UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
For the quarterly period ended June 30, 2015
Or
For the transition period from to .
Commission File Number 001-33092
LEMAITRE VASCULAR, INC.
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
(781) 221-2266
(Registrant’s telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule12b-2 of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ¨ No x
The registrant had 17,718,971 shares of common stock, $.01 par value per share, outstanding as of August 3, 2015.
LEMAITRE VASCULAR
TABLE OF CONTENTS
Part I.
Financial Information:
Item 1.
Financial Statements
Consolidated Balance Sheets as of June 30, 2015 (unaudited) and December 31, 2014
Unaudited Consolidated Statements of Operations for the three-month and six-month periods ended June 30, 2015 and 2014
Unaudited Consolidated Statements of Comprehensive Income for the three-month and six-month periods ended June 30, 2015 and 2014
Unaudited Consolidated Statements of Cash Flows for the six-month periods ended June 30, 2015 and 2014
Notes to Unaudited Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosure about Market Risk
Item 4.
Controls and Procedures
Part II.
Other Information:
Legal Proceedings
Item 1A.
Risk Factors
Unregistered Sales of Equity Securities and Use of Proceeds
Item 6.
Exhibits
Signatures
Index to Exhibits
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Part I. Financial Information
LeMaitre Vascular, Inc.
Consolidated Balance Sheets
Assets
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowances of $272 at June 30, 2015 and $242 at December 31, 2014
Inventory
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Goodwill
Other intangibles, net
Deferred tax assets
Other assets
Total assets
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses
Acquisition-related obligations
Total current liabilities
Deferred tax liabilities
Other long-term liabilities
Total liabilities
Stockholders’ equity:
Preferred stock, $0.01 par value; authorized 3,000,000 shares; none outstanding
Common stock, $0.01 par value; authorized 37,000,000 shares; issued 19,081,098 shares at June 30, 2015, and 18,778,436 shares at December 31, 2014
Additional paid-in capital
Retained earnings
Accumulated other comprehensive loss
Treasury stock, at cost; 1,407,959 shares at June 30, 2015, and 1,407,211 shares at December 31, 2014
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes to consolidated financial statements.
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Consolidated Statements of Operations
(unaudited)
Net sales
Cost of sales
Gross profit
Sales and marketing
General and administrative
Research and development
Restructuring charges
Impairment charges
Medical device excise tax
Total operating expenses
Income from operations
Other income (expense):
Interest income
Foreign currency gain (loss)
Income before income taxes
Provision for income taxes
Net income
Earnings per share of common stock:
Basic
Diluted
Weighted-average shares outstanding:
Cash dividends declared per common share
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Consolidated Statements of Comprehensive Income
Other comprehensive income (loss):
Foreign currency translation adjustment, net
Total other comprehensive income (loss)
Comprehensive income
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Consolidated Statements of Cash Flows
Operating activities
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization
Stock-based compensation
Accrued contingent earnout
Provision of doubtful accounts
Provision for inventory write-downs
Excess tax benefits from stock-based compensation awards
Loss on disposal of property and equipment
Foreign currency transaction gain (loss)
Changes in operating assets and liabilities:
Accounts receivable
Prepaid expenses and other assets
Accounts payable and other liabilities
Net cash provided by (used in) operating activities
Investing activities
Purchases of property and equipment
Proceeds from disposal of property and equipment
Payments related to acquisitions, net of cash acquired
Purchase of intellectual property
Net cash used in investing activities
Financing activities
Proceeds from issuance of common stock
Purchase of treasury stock
Common stock cash dividend paid
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
Supplemental disclosures of cash flow information (see Note 13)
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Notes to Consolidated Financial Statements
June 30, 2015
Description of Business
Unless the context requires otherwise, references to LeMaitre Vascular, we, our, and us refer to LeMaitre Vascular, Inc. and our subsidiaries. We develop, manufacture, and market medical devices and implants used primarily in the field of vascular surgery. We operate in a single segment in which our principal product lines include the following: valvulotomes, balloon catheters, carotid shunts, biologic patches, biologic grafts, radiopaque marking tape, anastomotic clips, remote endarterectomy devices, laparoscopic cholecystectomy devices, vascular grafts, angioscopes, and powered phlebectomy devices. Our offices are located in Burlington, Massachusetts; Mississauga, Canada; Sulzbach, Germany; Milan, Italy; Madrid, Spain; North Melbourne, Australia; Tokyo, Japan; and Shanghai, China.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal, recurring adjustments considered necessary for a fair presentation of the results of these interim periods have been included. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are updated as appropriate. The results for the six months ended June 30, 2015 are not necessarily indicative of results to be expected for the entire year. The information contained in these interim financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2014, including the notes thereto, included in our Form 10-K filed with the Securities and Exchange Commission (SEC).
Consolidation
Our consolidated financial statements include the accounts of LeMaitre Vascular and the accounts of our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board issued a new accounting standard that provides for a comprehensive model to use in the accounting for revenue arising from contracts with customers that will replace most existing revenue recognition guidance in GAAP. Under this standard, revenue will be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard will be effective for annual reporting periods beginning after December 15, 2017, allows for either full retrospective or modified retrospective application, and early adoption is not permitted. We are assessing the new standard and which adoption method we will apply. We have not yet determined the impact on our results of operations.
As part of the process of preparing our consolidated financial statements we are required to determine our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing temporary differences resulting from recognition of items for income tax and
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accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from taxable income during the carryback period or in the future; and to the extent we believe that recovery is not more likely than not, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must reflect this increase as an expense within the tax provision in the statement of operations. We do not provide for income taxes on undistributed earnings of foreign subsidiaries, as our intention is to permanently reinvest these earnings.
We recognize, measure, present and disclose in our financial statements any uncertain tax positions that we have taken, or expect to take on a tax return. We operate in multiple taxing jurisdictions, both within and without the United States, and may be subject to audits from various tax authorities. Management’s judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, liabilities for uncertain tax positions, and any valuation allowance recorded against our net deferred tax assets. We will monitor the realizability of our deferred tax assets and adjust the valuation allowance accordingly.
Our policy is to classify interest and penalties related to unrecognized tax benefits as income tax expense.
Our 2015 income tax expense varies from the statutory rate mainly due to certain permanent items, offset by lower statutory rates from our foreign entities and a discrete item for stock option exercises. Our 2014 income tax expense varies from the statutory rate mainly due to certain permanent items, offset by lower statutory rates from our foreign entities, and discrete items related to certain foreign branch losses previously not deductible and the release of a valuation allowance on certain foreign loss carryforwards.
We have reviewed the tax positions taken, or to be taken, in our tax returns for all tax years currently open to examination by a taxing authority. As of June 30, 2015, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $73,000. We remain subject to examination until the statute of limitations expires for each respective tax jurisdiction. The statute of limitations will be open with respect to these tax positions until 2024. A reconciliation of beginning and ending amount of our unrecognized tax benefits is as follows:
Unrecognized tax benefits at the beginning of year
Additions for tax positions of current year
Additions for tax positions of prior years
Reductions for settlements with taxing authorities
Reductions for lapses of the applicable statutes of limitations
Unrecognized tax benefits at the end of the period
As of June 30, 2015, a summary of the tax years that remain subject to examination in our taxing jurisdictions is as follows:
United States
Foreign
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Inventories consist of the following:
Raw materials
Work-in-process
Finished products
Total inventory
We held inventory on consignment of $0.9 and $0.8 million as of June 30, 2015 and December 31, 2014, respectively.
Clinical Instruments International, Inc.
In July 2013, we entered into an asset purchase agreement with Clinical Instruments International, Inc. (Clinical Instruments) to acquire substantially all the assets of Clinical Instruments for $1.1 million. We paid $0.9 million at the closing and paid the remaining $0.2 million in October 2014. We accounted for the acquisition as a business combination. Assets acquired include inventory and intellectual property. We recorded $0.2 million of inventory, $0.3 million of intangible assets and $0.6 million of goodwill. The weighted-average amortization period for the acquired intangible assets as of July 31, 2013 was 5.7 years. The goodwill will be deductible for tax purposes over 15 years.
InaVein LLC
In August 2013, we entered into an asset purchase agreement with InaVein LLC (InaVein) to acquire substantially all the assets of InaVein for $2.5 million and potential acquisition-related contingent consideration totaling up to $1.4 million in 2014 and 2015 dependent on the sales performance of the acquired business and the timing of regulatory approval in China. We paid $2.1 million at the closing and paid the remaining $0.4 million in September 2014. We accounted for the acquisition as a business combination. Assets acquired include receivables, inventory, equipment, and intellectual property. Liabilities assumed include payables and service contracts. We recorded $0.8 million of tangible assets, $1.1 million of intangible assets, $0.7 million of goodwill, and $0.1 million of assumed liabilities. The weighted-average amortization period for the acquired intangible assets as of August 31, 2013 was 6.7 years. The goodwill will be deductible for tax purposes over 15 years.
The contingent consideration was initially valued at the date of acquisition and is remeasured each reporting period until the contingency is resolved. Based upon stronger than expected sales to China, we recorded an increase of $0.1 million in the contingent consideration dependent on the sales performance of the acquired business in the first year following the closing as a charge to general and administrative expense in 2014. In October 2014, we paid $0.2 million for the first sales related milestone. The milestone related to the timing of the regulatory approval in China was not achieved. The final potential milestone payment is dependent on sales performance of the acquired business from August 2014 to August 2015. We currently do not expect to pay the second sales related milestone.
Xenotis Pty Ltd
In August 2014, we entered into a stock purchase agreement with the shareholders of Xenotis Pty Ltd (Xenotis) to acquire all of the capital stock of Xenotis for $6.7 million with a mechanism for a purchase price adjustment based on the net tangible assets of Xenotis at closing. Xenotis is the parent company of Bio Nova International, the manufacturer and marketer of the Omniflow II biosynthetic vascular graft for lower extremity bypass and AV access. We paid $5.1 million at the closing and the remaining is payable in August 2015. The final payment is estimated to be $1.1 million based upon the foreign exchange rates as of August 3, 2015.
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The net tangible asset purchase price adjustment of $0.2 million was paid in November 2014. We accounted for the acquisition as a business combination. Assets acquired include receivables, inventory, equipment, a building, and intellectual property. We recorded $2.1 million of tangible assets, $2.1 million of property and equipment, $1.8 million of intangible assets, and $2.5 million of goodwill. The weighted-average amortization period for the acquired intangible assets as of August 31, 2014 was 6.8 years. Liabilities assumed include payables and debt which totaled $1.7 million and included $1.1 million of assumed debt, which we paid in full in August 2014. The purchase accounting is complete.
The goodwill of $2.5 million will not be deductible for tax purposes. In addition, we acquired deferred tax assets of $2.4 million which consist primarily of net operating loss carry-forwards and capital loss carry-forwards. We recorded a full valuation allowance on these deferred tax assets.
In September 2014, we entered into definitive agreements with eight former Xenotis distributors in Europe to terminate their distribution of our Omniflow II biosynthetic vascular grafts for $1.3 million. We paid approximately $1.1 million in 2014 and $0.2 million in 2015 with the remaining $20,000 due in 2015. We recorded $0.4 million of inventory and $0.9 million of intangible assets. We allocated the payment to the tangible and intangible assets acquired based on the estimated fair value of each of these elements to the transactions. The weighted-average amortization period for the acquired intangible assets as of September 30, 2014 was 5.0 years.
UreSil, LLC
In May 2015, we entered into an asset purchase agreement with UreSil, LLC (UreSil) to acquire the production and distribution rights of UreSil’s Tru-Incise valvulotome for sales outside the United States for $1.4 million. We paid $1.1 million with the remaining $0.3 million payable at various points in 2016 and 2017. We accounted for the acquisition as a business combination. Assets acquired include inventory and intellectual property. We did not assume any liabilities.
The following table summarizes the preliminary purchase price allocation at the date of the acquisition:
Intangible assets
Purchase price
The goodwill will be deductible for tax purposes over 15 years.
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The following table reflects the allocation of the acquired intangible assets and related estimated useful lives:
Non-compete agreement
Tradename license
Technology
Customer relationships
Total intangible assets
Following the acquisition, we entered into definitive agreements with seven former UreSil distributors to terminate their distribution of the Tru-Incise valvulotome for $0.2 million. We paid approximately $0.1 million to date with the remainder primarily due in 2015. We recorded approximately $0.2 million of intangible assets with a weighted-average amortization period of 3.0 years.
Our acquisitions have historically been made at prices above the fair value of the acquired identifiable assets, resulting in goodwill, due to expectations of synergies that will be realized by combining businesses. These synergies include the use of our existing sales channel to expand sales of the acquired businesses’ products, consolidation of manufacturing facilities, and the leveraging of our existing administrative infrastructure.
Non-occlusive modeling catheter divestiture
In July 2015, we entered into an asset sales agreement with Merit Medical Ireland Limited to sell our inventory, intellectual property, and customer lists associated with our non-occlusive modeling catheter product line for $0.4 million which we will recognize as a gain on divestiture in the three months ended September 30, 2015. During the three months ended June 30, 2014, we recognized an impairment charge of $0.2 million on our non-occlusive modeling catheter product line. Additionally, we recognized a $0.3 million charge to cost of sales related to the non-occlusive modeling catheter inventory.
The fair market valuations associated with these transactions fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value. The fair value measurements were calculated using unobservable inputs, primarily using the income approach, specifically the discounted cash flow method. The amount and timing of future cash flows within our analysis was based on our due diligence models, most recent operational budgets, long range strategic plans and other estimates.
Goodwill consists of the following:
Balance at beginning of year
Additions for acquisitions
Effects of currency exchange
Balance at June 30, 2015
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Other intangibles consist of the following:
Product technology
Trademarks and licenses
Other intangible assets
Total identifiable intangible assets
These intangible assets are being amortized over their useful lives ranging from 1 to 13 years. The weighted-average amortization period for these intangibles as of June 30, 2015 is 7.2 years. Amortization expense is included in general and administrative expense and is as follows:
Amortization expense
Estimated amortization expense for the remainder of 2015 and each of the five succeeding fiscal years is as follows:
Accrued expenses consist of the following:
Compensation and related taxes
Income and other taxes
Professional fees
Other
Total
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In February 2014, we committed to a plan intended to improve operational efficiencies, which included a reduction in force of approximately 10% of our workforce and other cost-cutting measures, including the transfer of our Clinical Instruments manufacturing to our Burlington headquarters and corresponding closure of our Southbridge manufacturing facility. As a result, we recorded approximately $0.4 million of severance related restructuring expense for the three months ended March 31, 2014. We made approximately $0.1 million of severance related payments during the three months ended March 31, 2014.
In April 2014, we committed to an additional reduction in force of approximately seven employees. As a result, we recorded approximately $0.1 million of severance related restructuring expense for the three months ended June 30, 2014.
We did not incur restructuring charges during the six months ended June 30, 2015.
Purchase Commitments
As of June 30, 2015, as part of our normal course of business, we have purchase commitments to purchase $3.0 million of inventory through 2016.
The FASB establishes standards for reporting information regarding operating segments in financial statements. Operating segments are identified as components of an enterprise about which separate, discrete financial information is evaluated by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. We view our operations and manage our business as one operating segment. No discrete operating information is prepared by us except for product sales by product line and by legal entity for local reporting purposes.
Most of our revenues were generated in the United States, Germany, Italy, Japan, Canada, and other European countries, and substantially all of our assets are located in the United States. Net sales to unaffiliated customers by country were as follows:
Germany
Italy
Other countries
Net Sales
Our 2006 Stock Option and Incentive Plan allows for granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, unrestricted stock awards, and deferred stock awards to our officers, employees, directors, and consultants.
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The components of share-based compensation expense were as follows:
Stock option awards
Restricted stock units
Total share-based compensation
We have computed the fair values of employee stock options for option grants issued during the six months ended June 30, 2014 using the Black-Scholes option model with the following assumptions:
Dividend yield
Volatility
Risk-free interest rate
Weighted average expected option term (in years)
Weighted average fair value per share of options granted
We did not issue option grants in the six months ended June 30, 2015. The weighted-average fair value per share of restricted stock unit grants issued for the six months ended June 30, 2015 was $7.42. We did not issue restricted stock unit grants in the six months ended June 30, 2014.
We issued approximately 303,000 and 57,000 shares of common stock following the exercise or vesting of underlying stock options or restricted stock units in the six months ended June 30, 2015 and 2014, respectively.
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The computation of basic and diluted net income per share was as follows:
Basic:
Net income available for common stockholders
Weighted average shares outstanding
Basic earnings per share
Diluted:
Weighted-average shares outstanding
Common stock equivalents, if diluted
Shares used in computing diluted earnings per common share
Diluted earnings per share
Shares excluded in computing diluted earnings per share as those shares would be anti-dilutive
Share Offering
On June 4, 2014, we issued 1,644,500 shares of our common stock, $0.01 par value per share, at a price to the public of $7.00 per share less underwriting discounts. The net proceeds, after deducting the underwriting discounts and other estimated offering expenses, were approximately $10.5 million. We deployed the net proceeds from the offering on acquisitions consummated in 2014 and used the remainder for general corporate purposes, including continued development of our products, working capital and capital expenditures, payments under our quarterly dividend program, and payments related to acquisitions.
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Dividends
In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis. The dividend activity for the periods presented is as follows:
Record Date
Fiscal Year 2015
March 20, 2015
May 22, 2015
Fiscal Year 2014
March 20, 2014
May 22, 2014
August 21, 2014
November 20, 2014
On July 23, 2015 our Board of Directors approved a quarterly cash dividend on our common stock of $0.04 per share payable on September 3, 2015 to stockholders of record at the close of business on August 20, 2015, which will total approximately $0.7 million.
Cash paid for income taxes, net
The fair value accounting guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:
As of June 30, 2015, we had cash equivalents in a money market fund that was valued using Level 1 inputs (quoted market prices for identical assets) at a fair value of $12.0 million.
We had no Level 2 assets being measured at fair value on a recurring basis as of June 30, 2015.
As discussed in Note 4, we have one remaining acquisition-related contingent liability which is remeasured each reporting period using Level 3 techniques based on an assessment of the probability that we will be required to make such future payment. There were no changes in estimated liability associated with this milestone as we currently do not expect to pay the second sales related milestone.
Changes to our accumulated other comprehensive loss consisted of foreign currency translation for the six months ended June 30, 2015 and 2014, respectively.
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Beginning balance
Other comprehensive income (loss) before reclassifications
Amounts reclassified from accumulated other comprehensive loss
Net current period other comprehensive income (loss)
Ending Balance
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This Quarterly Report on Form 10-Q contains forward-looking statements (within the meaning of the federal securities law) that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future net sales, projected costs, projected expenses, prospects and plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the expectations underlying any of our forward-looking statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections, or expectations prove incorrect, our actual results, performance, or financial condition may vary materially and adversely from those anticipated, estimated, or expected. These risks and uncertainties include, but are not limited to: the risk that the Company may not realize the anticipated benefits of its strategic activities; risks related to the integration of acquisition targets; the risk that assumptions about the market for the Company’s products and the productivity of the Company’s direct sales force and distributors may not be correct; risks related to product demand and market acceptance of the Company’s products; the risk that the XenoSure product is not as accretive and does not achieve the gross margins currently anticipated by the Company; the risk that the Company experiences increased expense, production delays or quality difficulties in increasing the production of our XenoSure manufacturing operations; risks related to attracting, training and retaining sales representatives and other employees in new markets such as Finland and New Zealand; adverse or fluctuating conditions in the general domestic and global economic markets; and the risk that the Company is not successful in transitioning to a direct-selling model in new territories.
Forward-looking statements reflect management’s analysis as of the date of this quarterly report. Further information on potential risk factors that could affect our business and financial results is detailed in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission, including under the section headed “Risk Factors” in our most recent Annual Report on Form 10-K. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included in this report and our other SEC filings, including our audited consolidated financial statements and the related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 18, 2015. We do not assume any obligation to update any forward-lookingstatements, whether as a result of new information, future events, or otherwise, except as required by law.
Unless the context requires otherwise, references to “LeMaitre Vascular,” “we,” “our,” and “us” in this Quarterly Report on Form 10-Q refer to LeMaitre Vascular, Inc. and its subsidiaries.
LeMaitre, AlboSure, Omniflow, and XenoSure are registered trademarks of LeMaitre Vascular or one of its subsidiaries. This Quarterly Report on Form 10-Q also includes the registered and unregistered trademarks of other persons, which are the property of their respective owners.
Overview
We are a medical device company that develops, manufactures, and markets medical devices and implants for the treatment of peripheral vascular disease. Our principal product offerings are sold throughout the world, primarily in North America, Europe and, to a lesser extent, Asia and the Pacific Rim. We estimate that the annual worldwide market for all peripheral vascular devices approximates $4 billion, within which our core product lines address roughly $750 million. We have grown our business by using a three-pronged strategy: competing for sales of niche products, expanding our worldwide direct sales force, and acquiring and developing complementary vascular devices. We have used acquisitions as a primary means of further accessing the larger peripheral vascular device market, and we expect to continue to pursue this strategy in the future. Additionally, we have increased our efforts to expand our vascular device offerings through new product development. We currently manufacture most of our product lines in our Burlington, Massachusetts headquarters.
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Our products are used by vascular surgeons who treat peripheral vascular disease through both open surgical methods and endovascular techniques. In contrast to interventional cardiologists and interventional radiologists, neither of whom are certified to perform open surgical procedures, vascular surgeons can perform both open surgical and minimally invasive endovascular procedures, and are therefore uniquely positioned to provide a wider range of treatment options to patients.
Our principal product lines include the following: valvulotomes, balloon catheters, carotid shunts, biologic vascular patches, radiopaque marking tape, anastomotic clips, remote endarterectomy devices, laparoscopic cholecystectomy devices, vascular grafts, biosynthetic vascular grafts, angioscopes, and powered phlebectomy devices.
To assist us in evaluating our business strategies, we regularly monitor long-term technology trends in the peripheral vascular device market. Additionally, we consider the information obtained from discussions with the medical community in connection with the demand for our products, including potential new product launches. We also use this information to help determine our competitive position in the peripheral vascular device market and our manufacturing capacity requirements.
Our business opportunities include the following:
We sell our products primarily through a direct sales force. As of June 30, 2015, our sales force was comprised of 81 sales representatives in North America, Europe, Japan, Australia, and New Zealand. We also sell our products in other countries through distributors. Our worldwide headquarters is located in Burlington, Massachusetts. Our international operations are headquartered in Sulzbach, Germany. We also have sales offices located in Tokyo, Japan; Mississauga, Canada; Madrid, Spain; Milan, Italy; Shanghai, China; and North Melbourne, Australia. In the six months ended June 30, 2015, approximately 93% of our net sales were generated in territories in which we employ direct sales representatives.
We have experienced success in niche product segments, for example the market segments for biologic patches and valvulotome devices. In the biologic patch market segment, we believe that we have been able to increase segment share and increase selling prices. In the valvulotome market segment, we believe that we have been able to increase selling prices without compromising market segment share. There can be no assurance that we will not meet resistance to increased selling prices in the future. In contrast, we have experienced less success in highly competitive product segments such as polyester and ePTFE grafts, where we face stronger competition from larger companies with greater resources. We have also experienced less success in segments such as radiopaque tape, where we face recently introduced competitive products. While we believe that these challenging market dynamics can be mitigated by our strong relationships with our vascular surgeon customers, there can be no assurance that we will be successful in highly competitive market segments.
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In recent years we have also experienced comparatively greater success in geographic markets outside of the United States, including Europe and other non-traditional markets for our devices such as China and Saudi Arabia. Sales to these geographies generally include comparatively lower average selling prices, and to the extent that we continue to be successful in these markets which carry a lower margin, we will likely experience downward pressure on our gross margin.
Because we believe that direct-to-hospital sales engender closer customer relationships, and allow for higher selling prices and gross margins, we periodically enter into transactions with our distributors to transition their sales of our medical devices to our direct sales organization:
Our strategy for growing our business includes the acquisition of complementary product lines and companies and occasionally the discontinuance or divestiture of products or activities that are no longer complementary:
In addition to relying upon acquisitions to grow our business, we also rely on our product development efforts to bring differentiated technology and next-generation products to market. These efforts have led to the following recent product developments:
In addition to our sales growth strategies, we have also executed several operational initiatives designed to consolidate and streamline manufacturing within our Burlington, Massachusetts facilities. We expect that these plant consolidations will result in improved control over our production capacity as well as reduced costs over the long-term. Our most recent manufacturing transitions included:
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We currently expect to maintain the manufacturing operations of the recently acquired North Melbourne, Australia facility for the foreseeable future.
Our execution of these business opportunities may affect the comparability of our financial results from period to period and may cause substantial fluctuations from period to period, as we incur related restructuring and other non-recurring charges, as well as longer term impacts to revenues and operating expenditures. For example, in 2014, we incurred $0.5 million of restructuring charges related to reductions in force and our Clinical Instruments facility closure and relocation to Burlington, Massachusetts.
Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, primarily the Euro, affect our financial results. For the six months ended June 30, 2015, approximately 38% of our sales were from outside the Americas. We expect that foreign currencies will continue to represent a similarly significant percentage of our sales in the future. Selling, marketing, and administrative costs related to these sales are largely denominated in the same respective currency, thereby partially mitigating our transaction risk exposure. However, most of our foreign sales are denominated in local currency, and if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases we will receive less in U.S. dollars than we did before the rate increase went into effect. For the six months ended June 30, 2015, the negative effects of foreign exchange reduced sales by $3.2 million. As of July 28, 2015, we estimate that the strong U.S. dollar could decrease our 2015 revenues by approximately $5.3 million, reduce gross margin by 1.7%, and reduce operating income by approximately $2.4 million as compared to the exchange rates for the year ended December 31, 2014. However, the actual impact of fluctuations in exchange rates in 2015 may vary materially and adversely from these estimates.
Net Sales and Expense Components
The following is a description of the primary components of our net sales and expenses:
Net sales. We derive our net sales from the sale of our products, less discounts and returns. Net sales include the shipping and handling fees paid for by our customers. Most of our sales are generated by our direct sales force and are shipped and billed to hospitals or clinics throughout the world. In countries where we do not have a direct sales force, sales are primarily generated by shipments to distributors who, in turn, sell to hospitals and clinics. In those cases where our products are held on consignment at a hospital or clinic, we generate sales at the time the product is used in surgery rather than at shipment.
Cost of sales. We manufacture nearly all of the products that we sell. Our cost of sales consists primarily of manufacturing personnel, raw materials and components, depreciation of property and equipment, and other allocated manufacturing overhead, as well as freight expense we pay to ship products to customers.
Sales and marketing. Our sales and marketing expense consists primarily of salaries, commissions, stock based compensation, travel and entertainment, attendance at medical society meetings, training programs, advertising and product promotions, direct mail, and other marketing costs.
General and administrative. General and administrative expense consists primarily of executive, finance and human resource expense, stock based compensation, legal and accounting fees, information technology expense, intangible amortization expense, and insurance expense.
Research and development. Research and development expense includes costs associated with the design, development, testing, enhancement, and regulatory approval of our products, principally salaries, laboratory testing, and supply costs. It also includes costs associated with design and execution of clinical studies, regulatory submissions and costs to register, maintain, and defend our intellectual property, and royalty payments associated with licensed and acquired intellectual property.
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Restructuring. Restructuring expense includes costs directly associated with distribution agreement termination expenses, severance and retention costs for terminated employees, factory relocation costs, and other expenses associated with restructuring our operations.
Other income (expense). Other income (expense) primarily includes interest income and expense, foreign currency gains (losses), and other miscellaneous gains (losses).
Income tax expense. We are subject to federal and state income taxes for earnings generated in the United States, which include operating losses in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned Canadian, German, Italian, and Chinese subsidiaries. Our consolidated tax expense is affected by the mix of our taxable income (loss) in the United States and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S tax reporting purposes.
Results of Operations
Comparison of the three and six months ended June 30, 2015 to the three and six months ended June 30, 2014.
The following tables set forth, for the periods indicated, our results of operations, net sales by geography, and the change between the specified periods expressed as a percentage increase or decrease:
Net sales by geography:
Americas
International
Net sales. Net sales increased 10% to $19.9 million for the three months ended June 30, 2015, compared to $18.2 million for the three months ended June 30, 2014. Sales increases for the three months ended June 30, 2015 were primarily driven by increased sales of our biologic vascular patches of $0.6 million, valvulotomes of $0.6 million (driven by the 1.5mm HYDRO LeMaitre Valvulotome conversion), and radiopaque tape of $0.2 million (driven by $0.3 million of OEM tape sales), and were partially offset by decreased sales of vessel closure systems of $0.2 million, powered phlebectomy devices of $0.2 million, catheters, remote endarterectomy devices, and the negative effects of changes in foreign currency exchange rates of $1.7 million. Our biosynthetic vascular graft, acquired in August 2014, contributed $0.9 million of sales during the three months ended June 30, 2015.
Net sales increased 11% to $38.8 million for the six months ended June 30, 2015, compared to $34.9 million for the six months ended June 30, 2014. Sales increases for the six months ended June 30, 2015 were primarily driven by increased sales of our biologic vascular patches of $1.2 million, valvulotomes of $1.1 million (driven by the 1.5mm HYDRO LeMaitre Valvulotome conversion), and radiopaque tape of $0.4 million (driven by $0.6 million of OEM tape sales), and were partially offset by decreased sales of catheters of $0.4 million, cholangiogram catheters of $0.3 million, remote endarterectomy devices, and the negative effects of changes in foreign currency exchange rates of $3.2 million. Our biosynthetic vascular graft, acquired in August 2014, contributed $2.0 million of sales during the six months ended June 30, 2015.
Direct-to-hospital net sales were 93% for the six months ended June 30, 2015, versus 92% for the six months ended June 30, 2014.
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Net sales by geography. Net sales in the Americas increased $1.2 million for the three months ended June 30, 2015. The increase was primarily driven by valvulotomes, biologic vascular patches, radiopaque tape, and vessel closure systems and was partially offset by decreased sales of remote endarterectomy devices and catheters. International net sales increased $0.5 million for the three months ended June 30, 2015. The increase was primarily driven by sales of our newly acquired biosynthetic vascular graft, increased sales in biologic vascular patches and valvulotomes, and was partially offset by decreased sales of vessel closure systems and powered phlebectomy devices to China.
Net sales in the Americas increased $2.5 million for the six months ended June 30, 2015. The increase was primarily driven by valvulotomes, biologic vascular patches, radiopaque tape, angioscopes, and vessel closure systems and was partially offset by decreased sales of cholangiogram catheters, catheters, and remote endarterectomy devices. International net sales increased $1.4 million for the six months ended June 30, 2015. The increase was primarily driven by sales of our newly acquired biosynthetic vascular graft as well as increased sales in biologic vascular patches and valvulotomes, and was partially offset by decreased sales of vessel closure systems and powered phlebectomy devices to China and radiopaque tape.
Gross margin
Gross Profit. Gross profit increased $0.8 million to $13.1 million for the three months ended June 30, 2015, while gross margin decreased 2.1% to 66.0% in the period. The gross margin decrease was largely driven by the negative impact of changes in foreign currency exchange rates on our international sales and unfavorable geographic and product mix. These decreases were partially offset by manufacturing efficiencies and higher average selling prices across nearly all product lines. The gross profit increase was a result of higher sales.
Gross profit increased $2.6 million to $26.2 million for the six months ended June 30, 2015, while gross margin remained flat at 67.6% in the period. The gross margin was favorably impacted by the completion of the biologic vascular patch manufacturing transition in the second quarter of 2014 resulting in reduced manufacturing costs in the current year, other manufacturing efficiencies, and by higher average selling prices across nearly all product lines. These increases were partially offset by the negative impact of changes in foreign currency exchange rates on our international sales and unfavorable geographic and product mix. The gross profit increase was a result of higher sales.
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Sales and marketing. For the three months ended June 30, 2015, sales and marketing expense was relatively flat at $5.5 million with both selling and marketing expenses consistent between periods as increased sales compensation related costs were offset by changes in foreign currency exchange rates of $0.5 million.
For the six months ended June 30, 2015, sales and marketing expense decreased 3% to $11.4 million with selling expense decreasing by $0.3 million and marketing expense consistent between periods. The decrease was driven by changes in foreign currency exchange rates of $1.0 million and was partially offset by increased sales compensation related costs. As a percentage of net sales, sales and marketing expense was 29% in the six months ended June 30, 2015. We plan to increase the size of our sales force in 2015, and we expect that selling and marketing expenses will increase commensurately.
General and administrative. For the three months ended June 30, 2015, general and administrative expense was relatively flat at $3.3 million. General and administrative expense included increased compensation related costs which were offset by changes in foreign currency exchange rates of $0.2 million, a decrease in professional fees, and a contingent consideration expense related to the InaVein acquisition of $0.2 million recognized in 2014.
For the six months ended June 30, 2015, general and administrative expense increased 5% to $6.9 million. General and administrative expense increases were driven by compensation related costs and recruiting fees, and were partially offset by changes in foreign currency exchange rates of $0.4 million, a decrease in professional fees, and a contingent consideration expense related to the InaVein acquisition of $0.2 million recognized in 2014. As a percentage of net sales, general and administrative expense was 18% in the six months ended June 30, 2015. We expect general and administrative expenses to increase in 2015 primarily due to our new subsidiary in China.
Research and development. For the three months ended June 30, 2015, research and development expense increased 17% to $1.3 million. Product development expenses increased $0.1 million primarily driven by product testing costs. Clinical and regulatory expenses were relatively flat.
For the six months ended June 30, 2015, research and development expense were relatively flat at $2.5 million. Product development expenses increased $0.1 million primarily driven by product testing costs. Clinical and regulatory expenses decreased $0.1 million primarily due to costs related to regulatory submissions for new products in geographies such as China and Australia completed in 2014. As a percentage of net sales, research and development expenses was 6% for the six months ended June 30, 2015.
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Restructuring. In February 2014, we committed to a plan intended to improve operational efficiencies, which included a reduction in force of approximately 10% of our workforce and other cost-cutting measures, including the transfer of our recently acquired Clinical Instruments manufacturing to our Burlington headquarters and corresponding closure of our Southbridge manufacturing facility. As a result, we recorded approximately $0.4 million of severance related restructuring expense for the three months ended March 31, 2014. In April 2014, we committed to an additional reduction in force of approximately seven employees. As a result, we recorded approximately $0.1 million of severance related restructuring expense for the three months ended June 30, 2014. We did not incur restructuring charges during the six months ended June 30, 2015.
Impairment charges. During the six months ended June 30, 2014, we recognized an intangible asset impairment charge of $0.2 million upon the terminaton of our non-occlusive modeling catheter product line. We did not incur impairment charges during the six months ended June 30, 2015.
Medical device excise tax. The medical device excise tax was relatively flat for the three months and six months ended June 30, 2015 and 2014, respectively.
Income tax expense. We recorded a provision for taxes of $1.1 million on pre-tax income of $2.8 million for the three months ended June 30, 2015, compared to $0.7 million on pre-tax income of $2.0 million for the three months ended June 30, 2014. We recorded a provision for taxes of $2.0 million on pre-tax income of $5.2 million for the six months ended June 30, 2015, compared to $0.7 million on pre-tax income of $1.7 million for the six months ended June 30, 2014. Our 2015 provision was based on the estimated annual effective tax rate of 37.2%, comprised of estimated federal and state income taxes of approximately $3.0 million, as well as foreign income taxes of $0.4 million. Our income tax expense for the current period varies from the statutory rate amounts mainly due to certain permanent items, offset by lower statutory rates from our foreign entities and a discrete item for stock option exercises. Our 2014 provision was based on the estimated annual effective tax rate of 36.9%, comprised of estimated federal and state income taxes of approximately $1.8 million, as well as foreign income taxes of $0.4 million. Our 2014 income tax expense varied from the statutory rate amounts mainly due to certain permanent items, offset by lower statutory rates from our foreign entities, and discrete items related to certain foreign branch losses previously not deductible and the release of a valuation allowance on certain foreign loss carryforwards. We monitor the mix of profitability by tax jurisdiction and adjust our annual expected rate on a quarterly basis as needed. While it is often difficult to predict the final outcome or timing of the resolution for any particular tax matter, we believe that our tax reserves reflect the probable outcome of known contingencies.
We have assessed the need for a valuation allowance against our deferred tax assets and concluded that as of June 30, 2015, we carried a valuation allowance against $3.2 million of deferred tax assets, principally foreign net operating loss and capital loss carry-forwards and state research and development credit carry-forwards, which based on the available evidence, we believe it is more likely than not that such assets will not be realized.
We expect that our effective tax rate will increase in 2015 if the Federal research and development tax credit is not reinstated in 2015. If the Federal research and development tax credit is reinstated in 2015, we expect our effective tax rate will be similar to our effective tax rate in 2014. We will not be able to generate Federal research and development tax credits in 2015 until and if legislation is enacted.
Liquidity and Capital Resources
At June 30, 2015, our cash and cash equivalents were $19.4 million as compared to $18.7 million at December 31, 2014. Our cash and cash equivalents are highly liquid investments with maturities of 90 days or less at the date of purchase, consist of money market funds, and are stated at cost, which approximates fair value. All of our cash held outside of the United States is available for corporate use.
Operating and Capital Expenditure Requirements
We require cash to pay our operating expenses, make capital expenditures, and pay our long-term liabilities. Since our inception, we have funded our operations through public offerings and private placements of equity securities, short-term borrowings, and funds generated from our operations.
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We recognized operating income of $5.1 million for the six months ended June 30, 2015. For the year ended December 31, 2014, we recognized operating income of $6.3 million. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following:
Our cash balances may decrease as we continue to use cash to fund our operations, make acquisitions, make payments under our quarterly dividend program, and make deferred payments related to prior acquisitions. We believe that our cash, cash equivalents, investments and the interest we earn on these balances will be sufficient to meet our anticipated cash requirements for at least the next twelve months. If these sources of cash are insufficient to satisfy our liquidity requirements beyond the next twelve months, we may seek to sell additional equity or debt securities or borrow funds from, or establish a revolving credit facility, with a financial institution. The sale of additional equity and debt securities may result in dilution to our stockholders. If we raise additional funds through the issuance of debt securities, such securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations and possibly our ability to pay dividends. We may require additional capital beyond our currently forecasted amounts. Any such required additional capital may not be available on reasonable terms, if at all.
Payment Date
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Cash Flows
Cash flows provided by (used in):
Net cash provided by operating activities. Net cash provided by operating activities was $3.3 million for the six months ended June 30, 2015, and consisted of $3.1 million net income, adjusted for non-cash items of $2.6 million (including depreciation and amortization of $1.7 million, stock-based compensation of $0.6 million, and provision for inventory write-offs of $0.3 million) and was offset by changes in working capital of $2.5 million. The net cash used by changes in working capital was driven by increases in accounts receivable of $1.8 million and prepaid and other current assets of $0.6 million, and decreases in accounts payable and other liabilities of $0.4 million and was partially offset by decreases in inventory of $0.4 million.
Net cash used in operating activities was $0.1 million for the six months ended June 30, 2014, and consisted of a $1.0 million net income, adjusted for non-cash items of $3.0 million (including depreciation and amortization of $1.6 million, stock-based compensation of $0.5 million, provision for inventory write-offs of $0.4 million, increases in accrued contingent consideration of $0.2 million and impairment charges of $0.2 million) and was offset by changes in working capital of $4.1 million. The net cash used by changes in working capital was driven by increases in inventory of $2.1 million, primarily related to powered phlebectomy devices and biologic vascular patches and accounts receivable of $0.8 million, and decreases in accounts payable and other liabilities of $1.2 million.
Net cash used in investing activities. Net cash used in investing activities was $2.0 million for six months ended June 30, 2015. This was driven by the UreSil acquisition and related distributor buyouts of $1.3 million and purchase of property and equipment of $0.8 million.
Net cash used in investing activities was $0.7 million for the six months ended June 30, 2014. This was primarily driven by the purchase of property and equipment of $0.5 million and distributor buyout payments of $0.2 million.
Net cash used in financing activities. Net cash used in financing activities was $0.4 million for the six months ended June 30, 2015, driven primarily by payments of common stock dividends of $1.4 million and partially offset by proceeds from stock option exercises of $1.1 million.
Net cash provided by financing activities was $9.6 million for the six months ended June 30, 2014, driven primarily by proceeds from our secondary stock offering of $10.5 million and partially offset by payments of common stock dividends of $1.1 million.
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Contractual obligations. Our principal contractual obligations consist of operating leases and inventory purchase commitments. The following table summarizes our commitments to settle contractual obligations as of June 30, 2015:
Contractual obligations
Operating leases
Purchase commitments for inventory
Total contractual obligations
The commitments under our operating leases consist primarily of lease payments for our facilities in North America, Europe, Asia, and Australia. They also include automobile and equipment leases.
The purchase commitments for inventory are intended to be used in operations in the normal course of business and do not represent excess commitments or loss contracts.
Off-Balance Sheet Arrangements
We did not have any off-balance sheet arrangements as of June 30, 2015. We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As a result, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in these relationships.
Critical Accounting Policies and Estimates
We have adopted various accounting policies to prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Our most significant accounting policies are described in note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. There has been no material changes in our critical accounting policies during the six months ended June 30, 2015. The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are reviewed on an ongoing basis and updated as appropriate. Actual results may differ from those estimates.
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This item is not applicable to us as a smaller reporting company.
Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934 is reported, processed, and summarized within the time periods specified in the SEC’s rules and forms. As of June 30, 2015, or the Evaluation Date, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control
There have been no changes in our internal control over financial reporting for the quarter ended June 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Inherent Limitations of Internal Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Part II. Other Information
In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to employment, product liability, commercial arrangements, intellectual property, and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, there are no matters, as of August 6, 2015, that management believes would have a material adverse effect on our financial position, results of operations or cash flows.
In addition to the information set forth in this report, you should consider the risks and uncertainties discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition, or future results. There have been no substantive changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the Securities and Exchange Commission on March 18, 2015.
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Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
In the quarter ended June 30, 2015, we did not repurchase any shares of our common stock.
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Exhibit
Number
Filed
Herewith
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on August 6, 2015.
/s/ George W. LeMaitre
/s/ Joseph P. Pellegrino, Jr.
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EXHIBIT INDEX