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Acquisitions | 12 Months Ended
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Dec. 31, 2011
Business Combinations [Abstract] |
Acquisitions | ACQUISITIONS On September 2, 2011, we entered into an Asset Purchase Agreement with Ash Access Technology, Inc. (“Ash Access”), an Indiana corporation, and AAT Catheter Technologies, LLC (“AAT”), an Indiana limited liability corporation (collectively “Ash”), to purchase intellectual property rights with respect to various dialysis catheters. We made an initial payment of $5.0 million to Ash in September 2011. We are obligated to pay an additional $1.0 million upon reaching a certain milestone set forth in the purchase agreement and future royalties based on a percentage of related product sales. We accounted for this acquisition as a business combination. The acquisition-date fair value of these contingent liabilities has been included as part of the purchase consideration. Acquisition-related costs during the year ended December 31, 2011, respectively, which are included in selling, general and administrative expense in the accompanying consolidated statements of operations, were not material. During the year ended December 31, 2011, sales subsequent to the acquisition date related to our dialysis catheter acquired were not material. The purchase price was preliminarily allocated as follows (in thousands):
Assets Acquired |
Property and equipment | $ | 73 |
Intangibles |
Developed technology | 3,200 |
Customer lists | 300 |
Goodwill | 2,697 |
Total assets acquired | 6,270 |
Liabilities Assumed |
Contingent liabilities | 1,270 |
Net assets acquired | $ | 5,000 |
With respect to the assets we acquired from Ash, we intend to amortize developed technology over 15 years and customer lists on an accelerated basis over two years. The total weighted-average amortization period for these acquired intangible assets is nine years. The assets and liabilities related to this acquisition are included in our cardiovascular segment. Pro forma consolidated financial results for the Ash acquisition discussed above have not been included in our consolidated financial results because we believe their effects would not be material. On June 20, 2011, we acquired the intellectual property rights to certain vena cava filter technology. We made an initial payment of $1.0 million in June 2011, and we are obligated to pay up to an additional $3.5 million if certain milestones set forth in the agreement are reached related to further research and development activities and regulatory approval of the vena cava filter. On July 18, 2011, we acquired the intellectual property rights to certain introducer sheath technology. We made an initial payment of $1.0 million in July 2011, and we are obligated to pay an additional $1.0 million upon the earlier of the commercialization of the product or the third anniversary of the effective date of the agreement. The discounted liability of $948,000 has been reflected in our consolidated balance sheets as a long-term liability as of December 31, 2011. On December 15, 2011, we acquired the intellectual property rights to certain support guide catheter technology. We made an initial payment of $2.0 million in December 2011, and we are obligated to pay up to an additional $3.0 million if certain obligations and milestones set forth in the agreement are performed or reached related to further research and development activities and regulatory approval of the support guide catheter. Each of these three transactions discussed above represented an asset acquisition related to a research and development project and a not business combinations. A total charge of approximately $4.9 million related to these acquired in-process research and development assets has been included in the accompanying consolidated statements of operations for the year ended December 31, 2011, since technological feasibility of the underlying research and development projects had not yet been reached and such technology had no future alternative use. On September 10, 2010, we completed our acquisition of BioSphere in an all-cash merger transaction valued at approximately $95.7 million, inclusive of all common equity and Series A Preferred preferences. BioSphere develops and markets embolotherapeutic products for the treatment of uterine fibroids, hypervascularized tumors and arteriovenous malformations. We believe the acquisition of BioSphere gives us a platform technology applicable to multiple therapeutic areas with significant market potential while leveraging existing interventional radiology call points. The gross amount of trade receivables we acquired from BioSphere was approximately $4.6 million, of which $51,000 was expected to be uncollectible. Our consolidated financial statements for the year ended December 31, 2010 reflect sales subsequent to the acquisition date of approximately $9.0 million related to our BioSphere acquisition. We report sales and operating expenses related to the BioSphere acquisition in our cardiovascular segment. It is not practical to separately report the earnings related to the BioSphere acquisition, as we cannot split out sales costs related to Biosphere’s products, principally because our sales representatives are selling multiple products (including BioSphere products) in the cardiovascular business segment. As of December 31, 2010, the BioSphere purchase price was allocated as follows (in thousands):
Assets Acquired |  |
Marketable securities | $ | 9,673 |
Trade receivables | 4,529 |
Inventories | 5,694 |
Other assets | 1,340 |
Property and equipment | 546 |
Deferred income tax assets | 16,012 |
Intangibles |  |
Developed technology | 19,000 |
Customer list | 7,900 |
License agreement | 380 |
Trademark | 3,200 |
Goodwill | 34,016 |
Total assets acquired | 102,290 |
Liabilities Assumed |  |
Accounts payable | 322 |
Accrued expenses | 3,617 |
Deferred income tax liabilities | 729 |
Liabilities related to unrecognized tax benefits | 961 |
Other liabilities | 936 |
Total liabilities assumed | 6,565 |
Net assets acquired, net of cash acquired of $274 | $ | 95,725 |
During the year ended December 31, 2011, the goodwill related to the BioSphere acquisition was decreased by approximately $228,000. The change was primarily due to BioSphere tax adjustments including items related to the BioSphere 2010 income tax return, which was finalized during the third quarter of 2011. With respect to the BioSphere assets, we intend to amortize developed technology over 15 years, a license agreement over 10 years and customer lists on an accelerated basis over 10 years. While U.S. trademarks can be renewed indefinitely, we currently estimate that we will generate cash flow from the acquired trademarks for a period of 15 years from the acquisition date. The total weighted-average amortization period for these acquired intangible assets is 13.6 years. In connection with our BioSphere acquisition, we paid approximately $522,000 in long-term debt issuance costs to Wells Fargo Bank for our long-term debt (see Note 7). These costs consist primarily of loan origination fees and legal costs that we intend to amortize over five years, which is the contract term of our unsecured Credit Agreement, dated September 10, 2010 with Lenders who are or may become party thereto and Wells Fargo, as administrative agent for the Lenders. We also incurred approximately $86,000 and $2.5 million of acquisition-related costs during the years ended December 31, 2011 and 2010, respectively, which are included in selling, general and administrative expense in the accompanying consolidated statements of operations. During the fourth quarter of 2010, we terminated several exclusive BioSphere sales distributor agreements in European countries where we already had previously established direct sales relationships. In connection with the termination of these agreements, we agreed to purchase customer lists from the terminated distributors. The total purchase price of the customer lists was approximately $1.3 million and was allocated to customer lists. We intend to amortize the customer lists on an accelerated basis over 10 years. On February 19, 2010, we entered into a manufacturing and technology license agreement with a medical device manufacturer for certain medical products. We made an initial payment of $250,000 in February 2010, a second payment of $250,000 in May 2010, a third payment of $250,000 in November 2010 and a final payment of $250,000 in August 2011. We have included the $1.0 million intangible asset in developed technology and intend to amortize the asset over an estimated life of 10 years. The following table summarizes our consolidated results of operations for the years ended December 31, 2010 and 2009, as well as the pro forma consolidated results of operations as though the BioSphere acquisition had occurred on January 1, 2009 (in thousands, except per share amounts):
| Year Ended December 31, 2010 |  | Year Ended December 31, 2009
| As Reported |  | Pro Forma |  | As Reported |  | Pro Forma
Sales | $ | 296,755 |  |  | $ | 317,382 |  |  | $ | 257,462 |  |  | $ | 288,589 |
Net income | 12,460 |  |  | 7,258 |  |  | 22,530 |  |  | 17,000 |
Earnings per common share: |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 0.35 |  |  | $ | 0.21 |  |  | $ | 0.64 |  |  | $ | 0.49 |
Diluted | $ | 0.35 |  |  | $ | 0.20 |  |  | $ | 0.63 |  |  | $ | 0.48 |
The unaudited pro forma information set forth above is for informational purposes only and should not be considered indicative of actual results that would have been achieved if BioSphere had been acquired the beginning of 2009, or results that may be obtained in any future period. On October 21, 2009, we entered into an Exclusive License, Development and Supply Agreement with Vysera Biomedical Limited (“Vysera”), pursuant to which Vysera granted to us an exclusive license to use, modify and sell certain valve technology and biomaterial coating technology for medical devices (the “Licensed Technology”) and other intellectual property associated with the Licensed Technology and to develop and market improvements to the Licensed Technology. In the transaction, we also purchased 253,047 A Ordinary Shares of Vysera, for an aggregate price of approximately $2.4 million. Under the License Agreement, we paid Vysera a license fee of $1.5 million and agreed to pay royalties on products we sell that incorporate the Licensed Technology. The license fee of $1.5 million has been allocated to developed technology, which we intend to amortize over 15 years. During 2011, we abandoned our Vysera coating technology of $500,000, which has been included in the accompanying consolidated statements of operations in acquired in-process research and development. On April 6, 2011, we supplemented and amended our Exclusive License, Development and Supply Agreement with Vysera to include the manufacturing rights for Vysera’s valve technology. We made an initial payment of $500,000 in April 2011 and a final payment of $500,000 in August of 2011. We have recorded the $1.0 million intangible asset as developed technology for purposes of our consolidated balance sheet and we intend to amortize it over an estimated life of 10 years. On June 2, 2009, we entered into an Asset Purchase Agreement with Hatch Medical, L.L.C., a Georgia limited liability company (“Hatch”), to purchase assets associated with the EN Snare® foreign body retrieval system. We paid Hatch $21.0 million as of December 31, 2009. Our consolidated financial statements for the year ended December 31, 2009 reflect royalty income subsequent to the acquisition date of approximately $1.0 million and a net income of approximately $210,000 related to our Hatch acquisition. The purchase price was allocated as follows (in thousands):
Assets Acquired |  |
Intangibles |  |
Developed technology | $ | 8,100 |
Customer list | 590 |
Non-compete | 240 |
Trademark | 650 |
Goodwill | 11,420 |
Total assets acquired | 21,000 |
Liabilities Assumed | — |
Net assets acquired | $ | 21,000 |
With respect to the assets we acquired from Hatch, we are amortizing developed technology over 11 years and a non-compete covenant over seven years. The acquired trademarks are scheduled to renew in 3.87 years (based on a weighted-average computation, from December 31, 2009 until the trademark renewal date). While U.S. trademarks can be renewed indefinitely, we currently estimate that we will generate cash flow from the acquired trademarks for a period of 15 years from the acquisition date. On February 18, 2009, we entered into an Asset Purchase Agreement with Alveolus to purchase their non-vascular interventional stents used for esophageal, tracheobronchial, and biliary stenting procedures. We paid Alveolus $19.1 million in March 2009. The gross amount of trade receivables we acquired from Alveolus is approximately $1.0 million, of which $49,000 was expected to be uncollectible. Our consolidated financial statements for the year ended December 31, 2009 reflect sales subsequent to the acquisition date of approximately $6.1 million and a net loss of approximately $2.3 million related to our acquisition of the Alveolus assets. The purchase price was allocated as follows (in thousands):
Assets Acquired |  |
Inventories | $ | 1,741 |
Trade receivables | 974 |
Other assets | 241 |
Property and equipment | 547 |
Intangibles |  |
Developed technology | 5,700 |
Trademarks | 1,400 |
Customer lists | 1,100 |
In-process research and development | 400 |
Goodwill | 8,028 |
Total assets acquired | 20,131 |
Liabilities Assumed |  |
Accounts payable | 467 |
Other liabilities | 572 |
Total liabilities assumed | 1,039 |
Net assets acquired | $ | 19,092 |
With respect to the assets we acquired from Alveolus, we are amortizing the developed technology and trademarks over 15 years and customer lists on an accelerated basis over seven years. We intend to amortize the in-process research and development over 15 years, which will begin if the resulting product is successfully launched in the market. The acquired trademarks are scheduled to renew in 3.52 years (based on a weighted-average calculation, from December 31, 2009 until the trademark renewal date). While U.S. trademarks can be renewed indefinitely, we currently estimate that we will generate cash flow from the acquired trademarks for a period of 15 years from the acquisition date. Our in-process research and development (“IPR&D”) intangible asset in the foregoing table represented the value of in-process projects acquired in 2009 that had not yet reached technological feasibility and had no alternative future uses as of the date of acquisition. The primary basis for determining the technological feasibility of these projects is obtaining regulatory approval to market the underlying products in an applicable geographic region. During 2011, we abandoned our IPR&D related to our covered biliary stent resulting in a charge of $400,000, which has been included in the accompanying consolidated statements of operations in acquired IPR&D. On February 19, 2009, we entered into an Asset Purchase and Supply Agreement with Biosearch to purchase a bipolar coagulation probe and grafted biliary stents. We paid Biosearch $1.1 million in February 2009 and paid Biosearch an additional $500,000 in June 2009. Our consolidated financial statements for the year ended December 31, 2009 reflect sales subsequent to the acquisition date of approximately $1.6 million and net income of approximately $320,000 related to the Biosearch acquisition. The purchase price was allocated as follows (in thousands):
Assets Acquired |  |
Inventories | $ | 188 |
Property and equipment | 31 |
Intangibles |  |
Developed technology | 380 |
Customer lists | 660 |
Non-compete | 25 |
Goodwill | 316 |
Total assets acquired | 1,600 |
Liabilities Assumed | — |
Net assets acquired | $ | 1,600 |
With respect to the assets we acquired from Biosearch, we are amortizing developed technology over 15 years, customer lists on an accelerated basis over eight years and a non-compete covenant over seven years. The following table summarizes our consolidated results of operations for the year ended December 31, 2009, as well as the pro forma consolidated results of operations as though the Hatch, Alveolus and Biosearch transactions had occurred on January 1, 2009 (in thousands, except per share amounts):
| Year Ended December 31, 2009
| As Reported |  | Pro Forma
Sales | $ | 257,462 |  |  | $ | 259,914 |
Net income | 22,530 |  |  | 22,470 |
Earnings per common share: |  |  |  |  |
Basic | $ | 0.64 |  |  | $ | 0.64 |
Diluted | $ | 0.63 |  |  | $ | 0.63 |
The goodwill arising from the acquisitions discussed above consists largely of the synergies and economies of scale we hope to achieve from combining the acquired assets and operations with our historical operations (see Note 4). The goodwill recognized from these acquisitions is expected to be deductible for income tax purposes, except for the goodwill recognized in connection with our stock acquisition of BioSphere.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141 -Paragraph 51, 52 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 6 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1500-128463 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7000-128479 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6927-128479 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e7008-128479 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1490-128463 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 30 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6911361&loc=d3e6996-128479 Reference 8: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4922-128472 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4934-128472 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Appendix F -Paragraph F4 -Subparagraph e Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 3 -URI http://asc.fasb.org/extlink&oid=6910749&loc=d3e4926-128472 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1383-128463 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1392-128463 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1497-128463 Reference 15: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 141R -Paragraph 67-73 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. Reference 16: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=6909870&loc=d3e1524-128463 Reference 17: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Emerging Issues Task Force (EITF) -Number 88-16 -LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy. 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