XML 29 R14.htm IDEA: XBRL DOCUMENT
v3.10.0.1

GOODWILL AND OTHER INTANGIBLE ASSETS | 12 Months Ended
--- | ---
Dec. 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract] |
GOODWILL AND OTHER INTANGIBLE ASSETS | GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill During the third quarter of 2018, the Company elected to bypass the qualitative assessment for its three reporting units and perform a quantitative test. The assumptions used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management. The Company estimated the fair value of its three reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty. Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy. For Level 3 measurements, significant increases or decreases in long-term growth rates or discount rates in isolation or in combination could result in a significantly lower or higher fair value measurement. The key assumptions impacting the valuation included the following:
• | The reporting unit's financial projections, which are based on management's assessment of regional and macroeconomic variables, industry trends and market opportunities, and the Company's strategic objectives and future growth plans.
• | The projected terminal value for the reporting unit, which represents the present value of projected cash flows beyond the last period in the discounted cash flow analysis. The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans.
• | The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are likely to be considered by a market participant. The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise. In performing this test, the Company utilized a discount rate of 9.0%.
Given the excess of the estimated fair values over their carrying values, no impairment was recognized. Changes in the carrying amount of goodwill in 2018 and 2017 were as follows:
| Codman Specialty Surgical |  | Orthopedics and Tissue Technologies |  | Total
| (In thousands)
Goodwill at January 1, 2017 | $ | 284,358 |  |  | $ | 226,213 |  |  | $ | 510,571 |
Derma Sciences acquisition | — |  |  | 73,765 |  |  | 73,765 |
Codman acquisition | 346,220 |  |  | — |  |  | 346,220 |
Divestment to Natus | (2,861 | ) |  | — |  |  | (2,861 | )
Foreign currency translation and other | 7,050 |  |  | 3,160 |  |  | 10,210 |
Goodwill at December 31, 2017 | $ | 634,767 |  |  | $ | 303,138 |  |  | $ | 937,905 |
Codman acquisition measurement period adjustments | (3,964 | ) |  | — |  |  | (3,964 | )
Foreign currency translation | (5,043 | ) |  | (2,423 | ) |  | (7,466 | )
Goodwill at December 31, 2018 | $ | 625,760 |  |  | $ | 300,715 |  |  | $ | 926,475 |
Other Intangible Assets The components of the Company's identifiable intangible assets were as follows:
| Weighted Average Life |  | December 31, 2018
| Cost |  | Accumulated Amortization |  | Net
| (Dollars in Thousands)
Completed technology | 19 years |  | $ | 855,679 |  |  | $ | (167,384 | ) |  | $ | 688,295 |
Customer relationships | 13 years |  | 231,448 |  |  | (106,859 | ) |  | 124,589 |
Trademarks/brand names | 28 years |  | 104,061 |  |  | (24,764 | ) |  | 79,297 |
Codman trade name | Indefinite |  | 162,054 |  |  | — |  |  | 162,054 |
Supplier relationships | 27 years |  | 34,721 |  |  | (16,519 | ) |  | 18,202 |
All other (1) | 4 years |  | 10,958 |  |  | (3,899 | ) |  | 7,059 |
|  |  | $ | 1,398,921 |  |  | $ | (319,425 | ) |  | $ | 1,079,496 |
| Weighted Average Life |  | December 31, 2017
|  | Cost |  | Accumulated Amortization |  | Net
| (Dollars in Thousands)
Completed technology | 19 years |  | $ | 869,174 |  |  | $ | (124,096 | ) |  | $ | 745,078 |
Customer relationships | 13 years |  | 233,430 |  |  | (91,961 | ) |  | 141,469 |
Trademarks/brand names | 28 years |  | 104,879 |  |  | (22,293 | ) |  | 82,586 |
Codman trade name | Indefinite |  | 162,900 |  |  | — |  |  | 162,900 |
Supplier relationships | 27 years |  | 34,721 |  |  | (15,092 | ) |  | 19,629 |
All other (1) | 4 years |  | 11,511 |  |  | (3,546 | ) |  | 7,965 |
|  |  | $ | 1,416,615 |  |  | $ | (256,988 | ) |  | $ | 1,159,627 |
(1) | At December 31, 2018 and 2017, all other included IPR&D of $1.0 million, which was indefinite-lived.
There were no impairment charges for research and development expenses related to IPR&D projects during 2018 and 2017. During the third quarter of 2018, the Company elected to bypass the qualitative assessment for its Codman Tradename intangible asset and perform a quantitative test. In performing this test, the Company utilized a discount rate of 13.0%. The assumptions used in evaluating the Codman Tradename for impairment are subject to change and are tracked against historical results by management. Based on the results of the quantitative test, the Company recorded no impairment to the Codman Tradename intangible asset. During the third quarter of 2018, the Company recorded an impairment charge of $4.9 million in cost of goods sold related to completed technology assets acquired from Koby Ventures II, L.P dba Metasurg ("Metasurg Technology") due to recent contract negotiations and revised future projections. Metasurg Technology is included in the Orthopedic and Tissue Technology segment. Of the total impairment charge of $4.9 million, $2.5 million was related to an out-of-period adjustment included in the twelve months ended December 31, 2018. The out-of-period adjustment is attributed to the timing of performing the impairment test based on the contract termination associated with the intangible asset. The Company determined that the adjustment was not material to the consolidated financial statements for any previously reported annual or interim period and the adjustment to correct the misstatements is not material to the period ended December 31, 2018. During the third quarter of 2017, the Company recorded an impairment charge of $3.3 million in cost of goods sold related to completed technology assets acquired from Tarsus Medical, Inc. ("Tarsus Technology"), since the underlying product will no longer be sold. Tarsus Technology was included in the Orthopedic and Tissue Technology segment. Amortization expense (including amounts reported in cost of product revenues, but excluding any possible future amortization associated with acquired IPR&D) for the years ended December 31, 2018, 2017 and 2016 was $71.6 million, $52.8 million and $41.5 million, respectively. Annual amortization expense is expected to approximate $66.2 million in 2019, $65.9 million in 2020, $64.8 million in 2021, $61.3 million in 2022, $60.4 million in 2023 and $596.6 million thereafter. Amortization of product technology based intangible assets totaled $50.4 million, $35.7 million and $27.6 million for the years ended December 31, 2018, 2017 and 2016, respectively, and is presented by the Company within cost of goods sold.

X
- References No definition available. + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
Name: | us-gaap_GoodwillAndIntangibleAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | nonnum:textBlockItemType
Balance Type: | na
Period Type: | duration