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): August 3, 2004
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 0-26224 51-0317849
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification No.)
311 Enterprise Drive
Plainsboro, NJ 08536
(Address of principal executive offices) (Zip Code)
(609)-275-0500
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
Pro Forma Financial Information
This Current Report on Form 8-K includes updated pro forma information related
to the acquisition by Integra LifeSciences Holdings Corporation of all of the
issued and outstanding capital stock of J. Jamner Surgical Instruments, Inc. on
March 17, 2003. This updated information is provided in conjunction with
Integra's concurrently filed Post Effective Amendment No. 2 to Registration
Statement on Form S-3.
The Stock Purchase Agreement, dated as of March 17, 2003, between Integra
LifeSciences Corporation and Howard Jamner and other individual stockholders of
J. Jamner Surgical Instruments, Inc., was filed as Exhibit 2.1 in a Current
Report on Form 8-K filed with the Securities and Exchange Commission on March
25, 2003.
Potential Impact of New Accounting Standard
In its consensuses on Issue 03-6, "Participating Securities and the Two-Class
Method Under FASB Statement No. 128," the Emerging Issues Task Force (EITF)
expanded the notion of participation rights in calculating earnings per share
from previous practice. Issue 03-6 does not focus on a security holder's
contractual rights to ultimately receive the undistributed earnings and net
assets of the company upon redemption or liquidation. Instead, it defines
participation rights based solely on whether the holder would be entitled to
receive any dividends if the entity declared them during the period, even if
those earnings would not actually be distributed from an economic or practical
perspective and even if the company has legal or contractual limitations on its
ability to pay dividends.
Under Issue 03-6, all securities that meet the definition of a participating
security, regardless of whether the securities are convertible, non-convertible,
or potential common stock securities, will be considered for inclusion in the
computation of basic earnings per share using the two-class method. The
application of the two-class method may also have an impact on the diluted
earnings per share calculation due to the need to consider each type of
potential common shares in the proper sequence to arrive at maximum dilution.
Integra will adopt the provisions of Issue 03-6 in the second quarter of 2004.
The transition provisions of Issue 03-6 require prior period earnings per share
amounts to be restated to conform to the new standard, including the impact
relating to securities that have been extinguished but were outstanding for a
portion of some prior period that is presented for comparative purposes.
Accordingly, in the future, Integra will restate its earnings per share
calculations for the year ended December 31, 2001 to conform to the two-class
method required by Issue 03-6 as it relates to the dividend participation rights
included in the Series B and Series C Convertible Preferred Stock that were
outstanding during that period. The adoption of Issue 03-6 will reduce
previously reported basic earnings per share by $0.05 to $1.03 and diluted
earnings per share by $0.02 to $0.92 in 2001. The adoption of Issue 03-6 will
not change the previously reported basic or diluted earnings per share for any
other year.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial statements of the business acquired
Audited financial statements for J. Jamner Surgical Instruments, Inc. as of and
for the year ended December 31, 2002 were filed as Exhibit 99.1 in a Current
Report on Form 8-K filed with the Securities and Exchange Commission on March
25, 2003.
(b) Pro forma financial information
An unaudited pro forma condensed combined balance sheet as of December 31, 2002
and an unaudited pro forma condensed combined statement of operations for the
year ended December 31, 2002 were filed as Exhibit 99.2 in a Current Report on
Form 8-K filed with the Securities and Exchange Commission on March 25, 2003.
An unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2003 is filed herewith as Exhibit 99.1.
(c) Exhibits.
Exhibit
Number Description of Exhibit
------- ----------------------
99.1 Unaudited pro forma condensed combined statement of operations for
the year ended December 31, 2003
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: August 3, 2004 By: /s/ Stuart M. Essig
-----------------------------
Stuart M. Essig
President and Chief Executive Officer
Exhibit Index
Exhibit
Number Description of Exhibit
------- ----------------------
99.1 Unaudited pro forma condensed combined statement of operations for
the year ended December 31, 2003
Exhibit 99.1.
Unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2003.
On March 17, 2003 (the "Closing Date"), Integra LifeSciences Corporation
("Integra"), a wholly-owned subsidiary of Integra LifeSciences Holdings
Corporation (the "Company"), acquired all of the issued and outstanding capital
stock of J. Jamner Surgical Instruments, Inc., a Delaware corporation (doing
business as JARIT(R) Surgical Instruments) ("JARIT"), for $44.5 million in cash,
subject to a working capital adjustment and other adjustments with respect to
certain income tax elections that totaled $0.8 million. The acquisition was made
pursuant to a Stock Purchase Agreement dated as of March 17, 2003 among Integra
and Howard Jamner and other individual stockholders of JARIT. JARIT markets a
wide variety of high quality, reusable surgical instruments for use in virtually
all surgical disciplines.
The unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2003 has been prepared to give effect to the acquisition by
Integra of all of the issued and outstanding capital stock of JARIT as of
January 1, 2003. This pro forma statement is presented for illustrative purposes
only. The pro forma adjustments are based upon available information and
assumptions that the Company believes are reasonable. The unaudited condensed
combined pro forma financial statement does not purport to represent what the
consolidated results of operations of the Company would actually have been if
the acquisition had occurred on the date referred to above, nor do they purport
to project the results of operations of the Company for any future period.
The unaudited pro forma condensed combined statement of operations for the year
ended December 31, 2003 was prepared by combining the Company's historical
statement of operations for the year ended December 31, 2003 with JARIT's
historical statement of operations for the period January 1, 2003 through March
17, 2003, giving effect to the acquisition as though it had occurred on January
1, 2003. This unaudited pro forma condensed combined statement of operations
does not give effect to any potential cost savings or other operating
efficiencies that could result from the acquisition.
Unaudited Pro Forma Condensed Combined Statement of Operations For the Year
Ended December 31, 2003
In thousands, except per share amounts
Integra J. Jamner
LifeSciences Surgical
Holdings Instruments, Pro Forma
Corporation Inc. Adjustments Note Consolidated
----------- ----------- ----------- ---- ------------
Total revenue $ 185,599 $ 6,013 $ -- $ 191,612
COSTS AND EXPENSES
Cost of product revenue 70,597 2,796 73,393
Research and development 12,814 -- -- 12,814
Selling, general and administrative 59,461 2,776 (224) 2A 62,013
Amortization 3,080 -- 195 2B 3,273
----------- ----------- ----------- ---- ------------
Total costs and expenses 145,952 5,572 (29) 151,495
Operating income 39,647 441 29 40,117
Interest income (expense), net 471 (62) 67 2C
(183) 2D 293
Other income (expense), net 3,071 270 -- 3,341
----------- ----------- ----------- ---- ------------
Income before income taxes 43,189 649 (87) 43,751
Income tax expense 16,328 -- 212 2E 16,540
----------- ----------- ----------- ---- ------------
Net income $ 26,861 $ 649 $ (299) $ 27,211
=========== =========== =========== ==== ============
Net income per share
Basic $ 0.92 $ 0.94
Diluted $ 0.88 $ 0.89
Weighted average common shares outstanding:
Basic 29,071 29,071
Diluted 30,468 30,468
See notes to pro forma condensed combined financial statements.
Notes to Unaudited Pro Forma Condensed Combined Financial Statements
1. Basis of Pro Forma Presentation
For the pro forma statement of operations for the year ended December 31, 2003,
the $43.5 million net purchase price has been allocated based on the fair values
of assets acquired and liabilities assumed as of the Closing Date as if the
acquisition was completed on January 1, 2003. The $43.5 million net purchase
price consisted of the initial $44.5 million of cash paid on the Closing Date,
$0.3 million of costs incurred by the Company directly as a result of the
acquisition, a subsequent $0.8 million purchase price adjustment paid to the
Seller, less $2.1 million of cash acquired. The actual purchase price allocation
as of the Closing Date is disclosed in Note 3 to the Company's audited financial
statements included in its Annual Report on Form 10-K for the year ended
December 31, 2003. The acquired intangible assets consist primarily of customer
relationships and tradename and are being amortized over lives ranging from five
to forty years. Accordingly, the pro forma $195,000 intangible asset
amortization adjustment is based on this allocation.
These pro forma condensed combined financial statements should be read in
conjunction with the audited financial statements of the Company included in its
Annual Report on Form 10-K for the year ended December 31, 2003, and the audited
financial statements of JARIT as of and for the year ended December 31, 2002
included in Exhibit 99.1 and the unaudited pro forma condensed combined balance
sheet as of December 31, 2002 and an unaudited pro forma condensed combined
statement of operations for the year ended December 31, 2002 included in Exhibit
99.2 to the Company's Current Report on Form 8-K filed on March 25, 2003.
2. Pro Forma Adjustments
The pro forma condensed combined statement of operations includes the following
adjustments:
2A This adjustment reduces the actual compensation paid to a certain JARIT
employee for the period January 1, 2003 to March 17, 2003 to an amount that
this employee would have been paid by the Company subject to the terms of
an employment agreement between the Company and this employee executed in
connection with this acquisition.
2B This adjustment records pro forma amortization expense for intangible
assets for the period January 1, 2003 through March 17, 2003, based on the
actual purchase price allocation.
2C This adjustment reduces the $67,000 of interest expense recorded by JARIT
during the period January 1, 2003 through March 17, 2003 on the loans
payable to stockholders of JARIT which were not assumed by the Company.
2D This adjustment reduces interest income by $183,000 for the estimated
interest income earned by the Company for the period January 1, 2003
through March 17, 2003 on the $43.5 million of short term investments used
to finance the acquisition. This reduction in interest income assumes the
$43.5 million was paid on January 1, 2003 and the average interest rate
earned on short term investments for the period January 1, 2003 through
March 17, 2003 was 2.0%.
2E The inclusion of the financial results of JARIT for the period January 1,
2003 through March 17, 2003 in the Company's consolidated results would
have increased the Company's income tax expense by approximately $212,000
for the year ended December 31, 2003. This adjustment results from the fact
that JARIT was an "S" Corporation for federal and New York state income tax
purposes and therefore did not record income tax expense at the same rate
that a "C" Corporation would have.