Item 1. Financial Statements
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
(In thousands, except par value)
|
June 30,
2014
|
|
December 31,
2013
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current assets:
|
|
|
|
Cash and cash equivalents
|
$
|
136,500
|
|
|
$
|
89,962
|
|
Short-term marketable securities
|
139,765
|
|
|
148,962
|
|
Accounts receivable, net of allowances of $1,554 and $1,581, respectively
|
65,054
|
|
|
62,414
|
|
Inventories
|
76,362
|
|
|
70,350
|
|
Prepaid expenses and other current assets
|
5,412
|
|
|
5,080
|
|
Income taxes receivable
|
4,690
|
|
|
2,723
|
|
Deferred income taxes
|
39,317
|
|
|
37,317
|
|
Total current assets
|
467,100
|
|
|
416,808
|
|
Property and equipment, net of accumulated depreciation of $109,342 and $99,910, respectively
|
65,572
|
|
|
64,150
|
|
Long-term marketable securities
|
36,754
|
|
|
36,528
|
|
Intangible assets, net
|
29,271
|
|
|
29,537
|
|
Goodwill
|
18,372
|
|
|
18,372
|
|
Other assets
|
931
|
|
|
909
|
|
Total assets
|
$
|
618,000
|
|
|
$
|
566,304
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
|
|
Current liabilities:
|
|
|
|
Accounts payable
|
$
|
8,814
|
|
|
$
|
10,073
|
|
Accounts payable to related-party
|
4,159
|
|
|
2,656
|
|
Accrued expenses
|
51,366
|
|
|
51,125
|
|
Income taxes payable
|
212
|
|
|
2,358
|
|
Business acquisition liabilities, current
|
1,419
|
|
|
1,730
|
|
Total current liabilities
|
65,970
|
|
|
67,942
|
|
Business acquisition liabilities, net of current portion
|
15,449
|
|
|
15,528
|
|
Deferred income taxes
|
4,147
|
|
|
6,385
|
|
Other liabilities
|
4,124
|
|
|
4,089
|
|
Total liabilities
|
89,690
|
|
|
93,944
|
|
Commitments and contingencies (Note 12)
|
|
|
|
|
|
Equity:
|
|
|
|
Common stock; $0.001 par value. Authorized 785,000 shares; issued and outstanding 94,367 and 93,443 shares at June 30, 2014 and December 31, 2013, respectively
|
94
|
|
|
93
|
|
Additional paid-in capital
|
168,008
|
|
|
153,987
|
|
Accumulated other comprehensive loss
|
(867
|
)
|
|
(1,009
|
)
|
Retained earnings
|
361,075
|
|
|
319,289
|
|
Total equity
|
528,310
|
|
|
472,360
|
|
Total liabilities and equity
|
$
|
618,000
|
|
|
$
|
566,304
|
|
See accompanying notes to consolidated financial statements.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(In thousands, except per share amounts)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Sales
|
$
|
113,573
|
|
|
$
|
107,009
|
|
|
$
|
227,783
|
|
|
$
|
212,027
|
|
Cost of goods sold
|
26,583
|
|
|
23,501
|
|
|
51,895
|
|
|
46,994
|
|
Provision for litigation - cost of goods sold
|
—
|
|
|
1,260
|
|
|
—
|
|
|
1,260
|
|
Gross profit
|
86,990
|
|
|
82,248
|
|
|
175,888
|
|
|
163,773
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
Research and development
|
7,694
|
|
|
7,037
|
|
|
15,137
|
|
|
13,884
|
|
Selling, general and administrative
|
46,425
|
|
|
45,750
|
|
|
93,103
|
|
|
91,147
|
|
Provision for litigation
|
1,318
|
|
|
18,269
|
|
|
3,853
|
|
|
18,319
|
|
Total operating expenses
|
55,437
|
|
|
71,056
|
|
|
112,093
|
|
|
123,350
|
|
|
|
|
|
|
|
|
|
Operating income
|
31,553
|
|
|
11,192
|
|
|
63,795
|
|
|
40,423
|
|
Other income/(expense), net
|
325
|
|
|
(221
|
)
|
|
570
|
|
|
58
|
|
Income before income taxes
|
31,878
|
|
|
10,971
|
|
|
64,365
|
|
|
40,481
|
|
Income tax provision
|
11,231
|
|
|
3,545
|
|
|
22,579
|
|
|
13,164
|
|
|
|
|
|
|
|
|
|
Net income
|
$
|
20,647
|
|
|
$
|
7,426
|
|
|
$
|
41,786
|
|
|
$
|
27,317
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
Basic
|
$
|
0.22
|
|
|
$
|
0.08
|
|
|
$
|
0.44
|
|
|
$
|
0.30
|
|
Diluted
|
$
|
0.22
|
|
|
$
|
0.08
|
|
|
$
|
0.44
|
|
|
$
|
0.29
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
94,212
|
|
|
92,415
|
|
|
93,965
|
|
|
92,110
|
|
Dilutive stock options
|
1,268
|
|
|
1,555
|
|
|
1,363
|
|
|
1,662
|
|
Diluted
|
95,480
|
|
|
93,970
|
|
|
95,328
|
|
|
93,772
|
|
|
|
|
|
|
|
|
|
Anti-dilutive stock equivalents excluded from weighted average calculation
|
1,370
|
|
|
1,772
|
|
|
1,302
|
|
|
2,478
|
|
See accompanying notes to consolidated financial statements.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Net income
|
$
|
20,647
|
|
|
$
|
7,426
|
|
|
$
|
41,786
|
|
|
$
|
27,317
|
|
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
Unrealized gain/(loss) on marketable securities, net of tax
|
9
|
|
|
(41
|
)
|
|
10
|
|
|
(59
|
)
|
Foreign currency translation gain/(loss)
|
135
|
|
|
17
|
|
|
132
|
|
|
(546
|
)
|
Total other comprehensive income/(loss)
|
144
|
|
|
(24
|
)
|
|
142
|
|
|
(605
|
)
|
Comprehensive income
|
$
|
20,791
|
|
|
$
|
7,402
|
|
|
$
|
41,928
|
|
|
$
|
26,712
|
|
See accompanying notes to consolidated financial statements.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
|
June 30,
2013
|
Cash flows from operating activities:
|
|
|
|
Net income
|
$
|
41,786
|
|
|
$
|
27,317
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
Depreciation and amortization
|
10,684
|
|
|
9,352
|
|
Amortization of premium on marketable securities
|
1,566
|
|
|
755
|
|
Provision for excess and obsolete inventories
|
3,535
|
|
|
3,463
|
|
Stock-based compensation
|
3,550
|
|
|
2,478
|
|
Allowance for doubtful accounts
|
112
|
|
|
89
|
|
Change in deferred income taxes
|
(4,231
|
)
|
|
(5,806
|
)
|
(Increase)/decrease in:
|
|
|
|
Accounts receivable
|
(2,491
|
)
|
|
(4,410
|
)
|
Inventories
|
(9,494
|
)
|
|
(12,955
|
)
|
Prepaid expenses and other assets
|
(384
|
)
|
|
(2,501
|
)
|
Increase/(decrease) in:
|
|
|
|
Accounts payable
|
(821
|
)
|
|
243
|
|
Accounts payable to related-party
|
1,503
|
|
|
2,645
|
|
Accrued expenses and other liabilities
|
385
|
|
|
15,824
|
|
Income taxes payable/receivable
|
(4,118
|
)
|
|
(9,238
|
)
|
Net cash provided by operating activities
|
41,582
|
|
|
27,256
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
Purchases of marketable securities
|
(105,015
|
)
|
|
(144,062
|
)
|
Maturities of marketable securities
|
95,292
|
|
|
3,900
|
|
Sales of marketable securities
|
17,155
|
|
|
—
|
|
Purchases of property and equipment
|
(12,231
|
)
|
|
(12,956
|
)
|
Net cash used in investing activities
|
(4,799
|
)
|
|
(153,118
|
)
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
Payment of business acquisition liabilities
|
(600
|
)
|
|
(700
|
)
|
Proceeds from issuance of common stock
|
6,631
|
|
|
4,254
|
|
Excess tax benefit related to nonqualified stock options
|
3,841
|
|
|
2,187
|
|
Net cash provided by financing activities
|
9,872
|
|
|
5,741
|
|
|
|
|
|
Effect of foreign exchange rate on cash
|
(117
|
)
|
|
35
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents
|
46,538
|
|
|
(120,086
|
)
|
Cash and cash equivalents, beginning of period
|
89,962
|
|
|
212,400
|
|
Cash and cash equivalents, end of period
|
$
|
136,500
|
|
|
$
|
92,314
|
|
|
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
Interest paid
|
25
|
|
|
30
|
|
Income taxes paid
|
$
|
27,122
|
|
|
$
|
25,891
|
|
See accompanying notes to consolidated financial statements.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) The Company
Globus Medical, Inc., together with its subsidiaries, is a medical device company focused exclusively on the design, development and commercialization of musculoskeletal implants. We are currently focused on implants that promote healing in patients with spine disorders. Since our inception in 2003, we have launched over
130
products and offer a product portfolio addressing a broad array of spinal pathologies.
We are headquartered in Audubon, Pennsylvania and market and sell our products through our exclusive sales force in the United States, as well as within North, Central & South America, Europe, Asia, Africa and Australia. The sales force consists of direct sales representatives and distributor sales representatives employed by exclusive independent distributors.
The terms “the Company,” “Globus,” “we,” “us” and “our” refer to Globus Medical, Inc. and, where applicable, our consolidated subsidiaries.
(b) Basis of Presentation
The accompanying interim unaudited condensed consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial statements and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain information and footnote disclosures normally included in complete financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). As such, the information included in this Quarterly Report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying footnotes included in our Annual Report on Form 10-K for the year ended
December 31, 2013
.
In the opinion of management, the statements include all adjustments necessary, which are of a normal and recurring nature, for the fair presentation of our financial position and of the results for the
three- and six-
month periods presented. The results of operations for any interim period are not indicative of results for the full year. Certain reclassifications have been made to prior period statements to conform to the current year presentation.
(c) Principles of Consolidation
The accompanying consolidated financial statements include the accounts of Globus and its wholly-owned subsidiaries. Our consolidation policy requires the consolidation of entities where a controlling financial interest is held. All intercompany balances and transactions are eliminated in consolidation.
(d) Use of Estimates
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. We base our estimates, in part, on historical experience that management believes to be reasonable under the circumstances. Actual results could differ materially from those estimates. Estimates and assumptions are periodically reviewed and the effects of revisions are reflected in the consolidated financial statements in the period they are determined to be necessary.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Significant areas that require management’s estimates include intangible assets, contingent payment liabilities, allowance for doubtful accounts, stock-based compensation, provision for excess and obsolete inventory, useful lives of assets, the outcome of litigation, and income taxes. We are subject to risks and uncertainties due to changes in the healthcare environment, regulatory oversight, competition, and legislation that may cause actual results to differ from estimated results.
(e) Marketable Securities
Our marketable securities include municipal bonds, corporate debt securities, commercial paper and asset-backed securities, and are classified as available-for-sale as of
June 30, 2014
. Available-for-sale securities are recorded at fair value in both short-term and long-term marketable securities on our consolidated balance sheets. The change in fair value for available-for-sale securities is recorded, net of taxes, as a component of accumulated other comprehensive income on our consolidated balance sheets. Premiums and discounts are recognized over the life of the related security as an adjustment to yield using the straight-line method. Realized gains or losses from the sale of our marketable securities are determined on a specific identification basis. Realized gains and losses, along with interest income and the amortization/accretion of premiums/discounts are included as a component of other income, net, on our consolidated statements of income. Interest receivable is recorded as a component of prepaid expenses and other current assets on our consolidated balance sheets.
We maintain a portfolio of various holdings, types and maturities, though most of the securities in our portfolio could be liquidated at minimal cost at any time. We invest in securities that meet or exceed standards as defined in our investment policy. Our policy also limits the amount of credit exposure to any one issue, issuer or type of security. We review our securities for other-than-temporary impairment at each reporting period. If an unrealized loss for any security is considered to be other-than-temporary, the loss will be recognized in our consolidated statement of income in the period the determination is made.
(f) Inventories
Inventories are stated at the lower of cost or market. Cost is determined on a first-in, first-out basis. The majority of our inventories are finished goods as we mainly utilize third-party suppliers to source our products. We periodically evaluate the carrying value of our inventories in relation to our estimated forecast of product demand, which takes into consideration the estimated life cycle of product releases. When quantities on hand exceed estimated sales forecasts, we record a reserve for such excess inventories.
(g) Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. A significant portion of our revenue is generated from consigned inventory maintained at hospitals or with sales representatives. For these products, revenue is recognized at the time the product is used or implanted. For all other transactions, we recognize revenue when title to the goods and risk of loss transfer to customers, provided there are no remaining performance obligations that will affect the customer’s final acceptance of the sale. Our policy is to classify shipping and handling costs billed to customers as sales and the related expenses as cost of goods sold.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
(h) Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board (“FASB”) released a standard on the recognition of revenue from contracts with customers that is designed to create greater comparability for financial statement users across industries and jurisdictions. Under the new standard, an entity will recognize revenue to depict the transfer of goods or services to customers in amounts that reflect the payment to which the entity expects to be entitled in exchange for those goods or services. The standard also will require enhanced disclosures and provide more comprehensive guidance for transactions such as service revenue and contract modifications. The standard will take effect for public companies for annual reporting periods beginning after December 15, 2016, and early adoption is prohibited. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently evaluating the impact of the new standard on our financial position, results of operations and disclosures.
NOTE 2. ACQUISITIONS
On December 23, 2013, we entered into an asset purchase agreement with a small robotics development company, pursuant to which we acquired substantially all of its assets for
$16.8 million
. In addition to the initial purchase price, we may be obligated to make a milestone payment and revenue sharing payments based upon a percentage of net sales of certain products based on the intellectual property we acquired in the transaction. The acquired company was privately held and is focused on developing a next generation surgical robotic positioning platform for spine, brain and other therapeutic markets. The technology is intended to enable surgeons to perform minimally invasive and percutaneous surgical procedures with greater accuracy, safety and reproducibility than is currently available. We accounted for this purchase as a business combination, and as a result, recorded goodwill of
$3.0 million
.
NOTE 3. INTANGIBLE ASSETS
A summary of intangible assets as of
June 30, 2014
is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Weighted
Average Amortization
Period
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Intangible
Assets, net
|
|
|
In-process research & development
|
—
|
|
$
|
24,560
|
|
|
$
|
—
|
|
|
$
|
24,560
|
|
Customer relationships & other intangibles
|
9.5
|
|
3,623
|
|
|
(1,059
|
)
|
|
2,564
|
|
Patents
|
17
|
|
2,420
|
|
|
(273
|
)
|
|
2,147
|
|
Total intangible assets
|
|
|
$
|
30,603
|
|
|
$
|
(1,332
|
)
|
|
$
|
29,271
|
|
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
A summary of intangible assets as of
December 31, 2013
is presented below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Weighted
Average Amortization
Period
(in years)
|
|
Gross
Carrying
Amount
|
|
Accumulated Amortization
|
|
Intangible
Assets, net
|
|
|
In-process research & development
|
—
|
|
$
|
24,560
|
|
|
$
|
—
|
|
|
$
|
24,560
|
|
Customer relationships & other intangibles
|
9.5
|
|
3,623
|
|
|
(864
|
)
|
|
2,759
|
|
Patents
|
17
|
|
2,420
|
|
|
(202
|
)
|
|
2,218
|
|
Total intangible assets
|
|
|
$
|
30,603
|
|
|
$
|
(1,066
|
)
|
|
$
|
29,537
|
|
NOTE 4. MARKETABLE SECURITIES
The composition of our short-term and long-term marketable securities as of
June 30, 2014
is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Contractual Maturity
(in years)
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
Short-term:
|
|
|
|
|
|
|
|
|
|
Municipal bonds
|
Less than 1
|
|
$
|
51,640
|
|
|
$
|
23
|
|
|
$
|
(1
|
)
|
|
$
|
51,662
|
|
Corporate debt securities
|
Less than 1
|
|
61,438
|
|
|
34
|
|
|
(7
|
)
|
|
61,465
|
|
Commercial paper
|
Less than 1
|
|
26,633
|
|
|
5
|
|
|
—
|
|
|
26,638
|
|
Total short-term marketable securities
|
|
|
$
|
139,711
|
|
|
$
|
62
|
|
|
$
|
(8
|
)
|
|
$
|
139,765
|
|
|
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
|
Municipal bonds
|
1-2
|
|
$
|
8,803
|
|
|
$
|
6
|
|
|
$
|
(1
|
)
|
|
$
|
8,808
|
|
Corporate debt securities
|
1-2
|
|
8,394
|
|
|
3
|
|
|
(2
|
)
|
|
8,395
|
|
Asset backed securities
|
1-2
|
|
19,543
|
|
|
8
|
|
|
—
|
|
|
19,551
|
|
Total long-term marketable securities
|
|
|
$
|
36,740
|
|
|
$
|
17
|
|
|
$
|
(3
|
)
|
|
$
|
36,754
|
|
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Our short-term and long-term marketable securities as of
December 31, 2013
were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Contractual Maturity
(in years)
|
|
Amortized Cost
|
|
Gross Unrealized Gains
|
|
Gross Unrealized Losses
|
|
Fair Value
|
Short-term:
|
|
|
|
|
|
|
|
|
|
Municipal bonds
|
Less than 1
|
|
$
|
77,342
|
|
|
$
|
17
|
|
|
$
|
(15
|
)
|
|
$
|
77,344
|
|
Corporate debt securities
|
Less than 1
|
|
35,525
|
|
|
15
|
|
|
(11
|
)
|
|
35,529
|
|
Commercial paper
|
Less than 1
|
|
36,083
|
|
|
6
|
|
|
—
|
|
|
36,089
|
|
Total short-term marketable securities
|
|
|
$
|
148,950
|
|
|
$
|
38
|
|
|
$
|
(26
|
)
|
|
$
|
148,962
|
|
|
|
|
|
|
|
|
|
|
|
Long-term:
|
|
|
|
|
|
|
|
|
|
Municipal bonds
|
1-2
|
|
$
|
12,304
|
|
|
$
|
13
|
|
|
$
|
(1
|
)
|
|
$
|
12,316
|
|
Corporate debt securities
|
1-2
|
|
17,533
|
|
|
27
|
|
|
—
|
|
|
17,560
|
|
Asset backed securities
|
1-2
|
|
6,651
|
|
|
2
|
|
|
(1
|
)
|
|
6,652
|
|
Total long-term marketable securities
|
|
|
$
|
36,488
|
|
|
$
|
42
|
|
|
$
|
(2
|
)
|
|
$
|
36,528
|
|
NOTE 5. FAIR VALUE MEASUREMENTS
Under the accounting for fair value measurements and disclosures, fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or the liability in an orderly transaction between market participants on the measurement date. Additionally, a fair value hierarchy was established that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets and liabilities and the lowest priority to unobservable inputs. The level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
Our assets and liabilities measured at fair value on a recurring basis are classified and disclosed in one of the following three categories:
Level 1—quoted prices (unadjusted) in active markets for identical assets and liabilities;
Level 2—observable inputs other than quoted prices in active markets for identical assets and liabilities; and
Level 3—unobservable inputs in which there is little or no market data available, which require the reporting entity to use significant unobservable inputs or valuation techniques.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The fair value of our assets and liabilities measured at fair value on a recurring basis was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
(In thousands)
|
June 30,
2014
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
54,905
|
|
|
$
|
50,037
|
|
|
$
|
4,868
|
|
|
$
|
—
|
|
Municipal bonds
|
60,470
|
|
|
—
|
|
|
60,470
|
|
|
—
|
|
Corporate debt securities
|
69,860
|
|
|
—
|
|
|
69,860
|
|
|
—
|
|
Commercial paper
|
26,638
|
|
|
—
|
|
|
26,638
|
|
|
—
|
|
Asset-backed securities
|
19,551
|
|
|
—
|
|
|
19,551
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Acquisition-related contingent consideration
|
14,298
|
|
|
—
|
|
|
—
|
|
|
14,298
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
|
|
|
|
(In thousands)
|
December 31,
2013
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
Assets
|
|
|
|
|
|
|
|
Cash equivalents
|
$
|
20,363
|
|
|
$
|
800
|
|
|
$
|
19,563
|
|
|
$
|
—
|
|
Municipal bonds
|
89,660
|
|
|
—
|
|
|
89,660
|
|
|
—
|
|
Corporate debt securities
|
53,089
|
|
|
—
|
|
|
53,089
|
|
|
—
|
|
Commercial paper
|
36,089
|
|
|
—
|
|
|
36,089
|
|
|
—
|
|
Asset-backed securities
|
6,652
|
|
|
—
|
|
|
6,652
|
|
|
—
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
Acquisition-related contingent consideration
|
14,177
|
|
|
—
|
|
|
—
|
|
|
14,177
|
|
Acquisition-related contingent consideration represents our contingent milestone, performance and revenue-sharing payment obligations related to our acquisitions and is measured at fair value, based on significant inputs not observable in the market, which represents a Level 3 measurement within the fair value hierarchy. The valuation of acquisition-related contingent consideration uses assumptions we believe would be made by a market participant. We assess these estimates on an ongoing basis as additional data impacting the assumptions is obtained. Changes in the fair value of acquisition-related contingent consideration related to updated assumptions and estimates are recognized within research and development and selling, general and administrative expenses in the consolidated statements of income.
NOTE 6. INVENTORIES
|
|
|
|
|
|
|
|
|
(In thousands)
|
June 30,
2014
|
|
December 31, 2013
|
Raw materials
|
$
|
2,275
|
|
|
$
|
1,369
|
|
Work in process
|
2,483
|
|
|
2,820
|
|
Finished goods
|
71,604
|
|
|
66,161
|
|
Total inventories
|
$
|
76,362
|
|
|
$
|
70,350
|
|
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NOTE 7. ACCRUED EXPENSES
|
|
|
|
|
|
|
|
|
(In thousands)
|
June 30,
2014
|
|
December 31,
2013
|
Compensation and other employee-related costs
|
$
|
13,888
|
|
|
$
|
17,428
|
|
Legal and other settlements and expenses
|
25,611
|
|
|
23,765
|
|
Non-income taxes
|
4,313
|
|
|
2,938
|
|
Other
|
7,554
|
|
|
6,994
|
|
Total accrued expenses
|
$
|
51,366
|
|
|
$
|
51,125
|
|
NOTE 8. DEBT
Line of Credit
In
May 2011
, we entered into a credit agreement with Wells Fargo Bank related to a revolving credit facility that provided for borrowings up to
$50.0 million
. At our request, and with the approval of the bank, the amount of borrowings available under the revolving credit facility can be increased to
$75.0 million
. The revolving credit facility includes up to a
$25.0 million
sub-limit for letters of credit. As amended to date, the revolving credit facility was extended to May 2015. Cash advances bear interest at our option either at a fluctuating rate per annum equal to the daily
LIBOR
in effect for a
one
-month period plus
0.75%
, or a fixed rate for a
one
- or
three
-month period equal to
LIBOR
plus
0.75%
. The credit agreement governing the revolving credit facility also subjects us to various restrictive covenants, including the requirement to maintain maximum consolidated leverage. The covenants also include limitations on our ability to repurchase shares, to pay cash dividends or to enter into a sale transaction. As of
June 30, 2014
, we were in compliance with all covenants under the credit agreement, there were no outstanding borrowings under the revolving credit facility and available borrowings were
$50.0 million
. We may terminate the credit agreement at any time on
ten
days’ notice without premium or penalty.
NOTE 9. EQUITY
Our amended and restated Certificate of Incorporation provides for a total of 785,000,000 authorized shares of common stock. Of the authorized number of shares of common stock,
500,000,000
shares are designated as Class A common stock (“Class A Common”),
275,000,000
shares are designated as Class B common stock (“Class B Common”) and
10,000,000
shares are designated as Class C common stock (“Class C Common”).
Our issued and outstanding common shares by Class were as follows:
|
|
|
|
|
|
|
|
|
|
(Shares)
|
Class A Common
|
|
Class B
Common
|
|
Total
|
June 30, 2014
|
70,489,228
|
|
|
23,877,556
|
|
|
94,366,784
|
|
December 31, 2013
|
66,065,197
|
|
|
27,377,556
|
|
|
93,442,753
|
|
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
The following table summarizes changes in total equity:
|
|
|
|
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
Total equity, beginning of period
|
$
|
472,360
|
|
Net income
|
41,786
|
|
Stock-based compensation
|
3,550
|
|
Exercise of stock options
|
6,631
|
|
Excess tax benefit of nonqualified stock options
|
3,841
|
|
Other comprehensive loss
|
142
|
|
Total equity, end of period
|
$
|
528,310
|
|
The tables below present the changes in each component of accumulated other comprehensive income/(loss), including current period other comprehensive income/(loss) and reclassifications out of accumulated other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
|
|
Unrealized gain on marketable securities, net of tax
|
|
Foreign currency translation adjustments
|
|
Accumulated other comprehensive loss
|
Accumulated other comprehensive income/(loss), net of tax, at December 31, 2013
|
|
|
$
|
32
|
|
|
$
|
(1,041
|
)
|
|
$
|
(1,009
|
)
|
Other comprehensive income before reclassifications
|
|
|
4
|
|
|
132
|
|
|
136
|
|
Amounts reclassified from accumulated other comprehensive income, net of tax
|
|
6
|
|
|
—
|
|
|
6
|
|
Other comprehensive income, net of tax
|
|
|
10
|
|
|
132
|
|
|
142
|
|
Accumulated other comprehensive income/(loss), net of tax, at June 30, 2014
|
|
|
$
|
42
|
|
|
$
|
(909
|
)
|
|
$
|
(867
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
|
Unrealized 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, 2012
|
$
|
—
|
|
|
$
|
(767
|
)
|
|
$
|
(767
|
)
|
Other comprehensive loss
|
(59
|
)
|
|
(546
|
)
|
|
(605
|
)
|
Other comprehensive loss, net of tax
|
(59
|
)
|
|
(546
|
)
|
|
(605
|
)
|
Accumulated other comprehensive loss, net of tax, at June 30, 2013
|
$
|
(59
|
)
|
|
$
|
(1,313
|
)
|
|
$
|
(1,372
|
)
|
NOTE 10. STOCK-BASED COMPENSATION
We have
three
stock plans, but no additional shares will be issued under our Amended and Restated 2003 Stock Plan and our 2008 Stock Plan, leaving the 2012 Equity Incentive Plan (the "2012 Plan") as the only remaining active stock plan. The purpose of these stock plans was, and the 2012 Plan is, to provide incentive to employees, directors, and consultants of Globus. The Plans are administered by the Board of Directors of Globus (the “Board”) or its delegates. The number, type of option, exercise price, and vesting terms are determined by the Board or its delegates in accordance with the terms of the Plans. The options
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
granted expire on a date specified by the Board, but generally not more than
ten
years from the grant date. Option grants to employees generally vest monthly over a
four
-year period.
The 2012 Plan was approved by our Board in March 2012, and by our stockholders in June 2012. Under the 2012 Plan, the aggregate number of shares of Class A Common that may be issued subject to options and other awards is equal to the sum of (i)
3,076,923
shares, (ii) any shares available for issuance under the 2008 Plan as of March 13, 2012, (iii) any shares underlying awards outstanding under the 2008 Plan as of March 13, 2012 that, on or after that date, are forfeited, terminated, expired or lapse for any reason, or are settled for cash without delivery of shares and (iv) starting January 1, 2013, an annual increase in the number of shares available under the 2012 Plan equal to up to
3%
of the number of shares of our common and preferred stock outstanding at the end of the previous year, as determined by our Board. The number of shares that may be issued or transferred pursuant to incentive stock options under the 2012 Plan is limited to
10,769,230
shares. The shares of Class A Common covered by the 2012 Plan are authorized but unissued shares, treasury shares or shares of common stock purchased on the open market.
As of
June 30, 2014
, there were
6,420,702
shares of common stock available for future grants under the 2012 Plan.
The weighted average grant date per share fair values of the options awarded to employees were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Weighted average grant date per share fair value
|
$
|
10.01
|
|
|
$
|
6.69
|
|
|
$
|
10.27
|
|
|
$
|
5.68
|
|
Stock option activity during the
six
months ended
June 30, 2014
is summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Shares(thousands)
|
|
Weighted average exercise price
|
|
Weighted average remaining contractual life (years)
|
|
Aggregate intrinsic value (thousands)
|
Outstanding at December 31, 2013
|
4,886
|
|
|
$
|
10.04
|
|
|
|
|
|
Granted
|
985
|
|
|
24.55
|
|
|
|
|
|
Exercised
|
(924
|
)
|
|
7.18
|
|
|
|
|
|
Forfeited
|
(150
|
)
|
|
14.61
|
|
|
|
|
|
Outstanding at June 30, 2014
|
4,797
|
|
|
$
|
13.22
|
|
|
7.2
|
|
$
|
50,891
|
|
Exercisable at June 30, 2014
|
2,384
|
|
|
$
|
8.49
|
|
|
5.6
|
|
$
|
36,798
|
|
Compensation expense related to stock options granted to employees and non-employees under our stock plans and the intrinsic value of stock options exercised was as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Compensation expense related to stock options
|
$
|
1,623
|
|
|
$
|
1,166
|
|
|
$
|
3,550
|
|
|
$
|
2,478
|
|
Intrinsic value of stock options exercised
|
4,614
|
|
|
10,379
|
|
|
15,897
|
|
|
17,299
|
|
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
As of
June 30, 2014
, there was
$16.1 million
of unrecognized compensation expense related to unvested employee stock options that are expected to vest over a weighted average period of
three
years.
NOTE 11. INCOME TAXES
In computing our income tax provision, we make certain estimates and management judgments, such as estimated annual taxable income or loss, annual effective tax rate, the nature and timing of permanent and temporary differences between taxable income for financial reporting and tax reporting, and the recoverability of deferred tax assets. Our estimates and assumptions may change as new events occur, additional information is obtained, or as the tax environment changes. Should facts and circumstances change during a quarter causing a material change to the estimated effective income tax rate, a cumulative adjustment is recorded.
For the
six
-month periods ended
June 30, 2014
and
2013
, our effective income tax rates were
35.1%
and
32.5%
, respectively. The
increase
in our effective rate was due primarily to the effects of litigation charges and the timing of the American Taxpayer Relief Act of 2012 (“ATRA”). On January 2, 2013, the ATRA was signed into law and reinstated the research and experimentation credit from January 1, 2012 through December 31, 2013. However, as the passage of the ATRA occurred in 2013, the reinstated credit for the year ended
December 31, 2012
was recognized during the three months ended March 31, 2013 in accordance with accounting guidance. As of
June 30, 2014
, the research and experimentation credit has not been extended for 2014, having an estimated
0.7%
impact to the effective rate for the
six
months ended
June 30, 2014
.
NOTE 12. COMMITMENTS AND CONTINGENCIES
We are involved in a number of proceedings, legal actions, and claims. Such matters are subject to many uncertainties, and the outcomes of these matters are not within our control and may not be known for prolonged periods of time. In some actions, the claimants seek damages, as well as other relief, including injunctions prohibiting us from engaging in certain activities, which, if granted, could require significant expenditures and/or result in lost revenues. We record a liability in the consolidated financial statements for these actions when a loss is known or considered probable and the amount can be reasonably estimated. If the reasonable estimate of a known or probable loss is a range, and no amount within the range is a better estimate than any other, the minimum amount of the range is accrued. If a loss is possible but not known or probable, and can be reasonably estimated, the estimated loss or range of loss is disclosed. In most cases, significant judgment is required to estimate the amount and timing of a loss to be recorded. While it is not possible to predict the outcome for most of the matters discussed, we believe it is possible that costs associated with them could have a material adverse impact on our consolidated earnings, financial position or cash flows.
N-Spine, Synthes and DePuy Synthes Litigation
In April 2010, N-Spine, Inc. and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. N-Spine, the patent owner, and Synthes USA, a licensee of the subject patent, allege that we infringe
one
or more claims of the patent by making, using, offering for sale or selling our TRANSITION
®
stabilization system product. N-Spine and Synthes USA seek injunctive relief and an unspecified amount in damages. We intend to defend our rights vigorously. This matter was stayed on July 14, 2011 pending the resolution of an
inter partes
reexamination on the asserted patent granted by the U.S. Patent and Trademark Office (“USPTO”) in February 2011. In December 2011, the examiner withdrew the original grounds of rejection of the asserted patent and we have appealed the
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
examiner’s decision. In January 2014, the USPTO ruled on the appeal finding certain claims rejected in view of the prior art and affirming certain other claims. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.
In a related matter, on January 8, 2014, Depuy Synthes Products, LLC (“Depuy Synthes”) filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Depuy Synthes alleges that we infringe one or more claims of the asserted patent by making, using, offering for sale or selling our TRANSITION
®
stabilization system product. Depuy Synthes seeks injunctive relief and an unspecified amount in damages. We intend to defend our rights vigorously. This matter is in its very early stages, and the probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.
Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC Litigation
In July 2011, Synthes USA, LLC, Synthes USA Products, LLC and Synthes USA Sales, LLC filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. Synthes USA LLC, the patent owner, Synthes USA Products, LLC, a licensee to manufacture products of the subject patents, and Synthes USA Sales LLC, a licensee to sell products of the subject patents, allege that we infringed
one
or more claims of
three
patents by making, using, offering for sale or selling our COALITION
®
, INDEPENDENCE
®
and INTERCONTINENTAL
®
products. As a result of the acquisition of Synthes, Inc. by Johnson & Johnson, a motion was filed to change the plaintiff in this matter to DePuy Synthes in February 2013. On June 14, 2013, the jury in this case returned a verdict, finding that prior versions of the three products we previously sold did infringe on DePuy Synthes’ patents and awarding monetary damages in the amount of
$16.0 million
. The jury also upheld the validity of DePuy Synthes’ patents. There was no finding of willful infringement by Globus. This verdict does not impact our ability to conduct our business or have any material impact on our future revenues.
We believe the facts and the law do not support the jury’s findings of infringement and patent validity and are seeking to overturn the verdict through the appeals process.
As of
December 31, 2013
, we accrued
$19.5 million
in damages and other litigation-related costs related to this case, of which
$1.3 million
was included in provision for litigation - cost of goods sold (due to a write off of certain inventory which will not be sold due to the verdict) and
$18.2 million
was included in provision for litigation (operating expense). During the
six
months ended
June 30, 2014
, we accrued an additional
$0.5 million
in interest included in provision for litigation related to this litigation.
L5 Litigation
In December 2009, we filed suit in the Court of Common Pleas of Montgomery County, Pennsylvania against our former exclusive independent distributor L5 Surgical, LLC and its principals, seeking an injunction and declaratory judgment concerning certain restrictive covenants made to L5 by its sales representatives. L5 brought counterclaims against us alleging tortious interference, unfair competition and conspiracy. The injunction phase was resolved in September 2010, and this matter is now in the discovery phase of litigation on the underlying damages claims. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
NuVasive Infringement Litigation
In October 2010, NuVasive, Inc. filed suit against us in the U.S. District Court for the District of Delaware for patent infringement. NuVasive, the patent owner, alleges that we infringe
one
or more claims of
three
patents by making, using, offering for sale or selling our MARS 3V
™
retractor for use in certain lateral fusion procedures. NuVasive seeks injunctive relief and an unspecified amount in damages. We intend to defend our rights vigorously. Additionally, we sought
inter partes
reexaminations of the three patents asserted by NuVasive in the USPTO, which were granted in April 2012. In August 2012, the examiner withdrew the original grounds of rejection of the patents asserted by NuVasive, and we are in the process of appealing the examiner’s decision. In June 2014, the USPTO found that the claims of one of the three patents are invalid and found that the claims of the second of the three patents are affirmed as valid. The appeal of the third patent is still pending. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.
NuVasive Employee Litigation
We have hired several employees who were formerly employed by NuVasive, Inc. In July 2011, NuVasive filed suit against us in the District Court of Travis County, Texas alleging that our hiring of one named former employee and other unnamed former employees constitutes tortious interference with its contracts with those employees, and with prospective business relationships, as well as aiding and abetting the breach of fiduciary duty. NuVasive is seeking compensatory damages, permanent injunction, punitive damages and attorneys’ fees. Trial is currently scheduled for October 2014. We intend to defend our rights vigorously. The probable outcome of this litigation cannot be determined, nor can we estimate a range of potential loss. Therefore, in accordance with authoritative guidance on the evaluation of loss contingencies, we have not recorded an accrual related to this litigation.
Bianco Litigation
On March 21, 2012, Sabatino Bianco filed suit against us in the Federal District Court for the Eastern District of Texas claiming that we misappropriated his trade secret and confidential information and improperly utilized it in developing our CALIBER
®
product. Bianco alleges that we engaged in misappropriation of trade secrets, breach of contract, unfair competition, fraud and theft and seeks correction of inventorship, injunctive relief and exemplary damages. On April 20, 2012, Bianco filed a motion for a preliminary injunction, seeking to enjoin us from making, using, selling, importing or offering for sale our CALIBER
®
product. On November 15, 2012, the court denied Bianco’s motion for preliminary injunction. On October 1, 2013, Bianco amended his complaint to claim that his trade secrets and confidential information were also used improperly in developing our RISE
®
and CALIBER-L
®
products.
On January 17, 2014, the jury in this case returned a verdict in favor of Bianco on a claim of misappropriation of trade secret. We accrued the verdict amount of
$4.3 million
as of
December 31, 2013
. The jury found against Bianco on the claims of breach of contract and disgorgement of profits. The court granted our motion for judgment as a matter of law and dismissed Bianco’s claims for unfair competition, fraud, and exemplary damages, and Bianco abandoned the claim of misappropriation of confidential information. Bianco’s claims of correction of inventorship, unjust enrichment, and permanent injunctive relief were not submitted to the jury. On March 7, 2014, the court denied Bianco’s claim for correction of inventorship and ruled he is not entitled to be named as a co-inventor on any of the patents at issue, and also denied his claim for unjust enrichment. On March 17, 2014, the court denied Bianco’s claim for permanent injunctive relief. On July 2, 2014, the court awarded Bianco an ongoing royalty of
5%
of the net sales of the
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
CALIBER
®
, CALIBER-L
®
, and RISE
®
products, or products that are not colorably different from those products, for a fifteen year period on sales starting on January 18, 2014. The court entered final judgment on the jury verdict on July 17, 2014.
We do not expect the verdict to impact our ability to conduct our business or to have any material impact on our future revenues. We believe the facts and the law do not support the jury’s findings of misappropriation of trade secret and will seek to overturn the verdict in post-trial motions with the District Court and, if necessary, we will continue to do so through the appeals process.
Altus Partners, LLC Litigation
On February 20, 2013, Altus Partners, LLC filed suit against us in the U.S. District Court for the Eastern District of Pennsylvania for patent infringement. On April 7, 2014, we settled the litigation with Altus Partners and recognized a provision for litigation of
$2.0 million
.
In addition, we are subject to legal proceedings arising in the ordinary course of business.
NOTE 13. RELATED-PARTY TRANSACTIONS
We have contracted with a third-party manufacturer in which certain of our senior management and significant stockholders have or had ownership interests and leadership positions.
We have purchased the following amounts of products and services from the supplier:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Purchases from related-party supplier
|
$
|
5,941
|
|
|
$
|
6,377
|
|
|
$
|
10,791
|
|
|
$
|
11,509
|
|
As of
June 30, 2014
and
December 31, 2013
, we had
$4.2 million
and
$2.7 million
, respectively, of accounts payable due to the supplier.
NOTE 14. SEGMENT AND GEOGRAPHIC INFORMATION
Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. We globally manage the business within
one
reportable segment. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. Products are sold principally in the United States.
The following table represents total sales by geographic area, based on the location of the customer:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
United States
|
$
|
101,631
|
|
|
$
|
98,106
|
|
|
$
|
203,336
|
|
|
$
|
194,378
|
|
International
|
11,942
|
|
|
8,903
|
|
|
24,447
|
|
|
17,649
|
|
Total sales
|
$
|
113,573
|
|
|
$
|
107,009
|
|
|
$
|
227,783
|
|
|
$
|
212,027
|
|
GLOBUS MEDICAL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
We classify our products into
two
categories: innovative fusion products and disruptive technology products. The following table represents total sales by product category:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
(In thousands)
|
June 30,
2014
|
|
June 30,
2013
|
|
June 30,
2014
|
|
June 30,
2013
|
Innovative Fusion
|
$
|
65,860
|
|
|
$
|
62,987
|
|
|
$
|
132,630
|
|
|
$
|
124,309
|
|
Disruptive Technology
|
47,713
|
|
|
44,022
|
|
|
95,153
|
|
|
87,718
|
|
Total sales
|
$
|
113,573
|
|
|
$
|
107,009
|
|
|
$
|
227,783
|
|
|
$
|
212,027
|
|