- Current report filing (8-K)
January 09 2009 - 9:03AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND
EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest
event reported): January 9, 2009
INTEGRA LIFESCIENCES HOLDINGS
CORPORATION
(Exact name of registrant as
specified in its charter)
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Delaware
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0-26224
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51-0317849
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(State or other Jurisdiction of Incorporation)
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(Commission File Number)
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(IRS Employer Identification No.)
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311 Enterprise
Drive
Plainsboro, NJ
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08536
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant’s telephone number,
including area code:
(609) 275-0500
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Not
Applicable
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(Former name or former address if changed since last report.)
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Check the appropriate box below if the
Form 8-K filing is intended to simultaneously satisfy the filing obligation of
the registrant under any of the following provisions:
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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Soliciting material pursuant
to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule
14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule
13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
1
ITEM 2.02 RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
On January 9, 2009, Integra
LifeSciences Holdings Corporation (the “Company”) issued a press
release announcing its updated guidance on revenues and GAAP and adjusted
diluted earnings per share for the quarter and year ended December 31, 2008 and
for the full year 2009 (the “Press Release”). A copy of the Press
Release is attached as Exhibit 99.1 to this Current Report on Form 8-K and
is incorporated by reference into this Item. The Company has included in the
Press Release a reconciliation of GAAP net income to adjusted net income and
GAAP earnings per diluted share to adjusted earnings per diluted share used by
management for guidance for the year ended December 31, 2009.
The information contained in
Item 2.02 of this Current Report on Form 8-K (including the Press Release)
is being furnished and shall not be deemed “filed” for the purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), or otherwise subject to the liabilities of that
Section. The information contained in Item 2.02 of this Current Report on
Form 8-K (including the Press Release) shall not be incorporated by reference
into any registration statement or other document pursuant to the Securities
Act of 1933, as amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in any such filing.
Discussion of Adjusted Financial
Measures
In addition to our GAAP results, we
provide adjusted net income and adjusted earnings per diluted share. Adjusted
net income consists of net income, excluding (i) acquisition-related
charges, (ii) facility consolidation, manufacturing and distribution
transfer and system integration charges, (iii) certain employee
termination and related costs, (iv) charges associated with discontinued or
withdrawn product lines, (v) charges related to restructuring European
subsidiaries, (vii) intangible asset impairment charges,
(vii) incremental professional and bank fees related to the delay in the
filing of our 2007 Annual Report on Form 10-K, (viii) charges relating to
the grant of restricted stock units in connection with the extension of the
term of the CEO’s employment agreement and (ix) the income tax
expense/benefit related to these adjustments, the cumulative impact of changes
in tax rates and certain other infrequently occurring items that affected the
reported income tax rate for quarter and year-to-date periods. Adjusted
earnings per diluted share are calculated by dividing adjusted net income for
earnings per diluted share by adjusted diluted weighted average shares
outstanding..
The Company believes that the
presentation of adjusted net income and adjusted earnings per diluted share
provides important supplemental information to management and investors
regarding financial and business trends relating to the Company’s
financial condition and results of operations. Management uses non-GAAP
financial measures in the form of adjusted net income and adjusted earnings per
diluted share when evaluating operating performance because we believe that the
inclusion or exclusion of the items described below, for which the amounts
and/or timing may vary significantly depending upon the Company’s
acquisition, integration, and restructuring activities or for which the amounts
are not expected to recur at the same magnitude as we further build out our
finance department and implement certain tax planning strategies, provides a
supplemental measure of our operating results that facilitates comparability of
our operating performance from period to period, against our business model
objectives, and against other companies in our industry. We have chosen to
provide this information to investors so they can analyze our operating results
in the same way that management does and use this information in their
assessment of our core business and the valuation of our Company.
Adjusted net income and adjusted
earnings per diluted share are significant measures used by management for
purposes of:
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supplementing the financial results and forecasts reported to the
Company’s board of directors;
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evaluating, managing and benchmarking the operating performance of the
Company;
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establishing internal operating budgets;
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determining compensation under bonus or other incentive programs;
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enhancing comparability from period to period;
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comparing performance with internal forecasts and targeted business
models; and
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evaluating and valuing potential acquisition candidates.
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Adjusted net income reflects net income
adjusted for the following items:
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Acquisition-related charges
.
Acquisition-related charges include in-process research and development
charges, charges related to discontinued research and development projects for
product technologies that were made redundant by an acquisition and inventory
fair value purchase accounting adjustments. Inventory fair value purchase
accounting adjustments consist of the increase to cost of goods sold that occur
as a result of expensing the “step up” in the fair value of
inventory that we purchased in connection with acquisitions as that inventory
is sold during the financial period. Although recurring given the ongoing
character of our acquisition program, these acquisition-related charges are not
factored into the evaluation of our performance by management after completion
of acquisitions because they are of a temporary nature, they are not related to
our core operating performance and the frequency and amount of such charges
vary significantly based on the timing and magnitude of our acquisition
transactions as well as the level of inventory on hand at the time of
acquisition.
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Facility
consolidation, manufacturing and distribution transfer and system integration
charges
. These charges, which include employee termination and other costs
associated with exit or disposal activities, costs related to transferring
manufacturing and/or distribution activities to different locations, and costs
associated with the worldwide implementation of a single enterprise resource
planning system, result from rationalizing and enhancing our existing
manufacturing, distribution and administrative infrastructure. Many of these
cost-saving and efficiency-driven activities are identified as opportunities in
connection with acquisitions that provide the Company with additional capacity
or economies of scale. Although recurring in nature given management’s
ongoing review of the efficiency of our manufacturing, distribution and
administrative facilities and operations, management excludes these items when
evaluating the operating performance of the Company because the frequency and
amount of such charges vary significantly based on the timing and magnitude of
the Company’s rationalization activities and are, in some cases,
dependent upon opportunities identified in acquisitions, which also vary in
frequency and magnitude.
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Employee
termination and related costs
. Employee termination and related costs
consist of charges related to significant reductions in force that are not
initiated in connection with facility consolidations or manufacturing transfers
and senior management level terminations. Management excludes these items when
evaluating the Company’s operating performance because these amounts do
not affect our core operations and because of the infrequent and/or large-scale
nature of these activities.
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Charges
associated with discontinued or withdrawn product lines
. This represents
charges taken and reductions in revenue recorded in connection with product
lines that the Company discontinues or withdraws. Management excludes this item
when evaluating the Company’s operating performance because of the
infrequent nature of this activity.
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Charges
related to restructuring our European subsidiaries.
These charges include
levies and fees paid to government authorities directly as a result of European
subsidiary reorganizations and transfers of business assets between these legal
entities. The benefit of the add-back of any incremental income tax provisions
directly related to such restructuring activities is included in “Income
tax expense (benefit) and the cumulative impact of changes in income tax
rates” line below. Management excludes this item when evaluating the
Company’s operating performance because of the infrequent nature of this
activity.
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Intangible
asset impairment charges.
This represents impairment charges recorded
against various intangible assets, including completed or core technology,
customer relationships, and tradenames. Such impairments result primarily from
management decisions to discontinue or significantly reduce promoting certain
product lines or tradenames, the inability to incorporate existing product
technologies into product development programs, and other circumstances.
Management excludes this item when evaluating the Company’s operating
performance because of the infrequent nature of this activity.
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Incremental professional and
bank fees related to the delay in the filing of our 2007 Annual Report on Form
10-K.
These charges include incremental fees directly related to the late
completion of the audit and filing of our Annual Report on Form 10-K for the
year ended 2007, including audit fee overruns from our independent registered
accounting firm, fees for legal advice and consultations with our external
counsel, and fees paid to various banks in connection with obtaining waivers to
certain non-financial debt covenants. Management excludes these items when
evaluating the Company’s operating performance because such incremental
amounts are not expected to be incurred to the same magnitude subsequent to the
completion of our 2007 audit.
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Charge relating to the grant
of restricted stock units in connection with the extension of the term of the
CEO’s employment agreement.
This charge was recognized in the third
quarter of 2008 upon the grant of restricted stock units that were vested at
the time of the grant on August 6, 2008. Management excludes this item
when evaluating the Company’s operating performance because of the
infrequent nature of this item.
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Income tax expense
(benefit), cumulative impact of changes in income tax rates and certain other
infrequently occurring items that affected the reported income tax rate for
quarter and year-to-date periods.
Income tax expense is adjusted by
(i) the amount of additional tax expense or benefit that the Company
estimates that it would record if it used non-GAAP results instead of GAAP
results in the calculation of its tax provision, based on the statutory rate
applicable to jurisdictions in which such non-GAAP adjustments relate,
(ii) reductions related to incremental income tax provisions directly
related to our European subsidiary restructuring activities,
(iii) eliminating the cumulative impact on prior quarters of changes in
statutory income tax rates during the year, (iv) penalties, interest, and
settlements with government tax authorities related to prior tax periods, and
(v) other infrequently occurring tax charges.
Adjusted net income and adjusted
earnings per diluted share are not calculated in accordance with GAAP, and
should be considered supplemental to, and not as a substitute for, or superior
to, financial measures calculated in accordance with GAAP. Non-GAAP financial
measures have limitations in that they do not reflect all of the costs or
benefits associated with the operations of the Company’s business as
determined in accordance with GAAP. As a result, you should not consider these
measures in isolation or as a substitute for analysis of the Company’s
results as reported under GAAP. The Company expects to continue to acquire
businesses and product lines and to incur expenses of a nature similar to some
of the non-GAAP adjustments described above, and exclusion of these items from
its adjusted net income should not be construed as an inference that all of
these items are unusual, infrequent or non-recurring. Some of the limitations
in relying on adjusted net income and adjusted earnings per diluted share are:
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The Company
periodically acquires other companies or businesses, and we expect to continue
to incur acquisition-related expenses and charges in the future. These costs
can directly impact the amount of the Company’s available funds or could
include costs for aborted deals which may be significant and reduce GAAP net
income.
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All of the
adjustments to net income have been tax affected at the Company’s actual
tax rates. Depending on the nature of the adjustments and the tax treatment of
the underlying items, the effective tax rate related to adjusted net income
could differ significantly from the effective tax rate related to GAAP net
income.
ITEM 7.01 REGULATION FD
DISCLOSURE
Attached as Exhibit 99.1, and
incorporated into this Item 7.01 by reference, is the Press Release issued
on January 9, 2009 by the Company.
ITEM 9.01 FINANCIAL STATEMENTS AND
EXHIBITS.
(d) Exhibits
99.1
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Press Release, dated January 9, 2009, issued by Integra LifeSciences
Holdings Corporation
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SIGNATURES
Pursuant to the requirements of the
Securities Exchange Act of 1934, as amended, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly
authorized.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
Date: January 9, 2009
By:
/s/ John B. Henneman,
III
John B. Henneman, III
Title: Executive Vice President,
Finance and Administration,
and Chief Financial Officer
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EXHIBIT INDEX
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Exhibit
No.
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Description
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99.1
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Press Release, dated January 9, 2009,
issued by Integra LifeSciences Holdings Corporation.
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