031 | |||||
Deferred revenue | 2,395 | 2,345 | |||||
Net operating loss carryforwards | 37,492 | 15,058 | |||||
Unrealized foreign exchange loss | 1,177 | 96 | |||||
Charitable contributions carryforward | 1,287 | 5 | |||||
Others | 3,077 | 128 | |||||
Total deferred tax assets | 96,499 | 78,227 | |||||
Less valuation allowance | (7,961 | ) | (3,604 | ) | |||
Deferred tax assets after valuation allowance | $ | 88,538 | $ | 74,623 | |||
Liabilities: | |||||||
Intangible and fixed assets | (146,327 | ) | (215,438 | ) | |||
Others | (1,091 | ) | (1,191 | ) | |||
Total deferred tax liabilities | $ | (147,418 | ) | $ | (216,629 | ) | |
Total net deferred tax liabilities | $ | (58,880 | ) | $ | (142,006 | ) | |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Balance, beginning of year | $ | 754 | $ | 1,085 | $ | 959 | |||||
Gross increases: | |||||||||||
Current year tax positions | 402 | — | — | ||||||||
Prior years' tax positions | — | 380 | 541 | ||||||||
Gross decreases: | |||||||||||
Prior years' tax positions | (777 | ) | (546 | ) | — | ||||||
Settlements | — | — | — | ||||||||
Statute of limitations lapses | (17 | ) | (131 | ) | (404 | ) | |||||
Other | 62 | (34 | ) | (11 | ) | ||||||
Balance, end of year | $ | 424 | $ | 754 | $ | 1,085 | |||||
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands, except per share amounts) | |||||||||||
Basic net income (loss) per share: | |||||||||||
Net income from continuing operations | $ | 64,743 | $ | 74,564 | $ | 6,851 | |||||
Net loss from discontinued operations | — | — | (10,370 | ) | |||||||
Net income (loss) | $ | 64,743 | $ | 74,564 | $ | (3,519 | ) | ||||
Weighted average common shares outstanding | 76,897 | 74,386 | 68,990 | ||||||||
Basic net income per common share from continuing operations | $ | 0.84 | $ | 1.00 | $ | 0.10 | |||||
Basic net loss per common share from discontinued operations | — | — | (0.15 | ) | |||||||
Basic net income (loss) per common share | $ | 0.84 | $ | 1.00 | $ | (0.05 | ) | ||||
Diluted net income (loss) per share: | |||||||||||
Net income from continuing operations | $ | 64,743 | $ | 74,564 | $ | 6,851 | |||||
Net loss from discontinued operations | — | — | (10,370 | ) | |||||||
Net income (loss) | $ | 64,743 | $ | 74,564 | $ | (3,519 | ) | ||||
Weighted average common shares outstanding — Basic | 76,897 | 74,386 | 68,990 | ||||||||
Effect of dilutive securities: | |||||||||||
2016 Convertible notes | — | 2,296 | 922 | ||||||||
Warrants | 971 | 1,166 | — | ||||||||
Stock options and restricted stock | 1,253 | 1,346 | 1,442 | ||||||||
Weighted average common shares for diluted earnings per share | 79,121 | 79,194 | 71,354 | ||||||||
Diluted net income per common share from continuing operations | $ | 0.82 | $ | 0.94 | $ | 0.10 | |||||
Diluted net loss per common share from discontinued operations | — | — | (0.15 | ) | |||||||
Diluted net income (loss) per common share | $ | 0.82 | $ | 0.94 | $ | (0.05 | ) | ||||
Gains and Losses on Cash Flow Hedges | Defined Benefit Pension Items | Foreign Currency Items | Short-term Investment | Total | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Balance at January 1, 2017 | $ | 1,071 | $ | (36 | ) | $ | (58,189 | ) | $ | — | $ | (57,154 | ) | |||||||
Other comprehensive (loss) income before reclassifications | (2,122 | ) | (57 | ) | 37,454 | (3,019 | ) | 32,256 | ||||||||||||
Less: Income (loss) reclassified from accumulated other comprehensive income (loss) | 1,928 | — | — | (3,019 | ) | (1,091 | ) | |||||||||||||
Current period other comprehensive (loss) income | (4,050 | ) | (57 | ) | 37,454 | — | 33,347 | |||||||||||||
Balance at December 31, 2017 | $ | (2,979 | ) | $ | (93 | ) | $ | (20,735 | ) | $ | — | $ | (23,807 | ) | ||||||
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, 2016 | $ | — | $ | — | $ | — | $ | 21,831 | ||||||||||
Change in fair value | — | — | — | 205 | Selling, general and administrative | |||||||||||||
Balance as of December 31, 2016 | — | — | — | 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 | ) | — | — | — | |||||||||||||
Change in fair value | (4,239 | ) | 113 | 294 | 148 | Selling, general and administrative | ||||||||||||
Balance as of December 31, 2017 | $ | 315 | $ | 1,387 | $ | 22,478 | $ | — | ||||||||||
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, 2016 | $ | 1,991 | $ | 161 | $ | — | $ | 931 | |||||||||
Payments | (2,000 | ) | — | — | (47 | ) | |||||||||||
Transfer from long-term to current potion | 161 | (161 | ) | — | — | ||||||||||||
Loss from increase in fair value | 14 | — | — | 1,083 | Selling, general and administrative | ||||||||||||
Other | — | — | — | 681 | Goodwill | ||||||||||||
Balance as of December 31, 2016 | 166 | — | — | 2,648 | |||||||||||||
Payments | (166 | ) | — | (113 | ) | (415 | ) | ||||||||||
Transfer | — | — | 3,273 | (3,273 | ) | ||||||||||||
Loss from increase in fair value | — | — | (519 | ) | 1,040 | Selling, general and administrative | |||||||||||
Balance as of December 31, 2017 | $ | — | $ | — | $ | 2,641 | $ | — | |||||||||
• | 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, and dental, podiatry, and veterinary offices. |
• | The Orthopedics and Tissue Technologies segment includes such offerings as skin and wound repair, bone and joint fixation implants in the upper and lower extremities, bone grafts and nerve and tendon repair. |
Years Ended December 31, | |||||||||||
2017 | 2016 | 2015 | |||||||||
(In thousands) | |||||||||||
Segment Net Sales | |||||||||||
Codman Specialty Surgical | $ | 720,301 | $ | 632,524 | $ | 586,918 | |||||
Orthopedics and Tissue Technologies | 467,935 | 359,551 | 295,816 | ||||||||
Total revenues | $ | 1,188,236 | $ | 992,075 | $ | 882,734 | |||||
Segment Profit | |||||||||||
Codman Specialty Surgical | $ | 292,971 | $ | 256,629 | $ | 242,479 | |||||
Orthopedics and Tissue Technologies | 129,697 | 103,852 | 87,844 | ||||||||
Segment profit | 422,668 | 360,481 | 330,323 | ||||||||
Amortization | (20,370) | (13,862) | (9,953) | ||||||||
Corporate and other | (357,494 | ) | (231,279 | ) | (240,783 | ) | |||||
Operating income | $ | 44,804 | $ | 115,340 | $ | 79,587 | |||||
United States* | Europe | Rest of the World | Consolidated | ||||||||||||
(In thousands) | |||||||||||||||
Total revenue, net: | |||||||||||||||
2017 | $ | 894,260 | $ | 150,147 | $ | 143,829 | $ | 1,188,236 | |||||||
2016 | 765,608 | 120,588 | 105,879 | 992,075 | |||||||||||
2015 | 680,824 | 103,057 | 98,853 | 882,734 | |||||||||||
Total long-lived assets: | |||||||||||||||
2017 | $ | 247,154 | $ | 30,942 | $ | 7,233 | $ | 285,329 | |||||||
2016 | 213,898 | 18,970 | 1,235 | 234,103 | |||||||||||
(In thousands, except per share data) | |||||||||||||||||||
Quarter | Total revenue, net | Gross margin | Net income | Per Share - Basic (1) | Per Share - Diluted (1) | ||||||||||||||
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 (3) (4) | 368,602 | 220,431 | 44,355 | 0.57 | 0.56 | ||||||||||||||
$ | 1,188,236 | $ | 752,725 | $ | 64,743 | ||||||||||||||
2016 | |||||||||||||||||||
First (2) | $ | 236,770 | $ | 151,997 | $ | 13,419 | $ | 0.18 | $ | 0.18 | |||||||||
Second | 249,309 | 159,744 | 12,755 | 0.17 | 0.16 | ||||||||||||||
Third | 250,332 | 161,003 | 20,144 | 0.27 | 0.25 | ||||||||||||||
Fourth | 255,664 | 170,242 | 28,246 | 0.38 | 0.35 | ||||||||||||||
$ | 992,075 | $ | 642,986 | $ | 74,564 | ||||||||||||||
Balance at Beginning of Period | Charged to Costs and Expenses | Charged to Other Accounts | Deductions | Balance at End of Period | ||||||||||||||||
Description | ||||||||||||||||||||
(In thousands) | ||||||||||||||||||||
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) | — | (2) | 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 | ) | (2 | ) | 3,604 | |||||||||||
Year ended December 31, 2015: | ||||||||||||||||||||
Allowance for doubtful accounts and sales returns and allowances | $ | 5,659 | $ | 1,262 | $ | — | $ | (1,349 | ) | (2 | ) | $ | 5,572 | |||||||
Deferred tax asset valuation allowance | 6,772 | 80 | — | (1,965 | ) | (2 | ) | 4,887 | ||||||||||||
(1) | Charges to other accounts primarily relates 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. |
Name of Subsidiary | State or Country of Incorporation or Organization | ||
Ascension Orthopedics, Inc. | Delaware | ||
Ascension Orthopedics, Limited | United Kingdom | ||
BIMECO, Inc. | Florida | ||
BioD, LLC | Delaware | ||
BioDlogics, LLC | Delaware | ||
BioRecovery, LLC | Delaware | ||
CardioDyne, Inc. | Massachusetts | ||
Cathtec, Incorporated | Massachusetts | ||
Caveangle Limited | United Kingdom | ||
Confluent Surgical, Inc. | Delaware | ||
Derma First Aid Products, Inc. | Pennsylvania | ||
Derma Sciences Canada, Inc. | Canada | ||
Derma Sciences Europe, Ltd. | United Kingdom | ||
Derma Sciences, Inc. | Delaware | ||
EndoSolutions, Inc. | Delaware | ||
Fiber Imaging Technologies, Inc. | Massachusetts | ||
GMS, Gesellschaft für medizinische Sondentechnik mbH | Germany | ||
ILS Financing Corporation | Delaware | ||
ILS Financing (Ireland) Limited | Ireland | ||
ILS Services Switzerland Ltd. | Switzerland | ||
INS Sweden AB | Sweden | ||
Integra Burlington MA, Inc. (formerly known as Integra Radionics, Inc.) | Delaware | ||
Integra Canada ULC (formerly known as Canada Microsurgical ULC) | Canada | ||
Integra CI, Inc. | Cayman Islands | ||
Integra Euro Holdings, Inc. | Delaware | ||
Integra France Holdings SAS | France | ||
Integra German Holdings GmbH | Germany | ||
Integra GmbH | Germany | ||
Integra Japan K.K. | Japan | ||
Integra LifeSciences Austria GmbH | Austria | ||
Integra LifeSciences Brazil Ltda. | Brazil | ||
Integra LifeSciences (Canada) Holdings, Inc. | Delaware | ||
Integra LifeSciences Corporation | Delaware | ||
Integra LifeSciences (Ireland) Limited | Ireland | ||
Integra LifeSciences Italy S.r.l. | Italy | ||
Integra LifeSciences Middle East FZ-LLC | Dubai | ||
Integra LifeSciences NR Ireland Limited | Ireland | ||
Integra LifeSciences Production Corporation | Delaware | ||
Integra LifeSciences Sales LLC (f/k/a Integra Healthcare Products LLC) | Delaware | ||
Integra LifeSciences Services (France) SAS | France | ||
Integra LifeSciences (Shanghai) Co., Ltd. | China | ||
Integra LifeSciences Shared Services (Ireland) Limited | Ireland | ||
Integra LifeSciences Singapore Pte. Ltd. | Singapore | ||
Integra LifeSciences Switzerland Sárl | Switzerland | ||
Integra LS (Benelux) NV | Belgium | ||
Integra LS Mexico, S. DE R. L. DE C.V. | Mexico | ||
Integra Luxtec, Inc. | Massachusetts | ||
Integra ME GmbH | Germany | ||
Integra MicroFrance SAS | France | ||
Integra NeuroSciences (International), Inc. | Delaware | ||
Integra NeuroSciences Holdings (UK) Limited | United Kingdom | ||
Integra NeuroSciences Holdings B.V. | Netherlands | ||
Integra NeuroSciences Implants (France) SAS | France | ||
Integra NeuroSciences Limited | United Kingdom | ||
Integra Neurosciences Pty Ltd. (AUS) | Australia | ||
Integra Neurosciences Pty Ltd. (NZ) | New Zealand | ||
Integra Sales, Inc. | Delaware | ||
Integra Selector Corporation | Delaware | ||
Integra York PA, Inc. (formerly known as Miltex, Inc.) | Delaware | ||
IsoTis NV | Netherlands | ||
IsoTis T.E. Facility B.V. | Netherlands | ||
J. Jamner Surgical Instruments, Inc. | Delaware | ||
Jarit GmbH | Germany | ||
LXU Healthcare, Inc. - Medical Specialty Products | Delaware | ||
MedEfficiency, Inc. | Delaware | ||
Minnesota Scientific, Inc. | Minnesota | ||
Nantong Derma Medical Products Co., Ltd. | China | ||
Newdeal SAS | France | ||
Newdeal, Inc. | Texas | ||
Precise Dental Holding Corp. | New Jersey | ||
Precise Dental Internacional, S.A. de C.V. | Mexico | ||
Precise Dental Products, Ltd. | California | ||
Precision Dental International, Inc. | California | ||
Spembly Cryosurgery Limited | United Kingdom | ||
Spembly Medical Limited | United Kingdom | ||
Tarsus Medical Inc. | Delaware | ||
TEI Biosciences Inc. | Delaware | ||
TEI Biosciences (UK) Limited | United Kingdom | ||
TEI Medical Inc. | Delaware | ||
1. | I have reviewed this annual report on Form 10-K of Integra LifeSciences Holdings Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13 a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | March 1, 2018 | /s/ Peter J. Arduini |
Peter J. Arduini | ||
President and Chief Executive Officer | ||
1. | I have reviewed this annual report on Form 10-K of Integra LifeSciences Holdings Corporation; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13 a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have: |
(a) | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
(a) | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
(b) | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
Date: | March 1, 2018 | /s/ Glenn G. Coleman |
Glenn G. Coleman | ||
Corporate Vice President and Chief Financial Officer | ||
1. | The Annual Report on Form 10-K of the Company for the year ended December 31, 2017 (the “Report”) fully complies with the requirement of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | March 1, 2018 | /s/ Peter J. Arduini |
Peter J. Arduini | ||
President and Chief Executive Officer | ||
1. | The Annual Report on Form 10-K of the Company for the year ended December 31, 2017 (the “Report”) fully complies with the requirement of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and |
2. | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: | March 1, 2018 | /s/ Glenn G. Coleman |
Glenn G. Coleman | ||
Corporate Vice President and Chief Financial Officer | ||
Document and Entity Information - USD ($) $ in Millions |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Feb. 27, 2018 |
Jun. 30, 2017 |
|
| Document and Entity Information [Abstract] | |||
| Document Type | 10-K | ||
| Amendment Flag | false | ||
| Document Period End Date | Dec. 31, 2017 | ||
| Document Fiscal Year Focus | 2017 | ||
| Document Fiscal Period Focus | FY | ||
| Trading Symbol | iart | ||
| Entity Registrant Name | INTEGRA LIFESCIENCES HOLDINGS CORP | ||
| Entity Central Index Key | 0000917520 | ||
| Current Fiscal Year End Date | --12-31 | ||
| Entity Filer Category | Large Accelerated Filer | ||
| Entity Well-known Seasoned Issuer | Yes | ||
| Entity Voluntary Filers | No | ||
| Entity Current Reporting Status | Yes | ||
| Entity Public Float | $ 3,415.7 | ||
| Entity Common Stock, Shares Outstanding (in shares) | 78,494,242 |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Statement of Comprehensive Income [Abstract] | |||
| Net income (loss) | $ 64,743 | $ 74,564 | $ (3,519) |
| Other comprehensive income (loss), before tax: | |||
| Change in foreign currency translation adjustments | 37,454 | (10,278) | (25,841) |
| Unrealized gain (loss) on derivatives | |||
| Unrealized derivative (loss) gain arising during period | (3,425) | 1,871 | (25) |
| Less: Reclassification adjustments for losses included in net loss | 2,958 | 0 | (923) |
| Unrealized (loss) gain on derivatives | (6,383) | 1,871 | 898 |
| Defined benefit pension plan - net (loss) gain arising during period | (57) | (45) | 904 |
| Total other comprehensive income (loss), before tax | 31,014 | (8,452) | (24,039) |
| Income tax expense (benefit) related to items in other comprehensive loss | 2,333 | (800) | (375) |
| Total other comprehensive income (loss), net of tax | 33,347 | (9,252) | (24,414) |
| Comprehensive income (loss), net of tax | $ 98,090 | $ 65,312 | $ (27,933) |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Statement of Financial Position [Abstract] | ||
| Trade accounts receivable, allowances | $ 8,882 | $ 6,319 |
| Preferred Stock, par value (in dollars per share) | ||
| Preferred Stock, authorized shares (in shares) | 15,000,000 | 15,000,000 |
| Preferred Stock, outstanding (in shares) | 0 | 0 |
| Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
| Common stock, shares authorized (in shares) | 240,000,000 | 240,000,000 |
| Common stock, shares issued (in shares) | 81,306,000 | 77,666,000 |
| Treasury stock, shares (in shares) | 2,912,000 | 2,946,000 |
BUSINESS |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| BUSINESS | BUSINESS Integra LifeSciences Holdings Corporation (the “Company”) was incorporated in Delaware in 1989. The Company, a world leader in medical devices, is dedicated to limiting uncertainty for surgeons through the development, manufacturing, and marketing of cost-effective surgical implants and medical instruments. Its products are used primarily in neurosurgery, extremity reconstruction, orthopedics and general surgery. The Company sells its products directly through various sales forces and through a variety of other distribution channels. |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION These financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America and conform to Regulation S-X under the Securities Exchange Act of 1934, as amended. PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions are eliminated in consolidation. See Note 4, Acquisitions and Pro Forma Results, for details of new subsidiaries included in the consolidation. On July 1, 2015, the Company completed the distribution of 100% of the outstanding common shares of SeaSpine Holdings Corporation ("SeaSpine") to Integra shareholders who received one share of SeaSpine common stock for every three shares, on a pre-split basis, of Integra common stock held as of the close of business on the record date, June 19, 2015. The Company has classified the results of operations, cash flows, and related assets and liabilities of SeaSpine as discontinued operations for all periods presented in the Company's consolidated financial statements. Unless indicated otherwise, the information in the Notes to the consolidated financial statements relates to the Company's continuing operations. Refer to Note 3, Discontinued Operations, for additional information regarding the distribution. USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, valuation of intangible assets and in-process research and development ("IPR&D"), amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets and goodwill, estimates of projected cash flows, depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation, valuation of pension assets and liabilities, valuation of derivative instruments, valuation of the equity component of convertible debt instruments, and valuation of debt instruments and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. RECLASSIFICATIONS Certain amounts from the prior year's financial statements have been reclassified in order to conform to the current year's presentation. CASH AND CASH EQUIVALENTS The Company considers all short-term, highly liquid investments purchased with original maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. TRADE ACCOUNTS RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS RECEIVABLE Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company's historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. Provision for doubtful accounts, associated with accounts receivable, included in selling, general and administrative expense, were $2.0 million, $0.4 million, and $1.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. INVENTORIES Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or net realizable value. Inventories consisted of the following:
At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management's judgment of probable economic benefit. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. No such amounts were capitalized at December 31, 2017 or 2016. PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software developed or obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software. Property, plant and equipment balances and corresponding lives were as follows:
Depreciation expense associated with property, plant and equipment was $36.1 million, $31.2 million, and $27.0 million for the years ended December 31, 2017, 2016 and 2015, respectively. The Company leased certain computer equipment under capital lease agreements. The gross carrying value of such leases amounted to $2.0 million at December 31, 2016. The accumulated depreciation of such leases amounted to $2.0 million at December 31, 2016, and the cost is included as a component of furniture, fixtures, office equipment and information systems and hardware. There are no outstanding capital lease agreements as of December 31, 2017. CAPITALIZED INTEREST The interest cost on capital projects, including facilities build-out and internal use software, is capitalized and included in the cost of the project. Capitalization commences with the first expenditure for the project and continues until the project is substantially complete and ready for its intended use. When no debt is incurred specifically for a project, interest is capitalized on project expenditures using the weighted average cost of the Company's outstanding borrowings. For the years ended December 31, 2017 and 2016, respectively, the Company capitalized $1.1 million and $1.0 million of interest expense into property, plant and equipment. ACQUISITIONS Results of operations of acquired companies are included in the Company’s results of operations as of the respective acquisition dates. The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent payments are recognized in selling, general and administrative expense in consolidated statements of operations. Contingent payments related to acquisitions consist of development, regulatory, and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques. The fair value of development, regulatory, and commercial milestone payments reflects management’s expectations of probability of payment, and increases or decreases as the probability of payment or expectation of timing of payments changes. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payments changes. GOODWILL AND OTHER INTANGIBLE ASSETS The excess of the cost over the fair value of net assets of acquired businesses is recorded as goodwill. Goodwill is not subject to amortization, but is reviewed for impairment at the reporting unit level annually, or more frequently if impairment indicators arise. The Company's assessment of the recoverability of goodwill is based upon a comparison of the carrying value of goodwill with its estimated fair value. The Company reviews goodwill for impairment annually as of July 31 and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. In October 2017, as part of the Company's branding strategy, the Company adopted the Codman name by rebranding the Specialty Surgical Solutions segment to Codman Specialty Surgical. The change in name does not have an effect on our reportable segments or reporting units. The Company has two reportable segments with three underlying reporting units: Instruments and Neurosurgery, under Codman Specialty Surgical and Orthopedics and Tissue Technologies. Refer to Note 13 - Segment and Geographic Information for more information on reportable segments. The Company estimated the fair value of the three reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following:
Given the excess of the Instruments, Neurosurgery and Orthopedics and Tissue Technologies estimated fair values over their carrying values after the reallocation of goodwill, no impairment was recognized. The Company elected to early adopt ASU 2017-4, Simplifying the Test for Goodwill Impairment, effective January 1, 2017. The Company performed its annual goodwill impairment test as of July 31, 2017. In reviewing goodwill for impairment, the Company has the option - for any or all of its reporting units that carry goodwill - to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (i.e. greater than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, the Company is then required to perform the quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether the Company chooses to perform the qualitative assessment or proceeds directly to the quantitative impairment test. The Company elected to perform a qualitative analysis for its three reporting units as of July 31, 2017. The Company determined, after performing qualitative analysis, that there was no evidence that it is more likely than not that the fair value of any identified reporting unit was less that the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test. Changes in the carrying amount of goodwill in 2017 and 2016 were as follows:
When the Company acquires a business, the assets acquired, including IPR&D, and liabilities assumed are recorded at their respective fair values as of the acquisition date. The Company's policy defines IPR&D as the fair value of those projects for which the related products have not received regulatory approval and have no alternative future use. Determining the fair value of intangible assets, including IPR&D, acquired as part of a business combination requires the Company to make significant estimates. These estimates include the amount and timing of projected future cash flows, the discount rate used to discount those cash flows to present value, the assessment of the asset’s life cycle, and the consideration of legal, technical, regulatory, economic, and competitive risks. The fair value assigned to other intangible assets, including IPR&D, is determined by estimating the future cash flows of each project or technology and discounting the net cash flows back to their present values. The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies. IPR&D acquired in a business combination is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred. Upon receipt of regulatory approval, the indefinite-lived intangible asset is then accounted for as a finite-lived intangible asset and amortized on a straight-line basis or accelerated basis, as appropriate, over its estimated useful life. If the research and debt project is subsequently abandoned, the indefinite-lived intangible asset is charged to expense. IPR&D acquired outside of a business combination is expensed immediately. Due to the uncertainty associated with research and development projects, there is risk that actual results will differ materially from the original cash flow projections and that the research and development project will result in a successful commercial product. The risks associated with achieving commercialization include, but are not limited to, delay or failure to obtain regulatory approvals to conduct clinical trials, delay or failure to obtain required market clearances, delays or issues with patent issuance, or validity and litigation. Other intangible assets include patents, trademarks, purchased technology, and supplier and customer relationships. Identifiable intangible assets are initially recorded at fair market value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives. The components of the Company's identifiable intangible assets were as follows:
The Company performs its assessment of the recoverability of indefinite-lived intangible assets annually during the third quarter, or more frequently as impairment indicators arise, and it is based upon a comparison of the carrying value of such assets to their estimated fair values. The Company performed its most recent annual assessment during the third quarter of 2017, which resulted in no impairments. There were no impairment charges for research and development expenses related to IPR&D projects during 2017 and 2016. During the third quarter of 2017, the Company recorded an impairment charge of $3.3 million in cost of goods sold related to completed technology assets acquired from Tarsus Medical, Inc. ("Tarsus Technology"), since the underlying product will no longer be sold. Tarsus Technology was included in the Orthopedic and Tissue Technology segment. During 2015, the Company recorded impairment charges of $0.4 million in research and development expense related to IPR&D projects that have been discontinued in its Orthopedics and Tissue Technologies segment. Amortization expense (including amounts reported in cost of product revenues, but excluding any possible future amortization associated with acquired IPR&D) for the years ended December 31, 2017, 2016 and 2015 was $52.8 million, $41.5 million and $32.2 million, respectively. Annual amortization expense is expected to approximate $66.9 million in 2018, $66.8 million in 2019, $66.7 million in 2020, $65.7 million in 2021, $62.2 million in 2022 and $658.9 million thereafter. Amortization of product technology based intangible assets totaled $35.7 million, $27.6 million and $22.3 million for the years ended December 31, 2017, 2016 and 2015, respectively, and is presented by the Company within cost of goods sold. LONG-LIVED ASSETS Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets. INTEGRA FOUNDATION The Company may periodically make contributions to the Integra Foundation, Inc. The Integra Foundation was incorporated in 2002 exclusively for charitable, educational, and scientific purposes and qualifies under IRC 501(c)(3) as an exempt private foundation. Under its charter, the Integra Foundation engages in activities that promote health, the diagnosis and treatment of disease, and the development of medical science through grants, contributions and other appropriate means. The Integra Foundation is a separate legal entity and is not a subsidiary of the Company; therefore, its results are not included in these consolidated financial statements. The Company contributed $0.5 million and $0.9 million to the Integra Foundation during the years ended December 31, 2017 and 2015, respectively. There were no contributions to the Integra Foundation during 2016. These contributions were recorded in selling, general, and administrative expense. DERIVATIVES The Company develops, manufactures, and sells medical devices globally, and its earnings and cash flows are exposed to market risk from changes in interest rates and currency exchange rates. The Company addresses these risks through a risk management program that includes the use of derivative financial instruments, and operates the program pursuant to documented corporate risk management policies. All derivative financial instruments are recognized in the financial statements at fair value in accordance with the authoritative guidance. Under the guidance, for those instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation, based on the exposure being hedged. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. The Company's derivative instruments do not subject its earnings or cash flows to material risk, and gains and losses on these derivatives generally offset losses and gains on the item being hedged. The Company has not entered into derivative transactions for speculative purposes and from time to time, the Company may enter into derivatives that are not designated as hedging instruments in order to protect itself from currency volatility due to intercompany balances. All derivative instruments are recognized at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its derivative instruments, using the framework prescribed by the authoritative guidance, by considering the estimated amount the Company would receive to sell or transfer these instruments at the reporting date and by taking into account: expected forward interest rates, currency exchange rates, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company utilizes a discounted cash flow model to measure fair value. Generally, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The Company has classified all of its derivative assets and liabilities within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of its derivative instruments. The Company classifies derivatives designated as hedges in the same category as the item being hedged for cash flow presentation purposes. The Company also has entered into an foreign currency forward contract that is not designated as a hedging instrument for accounting purposes. This contract is recorded at fair value, with the changes in fair value recognized into other income, net on the consolidated financial statements. FOREIGN CURRENCY All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. Foreign currency transaction (loss) gain of $(2.9) million, $0.3 million and $(0.5) million are reported in other income, net in the statements of operations, for the year ended December 31, 2017, 2016 and 2015, respectively. INCOME TAXES Income taxes are accounted for by using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. Reserves are established for positions that don't meet this recognition threshold. The reserve is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. These reserves are classified as long-term liabilities in the consolidated balance sheets of the Company, unless the reserves are expected to be paid in cash during the next twelve months, in which case they are classified as current liabilities. The Company also records interest and penalties accrued in relation to uncertain tax benefits as a component of income tax expense. While the Company believes it has identified all reasonably identifiable exposures and the reserve it has established for identifiable exposures is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause the Company to either materially increase or reduce the carrying amount of its tax reserve. The Company continues to indefinitely reinvest substantially all of its foreign earnings. The current provisional analysis indicates that the Company has sufficient U.S. liquidity, including borrowing capacity, to fund foreseeable U.S. cash needs without requiring the repatriation of foreign cash. The Tax Cuts and Jobs Act (the “2017 Tax Act”), enacted in December 2017, imposes a toll tax on a deemed repatriation of undistributed earnings of foreign subsidiaries. One time or unusual items that may impact the ability or intent to keep the foreign earnings and cash indefinitely reinvested include significant U.S. acquisitions, loans from a foreign subsidiary, changes in tax laws. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. The Company has recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the 2017 Tax Act. REVENUE RECOGNITION Total revenues, net, include product sales, product royalties and other revenues, such as fees received under research, licensing, distribution arrangements, research grants, and technology-related royalties. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred; title and risk of loss have passed to the customer, there is a fixed or determinable sales price, and collectability of that sales price is reasonably assured. For product sales, the Company's stated terms are primarily FOB shipping point and with most customers, title and risk of loss pass to the customer at that time. With certain United States customers, the Company retains risk of loss until the customers receive the product, and in those situations, the Company recognizes revenue upon receipt by the customer. A portion of the Company's product revenue is generated from consigned inventory maintained at hospitals and distributors, and also from inventory physically held by field sales representatives. For these types of products sales, the Company retains title until receiving appropriate notification that the product has been used or implanted, at which time revenue is recognized. Each revenue transaction is evidenced by either a contract with the customer or a valid purchase order and an invoice which includes all relevant terms of sale. There are generally no significant customer acceptance or other conditions that prevent the Company from recognizing revenue in accordance with its delivery terms. In certain cases, where the Company has performance obligations that are significant to the functionality of the product, the Company recognizes revenue upon fulfillment of its obligation. Sales invoices issued to customers contain the Company's price for each product or service. The Company performs a review of each specific customer's credit worthiness and ability to pay prior to accepting them as a customer. Further, the Company performs periodic reviews of its customers' status prospectively. The Company records a provision for estimated returns and allowances on revenues in the same period as the related revenues are recorded. These estimates are based on historical sales returns and discounts and other known factors. The provisions are recorded as a reduction to revenues. The Company's return policy, as set forth in its product catalogs and sales invoices, requires the Company to review and authorize the return of product in advance. Upon authorization, a credit will be issued for goods returned within a set amount of days from shipment, which is generally ninety days. Product royalties are estimated and recognized in the same period that the royalty-based products are sold by the Company's strategic partners. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant. Other operating revenues may include fees received under research, licensing, and distribution arrangements, technology-related royalties and research grants. Non-refundable fees received under research, licensing and distribution arrangements or for the licensing of technology are recognized as revenue when received if the Company has no continuing obligations to the other party. For those arrangements where the Company has continuing performance obligations, revenue is recognized using the lesser of the amount of non-refundable cash received or the result achieved using the proportional performance method of accounting based upon the estimated cost to complete these obligations. Research grant revenue is recognized when the related expenses are incurred. SHIPPING AND HANDLING FEES AND COSTS Amounts billed to customers for shipping and handling are included in revenues. The related shipping and freight charges incurred by the Company are included in cost of goods sold. Distribution and handling costs of $13.5 million, $13.6 million and $13.7 million were recorded in selling, general and administrative expense during the years ended December 31, 2017, 2016 and 2015, respectively. PRODUCT WARRANTIES Certain of the Company's medical devices, including monitoring systems and neurosurgical systems, are reusable and are designed to operate over long periods of time. These products are sold with warranties which may extend for up to two years from date of purchase. The Company accrues estimated product warranty costs at the time of sale based on historical experience. Any additional amounts are recorded when such costs are probable and can be reasonably estimated. Accrued warranty expense of $0.7 million and $0.8 million is recorded in the consolidated balance sheet at December 31, 2017 and 2016, respectively. RESEARCH AND DEVELOPMENT Research and development costs, including salaries, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred. EMPLOYEE TERMINATION BENEFITS AND OTHER EXIT-RELATED COSTS The Company does not have a written severance plan, and it does not offer similar termination benefits to affected employees in all restructuring initiatives. Accordingly, in situations where minimum statutory termination benefits must be paid to the affected employees, the Company records employee severance costs associated with these restructuring activities in accordance with the authoritative guidance for non-retirement post-employment benefits. Charges associated with these activities are recorded when the payment of benefits is probable and can be reasonably estimated. In all other situations where the Company pays out termination benefits, including supplemental benefits paid in excess of statutory minimum amounts and benefits offered to affected employees based on management's discretion, the Company records these termination costs in accordance with the authoritative guidance for ASC Topic 712 Compensation-Nonretirement Benefits and ASC Topic 420 One-time Employee Termination Benefits. The timing of the recognition of charges for employee severance costs other than minimum statutory benefits depends on whether the affected employees are required to render service beyond their legal notification period in order to receive the benefits. If affected employees are required to render service beyond their legal notification period, charges are recognized over the future service period. Otherwise, charges are recognized when management has approved a specific plan and employee communication requirements have been met. For leased facilities and equipment that have been abandoned, the Company records estimated lease losses based on the fair value of the lease liability, as measured by the present value of future lease payments subsequent to abandonment, less the present value of any estimated sublease income on the cease-use date. For owned facilities and equipment that will be disposed of, the Company records impairment losses based on fair value less costs to sell. The Company also reviews the remaining useful life of long-lived assets following a decision to exit a facility and may accelerate depreciation or amortization of these assets, as appropriate. AMENDMENT TO THE CERTIFICATE OF INCORPORATION AND STOCK SPLIT On October 25, 2016, the Board of Directors recommended, subject to stockholder approval, an Amendment to the Company’s Certificate of Incorporation (the “Amendment”) to increase the number of authorized shares of common stock from 60.0 million shares to 240.0 million shares with $0.01 per share par value, for the purpose of, among other things, affecting a two-for-one stock split. The Stockholders approved the amendment on its special Stockholders Meeting on December 21, 2016 and the Company filed a certificate of amendment to the amended and restated certificate of incorporation to effect the increase in authorized share of common stock and the two-for-one-stock split. Stockholders of record, as of the close of markets on December 21, 2016, became entitled to receive one additional share of common stock for each share held. The shares were distributed on January 3, 2017. No fractional shares of common stock were issued as a result of the two-for-one stock split. The adjusted stock price was reflected on the NASDAQ stock market on January 4, 2017. The shares of common stock retained a par value of $0.01 per share. Accordingly, the stockholders' equity reflects the stock split by reclassifying from "Additional paid-in capital" to "Common stock" in an amount equal to the par value of the increased shares resulting from the stock split. All share and per share amounts of common stock contained in the Company's financial statements have been restated for all periods to give retroactive effect to the stock split. STOCK-BASED COMPENSATION The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Stock-based compensation expense for stock option awards granted after January 1, 2006 was based on the fair value on the grant date using the binomial distribution model. The Company recognizes compensation expense for stock option awards, restricted stock awards, performance stock awards and contract stock awards over the requisite service period of the award. All excess tax benefits and taxes and tax deficiencies from stock-based compensation are included in provision for income taxes in the consolidated statement of operations. PENSION BENEFITS A defined benefit pension plan covers former employees in Germany. Various factors are considered in determining the pension liability, including the number of employees expected to be paid their salary levels and years of service, the expected return on plan assets, the discount rate used to determine the benefit obligations, the timing of benefit payments and other actuarial assumptions. If the actual results and events for the pension plans differ from current assumptions, the benefit obligation may be over or under valued. The Company acquired several funded and unfunded non-U.S. defined benefit pension plans as part of Codman Neurosurgery acquisition. The Company recognizes the underfunded status of the defined benefit pension plans as an asset or a liability in the balance sheet, with changes in the funded status recorded through other comprehensive income in the year in which those changes occur. Retirement benefit plan assumptions are reassessed on an annual basis or more frequently if changes in circumstances indicate a re-evaluation of assumptions are required. The key benefit plan assumptions are the discount rate and expected rate of return on plan assets. The discount rate is based on average rates on bonds that matched the expected cash outflows of the benefit plans. The expected rate of return is based on historical and expected returns on the various categories of plan assets. In September 2015, the Company completed the buy-out of its defined benefit pension plan in the United Kingdom (the "U.K.") which covered certain employees and retirees. All plan assets of the defined benefit pension plan were transferred to an independent financial services firm and the Company made cash contributions of approximately $1.8 million for the year-ended December 31, 2015. The Company recorded expenses totaling approximately $5.6 million in selling, general and administrative costs in conjunction with the buy-out of the plan. The buy-out of the U.K. pension plan eliminated future obligations of the Company under this plan. Total contributions to the defined benefit plans were $0.5 million and $2.2 million during the years ended December 31, 2017 and 2015. There were no contributions to the defined benefit plans for the year ended December 31, 2016. The Company use the corridor approach in measuring the amount of net periodic benefit pension cost to recognize each period. The corridor approach defers all actuarial gains and losses resulting from variances between actual results and actuarial assumptions. Those unrecognized gains and losses are amortized when the net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year. The amount in excess of the corridor is amortized over the average remaining service period to retirement date of active plan participants. CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents, which are held at major financial institutions, investment-grade marketable debt securities and trade receivables. The Company's products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer. A portion of the Company's trade receivables to customers outside the United States includes sales to foreign distributors, who then sell to government owned or supported healthcare systems. None of the Company's customers accounted for 10% or more of the consolidated net sales during the years ended December 31, 2017, 2016 and 2015. RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. This update will become effective for all annual periods and interim reporting period beginning after December 15, 2017. Early adoption as of January 1, 2017 is permitted. The Company will adopt this standard on January 1, 2018. The Company expects to apply the modified retrospective method. Based on preliminary results of the Company's assessment of the impact, the Company does not expect the adoption of ASU 2014-09 to have a material impact on the consolidated financial statements. The impact will primarily relate to: (i) the timing of recognition for goods in transit, in which control has been transferred to customers at the time of shipment and; (ii) the timing of recognition of revenue in the Company's private label business from point in time to over time during the manufacturing process. In July 2015, the FASB issued Update No. 2015-11, Simplifying the Measurement of Inventory. The amendment requires an entity to measure inventory that is within the scope of this amendment at the lower of cost and net realizable value. Existing impairment models will continue to be used for inventories that are accounted for using the last-in first-out (“LIFO”) method. The ASU requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years for public business entities. Early adoption is permitted. The Company adopted ASU 2015-11 as of January 1, 2017 on a prospective basis, and there was no significant impact of this guidance on its consolidated financial statements. In February 2016, the FASB issued Update No. 2016-02, Leases (Topic 842). Under current accounting guidance an entity is not required to report operating leases on the balance sheet. The amendment requires that lessees recognize virtually all of their leases on the balance sheet by recording a right-of-use asset and lease liability (other than leases that meet the definition of a "short-term lease"). This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2018. The new standard must be adopted using a modified retrospective transition. Early adoption is permitted. The Company is in the process of evaluating the impact of this standard on its financial statements. In August 2016, the FASB issued Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The guidance addresses the classification of cash flows related to debt repayment or extinguishment costs, settlement of zero-coupon debt instruments or debt instruments with coupon rate that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance, distribution received from equity method investees and beneficial interest in securitization transactions. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements. In October 2016, the FASB issued Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The guidance requires the income tax consequences of intra-entity transfers of assets other than inventory to be recognized as current period income tax expense or benefit and removes the requirement to defer and amortize the consolidated tax consequences of intra-entity transfers. The new standard will be effective for all annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-16 to have a material impact on its consolidated financial statements. In January 2017, the FASB issued Update 2017-04, Simplifying the Test for Goodwill Impairment. The standard eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for annual and interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company elected to early adopt ASU 2017-04 effective January 1, 2017 and applied the new guidance in its annual assessment in the third quarter of 2017. The Company performed its annual goodwill impairment assessment as of July 31, 2017. The Company elected to perform a qualitative analysis for its reporting units. The Company determined, after performing the qualitative analysis, that there was no evidence that it is more likely than not that the fair value of any identified reporting unit was less than the carrying amount, and therefore, it was not necessary to perform quantitative analysis for any reporting units. In January 2017, the FASB issued Update No. 2017-01, Business Combinations. The standard provides guidance for evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities (a “set”) does not qualify to be a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in an identifiable asset or a group of similar identifiable assets, the set of assets and activities is not a business. If the screen is not met, the guidance requires a set of assets and activities to be considered a business and to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs and removes the evaluation as to whether a market participant could replace the missing elements. The new standard will be effective for all annual periods beginning after December 15, 2017. Early adoption is permitted. The Company elected to early adopt ASU 2017-01 effective January 1, 2017. The implementation of the amended guidance did not have any material impact on the Company's consolidated financial statements. In March 2017, the FASB issued Update No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. In addition, the amendments also allow only the service cost component to be eligible for capitalization when applicable. The new standard will be effective for annual periods beginning after December 15, 2017. The Company does not expect the adoption of ASU 2017-07 to have a material impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Stock Compensation (Topic 718): Scope of Modification Accounting. The update to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The new standard will be effective for all annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update amends the hedge accounting rules to simplify the application of hedge accounting guidance and better portray the economic results of risk management activities in the financial statements. The guidance expands the ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company elected to early adopt ASU 2017-01 effective January 1, 2017 using modified retrospective method. The implementation of the amended guidance did not have any material impact on the Company's consolidated financial statements. There are no other recently issued accounting pronouncements that are expected to have a material effect on the Company's financial position, results of operations or cash flows. SUPPLEMENTAL CASH FLOW INFORMATION In addition to the $42.8 million and $0.4 million payment of accreted interest associated with the settlement of the 1.625% Convertible Senior Notes due in 2016 ("2016 Convertible Notes") during the years ended December 31, 2016 and 2015, respectively, cash paid for interest during the years ended December 31, 2017, 2016 and 2015 was $32.3 million (net of $1.1 million that was capitalized into construction in progress), $14.4 million (net of $1.0 million that was capitalized into construction in progress) and $12.7 million (net of $1.7 million that was capitalized into construction in progress), respectively. As part of settlement of 1.625% 2016 Convertible Notes in December 2016, the Company issued 2.9 million shares of common stock with fair value of $122.0 million. The Company also received 2.9 million shares of common stock from the exercise of call options with hedge participants with fair value of $123.1 million at the date of the exercise which was held as treasury stock as of December 31, 2016. For the year ended December 31, 2017, the affiliates of the initial purchasers of 2016 Convertible Notes (the “hedge participants”) exercised 8,707,202 warrants. As a result, the Company issued 2,839,743 shares of common stock for year ended December 31, 2017. Cash paid for income taxes, net of refunds, for the years ended December 31, 2017, 2016 and 2015 was $14.6 million, $4.3 million and $21.3 million, respectively. Property and equipment purchases included in liabilities at December 31, 2017, 2016 and 2015 were $7.8 million, $4.7 million and $4.7 million, respectively. |
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DISCONTINUED OPERATIONS |
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| DISCONTINUED OPERATIONS | DISCONTINUED OPERATIONS On October 29, 2014, Integra's Board of Directors approved the announcement of a plan to separate SeaSpine from Integra as a new, publicly traded medical technology company focused on the design, development and commercialization of surgical solutions for the treatment of patients suffering from spinal disorders. Integra's board of directors based this determination, in part, on its belief that the tax-free distribution of SeaSpine shares to Integra stockholders is the most efficient manner to separate the business from Integra's other medical technology businesses. On November 3, 2014, the Company announced its intention to separate its spine business, which was previously a separate reportable segment. On July 1, 2015, the Company completed the distribution of 100% of the outstanding common stock of SeaSpine to Integra stockholders, who received one share of SeaSpine common stock for every three shares, on a pre-split basis, of Integra common stock held as of the close of business on the record date, June 19, 2015. The Company and SeaSpine share three board members, including the chair of Integra’s board of directors who is lead director for SeaSpine. The separation agreement ensures that SeaSpine had approximately $47.0 million of total cash immediately following the distribution. No gain or loss was recognized on the part of the Company or shareholders as a result of the distribution resulting from the separation of the spine business. The historical results of operations, cash flows, and statement of financial position of SeaSpine have been presented as discontinued operations in the consolidated financial statements and prior periods have been revised. Discontinued operations include results of SeaSpine's business except for certain allocated corporate overhead costs and certain costs associated with transition services provided by Integra to SeaSpine. These allocated costs will remain part of continuing operations. Discontinued operations also include other costs incurred by Integra to separate SeaSpine from the fourth quarter of 2014 through the second quarter of 2015. These costs include transaction charges, advisory and consulting fees, and information system expenses. For the third quarter 2015 and going forward, SeaSpine as a stand-alone public company have separately reported its financial results. Due to differences between the basis of presentation for discontinued operations and the basis of presentation as a stand-alone company, the financial results of SeaSpine included within discontinued operations for the Company may not be indicative of actual financial results of SeaSpine as a stand-alone company. The following table summarizes results from discontinued operations of SeaSpine included in the consolidated statement of operations for the year ended December 31, 2015 (in thousands):
No income or expense has been recorded for the SeaSpine business after the separation from Integra on July 1, 2015. The following table presents Integra's spine business assets and liabilities removed from the consolidated balance sheet as of July 1, 2015:
The removal of SeaSpine's net assets and unrealized accelerated currency translation adjustment is presented as a reduction in Integra's retained earnings and accumulated other comprehensive loss. In order to effect the separation and govern Integra's relationship with SeaSpine after the separation, the Company entered into a Separation and Distribution Agreement and other agreements including a Tax Matters Agreement, an Employee Matters Agreement, several supply agreements, and a Transition Services Agreement. The Separation and Distribution Agreement governs the separation of the spine business, the transfer of assets and other matters related to the Company's relationship with SeaSpine. The Tax Matters Agreement governs the respective rights, responsibilities and obligations of SeaSpine and Integra with respect to taxes, tax attributes, tax returns, tax proceedings and certain other tax matters. The Employee Matters Agreement governs the compensation and employee benefit obligations with respect to the current and former employees and non-employee directors of SeaSpine and Integra, and generally allocates liabilities and responsibilities relating to employee compensation, benefit plans and programs. The Employee Matters Agreement provides that employees of SeaSpine will no longer participate in benefit plans sponsored or maintained by Integra. In addition, the Employee Matters Agreement provides that each of the parties will be responsible for their respective former and current employees and compensation plans for such current employees. The Company entered into several Supply Agreements in which SeaSpine engaged Integra to be the product supplier of Integra's former Integra MozaikTM product line ("Mozaik") for a three-year period following the separation after which there will be no defined terms and this will be considered a normal purchase/sale arrangement. This product line has been licensed to SeaSpine in conjunction with the spin-off. Prior to the spin-off, the sale of Mozaik products from an Integra facility to a SeaSpine facility eliminated in Integra's historical consolidated financial results of operations. The revenue and cost of goods sold related to prior sales of Mozaik to SeaSpine have been restated and are presented in Integra's continuing operations results of operations. The Company has recorded $0.7 million, $0.8 million, and $6.2 million in revenue related to the sale of Mozaik products for the year-ended December 31, 2017, 2016 and 2015, respectively and $0.3 million, $0.7 million and $3.8 million in cost of goods sold for the years ended December 31, 2017, 2016 and 2015, respectively, in its continuing operations. Under the terms of the Transition Services Agreement, the Company agreed to provide administrative, site services, information technology systems and various other corporate and support services to SeaSpine over various periods after the separation on a cost or cost-plus basis. The most significant components of the service income were the provision of information systems and legal services which was completed by the end of the first quarter of 2016. In the year-ended December 31, 2016 and 2015, other income (expense), net includes $0.3 million and $2.7 million of income in respect of the provision of services to SeaSpine, respectively. |
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ACQUISITIONS, DIVESTITURE AND PRO FORMA RESULTS |
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| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACQUISITIONS, DIVESTITURE AND PRO FORMA RESULTS | ACQUISITIONS, DIVESTITURE AND PRO FORMA RESULTS Johnson & Johnson's Codman Neurosurgery Business On February 14, 2017, the Company entered into a binding offer letter (the “Offer Letter”) with DePuy Synthes, Inc., a Delaware corporation (“DePuy Synthes”), a wholly-owned subsidiary of Johnson & Johnson, pursuant to which Integra made a binding offer to acquire certain assets, and assume certain liabilities, of Johnson & Johnson’s Codman neurosurgery business (the “Codman Acquisition”). The assets and liabilities subject to the proposed Codman Acquisition relate to the research, development, manufacturing, marketing, distribution and sale of certain products used in connection with neurosurgery procedures. The purchase price for the Codman Acquisition is $1.014 billion, subject to adjustments set forth in the Purchase Agreement (as defined below) relating to the book value of inventory transferred to the Company at the closing of the Codman Acquisition, the book value of certain inventory retained by DePuy Synthes and the amount of certain prepaid taxes. Pursuant to the terms of the Offer Letter, following the conclusion of certain statutory information or consultation processes in connection with the Codman Acquisition by the employees of DePuy Synthes and its affiliates in France, Switzerland, and Germany, on May 11, 2017, DePuy Synthes accepted the Company’s offer and countersigned the Asset Purchase Agreement (the “Purchase Agreement”) with respect to the Codman Acquisition, previously executed by the Company. On October 2, 2017, upon the terms and subject to the conditions set forth in the Purchase Agreement, the Codman Acquisition was completed. Under the terms of the Purchase Agreement, the Company paid an aggregate purchase price of $1.014 billion, subject to adjustments set forth in the Purchase Agreement relating to the book value of inventory transferred to the Company at the closing of the Codman Acquisition, the book value of certain inventory retained by DePuy Synthes will be transferred to the Company in the future along with certain prepaid taxes. To facilitate the completion of the Codman Acquisition, the Company drew $700.0 million from the Term Loan A-1 component of the Senior Credit Facility and used cash available as of October 2, 2017. The Codman Acquisition was accounted for using the acquisition method of business combination under ASC 805, Business Combinations. The Company recorded revenue for Codman Neurosurgery of approximately $76.9 million, in the consolidated statements of operations and comprehensive income for the year ended December 31, 2017. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it is in the process of being integrated into the Company's operations. The following summarizes the preliminary allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
As of December 31, 2017, certain amounts relating to the valuation of property, plant and equipment and pension liabilities have not been finalized. The finalization of these matters may result in changes to goodwill. Goodwill was allocated to the Codman Special Surgical segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is generally deductible for income tax purposes. The Company wrote-off construction in progress of $6.3 million related to a project acquired from Codman Neurosurgery that the Company decided to discontinue after the Codman Acquisition. Divestiture to Natus On September 8, 2017, to facilitate the acquisition of the Codman Neurosurgery Business, the Company and certain of its subsidiaries entered into an asset purchase agreement (the “Divestiture Agreement”) with Natus Medical Incorporated (“Natus”), pursuant to which the Company agreed to divest its Camino® Intracranial Pressure monitoring and the U.S. rights to its fixed pressure shunts businesses within its Codman Specialty Surgical segment together with certain neurosurgery assets acquired as part of the Codman Acquisition, which includes Codman U.S. dural graft implant, external ventricular drainage catheter and cerebrospinal fluid collection systems businesses (the “Divestiture”). The Divestiture Agreement was entered into in connection with the review of the Codman Acquisition by the Federal Trade Commission and the antitrust authority of Spain. On October 6, 2017, upon the terms and subject to the conditions of the Divestiture Agreement, the Divestiture was completed and Natus paid an aggregate purchase price of $46.4 million. Assets and liabilities divested consisted of the following as of October 6, 2017 (amounts in thousands):
Assets held for sale includes assets and liabilities related to U.S. dural graft implant, external ventricular drainage catheters and cerebrospinal fluid collection systems businesses acquired as part of acquisition of Codman Neurosurgery. The transitional supply agreement with Natus requires the Company to provide to Natus certain assets defined in the transitional supply agreement upon termination. The Company recognized a liability of $1.3 million, included in other liabilities in consolidated balance sheet, related to estimated cost of assets to be provided to Natus upon termination of transitional supply agreement. The Divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial statements. Goodwill was allocated to the assets and liabilities divested using the relative fair value method. The Company recognized a gain on sale of business of $2.6 million included in other income, net in its consolidated statement of operations for the year ended December 31, 2017. TGX Medical On April 4, 2017, the Company entered into a Membership Interest Purchase Agreement (the "Purchase Agreement"), by and among the Company, MCF I LP THX Medical System LLC Holdings, Inc., Terragraphix, Inc. and TGX Medical Systems, LLC (collectively, "TGX Medical"). Pursuant to the Purchase Agreement, the Company purchased all issued and outstanding membership interests in TGX Medical for $5.4 million. TGX Medical designs, develops and markets software solutions that track surgical instruments from the operating room, through sterilization to storage, which helps ensure that the instruments have been properly cleaned, assembled and maintained. TGX Medical’s customers are located in the U.S. and Canada. The Company recorded revenue for TGX Medical of approximately $0.6 million in the consolidated statements of operations and comprehensive income for year ended December 31, 2017. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it is in the process of being integrated into the Company's operations. The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
Goodwill was allocated to the Codman Surgical Solutions segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes. Derma Sciences On February 24, 2017, the Company executed the Agreement and Plan of Merger (the "Merger Agreement") under which the Company acquired all of the outstanding shares of Derma Sciences, Inc., a Delaware corporation ("Derma Sciences") for an aggregate purchase price of approximately $210.8 million, including payment of certain of Derma Sciences' closing expenses and settlement of stock-based compensation plans of $4.8 million and $4.3 million, respectively. The purchase price consisted of a cash payment to the former shareholders of Derma Sciences of approximately $201.7 million upon the closing of the transaction. Derma Sciences is a tissue regeneration company focused on advanced wound and burn care that offers products to help manage chronic and hard-to-heal wounds, especially those resulting from diabetes and poor vascular functioning. The Company recorded revenue for Derma Sciences of approximately $84.6 million in the consolidated statements of operations and comprehensive income for the year ended December 31, 2017. The net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been integrated into the Company's operations. The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
Goodwill was allocated to the Orthopedics and Tissue Technologies segment. Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected revenue and cost synergies of the combined company and assembled workforce. Goodwill recognized as a result of the acquisition is not deductible for income tax purposes. In the second quarter of 2017, the Company adjusted its preliminary purchase price allocation of other liabilities by $1.7 million because of additional liabilities for sales and use tax, employment tax and unclaimed property. In the third quarter of 2017, the Company adjusted the purchase price and goodwill by $0.3 million, as a result of cash received from escrow related to the acquisition of BioD LLC ("BioD") by Derma Sciences. BioD is a wholly owned subsidiary of Derma Sciences. Short-term Investments Short-term investments recognized at the acquisition date of Derma Sciences are investments in equity and debt securities including certificates of deposit purchased with an original maturity greater than three months which are deposited in various U.S. financial institutions and are fully insured by the Federal Deposit Insurance Corporation. The Company considers securities with original maturities of greater than 90 days to be available for sale securities. Securities under this classification are recorded at fair value and unrealized gains and losses are recorded within accumulated other comprehensive income. The estimated fair value of the available for sale securities is determined based on quoted market prices. The Company evaluates securities with unrealized losses to determine whether such losses, if any, are other than temporary. Short-term investments are classified as Level 1 in fair value hierarchy. Fair values of short-term investments are determined using the unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the balance sheet date. In the second quarter of 2017, the Company sold the acquired short-term investments and recognized a realized loss of $2.3 million included in other income, net in the consolidated statement of operations. Deferred Taxes The acquired deferred taxes of $14.5 million include a deferred tax asset of $39.7 million related to a federal net operating loss which the Company expects to utilize against income in future periods and a deferred tax asset of $16.4 million related to intangibles acquired by Derma Sciences in previous periods, offset by a deferred tax liability of $41.1 million for new intangibles for which the Company will not receive a tax benefit and deferred tax liability $0.5 million related to various deferred items. In the second quarter of 2017, the Company decreased the preliminary estimated value of the net deferred tax assets by $1.5 million to reflect adjustments to preliminary estimated fair values of assets and liabilities acquired. In fourth quarter of 2017, the Company decreased the preliminary value of the deferred tax asset by $3.3 million to reflect returns filed for periods prior to the acquisition date and adjustments for expected effective state tax rates. United States Food and Drug Administration ("FDA") Untitled Letter On June 22, 2015, the FDA issued an Untitled Letter (the "Untitled Letter") alleging that BioD morselized amniotic membrane based products do not meet the criteria for regulation as human cellular tissue-based products (“HCT/Ps”) solely under Section 361 of the Public Health Service Act and that, as a result, BioD would need a biologics license to lawfully market those morselized products. Since the issuance of the Untitled Letter, BioD and more recently, the Company have been in discussion with the FDA to communicate its disagreement with the FDA’s assertion that certain products are more than minimally manipulated. The FDA has not changed its position that certain of the BioD acquired products are not eligible for marketing solely under Section 361. In November 2017, the FDA issued the final guidance document related to human tissue titled, “Regulatory Considerations for Human Cells, Tissues, and Cellular and Tissue-Based Products: Minimal Manipulation and Homologous Use” (the “HCT/P Final Guidance”). The HCT/P Final Guidance maintains the FDA’s position that products such as the Company’s morselized amniotic membrane tissue based products do not meet the criteria for regulation solely as HCT/Ps. In addition, the FDA articulated a risk-based approach to enforcement and, while some uses for amniotic membrane tissue based products would enjoy as much as thirty-six months of enforcement discretion, other high risk uses could be subject to immediate enforcement action. The Company does not believe the uses for its amniotic membrane tissue based products fall into the high risk category. Nonetheless, we can make no assurances that the FDA will continue to exercise its enforcement discretion with respect to the Company’s amniotic membrane tissue based products, and any potential action of the FDA could have a financial impact regarding the sales of such products. Although the Company continues to disagree with the FDA’s position, the Company has been considering and continues to consider regulatory approval pathways for its amniotic membrane tissue based products. Revenues from BioD morselized amniotic material based products for the year ended December 31, 2017 were less than 1.0% of consolidated revenues. Contingent Consideration The Company assumed contingent consideration incurred by Derma Sciences related to its acquisitions of BioD and the intellectual property related to the Medihoney product. The Company accounted for the contingent liabilities by recording their fair value on the date of the acquisition based on a discounted cash-flow model. The contingent liabilities recognized as part of the Derma Sciences acquisition relate to the following:
At the date of the acquisition, net sales used in estimating the BioD Earnout Payments is based on the weighted average of different possible scenarios using revenue volatility of 13.5%. The BioD Earnout Payments were valued using a discount rate of 3.0%. The maximum payout related to the BioD Earnout Payments is $26.5 million. The estimated fair value as of February 24, 2017 was $9.1 million. In August 2017, the Company paid $4.8 million for the twelve-month period ending June 30, 2017 component of the BioD Earnout Payments. The Company recognized $4.0 million gain from change in estimated fair value, included in selling, general and administrative expenses, in the consolidated statement of operations for the year ended December 31, 2017. As of December 31, 2017, the estimated fair value of the remaining portion of the BioD Earnout Payments is $0.3 million. At the date of acquisition, the Company estimated that the probability of the Product Payment was 98.0% and valued it at a discount rate of 2.5%. The maximum payout related to the Product Payment is $29.7 million. The estimated fair value as of February 24, 2017 was $26.8 million. In the second quarter of 2017, the Company adjusted the preliminary estimated fair value to increase the Product Payment by $0.9 million related to additional products that should have been included in the preliminary estimate based on the Merger Agreement. On May 25, 2017, the Company made full payment for the Product Payment of $26.6 million. The payment was included in cash used in business acquisition, net of cash acquired within investing activities in the condensed consolidated statements of cash flows since the payment was made shortly after the acquisition. At the date of the acquisition, net sales used in estimating the Medihoney Earnout Payments is based on the weighted average of different possible scenarios using revenue volatility of 27.5%. The Medihoney Earnout Payments were valued using a discount rate of 4.5%. The maximum payout related to the Medihoney Earnout Payments is $5.0 million. The estimated fair value as of February 24, 2017 and December 31, 2017 was $1.4 million. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement. The contingent considerations are re-measured to fair value at each reporting date until the contingency is resolved, and those changes in fair value are recognized in earnings. Depending on the expected timing of the estimated payments, the acquisition date fair values and subsequent remeasurement could be different. Tekmed On December 15, 2015, the Company acquired the assets of Tekmed Instruments S.p.A ("Tekmed") for an aggregate purchase price of $14.1 million including a minimal amount of working capital and purchase adjustment which was recorded as an adjustment to assumed liabilities. Tekmed was a distributor of the Company's and third parties' products in Italy and focused on neurosurgery and neurotrauma, along with representation in plastic and reconstructive surgery, cardiovascular surgery, image diagnostics, general surgery, anesthesia and intensive care, interventional radiology, and proton therapy. This acquisition enables the Company to sell directly into the market support the Codman Specialty Surgical division's growth in Italy along with other key Integra franchises. The revenue and net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been integrated into the Company's operations. The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
Tornier's United States Toe & Ankle Business On October 2, 2015, the Company acquired the United States rights to Tornier's Salto Talaris® and Salto Talaris® XT ankle replacement products and Tornier's FuturaTM silastic toe replacement products (the "Salto and Futura") for $6.0 million in cash. Under the agreement, Integra acquired the U.S. rights to the Salto Talaris® Total Ankle Prosthesis, Salto Talaris® XT Revision Total Ankle Prosthesis, Futura™ Primus Flexible Great Toe system, Futura™ Classic Flexible Great Toe system, and Futura™ Lesser Metatarsal Phalangeal system. The agreement also includes an option to purchase, in the future, the rights to the Salto Talaris®, Salto Talaris® XT, Salto Mobile, and Futura™ silastic toe replacement products outside the United States. The estimated fair value of the net assets acquired exceeded the purchase price for the Salto and Futura product lines and resulted in the Company recording a gain of $1.1 million for the year-ended December 31, 2015 in other income. The acquired toe and ankle products enhances the Company's lower extremities product offering and accelerates its entry into the U.S. total ankle replacement market. The revenue and net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been integrated into the Company's operations. The following summarizes the allocation of the purchase price as based on the fair value of the assets acquired and liabilities assumed:
TEI On July 17, 2015, the Company executed the two merger agreements (collectively, the "Agreements") under which the Company acquired TEI Biosciences, Inc., a Delaware corporation ("TEI Bio"), and TEI Medical Inc., a Delaware corporation ("TEI Med", collectively "TEI") for an aggregate purchase price of approximately $312.2 million ($210.9 million for TEI Bio and $101.3 million for TEI Med) including a working capital adjustment of $0.2 million ($0.5 million for TEI Bio offset by $0.7 million cash received for TEI Med) which was recorded as a reduction from goodwill. The purchase price consisted of a cash payment to the former shareholders of TEI Bio and TEI Med of approximately $312.4 million upon the closing of the transaction, net of $1.2 million of acquired cash. The acquired assets included a contingent receivable with a fair value of $0.4 million at acquisition and will be paid to the Company if the sale of products used in breast surgery in the United States drops below $6.0 million in either 2016 or 2017. The fair value of this asset is based on future sales projections of the products under various potential scenarios and weighting the probability of these outcomes. At the date of the acquisition, the cash flow projection was discounted using an internal rate of return of 11.0%. These fair value measurements were based on significant inputs not observed in the market and thus represented a Level 3 measurement. In April 2017, the Company received from escrow $1.2 million related to the contingent consideration for 2016 calendar year. For the year ended December 31, 2017 and 2016, the Company recognized $1.6 million and $1.3 million gain, respectively, related to change in fair value of contingent receivable, included in selling, general and administrative expenses in the consolidated statements of operations. As of December 31, 2017, the fair value of this contingent receivable of $2.0 million is included in prepaid expenses and other current assets in the consolidated balance sheet. As of December 31, 2016, the $1.7 million balance of this contingent receivable is included in Prepaid expenses and other current assets and Other current assets of $1.2 million and $0.5 million, respectively. TEI Bio is in the business of developing and commercializing biologic devices for soft tissue repair and regenerative applications, including dura and hernia repair and plastic and reconstructive surgery. TEI Med holds a license to TEI Bio’s regenerative technology in the fields of wound healing and orthopedics. The revenue and net income or loss attributable to this acquisition cannot be identified on a stand-alone basis because it has been integrated into the Company's operations. The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
Pro Forma Results (unaudited) The following unaudited pro forma financial information summarizes the results of operations for the years ended December 31, 2017 and 2016 as if the acquisitions of Codman Neurosurgery, Derma Sciences and TGX Medical and Divestiture to Natus, which were completed by the Company during 2017 had been completed as of the beginning 2016. The pro forma results are based upon certain assumptions and estimates, and they give effect to actual operating results prior to the acquisitions and adjustments to reflect (i) the change in interest expense, depreciation expense, intangible asset amortization and fair value inventory step-up, (ii) timing of recognition for certain expenses that will not be recurring in the post-acquisition period, which includes $2.9 million incurred by Derma Sciences prior to acquisition and $24.9 million incurred by Integra, (iii) gain from the sale of business of $2.6 million related to the Divestiture to Natus, and (iv) income taxes at a rate consistent with the Company’s statutory rate at the date of the acquisitions. No effect has been given to other cost reductions or operating synergies. As a result, these pro forma results do not necessarily represent results that would have occurred if the acquisitions had taken place on the basis assumed above, nor are they indicative of the results of future combined operations.
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| DEBT | DEBT Amended and Restated Senior Credit Agreement On March 31, 2017, the Company entered into an amendment (the "March 2017 Amendment") to its fourth amended and restated Senior Credit Facility with a syndicate of lending banks with Bank of America, N.A., as Administrative Agent. The March 2017 Amendment increased the aggregate principal amount from $1.5 billion to $2.2 billion available to the Company through the following facilities:
In connection with the March 2017 Amendment, the Company’s maximum consolidated total leverage ratio in the financial covenants was increased to the following:
There was no change in the maturity date, which remains at December 7, 2021. Borrowings under the Senior Credit Facility bear interest, at the Company's option, at a rate equal to the following:
The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness less cash in excess of $40.0 million that is not subject to any restriction of the use or investment thereof to (b) consolidated EBITDA) at the time of the applicable borrowing. The Company will also pay an annual commitment fee (ranging from 0.15% to 0.35%), based on the Company’s consolidated total leverage ratio, on the amount available for borrowing under the revolving credit facility. The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets. The Senior Credit Facility is subject to various financial and negative covenants and at December 31, 2017 the Company was in compliance with all such covenants. The Company capitalized $19.1 million and $4.5 million of incremental financing costs in 2017 and 2016, respectively, in connection with the modifications of the Senior Credit Facility. The Company wrote-off previously capitalized financing cost of $0.5 million as interest expense in 2016 related to the modifications. No previously capitalized financing cost was written-off in 2017. In October 2017, to facilitate the completion of the Codman Acquisition, the Company drew $700.0 million from the Term Loan A-1 component of the Senior Credit Facility. The Company capitalized $19.1 million of incremental financing costs related to the drawing of Term A-1 component. At December 31, 2017 and 2016, there was $655.0 million and $165.0 million outstanding, respectively, under the revolving portion of the Senior Credit Facility at a weighted average interest rate of 3.7% and 2.2%, respectively. At December 31, 2017 and 2016 there was $500.0 million outstanding under the Term Loan A component of the Senior Credit Facility at a weighted average interest rate of 3.6% and 2.2%, respectively. At December 31, 2017, there was $700.0 million outstanding under the Term Loan A-1 component of the Senior Credit Facility at a weighted average interest rate of 3.6%. The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit facility, Term Loan A and Term Loan A-1 components at December 31, 2017 was approximately $661.0 million, $502.7 million and $703.7 million, respectively. These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company. These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy. Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities. Letters of credit outstanding as of December 31, 2017 and 2016 totaled $0.6 million and $0.5 million, respectively. There were no amounts drawn as of December 31, 2017. Contractual repayments of the Term A and Term A-1 components of Senior Credit Facility are due as follows:
The outstanding balance of revolving credit component of the Senior Credit Facility is due on December 7, 2021. 2016 Convertible Senior Notes On December 15, 2016, the Company extinguished its 2016 Convertible Notes by paying the remaining principal amount of $227.1 million and issued 2.9 million shares of common stock with fair a value of $122.0 million related to excess conversion value. No gain or loss on extinguishment was recognized as a result of the conversion. The Company also received 2.9 million shares of common stock from the exercise of call option with hedge participants with a fair value of $123.1 million at the date of the exercise. The shares of common stock received from exercise of the call option are held as treasury stock as of December 31, 2016 at a weighted average price of $41.78 for a total of $123.1 million. The 2016 Convertible Notes were issued on June 15, 2011 with the aggregate principal of $230.0 million and maturity date of December 15, 2016. The 2016 Convertible Notes bore interest at a rate of 1.625% per annum payable semi-annually in arrears on December 15 and June 15 of each year. The 2016 Convertible Notes were senior, unsecured obligations and were convertible into cash and, if applicable, shares of its common stock based on a conversion rate defined within the note agreement. In connection with the issuance of the 2016 Convertible Notes, the Company entered into call transactions and warrant transactions, primarily with the hedge participants. The initial strike price of the call transaction was approximately $28.72 per share, subject to customary anti-dilution adjustments. The initial strike price of the warrant transaction was approximately $35.03 per share, subject to customary anti-dilution adjustments. The strike price of the call transactions and warrant transactions has been adjusted similarly to the 2016 Convertible Notes as a result of the spin-off of the Company's spine business in July 2015 to $26.42 per share and $32.22 per share, respectively. The warrants expired on a series of expiration dates from March 2017 to August 2017. For the year ended December 31, 2017, the hedge participants exercised 8,707,202 warrants. As a result, the Company issued 2,839,743 shares of common stock for year ended December 31, 2017. The Company has no warrants outstanding as of December 31, 2017. Convertible Note Interest The interest expense components of the Company’s convertible notes are as follows:
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DERIVATIVE INSTRUMENTS |
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| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS Interest Rate Hedging The Company’s interest rate risk relates to U.S. dollar denominated variable interest rate borrowings. The Company uses interest rate swap derivative instruments to manage earnings and cash flow exposure resulting from changes in interest rates. These interest rate swaps apply a fixed interest rate on a portion of our expected LIBOR-indexed floating-rate borrowings. The Company held the following interest rate swaps as of December 31, 2017 (dollar amounts in thousands):
The Company designated these derivative instruments as cash flow hedges. The Company assess the effectiveness of these derivative instruments and recorded the change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in accumulated other comprehensive income (“AOCI”), net of tax, until the hedged item affected earnings, at which point the effective portion of any gain or loss was reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time. In 2017, the Company reclassified $0.1 million of pre-tax losses recorded as net in AOCI related to the interest rate hedges to earnings prior to the date of expiration. No gain or loss was reclassified to interest expense from AOCI in 2016. The Company expects that approximately $0.3 million of pre-tax income recorded in AOCI related to interest rate hedges could be reclassified to earnings in the next twelve months. Foreign Currency Hedging From time to time the Company enters into foreign currency hedge contracts intended to protect the U.S. dollar value of certain forecasted foreign currency denominated transactions. For contracts that are designated as a hedging instruments, the Company assess the effectiveness of the contracts. The change in fair value of foreign currency cash flow hedges are recorded in AOCI, net of tax, until the hedged item affects earnings. Once the related hedged item affects earnings, the Company reclassifies amounts recorded in AOCI to earnings. If the hedged forecasted transaction does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time. For contracts not designated as hedging instruments, the change in fair value of the contracts are recognized in other income (expense), net in the consolidated statements of operation, along with the offsetting foreign currency gain or loss on the underlying assets or liabilities. The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in foreign currencies. The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may affect its earnings and cash flows. On November 28, 2017, the Company entered into a foreign currency forward contract, with a notional amount of $8.9 million to mitigate the foreign currency exchange risk related to a certain intercompany loan denominated in Swiss Francs ("CHF"). The contract is not designated as a hedging instrument. The Company recognized $0.1 million gain from the change in fair value of the contract, which was included in other income (expense), net in the consolidated statement of operations. The fair value of the foreign currency forward contact was $0.1 million as of December 31, 2017. Cross-Currency Rate Swap On October 2, 2017, the Company entered into cross currency swap agreements to convert a notional amount of $300.0 million equivalent to 291.2 million of CHF denominated intercompany loans into U.S. dollars. The CHF denominated intercompany loans were the result of the purchase of intellectual property by a subsidiary in Switzerland as part of the Codman Acquisition. The objective of these cross-currency swaps is to reduce volatility of earnings and cash flows associated with changes in the foreign currency exchange rate. Under the terms of these contracts, which have been designated as cash flow hedges, the Company will make interest payments in Swiss Francs and receive interest in U.S. dollars. Upon the maturity of these contracts, the Company will pay the principal amount of the loans in Swiss Francs and receive U.S. dollars from the counterparties. The Company held the following cross-currency rate swaps as of December 31, 2017 (dollar amounts in thousands):
The cross-currency swaps were carried on the consolidated balance sheet at fair value, and changes in the fair values were recorded as unrealized gains or losses in AOCI. The Company recorded a gain of $1.1 million in other income, net related to change in fair value related to the foreign currency rate translation to offset the gains or losses recognized on the intercompany loan. For the year ended December 31, 2017, the Company recorded a loss of $2.1 million in AOCI related to change in fair value of the cross-currency swap and a gain of $1.9 million in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swap. The estimated gain that is expected to be reclassified to other income, net from AOCI as of December 31, 2017 within the next twelve months is $7.8 million. As of December 31, 2017, the Company does not expect any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur. Counterparty Credit Risk The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an ongoing basis. Therefore, the Company considers the credit risk of the counterparties to be low. Furthermore, none of the Company’s derivative transactions are subject to collateral or other security arrangements, and none contain provisions that depend upon the Company’s credit ratings from any credit rating agency. Fair Value of Derivative Instruments The Company has classified all of its derivative instruments within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of the derivative instruments. The fair values of the interest rate swaps and cross-currency swaps were developed using a market approach based on publicly available market yield curves and the terms of the swap. The Company performs ongoing assessments of counterparty credit risk. The following table summarizes the fair value and presentation in the consolidated balance sheet for derivatives designated as hedging instruments:
The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying consolidated statements of operations during the years ended December 31, 2017 and 2016:
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TREASURY STOCK |
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| Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract] | |
| TREASURY STOCK | TREASURY STOCK On October 25, 2016, the Board of Directors approved a resolution to retire approximately 17.8 million treasury stocks with an aggregate cost of $367.1 million and return such shares to authorized and unissued shares of common stock. These shares became available for issue on October 28, 2016. The effect of retiring these treasury stocks was recognized in Common stock and Additional paid-in capital. There was no effect on total stockholders’ equity as a result of retiring the treasury shares. On October 25, 2016, the Board of Directors terminated its October 2014 authorization for the repurchase of its outstanding common stock and authorized management to repurchase up to $150.0 million of its outstanding common stock through December 2018. Shares may be repurchased either in the open market or in privately negotiated transactions. As of December 31, 2017, there remained $150.0 million available for repurchases under this authorization. As part of the conversion of the 2016 Convertible Notes, the Company received 2.9 million shares of common stock from the exercise of call options with hedge participants. The shares of common stock received from exercise of the call options are held as treasury stock, and there were 2.9 million share of treasury stock outstanding as of December 31, 2017 and 2016, with cost of $121.6 million and $123.1 million, respectively, at a weighted average of $41.77 and $41.78 per share, respectively. There were no treasury stock repurchases under this authorization during the years ended December 31, 2017 and 2016. |
STOCK-BASED COMPENSATION |
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| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense - all related to employees and members of the Board of Directors - recognized under the authoritative guidance was as follows:
Estimated tax benefit related to stock-based compensation expense for the year ended December 31, 2017 does not include adjustments related to the effect of 2017 Tax Act. EMPLOYEE STOCK PURCHASE PLAN The purpose of the Employee Stock Purchase Plan (the “ESPP”) is to provide eligible employees of the Company with the opportunity to acquire shares of common stock at periodic intervals by means of accumulated payroll deductions. The ESPP is a non-compensatory plan. Under the ESPP, a total of 3.0 million shares of common stock are reserved for issuance. These shares will be made available either from the Company’s authorized but unissued shares of common stock or from shares of common stock reacquired by the Company as treasury stock. At December 31, 2017, 2.1 million shares remain available for purchase under the ESPP. During the years ended December 31, 2017, 2016 and 2015, the Company issued 12,168 shares, 12,494 shares and 12,040 shares under the ESPP for $0.6 million, $0.5 million and $0.4 million, respectively. EQUITY AWARD PLANS As of December 31, 2017, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under three plans, the 2000 Equity Incentive Plan (the “2000 Plan”), the 2001 Equity Incentive Plan (the “2001 Plan”), and the 2003 Equity Incentive Plan (the “2003 Plan,” and collectively, (the “Plans”)). In May 2010 and May 2017, the stockholders of the Company approved amendments to the 2003 Plan to increase by 3.5 million and 1.7 million, respectively, the number of shares of common stock that may be issued under the 2003 Plan. The Company has reserved 4.0 million shares under each of the 2000 Plan and the 2001 Plan, and 14.7 million shares under the 2003 Plan. The Plans permit the Company to grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, contract stock, performance stock, or dividend equivalent rights to designated directors, officers, employees and associates of the Company. Stock options issued under the Plans become exercisable over specified periods, generally within four years from the date of grant for officers and employees, and within one year from the date of the grant for members of the Board of Directors. The awards generally expire six years from the grant date for employees and from six to ten years for directors and certain executive officers. Restricted stock issued under the Plans vests ratably over specified periods, generally three years after the date of grant. In connection with the separation of SeaSpine on July 1, 2015 and in accordance with the Employee Matters Agreement, the Company made certain adjustments to the exercise price and number of share-based compensation awards with the intention of preserving the intrinsic value of the awards prior to the separation. Stock options issued in 2015 prior to the separation converted to those of the entity where the employee is working post-separation. Stock options issued prior to 2015 converted to both Integra and SeaSpine options such that the holders received stock options in both companies. The exercise price of these outstanding awards was adjusted to preserve the value of the awards immediately prior to the separation. Performance stock, restricted stock, and contract stock were adjusted for all employees holding outstanding awards to provide holders performance stock, restricted stock, and contract stock in the company that employs such employee following the separation. The adjustments to the Company's stock-based compensation awards resulted in an increase in incremental fair value of $4.4 million, of which $0.3 million, $0.7 million and $3.3 million was recorded during the year ended December 31, 2017, 2016 and 2015, respectively. The remaining $0.1 million will be recognized prospectively over the remaining term of outstanding awards, adjusted, as applicable, for forfeitures. Stock Options The Company values stock option grants using the binomial distribution model. Management believes that the binomial distribution model is preferable to the Black-Scholes model because it is a more flexible model that gives consideration to the impact of non-transferability and vesting provisions in valuing employee stock options. In determining the value of stock options granted, the Company considered that it has never paid cash dividends and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield. Expected volatilities are based on the historical volatility of the Company’s stock price. The expected life of stock options is estimated based on historical data on exercise of stock options, post-vesting forfeitures and other factors to estimate the expected term of the stock options granted. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected life of the options. The Company adopted ASU 2016-09 and elected to account for forfeitures as they occur. The following weighted-average assumptions were used in the calculation of fair value:
The following table summarizes the Company’s stock option activity.
The intrinsic value of options exercised for the years ended December 31, 2017, 2016 and 2015 were $16.2 million, $9.7 million and $5.8 million, respectively. The weighted average grant date fair value of options granted during the years ended December 31, 2017, 2016 and 2015 was $16.95, $12.48 and $8.59, respectively. Cash received from option exercises was $9.8 million, $10.5 million and $7.3 million, for the years ended December 31, 2017, 2016 and 2015, respectively. The realized tax benefit from options exercised were $6.2 million, $3.7 million and $2.2 million for the years ended December 31, 2017, 2016 and 2015, respectively. As of December 31, 2017, there was approximately $4.0 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately two years. Awards of Restricted Stock, Performance Stock and Contract Stock The following table summarizes the Company’s awards of restricted stock, performance stock and contract stock for the year ended December 31, 2017.
The Company recognized $18.5 million, $15.6 million and $10.2 million in expense related to such awards during the years ended December 31, 2017, 2016 and 2015, respectively. The total fair market value of shares vested and released in 2017, 2016 and 2015 was $22.2 million, $16.2 million and $19.9 million, respectively. Vested awards include shares that have been fully earned, but had not been delivered as of December 31, 2017. Performance stock awards have performance features associated with them. Performance stock, restricted stock and contract stock awards generally have requisite service periods of three years. The fair value of these awards is being expensed on a straight-line basis over the vesting period. As of December 31, 2017, there was approximately $16.9 million of total unrecognized compensation costs related to unvested restricted stock, performance stock and contract stock awards. These costs are expected to be recognized over a weighted-average period of approximately two years. At December 31, 2017, there are approximately 0.5 million vested Restricted Units and 0.2 million vested performance share units held by various employees for which the related shares have not yet been issued. The final determination of the number of shares to be issued in respect of an award based on achievement of pre-defined performance metrics is made by the Company's Compensation Committee of the Board of Directors. At December 31, 2017, there were approximately 3.4 million shares available for grant under the Plans. The Company capitalized into inventory, share based compensation costs of $0.5 million, $0.5 million and $0.3 million for the years ended December 31, 2017, 2016 and 2015, respectively. Such share based compensation was recognized as cost of goods sold when related inventory was sold. |
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RETIREMENT BENEFIT PLANS |
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| Retirement Benefits [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| RETIREMENT BENEFIT PLANS | RETIREMENT BENEFIT PLANS DEFINED BENEFIT PLANS The Company maintains a defined benefit pension plan that covers former employees in its manufacturing plant located in Tuttlingen, Germany (the “Germany Plan”). The Company closed the Tuttlingen, Germany plant in December 2005. The Company did not terminate the Germany Plan, and the Company remains obligated for the accrued pension benefits related to this plan. As part of the acquisition of Codman Neurosurgery, the Company assumed various defined benefit which covers certain employees acquired with Codman Neurosurgery in Austria, France, Japan, Germany and Switzerland. Net periodic benefit costs for the Company’s defined benefit pension plans for the year ended December 31, 2017 included the following amounts (amounts in thousand):
The following weighted average assumptions were used to develop net periodic pension benefit cost and the actuarial present value of projected pension benefit obligations for the year ended December 31, 2017:
The Company’s discount rates are determined by considering current yield curves representing high quality, long-term fixed income instruments. The resulting discount rates are consistent with the duration of plan liabilities. In 2017, the discount rate was prescribed as the current yield on corporate bonds with an average rating of AA or AAA of equivalent currency and term to the liabilities. The expected return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, the Company considers returns of historical market data as well as actual returns on the plan assets. Using this reference information, the long-term return expectations for each asset category are developed according to the allocation among those investment categories. The assessment is determined using projections from external financial sources, long-term historical averages, actual returns by asset class and the various asset class allocations by market. The following sets forth the change in projected benefit obligations and the change in plan assets for the years ended December 31, 2017 and a reconciliation of the funded status at December 31, 2017 (amounts in thousands):
The unfunded benefit obligation is included in other liabilities in the consolidated balance sheet at December 31, 2017. As of December 31, 2017, the Company has $0.4 million gain recognized within accumulated other comprehensive income (loss) that has not been recognized as component of net periodic cost. The combined accumulated benefit obligation for the defined benefit plans was $42.9 million as of December 31, 2017. Unrecognized gains and losses are amortized over the average remaining future service for each plan. For plans with no active employees, they are amortized over the average life expectancy. The amortization of gains and losses is determined by using a 10% corridor of the greater of the market value of assets or the accumulated benefit obligation. Total unamortized gains and losses in excess of the corridor are amortized over the average remaining future service. Prior service costs/benefits for the pension plans are amortized over the average remaining future service of plan participants at the time of the plan amendment. Prior service cost/benefit is amortized over the average remaining service to full eligibility age of plan participants at the time of the plan amendment. The net plan assets of the pension plans are invested in common trusts as of December 31, 2017. Common trusts are classified as Level 2 in fair value hierarchy. The fair value of common trusts is valued at net asset value based on the fair values of the underlying investments of the trusts as determined by the sponsor of the trusts. The investment strategy of the Company's defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk profile. The investment strategy for the Company’s defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk tolerances. The benefit plans in Austria, France and Germany had no assets at December 31, 2017. As of December 31, 2017, no plan assets are expected to be returned to the Company in the next twelve months. The following table is the summary of expected future benefit payments (in thousands):
As of December 31, 2017, contributions expected to be paid to the plan in 2018 is $1.8 million. In September 2015, the Company completed the buy-out of its defined benefit pension plan in the U.K. which covered certain employees and retirees. All plan assets of the defined benefit pension plan were transferred to an independent financial services firm and the Company made cash contributions of approximately $1.8 million for the year-ended December 31, 2015. The Company recorded expenses totaling approximately $5.6 million in selling, general and administrative costs in conjunction with the buy-out of the plan. The buy-out of the U.K. pension plan eliminated future obligations of the Company under this plan. DEFINED CONTRIBUTION PLANS The Company also has various defined contribution savings plans that cover substantially all employees in the United States, Belgium, Canada, France, Japan, Netherlands, the U.K. and Puerto Rico. The Company matches a certain percentage of each employee’s contributions as per the provisions of the plans. Total contributions by the Company to the plans were $7.2 million, $5.6 million and $3.7 million for the years ended December 31, 2017, 2016 and 2015, respectively. |
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LEASES AND RELATED PARTY LEASES |
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| LEASES AND RELATED PARTY LEASES | LEASES AND RELATED PARTY LEASES The Company leases administrative, manufacturing, research and distribution facilities and various manufacturing, office and transportation equipment through operating lease agreements. Future minimum lease payments under operating leases at December 31, 2017 were as follows:
Total rental expense for the years ended December 31, 2017, 2016 and 2015 and was $12.9 million, $10.3 million and $10.1 million, respectively, and included $0.3 million, in related party rental expense in each of the three years. There were no future minimum lease payments under capital leases at December 31, 2017. Related Party Leases Until December 27, 2016, the Company leased certain production equipment from a corporation whose sole stockholder is a general partnership, of which the Company’s principal owner and former Chairman and director is a partner and the President. Under the terms of the lease agreement, the Company pays $0.1 million per year to the related party lessor. Effective December 27, 2016, the Company purchased the production equipment for $0.4 million. The Company also leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50% owned by a corporation whose shareholders are trusts, whose beneficiaries include family members of the Company’s principal owner and former Chairman and director. The term of the current lease agreement is through October 31, 2032 at an annual rate of approximately $0.3 million per year. The current lease agreement also provides (i) a 5-year renewal option for the Company to extend the lease from November 1, 2032 through October 31, 2037 at the fair market rental rate of the premises, and (ii) another 5-year renewal option to extend the lease from November 1, 2037 through October 31, 2042 at the fair market rental rate of the premises. |
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INCOME TAXES |
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| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| INCOME TAXES | INCOME TAXES Income (Loss) before income taxes consisted of the following:
The 2017 Tax Act is making significant changes to the previous tax law. Included among the numerous changes are a reduction of the federal statutory rate from 35% to 21%, limitations on the deductibility of interest expense and executive compensation, and the elimination of certain domestic tax deductions such as the domestic production activities deduction. Additionally, the 2017 Tax Act imposes a one-time repatriation tax on accumulated foreign subsidiaries’ untaxed foreign earnings (the “Toll Tax”). The 2017 Tax Act implements a territorial tax system and includes base erosion provisions on non-U.S. earnings, which subjects certain foreign earnings to additional taxation as global intangible low-taxed income (“GILTI”). These provisions are effective on January 1, 2018. The Company has not completed its full analysis related to the GILTI provision within the 2017 Tax Act. The Company has not yet elected a policy as to whether it will recognize deferred taxes for basis difference expected to reverse as GILTI or whether the Company will account for GILTI as a period costs if and when incurred. Deferred tax assets and liabilities are measured at the enacted tax rate expected to apply when they are realized or settled. We recognized an estimated benefit of $43.4 million from the re-measurement of the Company’s net deferred tax liabilities at the reduced rate of 21%. The 2017 Tax Act eliminates the deferral of U.S. income tax on unrepatriated earnings from foreign subsidiaries through the imposition of the Toll Tax, a one-time tax in 2017 on deemed repatriated foreign earnings, which is paid over an eight-year period. The tax is assessed on the foreign subsidiary accumulated foreign earnings that were not previously taxed. Foreign earnings in cash and cash equivalents are taxed at 15.5% and all other earnings are taxed at 8.0%. The calculation of the Toll Tax allows for the ability to offset positive foreign earnings with existing foreign deficits and use of foreign tax credits. The Company prepared a reasonable estimate of this tax and expects to continue to refine the estimate as it finalizes its 2017 tax returns. As of December 31, 2017, we recorded an estimated income tax expense of $5.5 million related to the Toll Tax, of which, $0.4 million is expected to be paid within one year. On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Act. The Company has made reasonable estimates of the impact of the 2017 Tax Act on its consolidated financial statements and has recognized the provisional tax impacts related to deemed repatriated earnings and the revaluation of deferred tax assets and liabilities, as well as its indefinite reinvestment assertion. and included these amounts in its consolidated financial statements for the year ended December 31, 2017. The ultimate impact may differ from these provisional amounts, possibly materially, due to, among other things, additional analysis, changes in interpretations and assumptions the Company has made, additional regulatory guidance that may be issued, and actions the Company may take as a result of the 2017 Tax Act. The accounting is expected to be completed before filing the 2017 U.S. corporate income tax return in 2018. A reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows:
The effective tax rate decreased by 486.2% in 2017 compared with 2016 primarily from recording an income tax benefit of $43.4 million resulted from the reduction of the U.S. tax rate from 35% to 21%, offset by an expense of $5.5 million for the Toll Tax imposed on deemed repatriation of foreign untaxed earnings. In addition, the jurisdictional mix of income before tax in U.S.-based operations relative to foreign operations was a driver of a lower effective tax rate in 2017. The change in jurisdictional mix of income results primarily from significant acquisition and integrations costs incurred in the U.S. for the 2017 acquisitions of Derma Sciences and Codman Neurosurgery. During 2017, the Company's foreign operations generated a $1.2 million increase in income tax expense when compared with 2016, as a result of, among other factors, the geographic and business mix of taxable earnings and losses. The 2017 foreign effective tax rate is 15.7%, an increase of approximately 2.9% over the rate in 2016. The Company's foreign tax rate is primarily based upon statutory rates. The Company is negotiating a reduced corporate tax rate of 8% for the manufacturing operations in Switzerland. Once finalized, the negotiated rate will be available through 2024. During 2016, the Company's foreign operations generated a $0.8 million increase in income tax expense when compared with 2015, as a result of, among other factors, the geographic and business mix of taxable earnings and losses and the re-establishment of an income tax benefit in France for half of the year related to intercompany interest. The 2016 foreign effective tax rate is 12.7%, a decrease of approximately 2.1% over the rate in 2015. The Company's foreign tax rate is primarily based upon statutory tax rates and is not related to a tax holiday or negotiated tax rate. The provision for income taxes consisted of the following:
The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below:
The deferred tax assets and liabilities are measured based on the enacted tax rates that apply in years in which the temporary differences are expected to be realized or incurred. The Company re-measured its deferred tax assets and liabilities as a result of the 2017 Tax Act. The primary impact of this re-measurement was a decrease in the net deferred tax liability for the reduction of the U.S. statutory income tax rate from 35% to 21%. At December 31, 2017, the Company had net operating loss carryforwards of $148.2 million for federal income tax purposes, $26.4 million for foreign income tax purposes and $28.2 million for state income tax purposes to offset future taxable income. The federal net operating loss carryforwards expire through 2033, $1.0 million of the foreign net operating loss carryforwards expire through 2026 with the remaining $25.4 million having an indefinite carry forward period. The state net operating loss carryforwards expire through 2037. A valuation allowance of $8.0 million, $3.6 million and $4.9 million is recorded against the Company’s gross deferred tax assets of $96.5 million, $78.2 million, and $82.5 million recorded at December 31, 2017, 2016 and 2015, respectively. The valuation allowance relates to deferred tax assets for certain items that will be deductible for income tax purposes under very limited circumstances and for which the Company believes it is not more likely than not that it will realize the associated tax benefit. In the event that the Company determines that it would be able to realize more or less than the recorded amount of net deferred tax assets, an adjustment to the deferred tax asset valuation allowance would be recorded in the period such a determination is made. The Company’s valuation allowance increased by $4.4 million, and $1.3 million in 2017 and 2016, respectively. The 2017 overall increase in the valuation allowance was primarily due to establishing a valuation allowance against research credits as part of the acquisition of Derma Sciences. A reconciliation of the beginning and ending amount of uncertain tax benefits is as follows:
Approximately $0.4 million of the balance at December 31, 2017 relates to uncertain tax positions that, if recognized, would affect the annual effective tax rate. Included in the balance of uncertain tax positions at December 31, 2017 is less than $0.1 million related to tax positions for which it is reasonably possible that the total amounts could be reduced during the twelve months following December 31, 2017. The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. The Company recognized a minimal benefit for the years ended December 31, 2017, 2016 and 2015. The Company had minimal interest and penalties accrued for the years ended December 31, 2017 and 2016 and 2015. The Company files Federal income tax returns, as well as multiple state, local and foreign jurisdiction tax returns. The Company is no longer subject to examinations of its Federal income tax returns by the IRS through fiscal year 2013. All significant state and local matters have been concluded through fiscal 2012. All significant foreign matters have been settled through fiscal 2012. |
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NET INCOME (LOSS) PER SHARE |
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| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE Basic and diluted net income (loss) per share was as follows:
In connection with the separation of SeaSpine on July 1, 2015 and in accordance with the Employee Matters Agreement, the Company made certain adjustments to the exercise price and number of share-based compensation awards with the intention of preserving the intrinsic value of the awards prior to the separation. Stock options issued in 2015 prior to the separation converted to those of the entity where the employee is working post-separation. Stock options issued prior to 2015 converted to both Integra and SeaSpine options such that the holders received stock options in both companies. The exercise price of these outstanding awards was adjusted to preserve the value of the awards immediately prior to the separation. Performance stock, restricted stock, and contract stock were adjusted to provide holders performance stock, restricted stock, and contract stock in the company that employs such employee following the separation. The adjustments to the Company's stock-based compensation awards resulted in an increase in incremental fair value of $4.4 million, of which $0.3 million, $0.7 million and $3.3 million were recorded during the year-ended December 31, 2017, 2016 and 2015, respectively. The remaining $0.1 million will be recognized prospectively over the remaining term of outstanding awards, adjusted, as applicable, for forfeitures. Common stock of approximately 0.2 million shares at December 31, 2017, 2016 and 2015, that are issuable through exercise of dilutive securities were not included in the computation of diluted net income per share because their effect would have been anti-dilutive. For the year-ended December 31, 2015 and for the period from January 1, 2016 to December 15, 2016, the date of 2016 Convertible Notes settlement, the potential excess conversion value on the 2016 Convertible Notes was included in the Company's dilutive share calculation because the average stock price for period outstanding exceeded the conversion price. On December 15, 2016, the Company settled the 2016 Convertible Notes and issued 2.9 million shares of common stock related to the conversion premium of 2016 Convertible Notes. The Company also exercised the call option with hedge participants and received 2.9 million shares of common stock. See Note 5 for additional information related to our 2016 Convertible Notes. The Company also had warrants outstanding related to its 2016 Convertible Notes for the year ended 2016 and 2015 and the Company's 2016 Convertible Notes are convertible to common shares in certain circumstances (see Note 5). These warrants and the excess conversion value of the 2016 Convertible Notes are included in the diluted earnings per share calculation using the treasury stock method, unless the effect of including such items would be anti-dilutive. For the years ended December 31, 2017 and 2016, the potential excess conversion value on the 2016 Notes were included in the Company's dilutive share calculation because the average stock price for the years ended December 31, 2017 and 2016 exceeded the conversion price. Performance Shares and Restricted Units that entitle the holders to approximately 0.5 million shares of common stock are included in the basic and diluted weighted average shares outstanding calculation from their date of issuance because no further consideration is due related to the issuance of the underlying common shares. |
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
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| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in accumulated other comprehensive income (loss) by component between December 31, 2017 and 2016 are presented in the table below, net of tax:
For the year ended December 31, 2017, income tax expense related to comprehensive losses from cash flow hedges was $2.3 million and a minimal amount related to benefit pension items. |
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COMMITMENTS AND CONTINGENCIES |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES In consideration for certain technology, manufacturing, distribution, and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on sales of certain products that it sells. The royalty payments that the Company made under these agreements were not significant for any of the periods presented. The Company is subject to various claims, lawsuits and proceedings in the ordinary course of the Company's business, including claims by current or former employees, distributors and competitors and with respect to its products and product liability claims, lawsuits and proceedings, some of which have been settled by the Company. In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies. TEI, acquired by Integra on July 17, 2015, manufactures a bovine-derived surgical mesh product for Boston Scientific Corporation ("BSC”) and has been named as a defendant in lawsuits under a broad range of products liability theories, many of which have not been served on TEI. As of December 31, 2017, only ten active cases remained against TEI. Pursuant to an indemnification agreement with BSC (i) BSC is managing the litigation; (ii) TEI has in place a products liability insurance policy, of which it must exhaust $3.0 million before BSC’s indemnity begins to cover relevant claims (and of which only a small portion has been utilized to date and against which the insurer has reserved the entire $3.0 million). Because the thrust of products liability litigation focuses on synthetic surgical mesh products, counsel is filing motions to dismiss on behalf of TEI in many cases. In addition, Integra has certain protections in the merger agreements with TEI which would indemnify it for approximately $30.0 million for the first fifteen months after closing and between $20.0 and $30.0 million for the remainder of the three-year period after closing for losses relating to a variety of matters, including half of certain products liability claims (including those related to the product it manufactures for BSC) not covered by insurance. As of March 1, 2018, no indemnification payments were received nor owed in relation to the lawsuits. The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds, and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. The Company consistently accrues legal fees expected to be incurred in connection with loss contingencies as those fees are incurred by outside counsel as a period cost. Contingent Consideration The Company determined the fair value of contingent consideration during the twelve-month period ended December 31, 2017 and 2016 to reflect the change in estimate, additions, payments, transfers and the time value of money during the period. A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the year ended December 31, 2017 and 2016 is as follows (in thousands):
On January 15, 2014, the Company acquired all outstanding shares of Confluent Surgical, Inc., ("Confluent Surgical"). The purchase price includes contingent consideration. The potential maximum undiscounted contingent consideration of $30.0 million consists of $25.0 million upon obtaining certain U.S. governmental approvals and $5.0 million upon obtaining certain European governmental approvals, both related to the completion of the transition of the Confluent Surgical business. The fair values of contingent consideration related to the acquisition of Confluent Surgical were estimated using a discounted cash flow model using discount rate of 2.2%. The Company expects to receive the U.S. and European governmental approvals and pay the related contingent consideration in 2018. The Company assesses these assumptions on an ongoing basis as additional information affecting the assumptions is obtained. The contingent consideration balance was included in accrued expenses and other current liabilities and other liabilities at December 31, 2017 and in other liabilities at December 31, 2016. Supply Agreement Liability and Above Market Supply Agreement Liability On January 15, 2014, the Company entered into a transitional supply agreement with Covidien Group S.a.r.l ("Covidien"). This agreement contains financial incentives to Covidien for the timely supply of products each fiscal quarter through the third anniversary of the agreement. The prices paid under the supply agreement are essentially flat through the third anniversary of the agreement, and then increase significantly in each of the following three years. The Company determined the fair value of its supply agreement liability and above market supply agreement liability with Covidien for the year ended December 31, 2017 and 2016 to reflect the payments, change in estimate and the time value of money during the period. A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands):
The fair values of supply agreement liability and above market supply agreement liability were estimated using a discounted cash flow model using discount rate of 12.0%. The Company assesses the assumptions on an ongoing basis as additional information impacting assumptions is obtained. The supply agreement liability - short-term and above market supply agreement liability - short-term were included in accrued expenses and other current liabilities and the supply agreement - long term and above market supply agreement liability - long-term were included in other liabilities in the consolidated balance sheets. There were no transfers between Level 1, 2 or 3 during 2017 or 2016. If the Company's estimates regarding the fair value of its contingent consideration, supply agreement liability and above market supply agreement liability are inaccurate, a future adjustment to these estimated fair values may be required which could change significantly. BioD On April 7, 2017, the Company's indirect wholly-owned subsidiary, BioD filed an action in the Superior Court of New Jersey, Chancery Division, Middlesex County seeking a declaration that the resignation of Russell Olsen, the former CEO of BioD, was “for Good Reason” (as defined in Olsen’s employment agreement); a finding that Olsen breached the implied covenant of good faith and fair dealing, committed legal fraud, equitable fraud and negligent misrepresentation; and an award of damages for such actions, including a return of severance fees paid to Olsen. BioD was acquired in August 2016 by Derma Sciences, which Integra subsequently acquired in February 2017. After receiving a job offer from Integra that Olsen believed materially diminished his title and authority, on February 24, 2017 Olsen indicated his intention to terminate his position with BioD for Good Reason, as otherwise permitted by his employment agreement with BioD. Shortly thereafter, Cynthia Weatherly (as representative of the former equity owners of BioD) claimed in a letter to Derma Sciences that Olsen’s resignation was a “termination Without Cause” (as also defined in Olsen’s employment agreement), which would arguably trigger an acceleration of the earn out under a merger agreement between Derma Sciences, BioD and other parties (the "BioD Merger Agreement"), which was entered into in July 2016, and require as a result of the acceleration the payment of $26.5 million by BioD. As previously disclosed and described in Note 4 - Business Acquisition, to the Company's consolidated financial statements for the year ended December 31, 2017, Integra assumed this contingent liability in connection with its acquisition of Derma Sciences. The action for a declaratory judgment was filed to clarify that Olsen’s termination was for Good Reason and not Without Cause. If the employment agreement was terminated for Good Reason, then the Company believes that the earn out provision under the BioD Merger Agreement should not be accelerated and the likelihood of loss is remote. |
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SEGMENT AND GEOGRAPHIC INFORMATION |
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| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION In the first quarter of 2015, the Company began to disclose three global reportable segments as a result of changes in how the Company internally manages and reports the results of its businesses to its chief operating decision maker. On July 1, 2015, the Company completed the separation of its spine business, which was a reportable segment. See Note 3 - Discontinued Operations for additional information. Following the separation, the Company is disclosing two reportable segments. In October 2017, as part of our branding strategy, the Company leveraged the globally recognized Codman name by rebranding the Specialty Surgical Solutions segment to Codman Specialty Surgical. The two reportable segments and their activities are described below:
The Corporate and other category includes (i) various legal, finance, information systems, executive, and human resource functions, (ii) brand management, and (iii) share-based compensation costs. Prior to the realignment, costs related to procurement, manufacturing operations and logistics for the Company's entire organization were not allocated to operating segments. In connection with the realignment, a portion of these costs have now been incorporated into the disclosed operating segments. The operating results of the various reportable segments as presented are not comparable to one another because (i) certain operating segments are more dependent than others on corporate functions for unallocated general and administrative and/or operational manufacturing functions, and (ii) the Company does not allocate certain manufacturing costs and general and administrative costs to the operating segment results. Net sales and profit by reportable segment for the years ended December 31, 2017, 2016 and 2015 are as follows:
The Company does not allocate any assets to the reportable segments, and, therefore, no asset information is reported to the chief operating decision maker and disclosed in the financial information for each segment. The Company attributes revenue to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments above that are generated from non-U.S. customers and therefore included in Europe and the Rest of World revenues below. Total revenue, net and long-lived assets (tangible) by major geographic area are summarized below:
* Includes long-lived assets in Puerto Rico. |
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SELECTED QUARTERLY INFORMATION - UNAUDITED |
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| Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SELECTED QUARTERLY INFORMATION - UNAUDITED | SELECTED QUARTERLY INFORMATION - UNAUDITED
(1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing shares of its common stock during the year. (2) The net income for first quarter of 2016 was adjusted to reflect the effect of the adoption of ASU 2016-09 in second quarter of 2016 of $1.8 million. The earning per share were also restated to reflect the adoption of ASU 2016-09. (3) The net income for the fourth quarter of 2017 includes gain on sale of business of $2.6 million related to Divestiture to Natus. (4) The net income for the fourth quarter of 2017 includes benefit from income taxes of $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 2017 Tax Act (see Note 11, Income Taxes). |
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS |
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| Valuation and Qualifying Accounts [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basis Of Presentation | BASIS OF PRESENTATION These financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America and conform to Regulation S-X under the Securities Exchange Act of 1934, as amended. |
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| Principles Of Consolidation | PRINCIPLES OF CONSOLIDATION The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All intercompany accounts and transactions are eliminated in consolidation. See Note 4, Acquisitions and Pro Forma Results, for details of new subsidiaries included in the consolidation. On July 1, 2015, the Company completed the distribution of 100% of the outstanding common shares of SeaSpine Holdings Corporation ("SeaSpine") to Integra shareholders who received one share of SeaSpine common stock for every three shares, on a pre-split basis, of Integra common stock held as of the close of business on the record date, June 19, 2015. The Company has classified the results of operations, cash flows, and related assets and liabilities of SeaSpine as discontinued operations for all periods presented in the Company's consolidated financial statements. Unless indicated otherwise, the information in the Notes to the consolidated financial statements relates to the Company's continuing operations. Refer to Note 3, Discontinued Operations, for additional information regarding the distribution. |
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| Use Of Estimates | USE OF ESTIMATES The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, valuation of intangible assets and in-process research and development ("IPR&D"), amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets and goodwill, estimates of projected cash flows, depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation, valuation of pension assets and liabilities, valuation of derivative instruments, valuation of the equity component of convertible debt instruments, and valuation of debt instruments and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates. |
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| Reclassifications | RECLASSIFICATIONS Certain amounts from the prior year's financial statements have been reclassified in order to conform to the current year's presentation. |
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| Cash And Cash Equivalents | CASH AND CASH EQUIVALENTS The Company considers all short-term, highly liquid investments purchased with original maturities of three months or less to be cash equivalents. These investments are carried at cost, which approximates fair value. |
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| Trade Accounts Receivable And Allowances For Doubtful Accounts Receivable | TRADE ACCOUNTS RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS RECEIVABLE Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company's historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. |
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| Inventories | INVENTORIES Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or net realizable value. Inventories consisted of the following:
At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management's judgment of probable economic benefit. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. |
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| Property, Plant And Equipment | PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at historical cost less accumulated depreciation and any impairment charges. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred. The cost of computer software developed or obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software. |
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| Capitalized Interest | CAPITALIZED INTEREST The interest cost on capital projects, including facilities build-out and internal use software, is capitalized and included in the cost of the project. Capitalization commences with the first expenditure for the project and continues until the project is substantially complete and ready for its intended use. When no debt is incurred specifically for a project, interest is capitalized on project expenditures using the weighted average cost of the Company's outstanding borrowings. |
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| Acquisitions | ACQUISITIONS Results of operations of acquired companies are included in the Company’s results of operations as of the respective acquisition dates. The purchase price of each acquisition is allocated to the net assets acquired based on estimates of their fair values at the date of the acquisition. Any purchase price in excess of these net assets is recorded as goodwill. The allocation of purchase price in certain cases may be subject to revision based on the final determination of fair values during the measurement period, which may be up to one year from the acquisition date. Contingent consideration is recognized at the estimated fair value on the acquisition date. Subsequent changes to the fair value of contingent payments are recognized in selling, general and administrative expense in consolidated statements of operations. Contingent payments related to acquisitions consist of development, regulatory, and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques. The fair value of development, regulatory, and commercial milestone payments reflects management’s expectations of probability of payment, and increases or decreases as the probability of payment or expectation of timing of payments changes. The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payments changes. |
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| Goodwill And Other Intangible Assets | GOODWILL AND OTHER INTANGIBLE ASSETS The excess of the cost over the fair value of net assets of acquired businesses is recorded as goodwill. Goodwill is not subject to amortization, but is reviewed for impairment at the reporting unit level annually, or more frequently if impairment indicators arise. The Company's assessment of the recoverability of goodwill is based upon a comparison of the carrying value of goodwill with its estimated fair value. The Company reviews goodwill for impairment annually as of July 31 and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. In October 2017, as part of the Company's branding strategy, the Company adopted the Codman name by rebranding the Specialty Surgical Solutions segment to Codman Specialty Surgical. The change in name does not have an effect on our reportable segments or reporting units. The Company has two reportable segments with three underlying reporting units: Instruments and Neurosurgery, under Codman Specialty Surgical and Orthopedics and Tissue Technologies. Refer to Note 13 - Segment and Geographic Information for more information on reportable segments. The Company estimated the fair value of the three reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following:
Given the excess of the Instruments, Neurosurgery and Orthopedics and Tissue Technologies estimated fair values over their carrying values after the reallocation of goodwill, no impairment was recognized. The Company elected to early adopt ASU 2017-4, Simplifying the Test for Goodwill Impairment, effective January 1, 2017. The Company performed its annual goodwill impairment test as of July 31, 2017. In reviewing goodwill for impairment, the Company has the option - for any or all of its reporting units that carry goodwill - to first assess qualitative factors to determine whether the existence of events or circumstances leads to a determination that it is more likely than not (i.e. greater than 50%) that the estimated fair value of a reporting unit is less than its carrying amount. If the Company elects to perform a qualitative assessment and determines that an impairment is more likely than not, the Company is then required to perform the quantitative impairment test, otherwise no further analysis is required. The Company also may elect not to perform the qualitative assessment and, instead, proceed directly to quantitative impairment test. The ultimate outcome of the goodwill impairment review for a reporting unit should be the same whether the Company chooses to perform the qualitative assessment or proceeds directly to the quantitative impairment test. The Company elected to perform a qualitative analysis for its three reporting units as of July 31, 2017. The Company determined, after performing qualitative analysis, that there was no evidence that it is more likely than not that the fair value of any identified reporting unit was less that the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test. Changes in the carrying amount of goodwill in 2017 and 2016 were as follows:
When the Company acquires a business, the assets acquired, including IPR&D, and liabilities assumed are recorded at their respective fair values as of the acquisition date. The Company's policy defines IPR&D as the fair value of those projects for which the related products have not received regulatory approval and have no alternative future use. Determining the fair value of intangible assets, including IPR&D, acquired as part of a business combination requires the Company to make significant estimates. These estimates include the amount and timing of projected future cash flows, the discount rate used to discount those cash flows to present value, the assessment of the asset’s life cycle, and the consideration of legal, technical, regulatory, economic, and competitive risks. The fair value assigned to other intangible assets, including IPR&D, is determined by estimating the future cash flows of each project or technology and discounting the net cash flows back to their present values. The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies. IPR&D acquired in a business combination is capitalized as an indefinite-lived intangible asset. Development costs incurred after the acquisition are expensed as incurred. Upon receipt of regulatory approval, the indefinite-lived intangible asset is then accounted for as a finite-lived intangible asset and amortized on a straight-line basis or accelerated basis, as appropriate, over its estimated useful life. If the research and debt project is subsequently abandoned, the indefinite-lived intangible asset is charged to expense. IPR&D acquired outside of a business combination is expensed immediately. Due to the uncertainty associated with research and development projects, there is risk that actual results will differ materially from the original cash flow projections and that the research and development project will result in a successful commercial product. The risks associated with achieving commercialization include, but are not limited to, delay or failure to obtain regulatory approvals to conduct clinical trials, delay or failure to obtain required market clearances, delays or issues with patent issuance, or validity and litigation. Other intangible assets include patents, trademarks, purchased technology, and supplier and customer relationships. Identifiable intangible assets are initially recorded at fair market value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives. The components of the Company's identifiable intangible assets were as follows:
The Company performs its assessment of the recoverability of indefinite-lived intangible assets annually during the third quarter, or more frequently as impairment indicators arise, and it is based upon a comparison of the carrying value of such assets to their estimated fair values. |
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| Long-Lived Assets | LONG-LIVED ASSETS Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets. |
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| Integra Foundation | INTEGRA FOUNDATION The Company may periodically make contributions to the Integra Foundation, Inc. The Integra Foundation was incorporated in 2002 exclusively for charitable, educational, and scientific purposes and qualifies under IRC 501(c)(3) as an exempt private foundation. Under its charter, the Integra Foundation engages in activities that promote health, the diagnosis and treatment of disease, and the development of medical science through grants, contributions and other appropriate means. The Integra Foundation is a separate legal entity and is not a subsidiary of the Company; therefore, its results are not included in these consolidated financial statements. |
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| Derivatives | DERIVATIVES The Company develops, manufactures, and sells medical devices globally, and its earnings and cash flows are exposed to market risk from changes in interest rates and currency exchange rates. The Company addresses these risks through a risk management program that includes the use of derivative financial instruments, and operates the program pursuant to documented corporate risk management policies. All derivative financial instruments are recognized in the financial statements at fair value in accordance with the authoritative guidance. Under the guidance, for those instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation, based on the exposure being hedged. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. The Company's derivative instruments do not subject its earnings or cash flows to material risk, and gains and losses on these derivatives generally offset losses and gains on the item being hedged. The Company has not entered into derivative transactions for speculative purposes and from time to time, the Company may enter into derivatives that are not designated as hedging instruments in order to protect itself from currency volatility due to intercompany balances. All derivative instruments are recognized at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its derivative instruments, using the framework prescribed by the authoritative guidance, by considering the estimated amount the Company would receive to sell or transfer these instruments at the reporting date and by taking into account: expected forward interest rates, currency exchange rates, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company utilizes a discounted cash flow model to measure fair value. Generally, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets, other observable inputs for the asset or liability and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The Company has classified all of its derivative assets and liabilities within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of its derivative instruments. The Company classifies derivatives designated as hedges in the same category as the item being hedged for cash flow presentation purposes. The Company also has entered into an foreign currency forward contract that is not designated as a hedging instrument for accounting purposes. This contract is recorded at fair value, with the changes in fair value recognized into other income, net on the consolidated financial statements. |
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| Foreign Currency | FOREIGN CURRENCY All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. |
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| Income Taxes | INCOME TAXES Income taxes are accounted for by using the asset and liability method. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted. The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. Reserves are established for positions that don't meet this recognition threshold. The reserve is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. These reserves are classified as long-term liabilities in the consolidated balance sheets of the Company, unless the reserves are expected to be paid in cash during the next twelve months, in which case they are classified as current liabilities. The Company also records interest and penalties accrued in relation to uncertain tax benefits as a component of income tax expense. While the Company believes it has identified all reasonably identifiable exposures and the reserve it has established for identifiable exposures is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause the Company to either materially increase or reduce the carrying amount of its tax reserve. The Company continues to indefinitely reinvest substantially all of its foreign earnings. The current provisional analysis indicates that the Company has sufficient U.S. liquidity, including borrowing capacity, to fund foreseeable U.S. cash needs without requiring the repatriation of foreign cash. |
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| Revenue Recognition | REVENUE RECOGNITION Total revenues, net, include product sales, product royalties and other revenues, such as fees received under research, licensing, distribution arrangements, research grants, and technology-related royalties. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred; title and risk of loss have passed to the customer, there is a fixed or determinable sales price, and collectability of that sales price is reasonably assured. For product sales, the Company's stated terms are primarily FOB shipping point and with most customers, title and risk of loss pass to the customer at that time. With certain United States customers, the Company retains risk of loss until the customers receive the product, and in those situations, the Company recognizes revenue upon receipt by the customer. A portion of the Company's product revenue is generated from consigned inventory maintained at hospitals and distributors, and also from inventory physically held by field sales representatives. For these types of products sales, the Company retains title until receiving appropriate notification that the product has been used or implanted, at which time revenue is recognized. Each revenue transaction is evidenced by either a contract with the customer or a valid purchase order and an invoice which includes all relevant terms of sale. There are generally no significant customer acceptance or other conditions that prevent the Company from recognizing revenue in accordance with its delivery terms. In certain cases, where the Company has performance obligations that are significant to the functionality of the product, the Company recognizes revenue upon fulfillment of its obligation. Sales invoices issued to customers contain the Company's price for each product or service. The Company performs a review of each specific customer's credit worthiness and ability to pay prior to accepting them as a customer. Further, the Company performs periodic reviews of its customers' status prospectively. The Company records a provision for estimated returns and allowances on revenues in the same period as the related revenues are recorded. These estimates are based on historical sales returns and discounts and other known factors. The provisions are recorded as a reduction to revenues. The Company's return policy, as set forth in its product catalogs and sales invoices, requires the Company to review and authorize the return of product in advance. Upon authorization, a credit will be issued for goods returned within a set amount of days from shipment, which is generally ninety days. Product royalties are estimated and recognized in the same period that the royalty-based products are sold by the Company's strategic partners. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant. Other operating revenues may include fees received under research, licensing, and distribution arrangements, technology-related royalties and research grants. Non-refundable fees received under research, licensing and distribution arrangements or for the licensing of technology are recognized as revenue when received if the Company has no continuing obligations to the other party. For those arrangements where the Company has continuing performance obligations, revenue is recognized using the lesser of the amount of non-refundable cash received or the result achieved using the proportional performance method of accounting based upon the estimated cost to complete these obligations. Research grant revenue is recognized when the related expenses are incurred. |
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| Shipping And Handling Fees And Costs | SHIPPING AND HANDLING FEES AND COSTS Amounts billed to customers for shipping and handling are included in revenues. The related shipping and freight charges incurred by the Company are included in cost of goods sold. |
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| Product Warranties | PRODUCT WARRANTIES Certain of the Company's medical devices, including monitoring systems and neurosurgical systems, are reusable and are designed to operate over long periods of time. These products are sold with warranties which may extend for up to two years from date of purchase. The Company accrues estimated product warranty costs at the time of sale based on historical experience. Any additional amounts are recorded when such costs are probable and can be reasonably estimated. |
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| Research And Development | RESEARCH AND DEVELOPMENT Research and development costs, including salaries, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred. |
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| Employee Termination Benefits And Other Exit-Related Costs | EMPLOYEE TERMINATION BENEFITS AND OTHER EXIT-RELATED COSTS The Company does not have a written severance plan, and it does not offer similar termination benefits to affected employees in all restructuring initiatives. Accordingly, in situations where minimum statutory termination benefits must be paid to the affected employees, the Company records employee severance costs associated with these restructuring activities in accordance with the authoritative guidance for non-retirement post-employment benefits. Charges associated with these activities are recorded when the payment of benefits is probable and can be reasonably estimated. In all other situations where the Company pays out termination benefits, including supplemental benefits paid in excess of statutory minimum amounts and benefits offered to affected employees based on management's discretion, the Company records these termination costs in accordance with the authoritative guidance for ASC Topic 712 Compensation-Nonretirement Benefits and ASC Topic 420 One-time Employee Termination Benefits. The timing of the recognition of charges for employee severance costs other than minimum statutory benefits depends on whether the affected employees are required to render service beyond their legal notification period in order to receive the benefits. If affected employees are required to render service beyond their legal notification period, charges are recognized over the future service period. Otherwise, charges are recognized when management has approved a specific plan and employee communication requirements have been met. For leased facilities and equipment that have been abandoned, the Company records estimated lease losses based on the fair value of the lease liability, as measured by the present value of future lease payments subsequent to abandonment, less the present value of any estimated sublease income on the cease-use date. For owned facilities and equipment that will be disposed of, the Company records impairment losses based on fair value less costs to sell. The Company also reviews the remaining useful life of long-lived assets following a decision to exit a facility and may accelerate depreciation or amortization of these assets, as appropriate. |
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| Amendment to the Certificate of Incorporation and Stock Split | AMENDMENT TO THE CERTIFICATE OF INCORPORATION AND STOCK SPLIT On October 25, 2016, the Board of Directors recommended, subject to stockholder approval, an Amendment to the Company’s Certificate of Incorporation (the “Amendment”) to increase the number of authorized shares of common stock from 60.0 million shares to 240.0 million shares with $0.01 per share par value, for the purpose of, among other things, affecting a two-for-one stock split. The Stockholders approved the amendment on its special Stockholders Meeting on December 21, 2016 and the Company filed a certificate of amendment to the amended and restated certificate of incorporation to effect the increase in authorized share of common stock and the two-for-one-stock split. Stockholders of record, as of the close of markets on December 21, 2016, became entitled to receive one additional share of common stock for each share held. The shares were distributed on January 3, 2017. No fractional shares of common stock were issued as a result of the two-for-one stock split. The adjusted stock price was reflected on the NASDAQ stock market on January 4, 2017. The shares of common stock retained a par value of $0.01 per share. Accordingly, the stockholders' equity reflects the stock split by reclassifying from "Additional paid-in capital" to "Common stock" in an amount equal to the par value of the increased shares resulting from the stock split. All share and per share amounts of common stock contained in the Company's financial statements have been restated for all periods to give retroactive effect to the stock split. |
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| Stock-Based Compensation | STOCK-BASED COMPENSATION The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Stock-based compensation expense for stock option awards granted after January 1, 2006 was based on the fair value on the grant date using the binomial distribution model. The Company recognizes compensation expense for stock option awards, restricted stock awards, performance stock awards and contract stock awards over the requisite service period of the award. All excess tax benefits and taxes and tax deficiencies from stock-based compensation are included in provision for income taxes in the consolidated statement of operations. |
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| Pension Benefits | PENSION BENEFITS A defined benefit pension plan covers former employees in Germany. Various factors are considered in determining the pension liability, including the number of employees expected to be paid their salary levels and years of service, the expected return on plan assets, the discount rate used to determine the benefit obligations, the timing of benefit payments and other actuarial assumptions. If the actual results and events for the pension plans differ from current assumptions, the benefit obligation may be over or under valued. The Company acquired several funded and unfunded non-U.S. defined benefit pension plans as part of Codman Neurosurgery acquisition. The Company recognizes the underfunded status of the defined benefit pension plans as an asset or a liability in the balance sheet, with changes in the funded status recorded through other comprehensive income in the year in which those changes occur. Retirement benefit plan assumptions are reassessed on an annual basis or more frequently if changes in circumstances indicate a re-evaluation of assumptions are required. The key benefit plan assumptions are the discount rate and expected rate of return on plan assets. The discount rate is based on average rates on bonds that matched the expected cash outflows of the benefit plans. The expected rate of return is based on historical and expected returns on the various categories of plan assets. In September 2015, the Company completed the buy-out of its defined benefit pension plan in the United Kingdom (the "U.K.") which covered certain employees and retirees. All plan assets of the defined benefit pension plan were transferred to an independent financial services firm and the Company made cash contributions of approximately $1.8 million for the year-ended December 31, 2015. The Company recorded expenses totaling approximately $5.6 million in selling, general and administrative costs in conjunction with the buy-out of the plan. The buy-out of the U.K. pension plan eliminated future obligations of the Company under this plan. Total contributions to the defined benefit plans were $0.5 million and $2.2 million during the years ended December 31, 2017 and 2015. There were no contributions to the defined benefit plans for the year ended December 31, 2016. The Company use the corridor approach in measuring the amount of net periodic benefit pension cost to recognize each period. The corridor approach defers all actuarial gains and losses resulting from variances between actual results and actuarial assumptions. Those unrecognized gains and losses are amortized when the net gains and losses exceed 10% of the greater of the market-related value of plan assets or the projected benefit obligation at the beginning of the year. The amount in excess of the corridor is amortized over the average remaining service period to retirement date of active plan participants. |
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| Concentration Of Credit Risk | CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents, which are held at major financial institutions, investment-grade marketable debt securities and trade receivables. The Company's products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer. A portion of the Company's trade receivables to customers outside the United States includes sales to foreign distributors, who then sell to government owned or supported healthcare systems. |
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| Recently Issued and Adopted Accounting Standards | RECENTLY ISSUED AND ADOPTED ACCOUNTING STANDARDS In May 2014, the FASB issued Update No. 2014-09, Revenue from Contracts with Customers (Topic 606). The core principle of the guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, an entity should: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. This update will become effective for all annual periods and interim reporting period beginning after December 15, 2017. Early adoption as of January 1, 2017 is permitted. The Company will adopt this standard on January 1, 2018. The Company expects to apply the modified retrospective method. Based on preliminary results of the Company's assessment of the impact, the Company does not expect the adoption of ASU 2014-09 to have a material impact on the consolidated financial statements. The impact will primarily relate to: (i) the timing of recognition for goods in transit, in which control has been transferred to customers at the time of shipment and; (ii) the timing of recognition of revenue in the Company's private label business from point in time to over time during the manufacturing process. In July 2015, the FASB issued Update No. 2015-11, Simplifying the Measurement of Inventory. The amendment requires an entity to measure inventory that is within the scope of this amendment at the lower of cost and net realizable value. Existing impairment models will continue to be used for inventories that are accounted for using the last-in first-out (“LIFO”) method. The ASU requires prospective adoption for inventory measurements for fiscal years beginning after December 15, 2016 and interim periods within those fiscal years for public business entities. Early adoption is permitted. The Company adopted ASU 2015-11 as of January 1, 2017 on a prospective basis, and there was no significant impact of this guidance on its consolidated financial statements. In February 2016, the FASB issued Update No. 2016-02, Leases (Topic 842). Under current accounting guidance an entity is not required to report operating leases on the balance sheet. The amendment requires that lessees recognize virtually all of their leases on the balance sheet by recording a right-of-use asset and lease liability (other than leases that meet the definition of a "short-term lease"). This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2018. The new standard must be adopted using a modified retrospective transition. Early adoption is permitted. The Company is in the process of evaluating the impact of this standard on its financial statements. In August 2016, the FASB issued Update No. 2016-15, Classification of Certain Cash Receipts and Cash Payments. The guidance addresses the classification of cash flows related to debt repayment or extinguishment costs, settlement of zero-coupon debt instruments or debt instruments with coupon rate that are insignificant in relation to the effective interest rate of the borrowing, contingent consideration payments made after business combination, proceeds from the settlement of insurance claims and corporate-owned life insurance, distribution received from equity method investees and beneficial interest in securitization transactions. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-15 to have a material impact on its consolidated financial statements. In October 2016, the FASB issued Update No. 2016-16, Intra-Entity Transfers of Assets Other Than Inventory. The guidance requires the income tax consequences of intra-entity transfers of assets other than inventory to be recognized as current period income tax expense or benefit and removes the requirement to defer and amortize the consolidated tax consequences of intra-entity transfers. The new standard will be effective for all annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2016-16 to have a material impact on its consolidated financial statements. In January 2017, the FASB issued Update 2017-04, Simplifying the Test for Goodwill Impairment. The standard eliminates the second step in the goodwill impairment test which requires an entity to determine the implied fair value of the reporting unit’s goodwill. Instead, an entity should recognize an impairment loss if the carrying value of the net assets assigned to the reporting unit exceeds the fair value of the reporting unit, with the impairment loss not to exceed the amount of goodwill allocated to the reporting unit. The standard is effective for annual and interim goodwill impairment tests conducted in fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company elected to early adopt ASU 2017-04 effective January 1, 2017 and applied the new guidance in its annual assessment in the third quarter of 2017. The Company performed its annual goodwill impairment assessment as of July 31, 2017. The Company elected to perform a qualitative analysis for its reporting units. The Company determined, after performing the qualitative analysis, that there was no evidence that it is more likely than not that the fair value of any identified reporting unit was less than the carrying amount, and therefore, it was not necessary to perform quantitative analysis for any reporting units. In January 2017, the FASB issued Update No. 2017-01, Business Combinations. The standard provides guidance for evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The guidance provides a screen to determine when an integrated set of assets and activities (a “set”) does not qualify to be a business. The screen requires that when substantially all of the fair value of the gross assets acquired (or disposed of) is concentrated in an identifiable asset or a group of similar identifiable assets, the set of assets and activities is not a business. If the screen is not met, the guidance requires a set of assets and activities to be considered a business and to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create outputs and removes the evaluation as to whether a market participant could replace the missing elements. The new standard will be effective for all annual periods beginning after December 15, 2017. Early adoption is permitted. The Company elected to early adopt ASU 2017-01 effective January 1, 2017. The implementation of the amended guidance did not have any material impact on the Company's consolidated financial statements. In March 2017, the FASB issued Update No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. The guidance requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. If a separate line item or items are used to present the other components of net benefit cost, that line item or items must be appropriately described. If a separate line item or items are not used, the line item or items used in the income statement to present the other components of net benefit cost must be disclosed. In addition, the amendments also allow only the service cost component to be eligible for capitalization when applicable. The new standard will be effective for annual periods beginning after December 15, 2017. The Company does not expect the adoption of ASU 2017-07 to have a material impact on its consolidated financial statements. In May 2017, the FASB issued ASU 2017-09, Stock Compensation (Topic 718): Scope of Modification Accounting. The update to provide clarity and reduce both (1) diversity in practice and (2) cost and complexity when applying the guidance in Topic 718, Compensation-Stock Compensation, to a change to the terms or conditions of a share-based payment award. The new standard will be effective for all annual periods beginning after December 15, 2017. Early adoption is permitted. The Company does not expect the adoption of ASU 2017-09 to have a material impact on its consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update amends the hedge accounting rules to simplify the application of hedge accounting guidance and better portray the economic results of risk management activities in the financial statements. The guidance expands the ability to hedge nonfinancial and financial risk components, reduces complexity in fair value hedges of interest rate risk, eliminates the requirement to separately measure and report hedge ineffectiveness, as well as eases certain hedge effectiveness assessment requirements. This update will become effective for all annual periods and interim reporting periods beginning after December 15, 2018. Early adoption is permitted. The Company elected to early adopt ASU 2017-01 effective January 1, 2017 using modified retrospective method. The implementation of the amended guidance did not have any material impact on the Company's consolidated financial statements. There are no other recently issued accounting pronouncements that are expected to have a material effect on the Company's financial position, results of operations or cash flows. |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) |
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| Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Inventories, Net | Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or net realizable value. Inventories consisted of the following:
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| Schedule Of Property, Plant And Equipment Balances And Corresponding Lives | Property, plant and equipment balances and corresponding lives were as follows:
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| Schedule Of Changes In Carrying Amount Of Goodwill | Changes in the carrying amount of goodwill in 2017 and 2016 were as follows:
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| Schedule of Finite-Lived Intangible Assets | The components of the Company's identifiable intangible assets were as follows:
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| Schedule of Indefinite-Lived Intangible Assets | The components of the Company's identifiable intangible assets were as follows:
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DISCONTINUED OPERATIONS (Tables) |
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| Discontinued Operations and Disposal Groups [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance Sheet and Income Statement of Disposal Group | The following table summarizes results from discontinued operations of SeaSpine included in the consolidated statement of operations for the year ended December 31, 2015 (in thousands):
The following table presents Integra's spine business assets and liabilities removed from the consolidated balance sheet as of July 1, 2015:
Assets and liabilities divested consisted of the following as of October 6, 2017 (amounts in thousands):
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ACQUISITIONS, DIVESTITURE AND PRO FORMA RESULTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following summarizes the preliminary allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
The following summarizes the allocation of the purchase price as based on the fair value of the assets acquired and liabilities assumed:
The following summarizes the allocation of the purchase price based on the fair value of the assets acquired and liabilities assumed:
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| Pro Forma Financial Information, Summary of Results of Operations |
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| Schedule of Assets and Liabilities Divested | The following table summarizes results from discontinued operations of SeaSpine included in the consolidated statement of operations for the year ended December 31, 2015 (in thousands):
The following table presents Integra's spine business assets and liabilities removed from the consolidated balance sheet as of July 1, 2015:
Assets and liabilities divested consisted of the following as of October 6, 2017 (amounts in thousands):
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DEBT (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term Debt Maximum Leverage Ratios | In connection with the March 2017 Amendment, the Company’s maximum consolidated total leverage ratio in the financial covenants was increased to the following:
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| Schedule of Maturities of Long-term Debt | Contractual repayments of the Term A and Term A-1 components of Senior Credit Facility are due as follows:
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| Components of Interest Expense | The interest expense components of the Company’s convertible notes are as follows:
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DERIVATIVE INSTRUMENTS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Derivative Instruments | The Company held the following interest rate swaps as of December 31, 2017 (dollar amounts in thousands):
The Company held the following cross-currency rate swaps as of December 31, 2017 (dollar amounts in thousands):
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| Summary of Fair Value in Balance Sheet for Derivatives Designated as Hedging Instruments | The following table summarizes the fair value and presentation in the consolidated balance sheet for derivatives designated as hedging instruments:
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| Effect of Derivative Instruments Designated as Cash Flow Hedges on Statements of Operations | The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying consolidated statements of operations during the years ended December 31, 2017 and 2016:
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STOCK-BASED COMPENSATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary Of Employee Stock-Based Compensation Expense | Stock-based compensation expense - all related to employees and members of the Board of Directors - recognized under the authoritative guidance was as follows:
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| Summary Of Weighted-Average Assumptions | The following weighted-average assumptions were used in the calculation of fair value:
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| Summary Of Stock Option Activity | The following table summarizes the Company’s stock option activity.
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| Summary Of Restricted Stock, Performance Stock, and Contract Stock | The following table summarizes the Company’s awards of restricted stock, performance stock and contract stock for the year ended December 31, 2017.
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RETIREMENT BENEFIT PLANS (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retirement Benefits [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Net Periodic Benefit Costs | Net periodic benefit costs for the Company’s defined benefit pension plans for the year ended December 31, 2017 included the following amounts (amounts in thousand):
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| Schedule of Weighted Average Assumptions Used | The following weighted average assumptions were used to develop net periodic pension benefit cost and the actuarial present value of projected pension benefit obligations for the year ended December 31, 2017:
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| Schedule of Benefit Obligations and Plan Assets | The following sets forth the change in projected benefit obligations and the change in plan assets for the years ended December 31, 2017 and a reconciliation of the funded status at December 31, 2017 (amounts in thousands):
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| Schedule of Funded Status |
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| Schedule of Expected Benefit Payments and Minimum Contribution on Unfunded Plans | The following table is the summary of expected future benefit payments (in thousands):
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LEASES AND RELATED PARTY LEASES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Minimum Lease Payments for Operating Leases | Future minimum lease payments under operating leases at December 31, 2017 were as follows:
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INCOME TAXES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule Of Income (Loss) Before Income Taxes | Income (Loss) before income taxes consisted of the following:
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| Schedule Of Effective Income Tax Rate Reconciliation | A reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows:
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| Schedule Of Provision For Income Taxes | The provision for income taxes consisted of the following:
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| Schedule Of Deferred Tax Assets And Liabilities | The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below:
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| Schedule Of Uncertain Tax Benefits Reconciliation | A reconciliation of the beginning and ending amount of uncertain tax benefits is as follows:
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NET INCOME (LOSS) PER SHARE (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Basic And Diluted Net Income (Loss) Per Share | Basic and diluted net income (loss) per share was as follows:
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ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity Note [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Accumulated Other Comprehensive Income (Loss) | Changes in accumulated other comprehensive income (loss) by component between December 31, 2017 and 2016 are presented in the table below, net of tax:
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COMMITMENTS AND CONTINGENCIES (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Contingent Consideration | A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the year ended December 31, 2017 and 2016 is as follows (in thousands):
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| Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block] | A reconciliation of the opening balances to the closing balances of these Level 3 measurements is as follows (in thousands):
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SEGMENT AND GEOGRAPHIC INFORMATION (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information, by Segment | Net sales and profit by reportable segment for the years ended December 31, 2017, 2016 and 2015 are as follows:
The Company does not allocate any assets to the reportable segments, and, therefore, no asset information is reported to the chief operating decision maker and disclosed in the financial information for each segment. The Company attributes revenue to geographic areas based on the location of the customer. There are certain revenues managed by the various U.S. segments above that are generated from non-U.S. customers and therefore included in Europe and the Rest of World revenues below. Total revenue, net and long-lived assets (tangible) by major geographic area are summarized below:
* Includes long-lived assets in Puerto Rico. |
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SELECTED QUARTERLY INFORMATION - UNAUDITED (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2017 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selected Quarterly Financial Information [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Selected Quarterly Information |
(1) Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing shares of its common stock during the year. (2) The net income for first quarter of 2016 was adjusted to reflect the effect of the adoption of ASU 2016-09 in second quarter of 2016 of $1.8 million. The earning per share were also restated to reflect the adoption of ASU 2016-09. (3) The net income for the fourth quarter of 2017 includes gain on sale of business of $2.6 million related to Divestiture to Natus. (4) The net income for the fourth quarter of 2017 includes benefit from income taxes of $43.4 million related to the re-measurement of our deferred taxes resulting from a reduction of the federal statutory rate from 35% to 21% from the 2017 Tax Act (see Note 11, Income Taxes). |
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Schedule Of Inventories, Net) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Accounting Policies [Abstract] | ||
| Finished goods | $ 190,100 | $ 127,973 |
| Work in process | 58,637 | 50,043 |
| Raw materials | 47,595 | 39,247 |
| Total inventories, net | $ 296,332 | $ 217,263 |
DISCONTINUED OPERATIONS (Summary of Statements of Operations, Discontinued Operations) (Details) - USD ($) |
12 Months Ended | 30 Months Ended | ||
|---|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
Dec. 31, 2017 |
|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
| Loss from discontinued operations | $ 0 | $ 0 | $ (10,370,000) | |
| SeaSpine Inc. | Discontinued Operations, Disposed of by Means Other than Sale, Spinoff | ||||
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
| Total revenue | 65,775,000 | |||
| Costs and expenses | 80,618,000 | |||
| Operating loss | (14,843,000) | |||
| Other expense, net | (766,000) | |||
| Loss from discontinued operations before tax | (15,609,000) | |||
| Benefit for income taxes | (5,239,000) | |||
| Loss from discontinued operations | $ (10,370,000) | $ 0 | ||
ACQUISITIONS, DIVESTITURE AND PRO FORMA RESULTS (Schedule of Assets and Liabilities Divested) (Details) - Disposal Group, Held-for-sale, Not Discontinued Operations - Codman Specialty Surgical $ in Thousands |
Oct. 06, 2017
USD ($)
|
|---|---|
| Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |
| 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 of discontinued operations | 43,180 |
| Deferred revenue | 1,082 |
| Accrued compensation | 209 |
| Current liabilities of discontinued operations | $ 1,291 |
ACQUISITIONS, DIVESTITURE AND PRO FORMA RESULTS (Pro Forma Financial Information Summarization Results of Operations) (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Business Combinations [Abstract] | |||
| Total revenue from continuing operations | $ 1,428,491 | $ 1,446,903 | $ 940,005 |
| Net income from continuing operations | $ 81,730 | $ 27,520 | $ 10,694 |
| Net income from continuing operations per share: | |||
| Basic earnings per share from continuing operations, Pro forma (in dollars per share) | $ 1.06 | $ 0.37 | $ 0.31 |
DEBT (Schedule of Debt Maturity) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2018 | $ 60,000 |
| 2019 | 60,000 |
| 2020 | 90,000 |
| 2021 | $ 990,000 |
DEBT (Components of Interest Expense) (Details) - 2016 Convertible Senior Notes - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Debt Instrument [Line Items] | ||
| Amortization of the discount on the liability component | $ 8,073 | $ 7,917 |
| Cash interest related to the contractual interest coupon | 3,407 | 3,430 |
| Total | 11,480 | 11,347 |
| Amortization of debt discount, capitalized interest | 300 | 600 |
| Cash interest related to contractual interest coupon, capitalized interest | $ 100 | $ 300 |
TREASURY STOCK (Narrative) (Details) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Oct. 25, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
|
| Treasury Stock Transactions, Excluding Value of Shares Reissued [Abstract] | |||
| Treasury stock, shares, retired (in shares) | 17,800,000 | ||
| Treasury stock, aggregate cost | $ 367,100,000 | $ 121,644,000 | $ 123,051,000 |
| Stock repurchase program, authorized amount (up to) | $ 150,000,000.0 | ||
| Amount available for share repurchase under this latest authorization | $ 150,000,000.0 | ||
| Treasury stock outstanding (in shares) | 2,900,000 | 2,900,000 | 2,900,000 |
| Treasury stock, cost | $ 121,600,000 | $ 123,100,000 | |
| Treasury stock, price per share (in dollars per share) | $ 41.77 | $ 41.78 | |
| Stock repurchased during period (in shares) | 0 | 0 | |
STOCK-BASED COMPENSATION (Summary Of Weighted-Average Assumptions) (Details) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||
| Dividend yield | 0.00% | 0.00% | 0.00% |
| Expected volatility | 30.00% | 29.00% | 29.00% |
| Risk free interest rate | 2.18% | 1.94% | 1.96% |
| Expected life of option from grant date | 8 years | 8 years | 8 years |
RETIREMENT BENEFITS PLANS (Narrative) (Details) - USD ($) |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Defined Benefit Plan Disclosure [Line Items] | |||
| Unrecognized net actuarial gain included in accumulated other comprehensive income | $ 400,000 | ||
| Accumulated benefit obligation | 42,900,000 | ||
| Fair value of plan assets | 26,943,000 | $ 0 | |
| Plan assets expected to be returned next twelve months | 0 | ||
| Contributions expected to be paid to plan in 2018 | 1,800,000 | ||
| Employer contributions | 450,000 | $ 1,800,000 | |
| Selling, general and administrative expenses recorded in conjunction with the buy-out of the plan | 5,600,000 | ||
| Total contributions made | 7,200,000 | $ 5,600,000 | $ 3,700,000 |
| AUSTRIA | Foreign Plan | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Fair value of plan assets | 0 | ||
| FRANCE | Foreign Plan | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Fair value of plan assets | 0 | ||
| GERMANY | Foreign Plan | |||
| Defined Benefit Plan Disclosure [Line Items] | |||
| Fair value of plan assets | $ 0 | ||
RETIREMENT BENEFIT PLANS (Schedule of Net Periodic Benefit Costs) (Details) $ in Thousands |
12 Months Ended |
|---|---|
|
Dec. 31, 2017
USD ($)
| |
| Retirement Benefits [Abstract] | |
| Service cost | $ 565 |
| Interest cost | 95 |
| Expected return on plan assets | (224) |
| Recognized net actuarial loss | 8 |
| Net period benefit cost | $ 444 |
RETIREMENT BENEFIT PLANS (Schedule of Assumptions Used Periodic Benefit Cost and Actuarial Present Value) (Details) |
12 Months Ended |
|---|---|
Dec. 31, 2017 | |
| Retirement Benefits [Abstract] | |
| Discount rate | 0.74% |
| Expected return on plan assets | 3.08% |
| Rate of compensation increase | 1.70% |
RETIREMENT BENEFIT PLANS (Schedule of Change in Benefit Obligations and Plan Assets) (Details) - USD ($) $ in Thousands |
12 Months Ended | |
|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2015 |
|
| Change In Projected Benefit Obligations | ||
| Projected benefit obligation, beginning of year | $ 668 | |
| Interest cost | 95 | |
| Service cost | 565 | |
| Actuarial loss | (12) | |
| Employee contribution | 180 | |
| Premiums paid | (89) | |
| Benefit payment | (19) | |
| Effect of foreign currency exchange rates | (175) | |
| Projected benefit obligation, end of year | 47,661 | |
| Change In Plan Assets | ||
| Plan assets at fair value, beginning of year | 0 | |
| Actual return on plan assets | 82 | |
| Employer contributions | 450 | $ 1,800 |
| Employee contributions | 180 | |
| Premiums paid | (89) | |
| Effect of foreign currency exchange rates | (157) | |
| Plan assets at fair value, end of year | 26,943 | |
| Codman | ||
| Change In Projected Benefit Obligations | ||
| Transfer from Codman Neurosurgery acquisition | 46,448 | |
| Change In Plan Assets | ||
| Transfer from Codman Neurosurgery acquisition | $ 26,477 | |
RETIREMENT BENEFIT PLANS (Scheduled of Funded Status) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
|---|---|---|
| Retirement Benefits [Abstract] | ||
| Fair value of plan assets | $ 26,943 | $ 0 |
| Benefit obligations | 47,661 | $ 668 |
| Unfunded benefit obligation | $ 20,718 |
RETIREMENT BENEFIT PLANS (Schedule of Expected Benefit Payments and Minimum Contribution on Unfunded Plans) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
|---|---|
| Retirement Benefits [Abstract] | |
| 2018 | $ 158 |
| 2019 | 225 |
| 2020 | 296 |
| 2021 | 454 |
| 2022 | 466 |
| Next five years | $ 5,380 |
LEASES AND RELATED PARTY LEASES (Schedule Of Minimum Lease Payments) (Details) $ in Thousands |
Dec. 31, 2017
USD ($)
|
|---|---|
| Operating Leased Assets [Line Items] | |
| 2018 | $ 13,745 |
| 2019 | 12,541 |
| 2020 | 9,830 |
| 2021 | 7,354 |
| 2022 | 6,145 |
| Thereafter | 47,733 |
| Total minimum lease payments | 97,348 |
| Related Parties | |
| Operating Leased Assets [Line Items] | |
| 2018 | 296 |
| 2019 | 296 |
| 2020 | 296 |
| 2021 | 296 |
| 2022 | 296 |
| Thereafter | 2,019 |
| Total minimum lease payments | 3,499 |
| Third Parties | |
| Operating Leased Assets [Line Items] | |
| 2018 | 13,449 |
| 2019 | 12,245 |
| 2020 | 9,534 |
| 2021 | 7,058 |
| 2022 | 5,849 |
| Thereafter | 45,714 |
| Total minimum lease payments | $ 93,849 |
INCOME TAXES (Schedule Of Income Before Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Income Tax Disclosure [Abstract] | |||
| United States operations | $ (32,640) | $ 51,351 | $ 37,450 |
| Foreign operations | 44,025 | 39,055 | 23,221 |
| Income from continuing operations before income taxes | $ 11,385 | $ 90,406 | $ 60,671 |
INCOME TAXES (Schedule Of Provision For Income Taxes) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Current: | |||
| Federal | $ 6,644 | $ 13,700 | $ 46,665 |
| State | 1,233 | 2,503 | 2,301 |
| Foreign | 6,069 | 6,113 | 5,205 |
| Total current | 13,946 | 22,316 | 54,171 |
| Deferred: | |||
| Federal | (66,466) | (3,400) | 1,282 |
| State | (758) | (1,751) | (394) |
| Foreign | (80) | (1,323) | (1,239) |
| Total deferred | (67,304) | (6,474) | (351) |
| Provision for income taxes | $ (53,358) | $ 15,842 | $ 53,820 |
INCOME TAXES (Schedule Of Deferred Tax Assets And Liabilities) (Details) - USD ($) $ in Thousands |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|---|---|---|---|
| Assets: | |||
| Doubtful accounts | $ 1,811 | $ 2,344 | |
| Inventory related items | 29,266 | 30,074 | |
| Tax credits | 6,015 | 1,040 | |
| Accrued vacation | 2,556 | 3,264 | |
| Accrued bonus | 997 | 7,842 | |
| Stock compensation | 10,426 | 16,031 | |
| Deferred revenue | 2,395 | 2,345 | |
| Net operating loss carryforwards | 37,492 | 15,058 | |
| Unrealized foreign exchange loss | 1,177 | 96 | |
| Charitable contributions carryforward | 1,287 | 5 | |
| Others | 3,077 | 128 | |
| Total deferred tax assets | 96,499 | 78,227 | $ 82,500 |
| Less valuation allowance | (7,961) | (3,604) | $ (4,900) |
| Deferred tax assets after valuation allowance | 88,538 | 74,623 | |
| Liabilities: | |||
| Intangible and fixed assets | (146,327) | (215,438) | |
| Others | (1,091) | (1,191) | |
| Total deferred tax liabilities | (147,418) | (216,629) | |
| Total net deferred tax liabilities | $ (58,880) | $ (142,006) |
INCOME TAXES (Schedule of Uncertain Tax Benefits Reconciliation) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Reconciliation of Uncertain Tax Benefits [Roll Forward] | |||
| Balance, beginning of year | $ 754 | $ 1,085 | $ 959 |
| Gross increases: | |||
| Current year tax positions | 402 | 0 | 0 |
| Prior years' tax positions | 0 | 380 | 541 |
| Gross decreases: | |||
| Prior years' tax positions | (777) | (546) | 0 |
| Settlements | 0 | 0 | 0 |
| Statute of limitations lapses | (17) | (131) | (404) |
| Other | 62 | (34) | (11) |
| Balance, end of year | $ 424 | $ 754 | $ 1,085 |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Narrative) (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Income tax expense (benefit) related to items in other comprehensive loss | $ 2,333 | $ (800) | $ (375) |
| Pension Plan | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Income tax expense (benefit) related to items in other comprehensive loss | 0 | ||
| Cash Flow Hedging | |||
| Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
| Income tax expense (benefit) related to items in other comprehensive loss | $ 2,300 | ||
SEGMENT AND GEOGRAPHIC INFORMATION (Narrative) (Details) |
3 Months Ended | 12 Months Ended | 30 Months Ended |
|---|---|---|---|
|
Mar. 31, 2015
Segment
|
Dec. 31, 2017
Segment
product
|
Dec. 31, 2017
Segment
|
|
| Segment Reporting Information [Line Items] | |||
| Number of reportable segments | Segment | 3 | 2 | 2 |
| Codman Specialty Surgical | |||
| Segment Reporting Information [Line Items] | |||
| Number of products offered (more than) | product | 60,000 |
SEGMENT AND GEOGRAPHIC INFORMATION (Net Sales and Profit by Reportable Segment) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Segment Net Sales | |||||||||||
| Revenues | $ 368,602 | $ 278,834 | $ 282,164 | $ 258,636 | $ 255,664 | $ 250,332 | $ 249,309 | $ 236,770 | $ 1,188,236 | $ 992,075 | $ 882,734 |
| Segment Profit | |||||||||||
| Operating income | 44,804 | 115,340 | 79,587 | ||||||||
| Amortization | (20,370) | (13,862) | (9,953) | ||||||||
| Codman Specialty Surgical | |||||||||||
| Segment Net Sales | |||||||||||
| Revenues | 720,301 | 632,524 | 586,918 | ||||||||
| Orthopedics and Tissue Technologies | |||||||||||
| Segment Net Sales | |||||||||||
| Revenues | 467,935 | 359,551 | 295,816 | ||||||||
| Operating Segments | |||||||||||
| Segment Profit | |||||||||||
| Operating income | 422,668 | 360,481 | 330,323 | ||||||||
| Operating Segments | Codman Specialty Surgical | |||||||||||
| Segment Profit | |||||||||||
| Operating income | 292,971 | 256,629 | 242,479 | ||||||||
| Operating Segments | Orthopedics and Tissue Technologies | |||||||||||
| Segment Profit | |||||||||||
| Operating income | 129,697 | 103,852 | 87,844 | ||||||||
| Segment Reconciling Items | |||||||||||
| Segment Profit | |||||||||||
| Amortization | (20,370) | (13,862) | (9,953) | ||||||||
| Corporate, Non-Segment | |||||||||||
| Segment Profit | |||||||||||
| Operating income | $ (357,494) | $ (231,279) | $ (240,783) | ||||||||
SEGMENT AND GEOGRAPHIC INFORMATION (Total Revenue by Major Geographic Area) (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Segment Reporting Information [Line Items] | |||||||||||
| Total revenue, net | $ 368,602 | $ 278,834 | $ 282,164 | $ 258,636 | $ 255,664 | $ 250,332 | $ 249,309 | $ 236,770 | $ 1,188,236 | $ 992,075 | $ 882,734 |
| Total long-lived assets | 285,329 | 234,103 | 285,329 | 234,103 | |||||||
| United States (Includes long-lived assets in Puerto Rico) | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Total revenue, net | 894,260 | 765,608 | 680,824 | ||||||||
| Total long-lived assets | 247,154 | 213,898 | 247,154 | 213,898 | |||||||
| Europe | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Total revenue, net | 150,147 | 120,588 | 103,057 | ||||||||
| Total long-lived assets | 30,942 | 18,970 | 30,942 | 18,970 | |||||||
| Rest of the World | |||||||||||
| Segment Reporting Information [Line Items] | |||||||||||
| Total revenue, net | 143,829 | 105,879 | $ 98,853 | ||||||||
| Total long-lived assets | $ 7,233 | $ 1,235 | $ 7,233 | $ 1,235 | |||||||
SELECTED QUARTERLY INFORMATION - UNAUDITED (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | 12 Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Dec. 31, 2017 |
Sep. 30, 2017 |
Jun. 30, 2017 |
Mar. 31, 2017 |
Dec. 31, 2016 |
Sep. 30, 2016 |
Jun. 30, 2016 |
Mar. 31, 2016 |
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||
| Total revenue, net | $ 368,602 | $ 278,834 | $ 282,164 | $ 258,636 | $ 255,664 | $ 250,332 | $ 249,309 | $ 236,770 | $ 1,188,236 | $ 992,075 | $ 882,734 |
| Gross margin | 220,431 | 177,077 | 183,166 | 172,051 | 170,242 | 161,003 | 159,744 | 151,997 | 752,725 | 642,986 | |
| Net income | $ 44,355 | $ 3,159 | $ 10,835 | $ 6,394 | $ 28,246 | $ 20,144 | $ 12,755 | $ 13,419 | $ 64,743 | $ 74,564 | $ (3,519) |
| Per Share-Basic (in dollars per share) | $ 0.57 | $ 0.04 | $ 0.14 | $ 0.09 | $ 0.38 | $ 0.27 | $ 0.17 | $ 0.18 | $ 0.84 | $ 1.00 | $ (0.05) |
| Per Share-Diluted (in dollars per share) | $ 0.56 | $ 0.04 | $ 0.14 | $ 0.08 | $ 0.35 | $ 0.25 | $ 0.16 | $ 0.18 | $ 0.82 | $ 0.94 | $ (0.05) |
| Tax benefit, re-measurement of net deferred tax liabilities, Tax Cuts and Jobs Act of 2017 | $ 43,400 | ||||||||||
| Codman Specialty Surgical | Disposal Group, Held-for-sale, Not Discontinued Operations | |||||||||||
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||
| Gain on sale of business, included in other income, net | $ 2,600 | ||||||||||
| Accounting Standards Update 2016-09 | |||||||||||
| New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||||||||||
| Net income, restated to reflect the effect of adoption | $ 1,800 | ||||||||||
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS (Details) - USD ($) $ in Thousands |
12 Months Ended | ||
|---|---|---|---|
Dec. 31, 2017 |
Dec. 31, 2016 |
Dec. 31, 2015 |
|
| Allowance for doubtful accounts and sales returns and allowances | |||
| Movement in Valuation Allowances and Reserves [Roll Forward] | |||
| Balance at Beginning of Period | $ 6,319 | $ 5,572 | $ 5,659 |
| Charged to Costs and Expenses | 4,920 | 2,009 | 1,262 |
| Charged to Other Accounts | 1,518 | 0 | 0 |
| Deductions | (3,875) | (1,262) | (1,349) |
| Balance at End of Period | 8,882 | 6,319 | 5,572 |
| Deferred tax assets valuation allowance | |||
| Movement in Valuation Allowances and Reserves [Roll Forward] | |||
| Balance at Beginning of Period | 3,604 | 4,887 | 6,772 |
| Charged to Costs and Expenses | 740 | (1,228) | 80 |
| Charged to Other Accounts | 3,617 | 0 | 0 |
| Deductions | 0 | (55) | (1,965) |
| Balance at End of Period | $ 7,961 | $ 3,604 | $ 4,887 |