XML 146 R20.htm IDEA: XBRL DOCUMENT
v2.4.0.8

Commitments and Contingencies | 12 Months Ended
--- | ---
Sep. 27, 2014
Commitments and Contingencies Disclosure [Abstract] |
Commitments and Contingencies | Commitments and Contingencies (a) Contingent Earn-Out Payments In connection with certain of its acquisitions, the Company incurred obligations to make contingent earn-out payments tied to performance criteria, principally revenue growth of the acquired businesses over a specified period. These contingent consideration arrangements are recorded as either additional purchase price or compensation expense if continuing employment is required to receive such payments. Pursuant to ASC 805, contingent consideration that is deemed to be part of the purchase price is recorded as a liability based on the estimated fair value of the consideration the Company expects to pay to the former shareholders of the acquired business as of the acquisition date. This liability is re-measured each reporting period with the changes in fair value recorded through a separate line item within the Company’s Consolidated Statements of Operations. Increases or decreases in the fair value of contingent consideration liabilities can result from accretion of the liability for the passage of time, changes in discount rates, and changes in the timing, probabilities and amount of revenue estimates. Contingent consideration arrangements from acquisitions completed prior to the adoption of ASC 805 (effective in fiscal 2010 for the Company) that are deemed to be part of the purchase price of the acquisition are not subject to the fair value measurement requirements of ASC 805 and are recorded as additional purchase price to goodwill. In connection with the acquisition of Adiana, Inc., the Company was obligated to the former Adiana shareholders to make contingent payments based on worldwide sales of the Adiana Permanent Contraception System in the first year following FDA approval and on annual incremental sales growth thereafter through December 31, 2012. FDA approval of the Adiana system occurred on July 6, 2009, and the Company began accruing contingent consideration in the fourth quarter of fiscal 2009 based on the defined percentage of worldwide sales of the product. Since this contingent consideration obligation arose from an acquisition prior to the adoption of ASC 805, the amounts accrued were recorded as additional purchase price to goodwill. The Company made payments of $16.8 million and $8.8 million in fiscal 2013 and 2012, respectively, to the former Adiana shareholders, net of amounts withheld for the legal indemnification provision. No additional amounts are due to the former shareholders of Adiana. The Company had been in litigation with Conceptus, Inc. regarding certain intellectual property matters related to the Adiana system. On October 17, 2011, the jury returned a verdict in the Conceptus litigation matter in favor of Conceptus awarding damages in the amount of $18.8 million. On April 29, 2012, the Company entered into a license and settlement agreement with Conceptus in which Conceptus agreed to forgo the jury award in consideration of the Company agreeing to a permanent injunction against the manufacture, sale and distribution of the Adiana product. In connection with the Company’s acquisition of Interlace in fiscal 2011, the Company had an obligation to the former Interlace stockholders to make contingent payments over a two-year period. Pursuant to ASC 805, the Company recorded its estimate of the fair value of the contingent consideration liability based on future revenue projections of the Interlace business. The fair value of the contingent consideration for the first and second measurement periods was $51.8 million and $93.8 million, respectively. Payments were disbursed in the second quarter of fiscal 2013 and 2012, respectively, of which $39.0 million and $47.6 million, respectively, was reflected in the Consolidated Statements of Cash Flows as cash used in financing activities, representing the liability recognized at fair value for the first measurement period as of the acquisition date. The remainder, which is related to changes in the fair value of the liability, is reflected within cash provided by operating activities. The second and final measurement period ended during the second quarter of fiscal 2013, resulting in a contingent consideration liability of $93.8 million. Of this amount, $86.9 million was paid to the former Interlace stockholders in the second quarter of fiscal 2013. The remainder was withheld for legal indemnification provisions and is being used to pay qualifying legal expenses. At September 27, 2014, the Company had accrued $3.3 million related to the legal indemnification provision. In connection with the Company’s acquisition of TCT in June 2011, the Company had an obligation to certain of the former TCT shareholders, based on future employment, to make contingent payments over a two year period provided certain revenue milestones were met. These earnouts were recorded as compensation expense ratably over the required service periods. The second and final earn-out period was completed in the third quarter of fiscal 2013, and the Company paid $87.4 million of this earn-out in the fourth quarter of fiscal 2013. The remaining $31.1 million of this earn-out was paid in the first quarter of fiscal 2014. The Company also had an obligation to the former shareholders of Beijing Healthcome Technology Company, Ltd. for contingent payments that were accounted for as compensation expense. As of September 27, 2014, the Company had accrued $0.7 million. There was no contingent consideration expense recorded in fiscal 2014. A summary of amounts recorded to the Consolidated Statements of Operations is as follows:
Statement of Operations Line Item – Fiscal 2013 |  | Interlace |  | TCT |  | Total
Contingent consideration—compensation expense |  | $ | — |  |  | $ | 80.0 |  |  | $ | 80.0 |
Contingent consideration—fair value adjustments |  | 11.3 |  |  | — |  |  | 11.3 |
|  | $ | 11.3 |  |  | $ | 80.0 |  |  | $ | 91.3 |
Statement of Operations Line Item – Fiscal 2012 |  | Sentinelle Medical |  | Interlace |  | TCT |  | Healthcome |  | Total
Contingent consideration—compensation expense |  | $ | — |  |  | $ | — |  |  | $ | 75.5 |  |  | $ | 5.5 |  |  | $ | 81.0 |
Contingent consideration—fair value adjustments |  | (3.3 | ) |  | 41.8 |  |  | — |  |  | — |  |  | 38.5 |
|  | $ | (3.3 | ) |  | $ | 41.8 |  |  | $ | 75.5 |  |  | $ | 5.5 |  |  | $ | 119.5 |
Finance Lease Obligations The Company has two non-cancelable lease agreements for buildings that are primarily used for manufacturing. The Company was responsible for a significant portion of the construction costs, and in accordance with ASC 840, Leases, Subsection 40-15-5, the Company was deemed to be the owner of the respective buildings during the construction period. The Company recorded the fair market value of the buildings and land aggregating $28.3 million within property and equipment on its Consolidated Balance Sheets. At September 27, 2014, the Company has recorded $3.0 million in accrued expenses and $34.1 million in other long-term liabilities related to these obligations. The term of the leases is for a period of approximately 10 and 12 years, respectively, with the option to extend for two consecutive 5-year terms. At the completion of the construction period, the Company reviewed the lease for potential sale-leaseback treatment in accordance with ASC 840, Subsection 40, Sale-Leaseback Transactions. Based on its analysis, the Company determined that the lease did not qualify for sale-leaseback treatment. Therefore, the building, leasehold improvements and associated liabilities remain on the Company’s financial statements throughout the lease term, and the building and leasehold improvements are being depreciated on a straight line basis over their estimated useful lives of 35 years. Future minimum lease payments, including principal and interest, under these leases were as follows at September 27, 2014:
Fiscal 2015 | $ | 2.9 |
Fiscal 2016 | 3.1 |
Fiscal 2017 | 3.1 |
Fiscal 2018 | 2.9 |
Fiscal 2019 | 0.3 |
Total minimum payments | 12.3 |
Less-amount representing interest | (2.4 | )
Total | $ | 9.9 |
Non-cancelable Purchase and Royalty Commitments The Company has certain non-cancelable purchase obligations primarily related to inventory purchases and diagnostics instruments, primarily the Tigris and Panther systems, and to a lesser extent other operating expense commitments. These obligations are not recorded in the Consolidated Balance Sheet. For reasons of quality assurance, sole source availability or cost effectiveness, certain key components and raw materials and instruments are available only from a sole supplier and the Company has certain long-term supply contracts to assure continuity of supply. At September 27, 2014, purchase commitments are as follows:
Fiscal 2015 | $ | 53.7 |
Fiscal 2016 | 3.3 |
Fiscal 2017 | 3.1 |
Fiscal 2018 | 0.8 |
Total | $ | 60.9 |
In connection with its R&D efforts, the Company has various license agreements with unrelated parties that provide the Company with rights to develop and market products using certain technology and patent rights. Terms of the various license agreements require the Company to pay royalties ranging from less than 1% up to 35% of future sales on products using the specified technology. Such agreements generally provide for a term that commences upon execution and continues until expiration of the last patent covering the licensed technology. Under certain of these agreements, the Company is required to pay minimum annual royalty payments regardless of the level of sales. In addition, the Company has commitments for minimum payments under certain collaboration agreements. At September 27, 2014, minimum commitments for these agreements are as follows:
Fiscal 2015 | $ | 0.9 |
Fiscal 2016 | 1.4 |
Fiscal 2017 | 0.8 |
Fiscal 2018 | 0.6 |
Fiscal 2019 | 0.6 |
Thereafter | 4.0 |
Total | $ | 8.3 |
Concentration of Suppliers The Company purchases certain components of its products from a single or small number of suppliers. A change in or loss of these suppliers could cause a delay in filling customer orders and a possible loss of sales, which could adversely affect results of operations; however, management believes that suitable replacement suppliers could be obtained in such an event. Operating Leases The Company conducts its operations in leased facilities under operating lease agreements that expire through fiscal 2035. Substantially all of the Company’s lease agreements require the Company to maintain the facilities during the term of the lease and to pay all taxes, insurance, utilities and other costs associated with those facilities. The Company makes customary representations and warranties and agrees to certain financial covenants and indemnities. In the event the Company defaults on a lease, typically the landlord may terminate the lease, accelerate payments and collect liquidated damages. As of September 27, 2014, the Company was not in default of any covenants contained in its lease agreements. Certain of the Company’s lease agreements provide for renewal options. Such renewal options are at rates similar to the current rates under the agreements. Future minimum lease payments under all of the Company’s operating leases at September 27, 2014 are as follows:
Fiscal 2015 | $ | 18.9 |
Fiscal 2016 | 15.1 |
Fiscal 2017 | 12.5 |
Fiscal 2018 | 11.2 |
Fiscal 2019 | 7.3 |
Thereafter | 24.7 |
Total | $ | 89.7 |
Rent expense, net of sublease income from these locations, was $21.1 million, $19.9 million, and $18.3 million for fiscal 2014, 2013 and 2012, respectively. The Company subleases a portion of a building it owns and some of its facilities and has received aggregate rental income of $1.8 million, $1.9 million and $3.2 million in fiscal 2014, 2013 and 2012, respectively, which has been recorded as an offset to rent expense. The future minimum annual rental income payments under these sublease agreements at September 27, 2014 are as follows:
Fiscal 2015 | $ | 2.1 |
Fiscal 2016 | 2.2 |
Fiscal 2017 | 2.1 |
Fiscal 2018 | 2.1 |
Fiscal 2019 | 2.1 |
Thereafter | 2.1 |
Total | $ | 12.7 |

X
- Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for commitments and contingencies. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 210 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.5-02.25) -URI http://asc.fasb.org/extlink&oid=6877327&loc=d3e13212-122682 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 825 -SubTopic 20 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6449706&loc=d3e16207-108621 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 460 -SubTopic 10 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=6398077&loc=d3e12565-110249 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 450 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=25496072&loc=d3e14435-108349 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 440 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6394976&loc=d3e25287-109308 + Details
Name: | us-gaap_CommitmentsAndContingenciesDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration