Acquisitions (Tables)

12 Months Ended

Dec. 31, 2017

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

The purchase price was preliminarily allocated as follows (in thousands):



		Preliminary Allocation			Adjustments ⁽¹⁾			Revised Allocation
	Assets Acquired
	Trade receivables	$	952		$	6		$	958
	Inventories	2,244			(87		)	2,157
	Prepaid expenses and other assets	181			(96		)	85
	Property and equipment	1,472			—			1,472
	Intangibles
	Developed technology	22,900			(1,800		)	21,100
	Customer lists	100			600			700
	Trademarks	2,900			—			2,900
	Goodwill	7,612			1,377			8,989
	Total assets acquired	38,361			—			38,361

	Liabilities Assumed
	Trade payables	(338		)	—			(338		)
	Accrued expenses	(23		)	—			(23		)
	Total liabilities assumed	(361		)	—			(361		)

	Net assets acquired	$	38,000		$	—		$	38,000

(1)	Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented. Amounts represent adjustments to the preliminary purchase price first presented in our Quarterly Report on Form 10-Q for the Quarter Ended March 31, 2017, resulting from activities with respect to finalizing our purchase price allocation for this acquisition. The larger adjustments primarily relate to the valuation of the acquired intangible assets.

The purchase price was allocated to the net tangible and intangible assets acquired and liabilities assumed, based on estimated fair values, as follows (in thousands):



Assets Acquired
Trade receivables	$	4,054
Other receivables	6
Inventories	8,585
Prepaid expenses	630
Property and equipment	1,630
Other long-term assets	145
Intangibles
Developed technology	67,600
Customer lists	2,400
Trademarks	4,400
Goodwill	24,818
Total assets acquired	114,268

Liabilities Assumed
Trade payables	(1,790		)
Accrued expenses	(5,298		)
Deferred income tax liabilities - current	(701		)
Deferred income tax liabilities - noncurrent	(10,844		)
Total liabilities assumed	(18,633		)

Net assets acquired, net of cash received of $1,327	$	95,635

The purchase price was allocated as follows (in thousands):



Assets Acquired
Inventories	$	2,455
Property and equipment	290
Intangibles
Developed technology	12,100
Trademarks	700
Customers Lists	400
Goodwill	2,555

Total assets acquired	$	18,500

The following table summarizes the aggregate purchase price (including contingent royalty payment liabilities) allocated to the assets acquired from Laurane (in thousands):



Net Assets Acquired
Inventories	$	594
Intangibles
Developed technology	14,920
Customer list	120
Goodwill	6,366

Total net assets acquired	$	22,000

The following table summarizes the aggregate purchase price allocated to the assets acquired from ITL (in thousands):



Assets Acquired
Trade receivables	$	1,287
Other receivables	56
Inventories	1,808
Prepaid expenses and other assets	65
Property and equipment	1,053
Intangibles
Customer lists	5,940
Goodwill	3,740
Total assets acquired	13,949

Liabilities Assumed
Trade payables	(216		)
Accrued expenses	(542		)
Deferred tax liabilities	(1,901		)
Total liabilities assumed	(2,659		)

Total net assets acquired	$	11,290

The following table summarizes the preliminary purchase price allocated to the net tangible and intangible assets acquired and liabilities assumed (in thousands), adjusted as of December 31, 2017:



		Preliminary Allocation			Adjustments ⁽²⁾			Revised Allocation
	Assets Acquired
	Cash and cash equivalents	$	1,436		$	—		$	1,436
	Trade receivables	8,351			—			8,351
	Inventories	12,217			(995		)	11,222
	Prepaid expenses and other assets	1,275			—			1,275
	Income tax refund receivable	—			165			165
	Property and equipment	2,667			(348		)	2,319
	Deferred tax assets	184			18			202
	Intangibles
	Developed technology	2,600			(400		)	2,200
	Customer lists	1,300			200			1,500
	Trademarks	1,500			(600		)	900
	Total assets acquired	31,530			(1,960		)	29,570

	Liabilities Assumed
	Trade payables	(2,306		)	(108		)	(2,414		)
	Accrued expenses	(5,083		)	—			(5,083		)
	Income taxes payable	(2		)	2			—
	Deferred income tax liabilities	(999		)	65			(934		)
	Total liabilities assumed	(8,390		)	(41		)	(8,431		)

	Total net assets acquired	23,140			(2,001		)	21,139
	Gain on bargain purchase ⁽¹⁾	(12,243		)	1,204			(11,039		)
	Total purchase price	$	10,897		$	(797	)	$	10,100

(1)	The total fair value of the net assets acquired from Argon exceeded the purchase price, resulting in a gain on bargain purchase which was recorded within other income (expense) in our consolidated statements of income, and includes a negative adjustment of $1.2 million since the bargain purchase gain was first presented in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2017. We believe the reason for the gain on bargain purchase was a result of the divestiture of a non-strategic, slow-growth critical care business for Argon. It is our understanding that the divestiture allows Argon to focus on its higher growth interventional portfolio.
(2)	Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented. Amounts represent adjustments to the preliminary purchase price allocation first presented in our March 31, 2017 Form 10-Q resulting from our ongoing activities, including reassessment of the assets acquired and liabilities assumed, with respect to finalizing our purchase price allocation for this acquisition.

The following table summarizes the preliminary purchase price allocated to the net assets acquired (in thousands):



Net Assets Acquired
Inventories	$	979
Property and equipment	58
Intangibles
Developed technology	5,400
Customer list	200
Goodwill	203

Total net assets acquired	$	6,840

The following table summarizes the preliminary purchase price allocated to the net assets acquired and liabilities assumed (in thousands):



		Preliminary Allocation			Adjustments ⁽¹⁾			Revised Allocation
	Net Assets Acquired
	Intangibles
	Developed technology	$	7,800		$	—		$	7,800
	In-process technology	850			70			920
	Goodwill	4,323			(42		)	4,281
	Deferred tax liabilities	(3,073		)	(28		)	(3,101		)

	Total net assets acquired	$	9,900		$	—		$	9,900

(1)	Under U.S. GAAP, measurement period adjustments are recognized on a prospective basis in the period of change, instead of restating prior periods. There was no impact to reported earnings in connection with these measurement period adjustments for the periods presented. Amounts represent adjustments to the preliminary purchase price allocation first presented in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017 resulting from our ongoing activities, including reassessment of the assets acquired and liabilities assumed, with respect to finalizing our purchase price allocation for this acquisition.

Business Acquisition, Pro Forma Information

The following table summarizes our consolidated results of operations for the years ended December 31, 2017, 2016 and 2015, as well as unaudited pro forma consolidated results of operations as though the DFINE acquisition had occurred on January 1, 2015 and the acquisition of the Argon critical care division had occurred on January 1, 2016 (in thousands, except per common share amounts):



	2017				2016				2015
	As Reported		Pro Forma		As Reported		Pro Forma		As Reported		Pro Forma
Net sales	$	727,852	$	730,612	$	603,838	$	664,366	$	542,149	$	575,541
Net income	27,523		17,419		20,121		23,068		23,802		3,135
Earnings per common share:
Basic	$	0.56	$	0.36	$	0.45	$	0.52	$	0.54	$	0.07
Diluted	$	0.55	$	0.35	$	0.45	$	0.51	$	0.53	$	0.07