8-K
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): June 4, 2008
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
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Delaware
(State or other jurisdiction of
incorporation or organization)
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0-26224
(Commission File Number)
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51-0317849
(I.R.S. Employer Identification No.) |
311 Enterprise Drive
Plainsboro, NJ 08536
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (609) 275-0500
Not Applicable
(Former name or former address, if changed since last report)
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))
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ITEM 2.02 |
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RESULTS OF OPERATIONS AND FINANCIAL CONDITION |
On June 4, 2008, Integra LifeSciences Holdings Corporation (the Company) issued a press release
announcing financial results for the quarter ended March 31, 2008 (the Earnings Press Release).
A copy of the Earnings Press Release is attached as Exhibit 99.1 to this Current Report on Form 8-K
and is incorporated by reference into this Item. In the financial statements portion of the
Earnings Press Release, the Company has included 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 the quarters ended March 31, 2008 and 2007.
The information contained in Item 2.02 of this Current Report on Form 8-K (including the Earning
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 Earnings 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)
certain employee termination and related costs, (iii) facility consolidation, manufacturing and
distribution transfer and system integration charges, (iv) charges associated with discontinued or
withdrawn product lines, (v) incremental audit, legal and/or bank fees related to the delay in the
filing of our 2007 Annual Report on Form 10-K, and (vi) the income tax expense/benefit related to
these adjustments. Adjusted earnings per diluted share are calculated by dividing adjusted net
income for earnings per diluted share by diluted weighted average shares outstanding.
Integra 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 Companys 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 Companys 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.
Internally, 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 Companys 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:
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, inventory fair value purchase accounting
adjustments, and impairments to existing intangible assets in connection with a subsequent
acquisition. 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.
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 Integras operating performance because these
amounts do not affect our core operations and because of the infrequent and/or large-scale nature
of these activities.
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 managements 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 Companys rationalization activities and
are, in some cases, dependent upon opportunities identified in acquisitions, which also vary in
frequency and magnitude.
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 Integras operating
performance because of the infrequent nature of this activity.
Incremental audit, legal and/or 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 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 Integras operating performance because such incremental amounts are not expected to be
incurred to the same magnitude subsequent to the completion of our 2007 audit.
Income tax expense (benefit) and the cumulative impact of changes in income tax rates and
certain other infrequently occurring items that affected the reported income tax rate for the
quarter and year-to-date period. 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 legal entity 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
Companys 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 Integras results as reported under
GAAP. Integra expects to continue to incur expenses of a nature similar to some of the non-GAAP
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adjustments described above, and exclusion of these items from its adjusted net income should not
be construed as an inference that all of these costs are unusual, infrequent or non-recurring. Some
of the limitations in relying on adjusted net income and adjusted earnings per diluted share are:
Integra 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 Companys available funds or could include costs for aborted deals which may be significant
and reduce GAAP net income.
All of the adjustments have been tax affected at Integras 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.
In the financial statements portion of the Earnings Press Release, the Company has included 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 the quarters ended March 31, 2008 and
2007. Also included are reconciliations for future periods.
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ITEM 2.04 |
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TRIGGERING EVENTS THAT ACCELERATE OR INCREASE A DIRECT FINANCIAL OBLIGATION OR AN
OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT |
On May 31, 2008, we notified Wells Fargo Bank, N.A. as trustee under the indentures governing our
Senior Convertible Notes due 2010 and 2012 (collectively, the Notes), of our obligation to pay
additional amounts to the holders of the Notes due to the suspension of the registration statements
that permit resales of the common stock issuable upon conversion of the Notes. Additional amounts
were calculated with respect to the period from and including May 1, 2008 to but excluding June 1,
2008 at the prescribed rate of 0.25% per annum of the aggregate principal amount of the Notes
outstanding. We paid additional amounts in the aggregate amount of approximately $70,000 to the
holders of the Notes.
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ITEM 7.01 |
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REGULATION FD DISCLOSURE |
Attached as Exhibit 99.1, and incorporated into this Item 7.01 by reference, is the Earnings Press
Release issued on June 4, 2008 by the Company.
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ITEM 9.01 |
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FINANCIAL STATEMENTS AND EXHIBITS. |
(d) Exhibits
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99.1 |
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Earnings Press Release, dated June 4, 2008, 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
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Date: June 4, 2008 |
By: |
/s/ Stuart M. Essig
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Stuart M. Essig |
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Title: |
President and Chief Executive 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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Earnings Press Release, dated June 4, 2008, issued by Integra LifeSciences Holdings Corporation. |
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