DELAWARE
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04-3744954
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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2560 General Armistead Avenue, Audubon, PA 19403
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(610) 930-1800
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(Address of principal executive offices) (Zip Code)
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(Registrant’s telephone number, including Area Code)
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Large Accelerated Filer
x
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Accelerated Filer
¨
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Non-accelerated Filer
¨
(Do not check if a smaller reporting company)
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Smaller Reporting Company
¨
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Page
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Consolidated Balance Sheets
(Unaudited)
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March 31, 2016 and December 31, 2015
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Consolidated Statements of Income
(Unaudited)
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Three months ended March 31, 2016 and March 31, 2015
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Consolidated Statements of Comprehensive Income
(Unaudited)
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Three months ended March 31, 2016 and March 31, 2015
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Consolidated Statements of Cash Flows
(Unaudited)
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Three months ended March 31, 2016 and March 31, 2015
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Notes to Consolidated Financial Statements
(Unaudited)
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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Item 4.
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Item 1A.
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Risk Factors
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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Item 3.
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Defaults Upon Senior Securities
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Item 4.
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Mine Safety Disclosures
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Item 5.
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Other Information
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Item 6.
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(In thousands, except par value)
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March 31,
2016 |
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December 31,
2015 |
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ASSETS
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Current assets:
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Cash and cash equivalents
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$
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81,275
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$
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60,152
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Restricted cash
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10,451
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26,119
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Short-term marketable securities
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236,856
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220,877
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Accounts receivable, net of allowances of $2,563 and $2,513, respectively
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75,527
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77,681
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Inventories
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105,147
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105,260
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Prepaid expenses and other current assets
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5,961
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7,351
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Income taxes receivable
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281
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8,672
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Deferred income taxes
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—
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38,687
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Total current assets
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515,498
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544,799
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Property and equipment, net of accumulated depreciation of $145,642 and $139,114, respectively
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115,105
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114,743
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Long-term marketable securities
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58,943
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48,762
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Intangible assets, net
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32,849
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33,242
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Goodwill
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91,964
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91,964
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Other assets
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306
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590
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Deferred income taxes
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25,323
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—
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Total assets
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$
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839,988
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$
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834,100
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LIABILITIES AND EQUITY
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Current liabilities:
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Accounts payable
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$
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12,124
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$
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15,971
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Accrued expenses
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42,190
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53,769
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Income taxes payable
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6,390
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763
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Business acquisition liabilities, current
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11,633
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12,188
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Total current liabilities
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72,337
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82,691
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Business acquisition liabilities, net of current portion
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17,056
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21,126
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Deferred income taxes
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—
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13,260
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Other liabilities
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1,710
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1,699
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Total liabilities
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91,103
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118,776
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Commitments and contingencies (Note 12)
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Equity:
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Class A common stock; $0.001 par value. Authorized 500,000 shares; issued and outstanding 71,620 and 71,442 shares at March 31, 2016 and December 31, 2015, respectively
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71
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71
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Class B common stock; $0.001 par value. Authorized 275,000 shares; issued and outstanding 23,878 at March 31, 2016 and December 31, 2015, respectively
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24
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24
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Additional paid-in capital
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197,875
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192,629
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Accumulated other comprehensive loss
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(1,653
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)
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(1,958
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)
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Retained earnings
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552,568
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524,558
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Total equity
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748,885
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715,324
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Total liabilities and equity
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$
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839,988
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$
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834,100
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Three Months Ended
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(In thousands, except per share amounts)
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March 31,
2016 |
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March 31,
2015 |
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Sales
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$
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139,264
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$
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131,604
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Cost of goods sold
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31,644
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32,107
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Gross profit
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107,620
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99,497
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Operating expenses:
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Research and development
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10,199
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8,656
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Selling, general and administrative
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54,570
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52,289
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Provision for litigation
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—
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32
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Total operating expenses
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64,769
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60,977
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Operating income
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42,851
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38,520
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Other income/(expense), net
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Interest income, net
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496
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278
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Foreign currency transaction gain/(loss)
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108
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(677
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)
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Other income
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156
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52
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Total other income/(expense), net
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760
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(347
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)
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Income before income taxes
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43,611
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38,173
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Income tax provision
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15,601
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13,525
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Net income
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$
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28,010
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$
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24,648
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Earnings per share:
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Basic
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$
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0.29
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$
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0.26
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Diluted
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$
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0.29
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$
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0.26
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Weighted average shares outstanding:
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Basic
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95,398
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94,788
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Dilutive stock options
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895
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1,117
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Diluted
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96,293
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95,905
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Anti-dilutive stock options excluded from weighted average calculation
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5,208
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2,721
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Three Months Ended
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||||||
(In thousands)
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March 31,
2016 |
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March 31,
2015 |
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Net income
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$
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28,010
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$
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24,648
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Other comprehensive income/(loss):
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Unrealized gain on marketable securities, net of tax
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224
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65
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Foreign currency translation gain/(loss)
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81
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(243
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)
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Total other comprehensive gain/(loss)
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305
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(178
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)
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Comprehensive income
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$
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28,315
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$
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24,470
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Three Months Ended
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||||||
(In thousands)
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March 31,
2016 |
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March 31,
2015 |
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Cash flows from operating activities:
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Net income
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$
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28,010
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$
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24,648
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Adjustments to reconcile net income to net cash provided by operating activities:
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Depreciation and amortization
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6,676
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5,674
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Amortization of premium on marketable securities
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953
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640
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Write-down for excess and obsolete inventories
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2,225
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2,529
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Stock-based compensation expense
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2,770
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2,131
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Excess tax benefit related to nonqualified stock options
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(510
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)
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(684
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)
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Allowance for doubtful accounts
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88
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47
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|
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Change in deferred income taxes
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391
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(2,217
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)
|
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(Increase)/decrease in:
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|
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Restricted cash
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15,668
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—
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Accounts receivable
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2,201
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|
1,888
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Inventories
|
(2,252
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)
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(7,361
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)
|
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Prepaid expenses and other assets
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1,209
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|
896
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Increase/(decrease) in:
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|
||||
Accounts payable
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(1,238
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)
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835
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Accounts payable to related-party
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—
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(5,359
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)
|
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Accrued expenses and other liabilities
|
(15,661
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)
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(3,904
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)
|
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Income taxes payable/receivable
|
14,517
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|
14,907
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Net cash provided by operating activities
|
55,047
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34,670
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|
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Cash flows from investing activities:
|
|
|
|
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Purchases of marketable securities
|
(104,208
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)
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(72,874
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)
|
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Maturities of marketable securities
|
69,656
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|
64,574
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|
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Sales of marketable securities
|
7,798
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|
|
19,764
|
|
||
Purchases of property and equipment
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(9,366
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)
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(7,228
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)
|
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Acquisition of businesses, net of cash acquired
|
—
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|
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(48,015
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)
|
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Net cash used in investing activities
|
(36,120
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)
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|
(43,779
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)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
||||
Payment of business acquisition liabilities
|
(300
|
)
|
|
(300
|
)
|
||
Proceeds from exercise of stock options
|
1,895
|
|
|
1,425
|
|
||
Excess tax benefit related to nonqualified stock options
|
510
|
|
|
684
|
|
||
Net cash provided by financing activities
|
2,105
|
|
|
1,809
|
|
||
|
|
|
|
||||
Effect of foreign exchange rate on cash
|
91
|
|
|
41
|
|
||
|
|
|
|
||||
Net increase/(decrease) in cash and cash equivalents
|
21,123
|
|
|
(7,259
|
)
|
||
Cash and cash equivalents, beginning of period
|
60,152
|
|
|
82,265
|
|
||
Cash and cash equivalents, end of period
|
$
|
81,275
|
|
|
$
|
75,006
|
|
|
|
|
|
||||
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Interest paid
|
1
|
|
|
—
|
|
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Income taxes paid
|
$
|
774
|
|
|
$
|
509
|
|
|
Three Months Ended
|
||
(pro forma, unaudited, in thousands, except per share amounts)
|
March 31,
2015 |
||
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|
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Net sales
|
$
|
131,584
|
|
Net income
|
25,173
|
|
|
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|
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Earnings per share:
|
|
||
Basic
|
$
|
0.27
|
|
Diluted
|
$
|
0.26
|
|
|
|
|
March 31, 2016
|
||||||||||
(In thousands)
|
Weighted
Average Amortization Period (in years) |
|
Gross
Carrying Amount |
|
Accumulated Amortization
|
|
Intangible
Assets, net |
||||||
|
|
||||||||||||
In-process research & development
|
—
|
|
$
|
24,560
|
|
|
$
|
—
|
|
|
$
|
24,560
|
|
Supplier network
|
10.0
|
|
4,000
|
|
|
(567
|
)
|
|
3,433
|
|
|||
Customer relationships & other intangibles
|
7.3
|
|
5,525
|
|
|
(2,639
|
)
|
|
2,886
|
|
|||
Patents
|
17.0
|
|
2,495
|
|
|
(525
|
)
|
|
1,970
|
|
|||
Total intangible assets
|
|
|
$
|
36,580
|
|
|
$
|
(3,731
|
)
|
|
$
|
32,849
|
|
|
|
|
December 31, 2015
|
||||||||||
(In thousands)
|
Weighted
Average Amortization Period (in years) |
|
Gross
Carrying Amount |
|
Accumulated Amortization
|
|
Intangible
Assets, net |
||||||
|
|
||||||||||||
In-process research & development
|
—
|
|
$
|
24,560
|
|
|
$
|
—
|
|
|
$
|
24,560
|
|
Supplier network
|
10.0
|
|
4,000
|
|
|
(467
|
)
|
|
3,533
|
|
|||
Customer relationships & other intangibles
|
7.3
|
|
5,525
|
|
|
(2,384
|
)
|
|
3,141
|
|
|||
Patents
|
17.0
|
|
2,495
|
|
|
(487
|
)
|
|
2,008
|
|
|||
Total intangible assets
|
|
|
$
|
36,580
|
|
|
$
|
(3,338
|
)
|
|
$
|
33,242
|
|
|
|
|
March 31, 2016
|
||||||||||||||
(In thousands)
|
Contractual Maturity
(in years)
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
Less than 1
|
|
$
|
118,977
|
|
|
$
|
35
|
|
|
$
|
(19
|
)
|
|
$
|
118,993
|
|
Corporate debt securities
|
Less than 1
|
|
64,639
|
|
|
34
|
|
|
(6
|
)
|
|
64,667
|
|
||||
Commercial paper
|
Less than 1
|
|
41,515
|
|
|
19
|
|
|
—
|
|
|
41,534
|
|
||||
Securities of U.S. government-sponsored agencies
|
Less than 1
|
|
9,511
|
|
|
5
|
|
|
—
|
|
|
9,516
|
|
||||
Asset-backed securities
|
Less than 1
|
|
2,147
|
|
|
—
|
|
|
(1
|
)
|
|
2,146
|
|
||||
Total short-term marketable securities
|
|
|
$
|
236,789
|
|
|
$
|
93
|
|
|
$
|
(26
|
)
|
|
$
|
236,856
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term:
|
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
1-2
|
|
$
|
14,594
|
|
|
$
|
9
|
|
|
$
|
(4
|
)
|
|
$
|
14,599
|
|
Corporate debt securities
|
1-2
|
|
20,660
|
|
|
90
|
|
|
—
|
|
|
20,750
|
|
||||
Asset-backed securities
|
1-2
|
|
23,590
|
|
|
12
|
|
|
(8
|
)
|
|
23,594
|
|
||||
Total long-term marketable securities
|
|
|
$
|
58,844
|
|
|
$
|
111
|
|
|
$
|
(12
|
)
|
|
$
|
58,943
|
|
|
|
|
December 31, 2015
|
||||||||||||||
(In thousands)
|
Contractual Maturity
(in years)
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
||||||||
Short-term:
|
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
Less than 1
|
|
$
|
108,402
|
|
|
$
|
15
|
|
|
$
|
(81
|
)
|
|
$
|
108,336
|
|
Corporate debt securities
|
Less than 1
|
|
53,759
|
|
|
2
|
|
|
(57
|
)
|
|
53,704
|
|
||||
Commercial paper
|
Less than 1
|
|
42,149
|
|
|
3
|
|
|
(1
|
)
|
|
42,151
|
|
||||
Securities of U.S. government-sponsored agencies
|
Less than 1
|
|
14,511
|
|
|
4
|
|
|
(4
|
)
|
|
14,511
|
|
||||
Asset-backed securities
|
Less than 1
|
|
2,175
|
|
|
—
|
|
|
—
|
|
|
2,175
|
|
||||
Total short-term marketable securities
|
|
|
$
|
220,996
|
|
|
$
|
24
|
|
|
$
|
(143
|
)
|
|
$
|
220,877
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Long-term:
|
|
|
|
|
|
|
|
|
|
||||||||
Municipal bonds
|
1-2
|
|
$
|
18,508
|
|
|
$
|
—
|
|
|
$
|
(25
|
)
|
|
$
|
18,483
|
|
Corporate debt securities
|
1-2
|
|
12,033
|
|
|
—
|
|
|
(25
|
)
|
|
12,008
|
|
||||
Asset-backed securities
|
1-2
|
|
18,294
|
|
|
—
|
|
|
(23
|
)
|
|
18,271
|
|
||||
Total long-term marketable securities
|
|
|
$
|
48,835
|
|
|
$
|
—
|
|
|
$
|
(73
|
)
|
|
$
|
48,762
|
|
|
Balance at
|
|
|
|
|
|
|
||||||||
(In thousands)
|
March 31,
2016 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
17,176
|
|
|
$
|
478
|
|
|
$
|
16,698
|
|
|
$
|
—
|
|
Municipal bonds
|
133,592
|
|
|
—
|
|
|
133,592
|
|
|
—
|
|
||||
Corporate debt securities
|
85,417
|
|
|
—
|
|
|
85,417
|
|
|
—
|
|
||||
Commercial paper
|
41,534
|
|
|
—
|
|
|
41,534
|
|
|
—
|
|
||||
Asset-backed securities
|
25,740
|
|
|
—
|
|
|
25,740
|
|
|
—
|
|
||||
Securities of U.S. government-sponsored agencies
|
9,516
|
|
|
—
|
|
|
9,516
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
22,260
|
|
|
—
|
|
|
—
|
|
|
22,260
|
|
|
Balance at
|
|
|
|
|
|
|
||||||||
(In thousands)
|
December 31,
2015 |
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets
|
|
|
|
|
|
|
|
||||||||
Cash equivalents
|
$
|
12,700
|
|
|
$
|
1,701
|
|
|
$
|
10,999
|
|
|
$
|
—
|
|
Municipal bonds
|
126,819
|
|
|
—
|
|
|
126,819
|
|
|
—
|
|
||||
Corporate debt securities
|
65,712
|
|
|
—
|
|
|
65,712
|
|
|
—
|
|
||||
Commercial paper
|
42,151
|
|
|
—
|
|
|
42,151
|
|
|
—
|
|
||||
Asset-backed securities
|
20,446
|
|
|
—
|
|
|
20,446
|
|
|
—
|
|
||||
Securities of U.S. government-sponsored agencies
|
14,511
|
|
|
—
|
|
|
14,511
|
|
|
—
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
||||||||
Contingent consideration
|
26,617
|
|
|
—
|
|
|
—
|
|
|
26,617
|
|
(In thousands)
|
March 31,
2016 |
|
December 31, 2015
|
||||
Raw materials
|
$
|
12,575
|
|
|
$
|
12,308
|
|
Work in process
|
6,672
|
|
|
7,091
|
|
||
Finished goods
|
85,900
|
|
|
85,861
|
|
||
Total inventories
|
$
|
105,147
|
|
|
$
|
105,260
|
|
(In thousands)
|
March 31,
2016 |
|
December 31,
2015 |
||||
Compensation and other employee-related costs
|
$
|
16,432
|
|
|
$
|
21,151
|
|
Legal and other settlements and expenses
|
6,393
|
|
|
13,617
|
|
||
Accrued non-income taxes
|
7,165
|
|
|
6,808
|
|
||
Royalties
|
6,874
|
|
|
6,787
|
|
||
Other
|
5,326
|
|
|
5,406
|
|
||
Total accrued expenses
|
$
|
42,190
|
|
|
$
|
53,769
|
|
(Shares)
|
Class A Common
|
|
Class B
Common
|
|
Total
|
|||
March 31, 2016
|
71,620,035
|
|
|
23,877,556
|
|
|
95,497,591
|
|
December 31, 2015
|
71,442,166
|
|
|
23,877,556
|
|
|
95,319,722
|
|
|
Three Months Ended
|
||
(In thousands)
|
March 31,
2016 |
||
Total equity, beginning of period
|
$
|
715,324
|
|
Net income
|
28,010
|
|
|
Stock-based compensation cost
|
2,841
|
|
|
Exercise of stock options
|
1,895
|
|
|
Excess tax benefit of nonqualified stock options
|
510
|
|
|
Other comprehensive loss
|
305
|
|
|
Total equity, end of period
|
$
|
748,885
|
|
(In thousands)
|
|
|
Unrealized gain/(loss) on marketable securities, net of tax
|
|
Foreign currency translation adjustments
|
|
Accumulated other comprehensive loss
|
||||||
Accumulated other comprehensive loss, net of tax, at December 31, 2015
|
|
|
$
|
(119
|
)
|
|
$
|
(1,839
|
)
|
|
$
|
(1,958
|
)
|
Other comprehensive income before reclassifications
|
|
|
224
|
|
|
81
|
|
|
305
|
|
|||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Other comprehensive income, net of tax
|
|
|
224
|
|
|
81
|
|
|
305
|
|
|||
Accumulated other comprehensive income/(loss), net of tax, at March 31, 2016
|
|
$
|
105
|
|
|
$
|
(1,758
|
)
|
|
$
|
(1,653
|
)
|
(In thousands)
|
|
|
Unrealized gain/(loss) on marketable securities, net of tax
|
|
Foreign currency translation adjustments
|
|
Accumulated other comprehensive loss
|
||||||
Accumulated other comprehensive loss, net of tax, at December 31, 2014
|
|
|
$
|
(64
|
)
|
|
$
|
(1,593
|
)
|
|
$
|
(1,657
|
)
|
Other comprehensive income/(loss) before reclassifications
|
|
|
64
|
|
|
(243
|
)
|
|
(179
|
)
|
|||
Amounts reclassified from accumulated other comprehensive income, net of tax
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Other comprehensive income/(loss), net of tax
|
|
|
65
|
|
|
(243
|
)
|
|
(178
|
)
|
|||
Accumulated other comprehensive income/(loss), net of tax, at March 31, 2015
|
|
|
$
|
1
|
|
|
$
|
(1,836
|
)
|
|
$
|
(1,835
|
)
|
|
Three Months Ended
|
||||||
|
March 31,
2016 |
|
March 31,
2015 |
||||
Weighted average grant date per share fair value
|
$
|
7.81
|
|
|
$
|
9.42
|
|
|
Option Shares(thousands)
|
|
Weighted average exercise price
|
|
Weighted average remaining contractual life (years)
|
|
Aggregate intrinsic value (thousands)
|
|||||
Outstanding at December 31, 2015
|
6,677
|
|
|
$
|
19.14
|
|
|
|
|
|
||
Granted
|
1,280
|
|
|
24.93
|
|
|
|
|
|
|||
Exercised
|
(178
|
)
|
|
10.65
|
|
|
|
|
|
|||
Forfeited
|
(167
|
)
|
|
22.81
|
|
|
|
|
|
|||
Outstanding at March 31, 2016
|
7,612
|
|
|
$
|
20.23
|
|
|
7.8
|
|
$
|
31,834
|
|
Exercisable at March 31, 2016
|
3,042
|
|
|
$
|
14.63
|
|
|
6.0
|
|
$
|
28,456
|
|
Expected to vest at March 31, 2016
|
4,570
|
|
|
$
|
23.96
|
|
|
9.0
|
|
$
|
3,378
|
|
|
Three Months Ended
|
||||||
(In thousands)
|
March 31,
2016 |
|
March 31,
2015 |
||||
Intrinsic value of stock options exercised
|
$
|
2,731
|
|
|
$
|
3,260
|
|
|
|
|
|
||||
Stock-based compensation expense
|
$
|
2,770
|
|
|
$
|
2,131
|
|
Net stock-based compensation capitalized into inventory
|
71
|
|
|
—
|
|
||
Total stock-based compensation cost
|
$
|
2,841
|
|
|
$
|
2,131
|
|
|
Three Months Ended
|
||||
|
March 31,
2016 |
|
March 31,
2015 |
||
Effective income tax rate
|
35.8
|
%
|
|
35.4
|
%
|
|
Three Months Ended
|
||||||
(In thousands)
|
March 31,
2016 |
|
March 31,
2015 |
||||
Innovative Fusion
|
$
|
70,046
|
|
|
$
|
70,370
|
|
Disruptive Technology
|
69,218
|
|
|
61,234
|
|
||
Total sales
|
$
|
139,264
|
|
|
$
|
131,604
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Innovative Fusion
|
$
|
70,046
|
|
|
$
|
70,370
|
|
|
$
|
(324
|
)
|
|
(0.5
|
)%
|
Disruptive Technology
|
69,218
|
|
|
61,234
|
|
|
7,984
|
|
|
13.0
|
%
|
|||
Total sales
|
$
|
139,264
|
|
|
$
|
131,604
|
|
|
$
|
7,660
|
|
|
5.8
|
%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
United States
|
$
|
127,560
|
|
|
$
|
119,983
|
|
|
$
|
7,577
|
|
|
6.3
|
%
|
International
|
11,704
|
|
|
11,621
|
|
|
83
|
|
|
0.7
|
%
|
|||
Total sales
|
$
|
139,264
|
|
|
$
|
131,604
|
|
|
$
|
7,660
|
|
|
5.8
|
%
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Cost of goods sold
|
$
|
31,644
|
|
|
$
|
32,107
|
|
|
$
|
(463
|
)
|
|
(1.4
|
)%
|
Percentage of sales
|
22.7
|
%
|
|
24.4
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Research and development
|
$
|
10,199
|
|
|
$
|
8,656
|
|
|
$
|
1,543
|
|
|
17.8
|
%
|
Percentage of sales
|
7.3
|
%
|
|
6.6
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Selling, general and administrative
|
$
|
54,570
|
|
|
$
|
52,289
|
|
|
$
|
2,281
|
|
|
4.4
|
%
|
Percentage of sales
|
39.2
|
%
|
|
39.7
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Provision for litigation
|
$
|
—
|
|
|
$
|
32
|
|
|
$
|
(32
|
)
|
|
(100.0
|
)%
|
Percentage of sales
|
—
|
%
|
|
—
|
%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Other income/(expense), net
|
$
|
760
|
|
|
$
|
(347
|
)
|
|
$
|
1,107
|
|
|
(319.0
|
)%
|
Percentage of sales
|
0.5
|
%
|
|
(0.3
|
)%
|
|
|
|
|
|
Three Months Ended
|
|
Change
|
|||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
|
%
|
|||||||
Income tax provision
|
$
|
15,601
|
|
|
$
|
13,525
|
|
|
$
|
2,076
|
|
|
15.3
|
%
|
Effective income tax rate
|
35.8
|
%
|
|
35.4
|
%
|
|
|
|
|
|
Three Months Ended
|
||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
||||
Net Income
|
$
|
28,010
|
|
|
$
|
24,648
|
|
Interest income, net
|
(496
|
)
|
|
(278
|
)
|
||
Provision for income taxes
|
15,601
|
|
|
13,525
|
|
||
Depreciation and amortization
|
6,676
|
|
|
5,674
|
|
||
EBITDA
|
49,791
|
|
|
43,569
|
|
||
Stock-based compensation expense
|
2,770
|
|
|
2,131
|
|
||
Provision for litigation
|
—
|
|
|
32
|
|
||
Change in fair value of contingent consideration and other acquisition related costs
|
674
|
|
|
584
|
|
||
Adjusted EBITDA
|
$
|
53,235
|
|
|
$
|
46,316
|
|
Adjusted EBITDA as a percentage of sales
|
38.2
|
%
|
|
35.2
|
%
|
|
Three Months Ended
|
||||||
(In thousands)
|
March 31,
2016 |
|
March 31,
2015 |
||||
Net cash provided by operating activities
|
$
|
55,047
|
|
|
$
|
34,670
|
|
Adjustment for impact of restricted cash
|
(15,668
|
)
|
|
—
|
|
||
Purchases of property and equipment
|
(9,366
|
)
|
|
(7,228
|
)
|
||
Free cash flow
|
$
|
30,013
|
|
|
$
|
27,442
|
|
|
Three Months Ended
|
|
Percent Change
|
||||||||||
(In thousands, except percentages)
|
March 31,
2016 |
|
March 31,
2015 |
|
Reported
|
|
Constant Currency
|
||||||
United States
|
$
|
127,560
|
|
|
$
|
119,983
|
|
|
6.3
|
%
|
|
6.3
|
%
|
International
|
11,704
|
|
|
11,621
|
|
|
0.7
|
%
|
|
5.3
|
%
|
||
Total sales
|
$
|
139,264
|
|
|
$
|
131,604
|
|
|
5.8
|
%
|
|
6.2
|
%
|
|
Three Months Ended
|
|
Change
|
||||||||
(In thousands)
|
March 31,
2016 |
|
March 31,
2015 |
|
$
|
||||||
Net cash provided by operating activities
|
$
|
55,047
|
|
|
$
|
34,670
|
|
|
$
|
20,377
|
|
Net cash used in investing activities
|
(36,120
|
)
|
|
(43,779
|
)
|
|
7,659
|
|
|||
Net cash provided by financing activities
|
2,105
|
|
|
1,809
|
|
|
296
|
|
|||
Effect of foreign exchange rate changes on cash
|
91
|
|
|
41
|
|
|
50
|
|
|||
Increase/(decrease) in cash and cash equivalents
|
$
|
21,123
|
|
|
$
|
(7,259
|
)
|
|
$
|
28,382
|
|
(In thousands)
|
March 31,
2016 |
|
December 31,
2015 |
||||
Cash and cash equivalents
|
$
|
81,275
|
|
|
$
|
60,152
|
|
Short-term marketable securities
|
236,856
|
|
|
220,877
|
|
||
Long-term marketable securities
|
58,943
|
|
|
48,762
|
|
||
Total cash, cash equivalents and marketable securities
|
$
|
377,074
|
|
|
$
|
329,791
|
|
|
|
|
|
||||
Available borrowing capacity under revolving credit facility
|
50,000
|
|
|
50,000
|
|
||
Working capital
|
$
|
443,161
|
|
|
$
|
462,108
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GLOBUS MEDICAL, INC.
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Dated:
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May 4, 2016
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/s/ DAVID C. PAUL
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David C. Paul
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Chairman
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Chief Executive Officer
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(Principal Executive Officer)
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Dated:
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May 4, 2016
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/s/ DANIEL T. SCAVILLA
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Daniel T. Scavilla
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Senior Vice President
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Chief Financial Officer
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(Principal Financial Officer)
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1.
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I have reviewed this
Quarterly Report on Form 10-Q
of Globus Medical, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-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 have:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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Date:
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May 4, 2016
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/s/ DAVID C. PAUL
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David C. Paul
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Chairman
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Chief Executive Officer
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1.
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I have reviewed this
Quarterly Report on Form 10-Q
of Globus Medical, Inc.;
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2.
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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;
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3.
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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;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-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 have:
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a)
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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;
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b)
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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;
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c)
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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
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d)
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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
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5.
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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):
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a)
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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
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b)
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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.
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Date:
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May 4, 2016
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/s/ DANIEL T. SCAVILLA
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Daniel T. Scavilla
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Senior Vice President
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Chief Financial Officer
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(1)
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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Dated:
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May 4, 2016
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/s/ DAVID C. PAUL
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David C. Paul
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Chairman
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Chief Executive Officer
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Dated:
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May 4, 2016
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/s/ DANIEL T. SCAVILLA
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Daniel T. Scavilla
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Senior Vice President
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Chief Financial Officer
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