10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2016

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 0-28240

EXACTECH, INC.

(Exact name of registrant as specified in its charter)

FLORIDA	59-2603930
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

2320 NW 66TH COURT

GAINESVILLE, FL 32653

(Address of principal executive offices)

(352) 377-1140

(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  o

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  o

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 definition of “large accelerated filer”, “accelerated filer”, and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer o Accelerated Filer x Non-Accelerated Filer o Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o    No  x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at August 4, 2016
Common Stock, $.01 par value	14,149,038

EXACTECH, INC.

INDEX

		Page Number
PART 1.	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2016 (unaudited) and December 31, 2015	2
	Condensed Consolidated Statements of Income (unaudited) for the Three and Six Month Periods Ended June 30, 2016 and June 30, 2015	3
	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the Three and Six Month Periods Ended June 30, 2016 and June 30, 2015	4
	Condensed Consolidated Statements of Cash Flows (unaudited) for the Six Month Periods Ended June 30, 2016 and June 30, 2015	5
	Notes to Condensed Consolidated Financial Statements (unaudited) for the Three and Six Month Periods Ended June 30, 2016 and June 30, 2015	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	27
Item 4.	Controls and Procedures	28
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	29
Item 6.	Exhibits	30
Signatures		31

Item 1. Financial Statements

EXACTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

	(unaudited)			(audited)
	June 30,			December 31,
	2016			2015
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	10,052		$	12,713
Accounts receivable, net of allowances of $1,239 and $1,011		54,143			52,442
Prepaid expenses and other assets, net		4,155			2,552
Income taxes receivable		312			486
Inventories – current		74,913			71,429
Total current assets		143,575			139,622
PROPERTY AND EQUIPMENT:
Land		4,505			4,494
Machinery and equipment		38,595			37,008
Surgical instruments		131,489			123,533
Furniture and fixtures		4,722			4,655
Facilities		21,322			20,348
Projects in process		1,835			1,218
Total property and equipment		202,468			191,256
Accumulated depreciation		(98,142	)		(96,713	)
Net property and equipment		104,326			94,543
OTHER ASSETS:
Deferred financing and deposits, net		891			858
Deferred tax assets		777			—
Non-current inventories		11,459			8,995
Product licenses and designs, net		10,614			11,121
Patents and trademarks, net		1,293			1,426
Customer relationships, net		589			92
Goodwill		22,265			18,850
Total other assets		47,888			41,342
TOTAL ASSETS	$	295,789		$	275,507
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	15,888		$	13,932
Income taxes payable		950			603
Accrued expenses and other liabilities		11,096			9,498
Other current liabilities		2,768			792
Total current liabilities		30,702			24,825
LONG-TERM LIABILITIES:
Deferred tax liabilities		423			443
Line of credit		20,000			16,000
Other long-term liabilities		5,787			5,850
Total long-term liabilities		26,210			22,293
Total liabilities		56,912			47,118
SHAREHOLDERS’ EQUITY:
Common stock		143			142
Additional paid-in capital		85,156			81,963
Treasury Stock		(3,042	)		—
Accumulated other comprehensive loss		(10,438	)		(11,986	)
Retained earnings		167,058			158,270
Total shareholders’ equity		238,877			228,389
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	295,789		$	275,507

See notes to condensed consolidated financial statements

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EXACTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Unaudited)

	Three Month Periods Ended June 30,						Six Month Periods Ended June 30,
	2016			2015			2016			2015
NET SALES	$	66,124		$	61,493		$	131,422		$	122,869
COST OF GOODS SOLD		20,268			19,334			40,636			37,976
Gross profit		45,856			42,159			90,786			84,893
OPERATING EXPENSES:
Sales and marketing		23,835			21,464			47,154			43,314
General and administrative		5,640			5,776			11,554			11,623
Research and development		5,329			4,602			10,399			9,131
Depreciation and amortization		4,410			4,182			8,734			8,624
Total operating expenses		39,214			36,024			77,841			72,692
INCOME FROM OPERATIONS		6,642			6,135			12,945			12,201
OTHER INCOME (EXPENSE):
Interest income		2			2			6			4
Other income		32			37			72			65
Interest expense		(268	)		(275	)		(530	)		(577	)
Foreign currency gain (loss), net		98			(557	)		592			(759	)
Total other income (expense)		(136	)		(793	)		140			(1,267	)
INCOME BEFORE INCOME TAXES		6,506			5,342			13,085			10,934
PROVISION FOR INCOME TAXES		2,120			1,681			4,297			3,161
NET INCOME	$	4,386		$	3,661		$	8,788		$	7,773
BASIC EARNINGS PER SHARE	$	0.31		$	0.26		$	0.62		$	0.56
DILUTED EARNINGS PER SHARE	$	0.31		$	0.26		$	0.62		$	0.55

See notes to condensed consolidated financial statements

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EXACTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)

(Unaudited)

	Three Month Periods Ended June 30,					Six Month Periods Ended June 30,
	2016			2015		2016		2015
Net Income	$	4,386		$	3,661	$	8,788	$	7,773
Other comprehensive income (loss), net of tax:
Change in fair value of cash flow hedge		—			22		—		4
Change in currency translation		(1,024	)		488		1,548		(2,786	)
Other comprehensive income (loss), net of tax		(1,024	)		510		1,548		(2,782	)
Comprehensive income	$	3,362		$	4,171	$	10,336	$	4,991

See notes to condensed consolidated financial statements

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EXACTECH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)

	Six Month Periods Ended June 30,
	2016			2015
OPERATING ACTIVITIES:
Net income	$	8,788		$	7,773
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for allowance for doubtful accounts and sales returns		228			52
Inventory allowance		1,748			529
Depreciation and amortization		9,367			9,429
Restricted common stock issued for services		193			213
Compensation cost of stock awards		988			921
Loss on disposal of equipment		678			1,126
Foreign currency option loss		221			261
Foreign currency exchange (gain) loss		(926	)		498
Deferred income taxes		(958	)		(1,239	)
Changes in assets and liabilities, net of business combination effect, which provided (used) cash:
Accounts receivable		(1,986	)		(3,070	)
Prepaids and other assets		(1,549	)		(1,186	)
Inventories		(6,708	)		3,276
Accounts payable		1,501			(1,377	)
Income taxes receivable/payable		537			627
Accrued expense & other liabilities		741			501
Net cash provided by operating activities		12,863			18,334
INVESTING ACTIVITIES:
Purchases of property and equipment		(17,498	)		(11,605	)
Purchase of business, net of cash acquired		(833	)		(2,566	)
Proceeds from sale of property and equipment		118			—
Net cash used in investing activities		(18,213	)		(14,171	)
FINANCING ACTIVITIES:
Net borrowings on line of credit		4,000			—
Principal payments on debt		—			(1,500	)
Payments of contingency consideration		(669	)		—
Payments on capital leases		(25	)		(36	)
Debt issuance costs		—			(15	)
Repurchase of common stock		(3,042	)		—
Proceeds from issuance of common stock		2,433			2,309
Net cash provided by financing activities		2,697			758
Effect of foreign currency translation on cash and cash equivalents		(8	)		(120	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(2,661	)		4,801
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		12,713			10,051
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	10,052		$	14,852
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest	$	286		$	413
Income taxes		5,642			3,930
Non-cash investing and financing activities:
Cash flow hedge gain, net of tax		—			4
Capitalized lease additions		29			—
Purchase of equipment payable		289			—
Business combination, contingent consideration payable		2,147			6,349

See notes to condensed consolidated financial statements

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EXACTECH, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTH PERIODS ENDED JUNE 30, 2016 AND 2015

(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Exactech, Inc. and its subsidiaries (the “Company” or “Exactech”, “we”, “us” or “our”), which are for interim periods, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission relating to interim financial statements. These unaudited condensed consolidated financial statements do not include all disclosures provided in the Company's audited annual financial statements. The condensed financial statements should be read in conjunction with the audited financial statements and notes contained in Exactech's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included, consisting of normal recurring adjustments. Our subsidiaries, Exactech Asia, Exactech UK, Exactech Japan, Exactech France, Exactech Taiwan, Exactech Deutschland, Exactech Ibérica, Exactech International Operations, Blue Ortho, Exactech Australia and Exactech U.S., are consolidated for financial reporting purposes, and all intercompany balances and transactions have been eliminated. Results of operations for the six month period ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation.

During the first quarter of 2016, we changed the classification of surgical instrumentation not yet placed in service from non-current inventory in the other assets category to surgical instrumentation in the property, plant and equipment category. In order to present comparable financial statements, we reclassified $14.4 million of non-current inventory in the December 31, 2015 balance sheet to property, plant and equipment. We also reclassified the effect of the classification change on the cash flow statement for the six months ended June 30, 2015 by reducing cash used for inventory by $2.2 million in cash flow from operations and increasing the cash used for property, plant and equipment in cash flow from investing. The prior period reclassification had no impact on our condensed consolidated statements of income or equity in the condensed consolidated balance sheets.

2. NEW ACCOUNTING PRONOUNCEMENTS AND STANDARDS

In March 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance related to accounting for employee share-based payments. The guidance simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2016, and early adoption is permitted. We are currently assessing the impact of adopting this guidance on our financial statements.

In February 2016, the FASB issued updated guidance on leases. The new standard requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance.  A modified retrospective approach should be applied for leases existing at the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. We are currently assessing the impact of adopting this guidance on our financial statements.

In November 2015, the FASB issued amended guidance on income taxes, which simplifies the classification of deferred income tax liabilities and assets in a classified statement of financial position. The amendment requires entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. The amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and may be early adopted on a prospective basis or on a retrospective

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basis to all periods presented. In the first quarter of 2016 we adopted the amended guidance on a retrospective basis, and reclassified $1.7 million of current deferred tax assets to non-current deferred tax liabilities as of December 31, 2015.

In September 2015, the FASB issued guidance on business combination provisional adjustments during the measurement period. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for annual and interim periods beginning on or after December 15, 2017, and early application is permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations.

In May 2014, the FASB issued new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. The new guidance is based on the principle that revenue is recognized upon the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and clarify guidance for multiple-element arrangements. In July 2015, the FASB delayed the effective date of this guidance by one year. The guidance is effective for the first fiscal quarter of 2018, and early application is not permitted earlier than January 1, 2015.  We are currently assessing the impact of adopting this guidance on our financial statements.

3. FAIR VALUE MEASURES

Our financial instruments include cash and cash equivalents, trade receivables, debt, and foreign currency hedges. The carrying amounts of cash and cash equivalents, and trade receivables approximate fair value due to their short maturities. The carrying amount of debt approximates fair value due to the variable rate associated with the debt. The fair values of foreign currency hedges are based on dealer quotes.

The table below provides information on our liabilities that are measured at fair value on a recurring basis:

(In Thousands)	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2016
Liabilities
Contingent consideration	$	8,369	$	—	$	—	$	8,369
Total:	$	8,369	$	—	$	—	$	8,369
December 31, 2015
Liabilities
Contingent consideration	$	6,222	$	—	$	—	$	6,222
Total:	$	6,222	$	—	$	—	$	6,222

The fair value of our contingent consideration liability is management's best estimate based on the present value of estimated payment scenarios, which is determined based on inputs not observable in the market. We use assumptions we believe would be made by a market participant. We evaluate our estimates on a quarterly basis, as additional data impacting the assumptions is obtained, and recognize any changes in the unaudited condensed consolidated statements of income. See Note 12, Business Acquisition, for further discussion on the contingent consideration.

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4. GOODWILL AND OTHER INTANGIBLE ASSETS 

Goodwill – The following table provides the changes to the carrying value of goodwill for the six month period ended June 30, 2016:

(in thousands)	Extremities		Knee		Hip		Biologics and Spine		Other		Total
Balance as of December 31, 2015	$	4,461	$	5,132	$	904	$	7,553	$	800	$	18,850
Acquired goodwill		927		1,545		463		—		154		3,089
Foreign currency translation effects		129		134		40		—		23		326
Balance as of June 30, 2016	$	5,517	$	6,811	$	1,407	$	7,553	$	977	$	22,265

We test goodwill for impairment annually as of the 1^st of October. Our impairment analysis as of October 1, 2015 indicated no impairment to goodwill.

Other Intangible Assets – The following table summarizes the carrying values of our other intangible assets at June 30, 2016 and December 31, 2015:

(in thousands)	Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted Avg Amortization Period
Balance at June 30, 2016
Product licenses and designs	$	16,822	$	6,208	$	10,614		11.0
Patents and trademarks		4,678		3,385		1,293		14.2
Customer relationships		3,503		2,914		589		6.9
Balance at December 31, 2015
Product licenses and designs	$	16,675	$	5,554	$	11,121		11.0
Patents and trademarks		4,678		3,252		1,426		14.2
Customer relationships		2,923		2,831		92		6.9

5. HEDGING ACTIVITIES AND FOREIGN CURRENCY TRANSLATION

Foreign Currency Transactions

The following table provides information on the components of our foreign currency activities recognized in the unaudited condensed consolidated statements of income:

(in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Foreign currency transactions gain (loss)	$	200		$	110		$	926		$	(498	)
Foreign currency option loss		(102	)		(667	)		(334	)		(261	)
Foreign currency gain (loss), net	$	98		$	(557	)	$	592		$	(759	)

Foreign Currency Transactions – Gains and losses resulting from our transactions and our subsidiaries’ transactions that are made in currencies different from our and their own are included in income as they occur and as other income (expense) in the condensed consolidated statements of income.

Foreign Currency Options – During 2016, we entered into foreign currency forward contracts as economic hedges against the exchange rate fluctuations of the U.S. Dollar (USD) against the Euro (EUR), the British Pound (GBP) and the Japanese Yen (JPY). During the six months ended June 30, 2016, we recognized losses of $0.3 million related to these instruments.  The recognized losses are recorded in other income (expense) in the unaudited condensed consolidated statements of income related to the fair value of these currency options based upon dealers’ quotes.

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During 2015, we entered into foreign currency forward contracts as economic hedges against the strengthening of the USD against the EUR and the JPY. During the six months ended June 30, 2015, we recognized a loss of $0.3 million in the condensed consolidated statements of income related to the fair value of these currency options based upon dealers’ quotes.

Foreign Currency Translation

We are exposed to market risk related to changes in foreign currency exchange rates. The functional currency of substantially all of our international subsidiaries is their local currency. Transactions are translated into USD, and translation gains and losses are recognized in “Other comprehensive income (loss)”. Fluctuations in exchange rates affect our financial position and results of operations. The majority of our foreign currency exposure is to the EUR, GBP, Australian Dollar (AUD) and JPY. During the six months ended June 30, 2016, translation gains were $1.5 million, which were primarily due to the weakening of the GBP and offset partially by the strengthening of the JPY and the AUD in each case against the USD. During the six months ended June 30, 2015, translation losses were $2.8 million, which were primarily due to the weakening of the JPY against the USD, offset partially by the strengthening of the EUR and GBP against the USD. While we may experience translation gains and losses during the balance of the year ending December 31, 2016, these gains and losses are not expected to have a material adverse effect on our financial position, results of operations or cash flows.

Hedging Activities

We do not enter into or hold derivative instruments for trading or speculative purposes. During December 2015, we terminated our interest rate swap, which we had entered into to eliminate variability in future cash flows by converting LIBOR-based variable-rate interest payments into fixed-rate interest payments. The fair value of our interest rate swap agreement was based on dealer quotes. The change in fair value during the six months ended June 30, 2015 of $4,000 was recorded as accumulated other comprehensive loss in the consolidated balance sheets.

6. INVENTORIES

Inventories are valued at the lower of cost or net realizable value, using a FIFO method, and include implants consigned to customers and agents. The consigned or loaned inventory remains our inventory until we are notified of implantation. We are also required to maintain substantial levels of inventory, as it is necessary to maintain all sizes of each component to fill customer orders. The size of the component to be used for a specific patient is typically not known with certainty until the time of surgery. Due to this uncertainty, a minimum of one of each size of each component in the system to be used must be available to each sales representative at the time of surgery. As a result of this need to maintain substantial levels of inventory, we are subject to the risk of inventory obsolescence, and having to carry inventory in excess of expected sales (slow moving inventory). In the event that a substantial portion of our inventory becomes obsolete, it would have a material adverse effect on the Company. An allowance charge for slow moving inventories is recorded based upon an analysis of slow moving inventory items. For slow moving inventory, this analysis compares the quantity of inventory on hand to the historical sales of such inventory. As a result of this analysis, we record an estimated allowance for slow moving inventory. Due to the nature of slow moving inventory and changes in sales patterns and release schedules, this allowance may fluctuate up or down, as a charge or recovery. For items that we identify as obsolete, we record a charge to reduce their carrying value to net realizable value. Allowance charges for the three and six months ended June 30, 2016 were $394,000 and $1,748,000, respectively. Allowance charges for the three and six months ended June 30, 2015 were $491,000 and $529,000, respectively. The allowance charges increased as a result of our inventory builds for new and existing products. We also test our inventory levels for the amount of inventory that we expect to sell within one year. At certain times, such as when we stock new subsidiaries, add consignment locations, and launch new products, the level of inventory can exceed the forecasted level of cost of goods expected to be sold for the next twelve months.  We classify such inventory as non-current.

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The following table summarizes our classifications of inventory as of June 30, 2016 and December 31, 2015: 

(in thousands)	June 30, 2016		December 31, 2015
Raw materials	$	20,622	$	19,481
Work in process		1,791		1,633
Finished goods on hand		15,403		14,497
Finished goods on loan/consignment		48,556		44,813
Inventory total		86,372		80,424
Non-current inventories		11,459		8,995
Inventories, current	$	74,913	$	71,429

7. INCOME TAX

At June 30, 2016, net operating loss carry forwards of our foreign and domestic subsidiaries totaled $27.3 million, some of which begin to expire in 2020. For accounting purposes, the estimated tax effect of these net operating loss carry forwards results in a deferred tax asset.  The deferred tax asset associated with these losses was $8.3 million with a valuation allowance of $4.5 million charged against this deferred tax asset assuming these losses will not be fully realized. At December 31, 2015, these net operating loss carry forwards totaled $27.3 million, and the deferred tax asset was $8.5 million with a valuation allowance of $4.3 million charged against this deferred tax asset assuming these losses will not be fully realized.

Our income tax returns are subject to examination in numerous state, federal and foreign jurisdictions due to the multiple income tax jurisdictions in which we operate. We are not currently aware of any material open examinations in any such jurisdiction. As of June 30, 2016, we had no liability recorded as an uncertain tax benefit.

8. DEBT

Debt consisted of the following as of June 30, 2016 and December 31, 2015:

(in thousands)	June 30, 2016		December 31, 2015
Business line of credit payable on a revolving basis, plus interest based on adjustable rate as determined by one month LIBOR based on our ratio of funded debt to EBITDA, 1.75% as of June 30, 2016.		20,000		16,000
Total debt	$	20,000	$	16,000

The following is a schedule of future debt maturities as of June 30, 2016, for the years ending December 31 (in thousands):

2016	$	—
2017		—
2018		—
2019		—
2020		20,000
Thereafter		—
	$	20,000

9. COMMITMENTS AND CONTINGENCIES

Litigation

There are various claims, lawsuits, and disputes with third parties and pending actions involving various allegations against us incident to the operation of our business, principally product liability cases. While we

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believe that the various claims are without merit, we are unable to predict the ultimate outcome of such litigation. We therefore maintain insurance, subject to self-insured retention limits, for all such claims, and establish accruals for product liability and other claims based upon our experience with similar past claims, advice of counsel and the best information reasonably available. At June 30, 2016 and December 31, 2015, we had $125,000 and $100,000 accrued, respectively, for product liability claims. These product liability claims are subject to various uncertainties, and it is possible that they may be resolved unfavorably to us. While it is not possible to predict with certainty the outcome of the various cases, it is the opinion of management that, upon ultimate resolution, the cases will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Our insurance policies covering product liability claims must be renewed annually. Although we have been able to obtain insurance coverage for product liability claims at a cost and on other terms and conditions that have been acceptable to us, we may not be able to procure acceptable policies in the future.

Purchase Commitments

At June 30, 2016, we had outstanding commitments for the purchase of inventory, raw materials and supplies of $18.5 million and outstanding commitments for the purchase of capital equipment of $8.1 million. Purchases under our distribution agreements were $1.7 million during the six months ended June 30, 2016.

In June 2016 we entered into an agreement to pay a total of $5.9 million for the naming of the Exactech Arena at the newly remodeled Stephen C. O’Connell Center, a sports and entertainment complex on the University of Florida’s campus. Payments will be made annually over the term of the agreement. The sponsorship gives us presence at the venue, use of University of Florida facilities and television coverage and commercial spots on Fox Sports Sun and Fox Sports Florida during arena events. The 10-year agreement will become effective December 1, 2016, and contains an option to extend for an additional five years.

Our Taiwanese subsidiary, Exactech Taiwan, entered into a license agreement with the Industrial Technology Research Institute (ITRI) and the National Taiwan University Hospital (NTUH) for the rights to technology and patents related to the repair of cartilage lesions. As of June 30, 2016, we have paid approximately $2.1 million for the licenses, patents, and equipment related to this license agreement, and we will make royalty payments when the technology becomes marketable. Using the technology, we plan to launch a cartilage repair program that will include a device and method for the treatment and repair of cartilage in the knee joint. It is expected that the project will require us to complete human clinical trials under the guidance of the Food & Drug Administration in order to obtain pre-market approval for the device in the United States. The agreement terms include a license fee based on the achievement of specific, regulatory milestones and a royalty arrangement based on sales once regulatory clearances are established.

10. SEGMENT INFORMATION

We evaluate our operating segments by our major product lines: extremity implants, knee implants, hip implants, biologics and spine, and other products. The “other products” segment includes miscellaneous sales categories, such as surgical instruments held for sale, bone cement, instrument rental fees, shipping charges, and other implant product lines. Evaluation of the performance of operating segments is based on their respective incomes from operations before taxes, interest income and expense, and nonrecurring items. Intersegment sales and transfers are not significant. The accounting policies of the reportable segments are the same as those described in Note 2 of the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Total assets not identified with a specific segment are listed as “corporate” and include cash and cash equivalents, accounts receivable, income taxes receivable, deposits and prepaid expenses, deferred tax assets, land, facilities, office furniture and computer equipment, notes receivable, and other investments. Depreciation and amortization on corporate assets is allocated to the product segments for purposes of evaluating the income (loss) from operations, and capitalized surgical instruments are allocated to the appropriate product line supported by those assets.

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Summarized information concerning our reportable segments is shown in the following table (in thousands):

Three Months Ended June 30,	Extremity		Knee		Hip		Biologics & Spine		Other			Corporate			Total
2016
Net sales	$	24,224	$	19,190	$	12,377	$	5,433	$	4,900		$	—		$	66,124
Segment profit (loss)		5,113		718		326		328		157			(136	)		6,506
Total assets, net		42,381		74,295		40,822		25,034		9,156			104,101			295,789
Capital expenditures		1,361		2,888		1,516		228		464			2,038			8,495
Depreciation and Amortization		727		1,772		694		233		197			1,084			4,707
2015
Net sales	$	20,479	$	18,957	$	10,944	$	5,873	$	5,240		$	—		$	61,493
Segment profit (loss)		4,199		911		497		185		343			(793	)		5,342
Total assets, net		35,440		66,031		33,280		23,241		12,803			103,691			274,486
Capital expenditures		857		1,134		761		1,059		422			220			4,453
Depreciation and Amortization		866		1,658		720		276		128			939			4,587
Six Months Ended June 30,	Extremity		Knee		Hip		Biologics & Spine		Other			Corporate			Total
2016
Net sales	$	48,384	$	38,577	$	23,712	$	10,827	$	9,922		$	—		$	131,422
Segment profit (loss)		10,037		1,706		539		457		206			140			13,085
Total assets, net		42,381		74,295		40,822		25,034		9,156			104,101			295,789
Capital expenditures		2,613		4,096		2,518		492		4,603			3,494			17,816
Depreciation and Amortization		1,439		3,760		1,363		495		369			1,941			9,367
2015
Net sales	$	41,559	$	37,395	$	21,895	$	11,013	$	11,007		$	—		$	122,869
Segment profit (loss)		8,736		2,127		1,033		325		(20	)		(1,267	)		10,934
Total assets, net		35,440		66,031		33,280		23,241		12,803			103,691			274,486
Capital expenditures		1,909		3,196		1,678		1,125		660			869			9,437
Depreciation and Amortization		1,573		3,708		1,445		559		266			1,878			9,429

Geographic distribution of our long-lived assets and inventory is shown in the following table (in thousands):

As of:	June 30, 2016						December 31, 2015
	Domestic			International			Domestic			International
Long lived assets, gross	$	166,457		$	61,014		$	161,672		$	53,859
Accumulated depreciation and amortization		(88,484	)		(22,165	)		(88,958	)		(19,391	)
Long lived assets, net		77,973			38,849			72,714			34,468
Inventory	$	50,876		$	35,496		$	43,725		$	36,699

Geographic distribution of our sales is summarized in the following table (in thousands):

Three Months Ended June 30,	2016		2015		% Inc/Decr
Domestic sales	$	44,612	$	41,295		8.0
International sales		21,512		20,198		6.5
Total sales	$	66,124	$	61,493		7.5
Six Months Ended June 30,	2016		2015		% Inc/Decr
Domestic sales	$	89,185	$	82,543		8.0
International sales		42,237		40,326		4.7
Total sales	$	131,422	$	122,869		7.0

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11. SHAREHOLDERS’ EQUITY 

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for net income and net income available to common shareholders:

	Income (Numerator)		Shares (Denominator)		Per Share		Income (Numerator)		Shares (Denominator)		Per Share
	Three Months Ended						Three Months Ended
(in thousands, except per share amounts)	June 30, 2016						June 30, 2015
Net income	$	4,386					$	3,661
Basic EPS:
Net income available to common shareholders	$	4,386		14,112	$	0.31	$	3,661		13,947	$	0.26
Effect of dilutive securities:
Stock options				186						220
Diluted EPS:
Net income available to common shareholders plus assumed conversions	$	4,386		14,298	$	0.31	$	3,661		14,167	$	0.26
	Six Months Ended						Six Months Ended
(in thousands, except per share amounts)	June 30, 2016						June 30, 2015
Net income	$	8,788					$	7,773
Basic EPS:
Net income available to common shareholders	$	8,788		14,084	$	0.62	$	7,773		13,965	$	0.56
Effect of dilutive securities:
Stock options				159						238
Diluted EPS:
Net income available to common shareholders plus assumed conversions	$	8,788		14,243	$	0.62	$	7,773	$	14,203	$	0.55

For the three months ended June 30, 2016, weighted average options to purchase 185,724 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. For the three months ended June 30, 2015, weighted average options to purchase 323,201 shares of common stock were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method.

For the six months ended June 30, 2016, weighted average options to purchase 182,625 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. For the six months ended June 30, 2015, weighted average options to purchase 262,770 shares of common stock were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method.

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Changes in Shareholders’ Equity:

The following is a summary of the changes in shareholders’ equity for the six months ended June 30, 2016:

	Common Stock				Additional Paid-In			Common Stock Held in			Retained		Accumulated Other Comprehensive
(in thousands)	Shares		Amount		Capital			Treasury			Earnings		Income (Loss)			Total
Balance December 31, 2015		14,154	$	142	$	81,963		$	—		$	158,270	$	(11,986	)	$	228,389
Net income		—		—		—			—			8,788		—			8,788
Other comprehensive income (loss), net of tax		—		—		—			—			—		1,548			1,548
Exercise of stock options		123		1		2,074			—			—		—			2,075
Issuance of restricted common stock for services		9		—		193			—			—		—			193
Issuance of common stock under Employee Stock Purchase Plan		23		—		358			—			—		—			358
Repurchase of common stock		—		—		—			(3,042	)		—		—			(3,042	)
Compensation cost of stock options		—		—		988			—			—		—			988
Tax impact on stock awards		—		—		(420	)		—			—		—			(420	)
Balance June 30, 2016		14,309	$	143	$	85,156		$	(3,042	)	$	167,058	$	(10,438	)	$	238,877

Treasury Stock:

In December 2015, our Board of Directors authorized the repurchase of up to 1.0 million shares of our common stock over a two-year period. As of June 30, 2016, we had repurchased 163,529 shares of our common stock at an average price of $18.60 per share, or an aggregate of $3.0 million.

Stock-based Compensation Awards:

We sponsor an Executive Incentive Compensation Plan, which provides for the award of stock-based compensation, including options, stock appreciation rights, restricted stock and other stock-based incentive compensation awards to key employees, directors and independent agents and consultants. We implemented a comprehensive, consolidated incentive compensation plan upon shareholder approval at our Annual Meeting of Shareholders on May 7, 2009, which was amended and restated at our 2014 Annual Meeting of Shareholders, held on May 8, 2014, to increase the maximum number of shares issuable under the 2009 Plan by 500,000. We refer to this plan, as amended, as the 2009 Plan. The maximum number of common shares issuable under the 2009 Plan is 1,500,000 plus (a) the number of shares with respect to awards previously granted under our preexisting plans that terminate without being exercised, expire, are forfeited or canceled, plus (b) the number of shares that remain available for future issuance under our preexisting plans plus (c) the number of shares that are surrendered in payment of any awards or any tax withholding with respect thereto. Common stock issued upon exercise of stock options is settled with authorized but unissued shares available. Under the 2009 Plan, the exercise price of option awards equals the market price of our common stock on the date of grant, and each award has a maximum term of ten years. As of June 30, 2016, there were 417,679 total shares remaining issuable under the 2009 Plan.

The aggregate compensation cost charged against income with respect to awards issued under the 2009 Plan and the 2009 Employee Stock Purchase Plan, referred to as the 2009 ESPP, was $1.0 million and $0.9 million for the six months ended June 30, 2016 and 2015, respectively. Income tax benefit on exercises of non-qualified stock options was $0.3 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively.  As of June 30, 2016, total unrecognized compensation cost related to unvested awards was $1.4 million and is expected to be recognized over a weighted-average period of 1.8 years.

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Stock Options:

A summary of the status of stock option activity under our stock-based compensation plans as of June 30, 2016 and changes during the year to date is presented below:

	2016
	Options			Weighted Avg Exercise Price		Weighted Avg Remaining Contractual Term		Aggregate Intrinsic Value (In thousands)
Outstanding - January 1		1,217,003		$	18.70
Granted		18,500			23.00
Exercised		(122,644	)		16.92			$	446
Forfeited or Expired		(139,566	)		17.65
Outstanding - June 30		973,293		$	19.16		3.74	$	7,376
Exercisable - June 30		550,921		$	18.01		3.00	$	4,808

Outstanding options, consisting of five-year to ten-year incentive and non-qualified stock options, vest and become exercisable ratably over a three to five year period from the date of grant. The outstanding options expire from five to ten years from the date of grant or upon termination of employment with Exactech, and are contingent upon continued employment during the applicable option term. Certain non-qualified stock options are granted to non-employee sales agents and consultants, and they typically vest ratably over a period of three to four years from the date of grant and expire in five years or less from the date of grant, or upon termination of the agent's or consultant’s contract with Exactech.  Stock options for the purchase of 18,500 shares of common stock were granted during the six months ended June 30, 2016, compared to stock options for the purchase of 176,125 shares of common stock granted during the same period in 2015.

Restricted Stock Awards:

Under the 2009 Plan, we may grant restricted stock awards to eligible employees, directors, and independent agents and consultants. Restrictions on transferability, risk of forfeiture and other restrictions are determined by the Compensation Committee of the Board of Directors, or the Committee, at the time of the award. During February 2016, the Committee approved equity compensation to the outside members of the Board of Directors for their service on the Board of Directors. The annual compensation for each outside director consists of the grant of stock awards with an aggregate market value of $77,500, payable in four equal quarterly grants of common stock based on the market prices of our common stock on the respective dates of grant. The summary information of the restricted stock grants for the first three months of 2016 is presented below:

Grant date	February 29, 2016		May 31, 2016
Aggregate shares of restricted stock granted		5,190		3,925
Grant date fair value	$	97,000	$	97,000
Weighted average fair value per share	$	18.65	$	24.68

During February 2015, the Committee approved equity compensation to the outside members of the Board of Directors for their service on the Board of Directors. The annual compensation for each outside director consisted of the grant of stock awards with an aggregate market value of $77,500, payable in four equal quarterly grants of common stock based on the market prices of our common stock on the respective dates of grant. The summary information of the restricted stock grants for the first three months of 2015 is presented below:

Grant date	February 27, 2015		May 29, 2015
Aggregate shares of restricted stock granted		4,974		4,530
Grant date fair value	$	116,000	$	97,000
Weighted average fair value per share	$	23.35	$	21.38

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All of the restricted stock awards in 2016 and 2015 were fully vested at each of the grant dates. The restricted stock awards require no service period and thus contain no risk of, or provision for, forfeiture.

Employee Stock Purchase Plan:

On February 18, 2009, our Board of Directors adopted the 2009 ESPP, and our shareholders approved the 2009 ESPP at our Annual Meeting of Shareholders on May 7, 2009. Under the 2009 ESPP, employees are able to purchase shares of our common stock at a fifteen percent (15%) discount via payroll deduction, up to a maximum number of shares issuable under the 2009 ESPP of 300,000. In February 2016, our Board of Directors adopted an amendment to the 2009 ESPP, to increase the maximum number of shares issuable under the 2009 ESPP to 450,000, which was approved by our shareholders at our Annual Meeting of Shareholders held on May 2, 2016.  There are four offering periods during an annual period.  As of June 30, 2016, 166,000 shares remained available for purchase under the 2009 ESPP. The fair value of the employees' purchase rights is estimated using the Black-Scholes model. Purchase information and fair value assumptions are presented in the following table:

Six Months Ended June 30,	2016			2015
Shares purchased		23,179			19,737
Dividend yield		—			—
Expected life	1 year			1 year
Expected volatility		32	%		31	%
Risk free interest rates		0.7	%		0.2	%
Weighted average per share fair value	$	4.08		$	5.08

12. BUSINESS ACQUISITION

Exactech Australia

On February 1, 2016, we completed the acquisition of all of the outstanding capital stock of Exactech Australia Pty Ltd, an Australia-based company. Exactech Australia has been our independent importer and distribution partner in Australia for the past four years. The acquisition was accomplished to further the partnership between us and the team at Exactech Australia and to further service customers in the Asia Pacific area.

The aggregate purchase price for Exactech Australia will range from $3.1 million AUD to $7.6 million AUD, of which $1.6 million AUD, or $1.1 million USD at a 0.7034 AUD:USD exchange rate, was paid to the Exactech Australia shareholders in cash at the closing of the acquisition, and the remainder will be paid to such shareholders contingent on the achievement of certain future milestones. We expect the contingent payment to be paid over the next two years. Consideration also included $2.0 million USD in forgiven accounts receivable that were owed to us as of February 1, 2016. We are currently awaiting finalization of Exactech Australia’s closing balance sheet to complete purchase accounting. The estimated fair value of the contingent consideration was determined using the following assumptions: discount rates of 3.7%, probability levels of milestone range of outcomes, and expected timing of achievement of contingent consideration earn-out amounts. We financed the acquisition from our operating cash flows.

Upon completion of the acquisition, we effectively concluded a pre-existing distribution agreement for the distribution of our products, which was stated at fair value; therefore, we recognized no impact to the statement of income. The accounting for our acquisition of Exactech Australia is preliminary, pending final results of operations and deferred tax liability determination. The preliminary goodwill was determined as the excess of the consideration over the fair value of the net assets acquired, and was due to the synergies we obtained in the extended service in Australia. Goodwill was allocated to the knee, extremity and hip segments based on expected sales for the segments. Pro forma revenue and earnings for the business combination have not been presented because the effects, both individually and in the aggregate, were not material to our results of operations.  

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The following table summarizes the preliminary purchase price allocation and determination of goodwill, which is not deductible for tax purposes, as of February 1, 2016 (in thousands):

	Amounts at Acquisition
Consideration:
Cash	$	1,152
Fair value of contingent consideration		2,435
Total Purchase Price		3,587
Forgiveness of pre-existing debt		2,006
		5,593
Acquisition related expenses - incurred as of June 30, 2016	$	131
Preliminary identifiable assets acquired and liabilities assumed:
Current assets acquired		1,616
Property and equipment		722
Current liabilities assumed		(208	)
Deferred tax liability assumed		(161	)
Identifiable intangible assets		535
		2,504
Goodwill		3,089
Net assets acquired	$	5,593

The identifiable intangible assets are being amortized using the straight-line method using estimated ten year useful lives, and are recorded net of accumulated amortization in Customer relationships on the unaudited condensed consolidated balance sheet.

Blue Ortho

On January 15, 2015, we completed the acquisition of all of the outstanding capital stock of Blue Ortho SAS, a France-based company. Blue Ortho is the computer-assisted surgical technology development and manufacturing firm that partnered with the Company to develop the ExactechGPS^® Guided Personalized Surgery system. We acquired Blue Ortho to further the partnership between us and the team at Blue Ortho and expand the development of ExactechGPS to other segments of our portfolio.

The aggregate purchase price for Blue Ortho is a maximum of €10.0 million, of which €2.0 million, or $2.3 million at a 1.16 USD exchange rate at closing, was paid to the Blue Ortho shareholders in cash at the closing of the acquisition, and the remainder will be paid to such shareholders contingent on the achievement of certain future surgical case milestones. The estimated fair value of the contingent consideration was determined using the following assumptions: discount rates of 4.5-6.5%, probability levels of milestone range of outcomes, and expected timing of achievement of contingent consideration earn-out amounts. We expect the contingent consideration to be paid over the next five to ten years. We financed the acquisition from our operating cash flows.

We acquired tangible assets of $1.5 million, assumed liabilities of $2.9 million, intangible assets, comprising product licenses and designs, of $7.5 million, and goodwill of $6.5 million. Pro forma revenue and earnings for the business combination have not been presented because the effects, both individually and in the aggregate, were not material to our results of operations.  

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Contingent Consideration

The following table summarizes the contingent consideration balance and activity for the six month period ended June 30, 2016 (in thousands):

	Exactech Australia			Blue Ortho			Total
Beginning fair value of contingent liability, December 31, 2015	$	—		$	6,222		$	6,222
Initial fair value of contingent consideration		2,435			—			2,435
Period change in valuation		42			98			140
Payments		—			(669	)		(669	)
Foreign currency translation effects		127			114			241
Contingent liability balance, June 30, 2016		2,604			5,765			8,369
Current liability		(1,276	)		(1,411	)		(2,687	)
Non-current liability	$	1,328		$	4,354		$	5,682

Due to our expected timing of earn-out payments, a portion of the contingent consideration is classified in other current liabilities on our unaudited condensed consolidated balance sheets. The remainder is classified as other non-current liabilities. The change in the contingent consideration during the six months ended June 30, 2016 was recognized as interest expense in the unaudited condensed consolidated statements of income.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the unaudited condensed consolidated financial statements and related notes appearing elsewhere in this report.

Overview of the Company

We develop, manufacture, market and sell orthopaedic implant devices, related surgical instrumentation, supplies and biologic materials to hospitals and physicians in the United States and internationally. Our revenues are principally derived from sales of knee, hip, and extremity joint replacement systems and spinal fusion products. We believe that our continuing research and development projects will enable us to continue the introduction of new joint replacement systems, product line extensions, and other products and services.

Our operating expenses consist of sales and marketing expenses, general and administrative expenses, research and development expenses, and depreciation and amortization expenses. The largest component of operating expenses, sales and marketing expenses, primarily consists of payments made to independent sales representatives for their services to hospitals and surgical facilities on our behalf. These expenses tend to vary and generally relate to our sales volume. Research and development expenses primarily consist of expenditures on projects concerning knee, extremities, spine and hip implant product lines and biologic materials and services.

In marketing our products, we use a combination of traditional targeted media marketing together with our primary marketing focus, direct customer contact and service to orthopaedic surgeons. Because surgeons are important decision makers when it comes to the choice of products and services that best meet the needs of their patients, we focus our marketing strategy on meeting the needs of the orthopaedic surgeon community. In addition to surgeon’s preference, hospitals and buying groups, as the economic customers, actively participate with physicians in the choice of implants and services.

Non-GAAP financial measures – Because we operate internationally, we present the percentage change in sales by reporting segment on a constant currency basis, which is a non-GAAP financial measure.  We calculate this change on a constant currency basis by translating current period sales at the comparable average historical exchange rates for the same period in the prior year. We believe that presenting the percentage change in sales on a constant currency basis assists in the understanding of actual sales fluctuations by excluding the impact of foreign currency fluctuations. Non-GAAP financial measures should be used as a supplement to, but not a substitute for, our financial results reported in accordance with GAAP.

Overview of the Three and Six Months Ended June 30, 2016

During the quarter ended June 30, 2016, sales increased 8% to $66.1 million from $61.5 million in the quarter ended June 30, 2015, with an 8% increase in domestic sales and a 7% increase in international sales. Worldwide gross margins remained at 69% for each of the quarters ended June 30, 2016 and 2015. Operating expenses increased 9% when compared to the quarter ended June 30, 2015; however, as a percentage of sales, operating expenses remained unchanged at 59% during each of the second quarters ended June 30, 2016 and 2015. Net income for the quarter ended June 30, 2016 increased 20%, and diluted earnings per share was $0.31 as compared to $0.26 in the same quarter last year, which was primarily a result of the increase in sales.

During the six months ended June 30, 2016, sales increased 7% to $131.4 million from $122.9 million in the six months ended June 30, 2015, with an 8% increase in the domestic sales, primarily due to improvements in our domestic sales organization. Our international sales increased 5%, which reflected the improvement in sales to certain of our international markets. On a constant currency basis, international sales increased 5%. Worldwide gross margins remained at 69% in each of the first six months of 2016 and 2015. Operating expenses increased 7% when compared to the quarter ended June 30, 2015; however, as a percentage of sales, operating expenses remained unchanged at 59% during each of the six month periods of 2016 and 2015.  Net income for the six months ended June 30, 2016 increased 13%, and diluted earnings per share was $0.62 as compared to $0.55 in the same six months last year, which was primarily a result of the increase in sales.

During the six months ended June 30, 2016, we acquired $17.8 million in property and equipment, including a facility in Australia and surgical instrumentation. As of June 30, 2016, cash outlays for our February 2016 acquisition of Exactech Australia, our independent distributor in Australia, were $1.2 million. Net cash flow from operations was $12.9 million for the six months ended June 30, 2016, as compared to net cash flow from operations of $18.3 million during the six months ended June, 2015. The decrease was primarily due to

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increased purchases of inventory, which was partially offset by higher accounts payable in the first six months of 2016, as compared to the first six months of 2015.

The following tables include the net sales and percentage of net sales, as well as a comparison of net sales change to net sales change calculated on a constant currency basis, for each of our product lines, which are also our reportable segments, for the three and six month periods ended June 30, 2016 and June 30, 2015. The constant currency is calculated by translating current period sales at the average historical exchange rates for the same period in the prior year:

Sales by Product Line ($ in 000’s)
	Three Months Ended								Inc (decr)
	June 30, 2016				June 30, 2015				2016 - 2015				ConstantCurrency
Extremity	$	24,224	36.6	%	$	20,479	33.3	%		18.3		%		18.2		%
Knee		19,190	29.0			18,957	30.8			1.2				0.4
Hip		12,377	18.7			10,944	17.8			13.1				11.7
Biologics and Spine		5,433	8.2			5,873	9.6			(7.5	)			(7.7	)
Other		4,900	7.4			5,240	8.5			(6.5	)			(8.2	)
Total	$	66,124	100.0	%	$	61,493	100.0	%		7.5		%		6.8		%
	Six Months Ended								Inc (decr)
	June 30, 2016				June 30, 2015				2016 - 2015				ConstantCurrency
Extremity	$	48,384	36.8	%	$	41,559	33.8	%		16.4		%		16.7		%
Knee		38,577	29.4			37,395	30.4			3.2				3.0
Hip		23,712	18.0			21,895	17.8			8.3				8.0
Biologics and Spine		10,827	8.1			11,013	9.0			(1.7	)			(1.2	)
Other		9,922	7.5			11,007	9.0			(9.9	)			(10.3	)
Total	$	131,422	100.0	%	$	122,869	100.0	%		7.0		%		6.9		%

The following tables include the net sales, percentage of net sales, net sales change, and net sales change calculated on a constant currency basis, for our geographic distribution for the three and six month periods ended June 30, 2016 and June 30, 2015: 

Sales by Geographic Distribution ($ in 000’s)
	Three Months Ended								Inc (decr)
	June 30, 2016				June 30, 2015				2016 - 2015			Constant Currency
Domestic Sales	$	44,612	67.5	%	$	41,295	67.2	%		8.0	%		8.0	%
International Sales		21,512	32.5	%		20,198	32.8	%		6.5	%		4.3	%
Total	$	66,124	100.0	%	$	61,493	100.0	%		7.5	%		6.8	%
	Six Months Ended								Inc (decr)
	June 30, 2016				June 30, 2015				2016 - 2015			Constant Currency
Domestic Sales	$	89,185	67.9	%	$	82,543	67.2	%		8.0	%		8.0	%
International Sales		42,237	32.1	%		40,326	32.8	%		4.7	%		4.6	%
Total	$	131,422	100.0	%	$	122,869	100.0	%		7.0	%		6.9	%

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The following tables include items from the unaudited condensed consolidated statements of income for the three and six months ended June 30, 2016 as compared to the three and six months ended June 30, 2015, the dollar and percentage change from period to period and the percentage relationship to net sales (dollars in thousands):

Comparative Statement of Income Data
	Three Months June 30,						2016 – 2015 Inc (decr)						% of Sales
	2016			2015			$			%			2016				2015
Net sales	$	66,124		$	61,493			4,631			7.5			100.0		%		100.0		%
Cost of goods sold		20,268			19,334			934			4.8			30.7				31.4
Gross profit		45,856			42,159			3,697			8.8			69.3				68.6
Operating expenses:
Sales and marketing		23,835			21,464			2,371			11.0			36.0				34.9
General and administrative		5,640			5,776			(136	)		(2.4	)		8.5				9.4
Research and development		5,329			4,602			727			15.8			8.1				7.5
Depreciation and amortization		4,410			4,182			228			5.5			6.7				6.8
Total operating expenses		39,214			36,024			3,190			8.9			59.3				58.6
Income from operations		6,642			6,135			507			8.3			10.0				10.0
Other income (expense), net		(136	)		(793	)		657			82.8			(0.2	)			(1.3	)
Income before taxes		6,506			5,342			1,164			21.8			9.8				8.7
Provision for income taxes		2,120			1,681			439			26.1			3.2				2.7
Net income	$	4,386		$	3,661			725			19.8			6.6		%		6.0		%
	Six Months June 30,						2016 – 2015 Inc (decr)						% of Sales
	2016			2015			$			%			2016				2015
Net sales	$	131,422		$	122,869			8,553			7.0			100.0		%		100.0		%
Cost of goods sold		40,636			37,976			2,660			7.0			30.9				30.9
Gross profit		90,786			84,893			5,893			6.9			69.1				69.1
Operating expenses:
Sales and marketing		47,154			43,314			3,840			8.9			35.9				35.3
General and administrative		11,554			11,623			(69	)		(0.6	)		8.8				9.5
Research and development		10,399			9,131			1,268			13.9			7.9				7.4
Depreciation and amortization		8,734			8,624			110			1.3			6.6				7.0
Total operating expenses		77,841			72,692			5,149			7.1			59.2				59.2
Income from operations		12,945			12,201			744			6.1			9.9				9.9
Other income (expense), net		140			(1,267	)		1,407			111.0			0.1				(1.0	)
Income before taxes		13,085			10,934			2,151			19.7			10.0				8.9
Provision for income taxes		4,297			3,161			1,136			35.9			3.3				2.6
Net income	$	8,788		$	7,773			1,015			13.1			6.7		%		6.3		%

Three and Six Months Ended June 30, 2016 Compared to Three and Six Months Ended June 30, 2015

Sales

For the quarter ended June 30, 2016, sales increased 8% to $66.1 million from $61.5 million in the quarter ended June 30, 2015, as a result of the improvements in our domestic sales organization and international growth.  Domestic sales increased 8% and international sales grew 7%. Sales of our extremity products increased 18% to $24.2 million as compared to $20.5 million for the same period in 2015, as our expanded Equinoxe^® shoulder system continued to gain market share. Sales of knee implant products increased 1% to $19.2 million for the quarter ended June 30, 2016, as compared to $19.0 million for the same quarter in 2015, primarily as a result of our domestic sales increase.  Hip implant sales of $12.4 million during the quarter ended June 30, 2016 increased 13% from $10.9 million during the quarter ended June 30, 2015, as our new Alteon^® hip system, featuring both wedge and monobloc revision stems, continued to gain market acceptance. Sales from biologics and spine decreased 7% during the quarter ended June 30, 2016 to $5.4 million from $5.9 million in the comparable quarter in 2015, primarily as a result of the divestiture of our oral dental product line at the beginning of 2016 and pricing pressure on our core biologic products and services. Sales of all other products decreased to $4.9 million as compared to $5.2 million in the same quarter last year, primarily as a result of lower cement sales.

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For the six months ended June 30, 2016, sales increased 7% to $131.4 million from $122.9 million in the six months ended June 30, 2015, as a result of the improvements in our domestic sales organization and international growth. International sales increased 5% as a result of improved sales in certain of our international markets. Domestic sales increased 8% as we continue to deliver benefits from our sales organization changes over the last couple of years. Sales of our extremity products increased 16% to $48.4 million as compared to $41.6 million for the same period in 2015, as our Equinoxe^® platform shoulder system with its reverse components continued to gain market share as a result of its clinical performance in improving patient outcomes. Sales of knee implant products increased 3% to $38.6 million for the six months ended June 30, 2016, as compared to $37.4 million for the same six months in 2015, primarily as a result of contributions from our Optetrak Logic^® system, as well as the recently released revision system.  Hip implant sales of $23.7 million during the six months ended June 30, 2016 increased 8% from $21.9 million during the six months ended June 30, 2015, as our new Alteon^® hip system, featuring both wedge and monobloc revision stems, continued to gain market acceptance. Sales from biologics and spine decreased 2% during the six months ended June 30, 2016 to $10.8 million from $11.0 million in the comparable six months in 2015, primarily as a result of the divestiture of our oral dental product line and partially offset by contributions from spine implant system launches. Sales of all other products decreased to $9.9 million as compared to $11.0 million in the same six months last year, primarily as a result of lower instrumentation sales in international markets and lower cement sales.

Gross Profit

Gross profit increased to $45.9 million in the quarter ended June 30, 2016 from $42.2 million in the quarter ended June 30, 2015. As a percentage of sales, gross profit remained at 69% during each of the quarters ended June 30, 2016 and 2015. Gross profit increased to $90.8 million in the six months ended June 30, 2016 from $84.9 million in the six months ended June 30, 2015.  As a percentage of sales, gross profit remained at 69% during each of the six months ended June 30, 2016 and 2015. The increase in the three and six months of 2016 was primarily a result of increased worldwide sales. Looking forward to the remainder of 2016, we expect gross profit, as a percentage of sales, to decrease approximately 0.20-0.80% on a comparative basis due to pricing pressures.

Operating Expenses

Total operating expenses increased 9% to $39.2 million in the quarter ended June 30, 2016 from $36.0 million in the quarter ended June 30, 2015. As a percentage of sales, total operating expenses remained at 59% for each of the quarters ended June 30, 2016 and 2015. Total operating expenses increased 7% to $77.8 million in the six months ended June 30, 2016 from $72.7 million in the six months ended June 30, 2015. As a percentage of sales, total operating expenses remained at 59% for each of the six months ended June 30, 2016 and 2015, as a result of our continued focus on controlling general operating expenses.

Sales and marketing expenses, which is the largest component of total operating expenses, increased 11% for the quarter ended June 30, 2016 to $23.8 million from $21.5 million in the same quarter last year. Sales and marketing expenses, as a percentage of sales, increased to 36% for the quarter ended June 30, 2016 from 35% for the same quarter in 2015. Sales and marketing expenses increased 9% for the six months ended June 30, 2016 to $47.2 million from $43.3 million in the same six month period last year. Sales and marketing expenses, as a percentage of sales, increased to 36% for the six months ended June 30, 2016 from 35% in 2015. The increase for the three and six months ended June 30, 2016 was partially related to operating expenses of our newly acquired Australian distributor, as well as increased variable selling costs. Looking forward, sales and marketing expenditures, as a percentage of sales, are expected to be in the range of 35.5% to 36.5% for the remainder of 2016.

General and administrative expenses decreased 2% to $5.6 million for the quarter ended June 30, 2016. As a percentage of sales, general and administrative expenses decreased to 8.5% for the quarter ended June 30, 2016, as compared to 9.4% for the same quarter of 2015. General and administrative expenses decreased 1% to $11.6 million for the six months ended June 30, 2016. As a percentage of sales, general and administrative expenses decreased to 8.8% for the six months ended June 30, 2016, as compared to 9.5% for the same period of 2015. The decrease in the percentage of sales was primarily due to lower legal expenses and a result of our efforts to control operating expenses. General and administrative expenses for the remainder of 2016 are expected to be in the range of 8.5% to 9.5% of sales.

Research and development expenses increased 16% for the quarter ended June 30, 2016 to $5.3 million from $4.6 million in the same quarter last year. As a percentage of sales, research and development expenses increased to 8% for the quarter ended June 30, 2016 as compared to 7% for the quarter ended June 30, 2015. Research and development expenses increased 14% for the six months ended June 30, 2016 to $10.4 million

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from $9.1 million in the same quarter last year. As a percentage of sales, research and development expenses increased to 8% for the six months ended June 30, 2016 as compared to 7% for the six months ended June 30, 2015. The increase in research and development expenses was a result of continuing product development costs to support new product launches. We expect research and development expenses ranging from 7.5% to 8.5% of sales for the remainder of 2016.

Depreciation and amortization increased 5% to $4.4 million for the quarter ended June 30, 2016 from $4.2 million during the same quarter in 2015. As a percentage of sales, depreciation and amortization expense remained relatively flat at 7% during each of the quarters ended June 30, 2016 and 2015. Depreciation and amortization increased 1% to $8.7 million for the six months ended June 30, 2016 from $8.6 million during the same period in 2015. As a percentage of sales, depreciation and amortization expense remained relatively flat at 7% during each of the six month periods ended June 30, 2016 and 2015. We placed $14.2 million of surgical instrumentation, $1.0 million in facility additions, and $2.1 million of equipment in service during the first half of 2016.

Income from Operations

Our income from operations increased 8% to $6.6 million, or 10% of sales, in the quarter ended June 30, 2016 from $6.1 million, or 10% of sales, in the quarter ended June 30, 2015. The increase in our income from operations for the three months ended June 30, 2016 was primarily a result of our sales increase. Our income from operations increased 6% to $12.9 million, or 10% of sales, in the six months ended June 30, 2016 from $12.2 million, or 10% of sales, in the six months ended June 30, 2015. The increase in our income from operations for the six months ended June 30, 2016 was primarily a result of our sales increase, which was offset by a modest increase in operating expenses. Looking forward, we expect operating expenses for the remainder of 2016 to grow approximately 5-8%, and together with an anticipated increase in revenue of 2-6% we anticipate income from operations, as a percentage of sales, to increase by 0.5-1.5% for the remainder of 2016.

Other Income and Expenses

We had other expenses, net of other income, of $0.1 million during the quarter ended June 30, 2016, compared to other expenses, net of other income of $0.8 million in the quarter ended June 30, 2015. The change for the quarter was primarily a result of net foreign currency gains of $0.1 million for the quarter ended June 30, 2016, as compared to net foreign currency losses of $0.6 million for the same quarter of 2015. The increase in currency gains in the quarter ended June 30, 2016 was primarily due to the strengthening of the Australian Dollar (AUD) and the JPY against the USD offset by the weakening of the British Pound (GBP) on intercompany debt during the quarter ended June 30, 2016, as compared to the strengthening of the USD against the EUR and JPY during the quarter ended June 30, 2015. Net interest expense was relatively unchanged at $0.3 million for each of the quarters ended June 30, 2016 and 2015.

We had other income, net of other expense, of $0.1 million during the six months ended June 30, 2016, compared to other expenses, net of other income of $1.3 million in the six months ended June 30, 2015. The change for the six months was primarily a result of net foreign currency gains of $0.6 million for the six months ended June 30, 2016, as compared to net foreign currency losses of $0.8 million for the same six months of 2015. The increase in currency gains in the six months ended June 30, 2016 was primarily due to the strengthening of the Australian Dollar (AUD) and the JPY against the USD on intercompany debt during the six months ended June 30, 2016, as compared to the strengthening of the USD against the EUR and JPY during the six months ended June 30, 2015. Net interest expense was $0.5 million for the six months ended June 30, 2016, compared to $0.6 million for the same six months in 2015.

Taxes and Net Income

Income before provision for income taxes increased 22% to $6.5 million in the quarter ended June 30, 2016 from $5.3 million in the quarter ended June 30, 2015, primarily due to the impact of sales growth and foreign currency gains. The effective tax rate, as a percentage of income before taxes, was 33% for the quarter ended June 30, 2016, compared to 31% for the same quarter in 2015, primarily as a result of the change in the mix of income in the different tax jurisdictions.  As a result of the foregoing, we realized net income of $4.4 million in the quarter ended June 30, 2016, an increase of 20% from $3.7 million in the quarter ended June 30, 2015. As a percentage of sales, net income increased to 7% for the quarter ended June 30, 2016, compared to 6% for the same period in 2015. Earnings per share, on a diluted basis, increased to $0.31 for the quarter ended June 30, 2016, from $0.26 for the quarter ended June 30, 2015.

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Income before provision for income taxes increased 20% to $13.1 million in the six months ended June 30, 2016 from $10.9 million in the six months ended June 30, 2015, primarily due to the impact of sales growth and foreign currency gains. The effective tax rate, as a percentage of income before taxes, was 33% for the six months ended June 30, 2016, compared to 29% for the same period in 2015, primarily as a result of the change in the mix of income in the different tax jurisdictions and an elimination of a tax valuation allowance in Spain in the quarter ended March 31, 2015.  As a result of the foregoing, we realized net income of $8.8 million in the six months ended June 30, 2016, an increase of 13% from $7.8 million in the six months ended June 30, 2015. As a percentage of sales, net income increased to 7% for the six month period ended June 30, 2016, compared to 6% for the same six months in 2015. Earnings per share, on a diluted basis, increased to $0.62 for the six months ended June 30, 2016, from $0.55 for the six months ended June 30, 2015.

Liquidity and Capital Resources

We have financed our operations primarily through a combination of commercial debt financing and cash flows from our operating activities. As of June 30, 2016, we had working capital of $112.9 million, a 1.7% decrease from $114.8 million at the end of 2015. Working capital in 2016 decreased primarily as a result of our use of cash for increased equipment purchases, as well as stock repurchases, and payments for acquisitions.

We expect that cash flows from operating activities, borrowings under our line of credit, and the issuance of equity securities in connection with both stock purchases under the 2009 ESPP and the exercise of stock option awards under the 2009 Plan will be sufficient to meet our commitments and cash requirements in the next twelve months. If not, we will seek additional funding through any number of possible combinations of additional debt, additional issuance of equity or convertible debt. As of June 30, 2016, $4.3 million of our cash balance was held outside the United States. Our foreign cash holdings vary depending on operating cash needs of our foreign subsidiaries and the timing of reimbursements to the United States. There are currently no restrictions against repatriation of this cash.

Operating Activities – Operating activities provided net cash of $12.9 million in the six months ended June 30, 2016, as compared to net cash from operations of $18.3 million during the six months ended June 30, 2015. This decrease in the first six months of 2016 was primarily related to the increase in inventory, which used cash of $6.7 million for the six months ended June 30, 2016, offset partially by an increase in accounts payable of $1.5 million, in contrast to a decrease in inventory purchases providing $3.3 million and a $1.4 million increase in cash flow from accounts payable during the six months ended June 30, 2015. Accounts receivable used net cash of $2.0 for the six months ended June 30, 2016 compared to use of net cash of $3.1 million for the six months ended June 30, 2015. The change in total accounts receivable was due to increased sales during the first six months of 2016. Our allowance for doubtful accounts and sales returns increased to $1.2 million at June 30, 2016 from $1.0 million at December 31, 2015. The total days sales outstanding (DSO) ratio, based on average accounts receivable balances, was 73 for the six month period ended June 30, 2016, as compared to 76 for the six month period ended June 30, 2015, as we continued to see improvement in accounts receivable payment terms in the United States. However, as we continue to expand our operations internationally, our DSO ratio could increase because credit terms outside of the United States tend to be relatively longer than those in the United States.

Investing Activities- Investing activities used net cash of $18.2 million in the six months ended June 30, 2016, as compared to $14.2 million used in the six months ended June 30, 2015. The primary reason for the increase was our increased cash outlays for surgical instrumentation, facility and manufacturing equipment, which were $17.3 million during the six month period ended June 30, 2016, as compared to cash outlays of $9.1 million for purchases of surgical instrumentation and manufacturing equipment during the same period of 2015.

In February 2016, we acquired Exactech Australia and paid cash consideration of $1.2 million at closing and recognized a preliminary contingent consideration of $2.4 million, which we expect to be paid over the next two years. We funded our acquisition from cash flow from operations. We acquired $1.6 million in current assets, $0.7 million in property and equipment, $0.5 million in identifiable intangible assets, assumed $0.2 million in current liabilities and assumed preliminary deferred taxes of $0.2 million. We have recognized a preliminary goodwill amount of $3.1 million. Our accounting for the acquisition is preliminary and pending final pre-acquisition results and asset valuations. As of June 30, 2016, $1.3 million of the $2.6 million contingent consideration balance was classified in current liabilities due to the expected timing of the earn-out payments.

In January 2015, we acquired Blue Ortho and paid cash consideration of $2.3 million at closing and recognized contingent consideration of $7.1 million, which we expect to pay over the next five to ten years. We funded our acquisition from cash flow from operations. We acquired $1.3 million in current assets, $0.2 million in property and equipment, $7.5 million in identifiable intangible assets, assumed $0.4 million in current liabilities and

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assumed deferred taxes of $2.5 million. We have recognized a goodwill amount of $6.5 million. We finalized our accounting for the acquisition during the fourth quarter of 2015. As of June 30, 2016 we had $5.8 million of contingent consideration liability in our unaudited condensed consolidated balance sheets, of which $1.4 million is classified in other current liabilities, due to our expected timing of earn-out payments. The remaining $4.4 million preliminary contingent liability is classified as other non-current liabilities.

Financing Activities- Financing activities used net cash of $2.7 million in the six months ended June 30, 2016, as compared to $0.8 million in net cash provided for the six months ended June 30, 2015. In the first six months of 2016, we increased the amount outstanding under our line of credit by $4.0 million, as compared to net repayments of debt of $1.5 million in the first six months of 2015 related to payments on our previous term loan. During the first six months of 2016, we paid contingent consideration payments to the former shareholders of Blue Ortho of $0.7 million, and we used cash of $3.0 million for the repurchase of our common stock. Proceeds from the exercise of stock options provided cash of $2.4 million during the six months ended June 30, 2016, as compared to $2.3 million during the six months ended June 30, 2015, and we used the proceeds to fund general working capital.  

Long-term Debt

In December 2015, we entered into a new revolving credit line for a maximum aggregate principal amount of $150.0 million, referred to as the Credit Agreement, with JP Morgan Chase Bank, as Administrative Agent, JP Morgan Securities, as Lead Arranger and Lead Bookrunner, and Compass Bank as Syndication Agent. The Credit Agreement is composed of a revolving credit line in an aggregate principal amount of up to $150.0 million, of which, a portion is a $5.0 million swingline facility and portion is a $5.0 million facility for the issuance of letters of credit. Interest on the outstanding balance under the Credit Agreement is based, at our election, on a base rate, a LIBOR Rate or an index rate, in each case plus an applicable margin. The Credit Agreement expires on December 16, 2020. The Credit Agreement contains financial covenants requiring that we maintain a leverage ratio of not greater than 3.00 to 1.00 and a fixed charge coverage ratio of not less than 1.50 to 1.00. As of June 30, 2016, we were in compliance with all financial covenants. For additional information regarding the Credit Agreement, please see note 6 - Debt to our audited consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2015.

Other Commitments and Contingencies

At June 30, 2016, we had outstanding commitments for the purchase of inventory, raw materials and supplies of $18.5 million and outstanding commitments for the purchase of capital equipment of $8.1 million. Purchases under our distribution agreements were $1.7 million during the six months ended June 30, 2016.

In June 2016 we entered into an agreement to pay a total of $5.9 million for the naming of the Exactech Arena at the newly remodeled Stephen C. O’Connell Center, a sports and entertainment complex on the University of Florida’s campus. Payments will be made annually over the term of the agreement. The sponsorship agreement gives us presence at the venue, use of University of Florida facilities and television coverage and commercial spots on Fox Sports Sun and Fox Sports Florida during arena events. The 10-year agreement will become effective December 1, 2016, and contains an option to extend for an additional five years.

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CAUTIONARY STATEMENT RELATING TO FORWARD LOOKING STATEMENTS

This report contains various “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which represent the Company’s expectations or beliefs concerning future events, including, but not limited to, statements regarding growth in sales of the Company’s products, profit margins and the sufficiency of the Company’s cash flow for its future liquidity and capital resource needs. When used in this report, the terms “anticipate,” “believe,” “estimate,” “expect”, “plan” and “intend” and words or phrases of similar import, as they relate to the Company or its subsidiaries or its management, are intended to identify forward-looking statements. These forward-looking statements are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without limitation, the effect of competitive pricing, the Company’s dependence on the ability of its third-party suppliers to produce components on a cost-effective basis to the Company, significant expenditures of resources to maintain high levels of inventory, market acceptance of the Company’s products, the impact of the medical device excise tax, the outcome of litigation, the effects of governmental regulation, potential product liability risks and risks of securing adequate levels of product liability insurance coverage, and the availability of reimbursement to patients from health care payers for procedures in which the Company’s products are used. Results actually achieved may differ materially from expected results included in these statements as a result of these or other factors, including those factors discussed under “Risk Factors” in our annual report on Form 10-K for the year ended December 31, 2015. Exactech undertakes no obligation to update, and the Company does not have a policy of updating or revising, these forward-looking statements. Except where the context otherwise requires, the terms, “we”, “us”, “our”, “the Company,” or “Exactech” refer to the business of Exactech, Inc. and its consolidated subsidiaries.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

We are exposed to market risk from interest rates. For our cash and cash equivalents, a change in interest rates affects the amount of interest income that can be earned. For our debt instruments, changes in interest rates affect the amount of interest expense incurred. If our variable rates of interest increased by 1%, our debt service would increase by approximately $0.1 million for the remainder of 2016.

The table below provides information about our line of credit, which is currently our sole financial instrument sensitive to changes in interest rates. The table presents principal cash flow by expected maturity dates and weighted average interest rates for our debt obligation. We believe that the amounts presented reasonably approximate the financial instrument's fair market value as of June 30, 2016, and the weighted average interest rate for the six months ended June 30, 2016:

(in thousands, except percentages)	2016			2017		2018		2019		Thereafter		Total
Liabilities
Line of Credit at variable interest rate	$	—		$	—	$	—	$	—	$	20,000	$	20,000
Weighted average interest rate		2.0	%

Foreign Currency Risk

Foreign Currency Translations – We are exposed to market risk related to changes in foreign currency exchange rates. The functional currency of substantially all of our international subsidiaries is their local currency. Transactions are translated into U.S. Dollars (USD), and exchange gains and losses arising from translation are recognized in “Other comprehensive income (loss)”. Fluctuations in exchange rates affect our financial position and results of operations. The majority of our foreign currency exposure is to the Euro (EUR), British Pound (GBP), Japanese Yen (JPY) and Australian Dollar (AUD). During the six months ended June 30, 2016, translation gains were $1.5 million, which were primarily due to the strengthening of the JPY and AUD against the USD. During the six months ended June 30, 2015, translation losses were $2.8 million.

Foreign Currency Transactions – The USD is our primary currency, and transactions that are completed in a foreign currency are translated into USD and recorded in our consolidated financial statements. We recognized currency transaction gains of $0.9 million for the six months ended June 30, 2016, primarily due to the strengthening of the JPY and AUD as compared to the USD, and currency transaction losses of $0.5 million during the same period in 2015. We currently believe that our exchange rate risk exposure is not material to our operations.

Foreign Currency Options – During the first half of 2016, we entered into foreign currency forward contracts as economic hedges against the exchange rate fluctuations of the USD against the EUR, GBP and the JPY. During the six months ended June 30, 2016, we recognized losses of $0.3 million related to these instruments because the USD weakened against the EUR and the JPY and strengthened against the GBP.  The recognized losses are recorded in other income (expense) in the unaudited condensed consolidated statements of income related to the fair value of these currency options based upon a dealer's quotes.

During the first half of 2015, we entered into foreign currency forward contracts as economic hedges against the strengthening of the USD against the EUR and the JPY. As of June 30, 2015, we had two foreign currency forward contracts with six month terms. During the six months ended June 30, 2015, we recognized a loss of $0.3 million on the condensed consolidated statements of income related to the fair value of these currency options based upon a dealer's quotes.

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Item 4. Controls and Procedures

Disclosure Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer ("CEO") and our Chief Financial Officer ("CFO"), of the effectiveness of the design and operation of our disclosure controls and procedures, or “disclosure controls,” pursuant to Exchange Act Rule 13a-15(b). Disclosure controls are controls and procedures designed to reasonably ensure that information required to be disclosed in our reports filed under the Exchange Act, such as this quarterly report, is recorded, processed, summarized and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms. Disclosure controls include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, or persons performing similar functions, as appropriate, to allow timely decisions regarding required disclosure. Our disclosure controls include some, but not all, components of our internal control over financial reporting. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures were effective as of June 30, 2016.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 during the three months ended June 30, 2016, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are various claims, lawsuits, and disputes with third parties and pending actions involving various allegations against us incident to the operation of our business, principally product liability cases. While we believe that the various claims are without merit, we are unable to predict the ultimate outcome of such litigation. We therefore maintain insurance, subject to self-insured retention limits, for all such claims, and establish accruals for product liability and other claims based upon our experience with similar past claims, advice of counsel and the best information reasonably available. At June 30, 2016 and December 31, 2015, we had $125,000 and $100,000 accrued, respectively, for product liability claims. These product liability claims are subject to various uncertainties, and it is possible that they may be resolved unfavorably to us. While it is not possible to predict with certainty the outcome of the various cases, it is the opinion of management that, upon ultimate resolution, the cases will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Our insurance policies covering product liability claims must be renewed annually. Although we have been able to obtain insurance coverage for product liability claims at a cost and on other terms and conditions that have been acceptable to us, we may not be able to procure acceptable policies in the future.

Item 1A. Risk Factors

There have been no material changes to the risk factors set forth in Part I, Item 1A, of our Annual Report on Form 10-K for the year ended December 31, 2015.

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Item 6.Exhibits

(a) Exhibit	Description
10.1	Amendment No. 2 to Exactech, Inc. 2009 Employee Stock Purchase Plan, filed as Exhibit A to the Company’s Definitive Proxy Statement on Schedule 14A, filed with the SEC on March 22, 2016.
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer pursuant to 18 USC Section 1350.
32.2	Certification of Chief Financial Officer pursuant to 18 USC Section 1350.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

30

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.

			Exactech, Inc.
Date:	August 9, 2016	By:	/s/ David Petty
			David Petty
			Chief Executive Officer (principal executive officer) and President
Date:	August 9, 2016	By:	/s/ Joel C. Phillips
			Joel C. Phillips
			EVP, Chief Financial Officer (principal financial officer and principal accounting officer) and
			Treasurer

31

EX-31.1

Exhibit31.1

CERTIFICATION

I, David Petty, certify that:

1.	I have reviewed thisquarterly report on Form10-Q of Exactech,Inc.;
2.	Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementswere made, not misleading with respecttotheperiods covered by thisreport;
3.	Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,and for, theperiods presented in thisreport;
4.	Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(as defined in ExchangeActRules 13a-15(f) and 15d-15(f)) fortheregistrant and we have:
a)		designed such disclosure controls and procedures, or causedsuch disclosure controls and procedures tobe designed under our supervision,to ensure that materialinformation relatingto theregistrant, includingits consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared; and
b)		designed such internal control over financial reporting, or caused such internal control over financialreportingto be designed under our supervision, to provide reasonable assurance regardingthe reliability offinancialreporting and thepreparation of financialstatements for external purposes in accordance withgenerally accepted accounting principles; and
c)		evaluated the effectiveness of the registrant’s disclosure controlsand procedures and presented in thisreportour conclusionsabout theeffectiveness of thedisclosure controlsand procedures, as of theend ofthe period covered by this report based on such evaluation; and
d)		disclosed in this report any change in the registrant’s internal control over financial reportingthat occurredduring the registrant’s most recent fiscalquarter (the registrant’s fourth fiscalquarter in thecase of anannualreport)thathas materiallyaffected,or is reasonablylikelytomateriallyaffect,theregistrant’sinternalcontrol over financial reporting.
5.	Theregistrant’sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationoftheinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeofregistrant’sboardofdirectors(or persons performing the equivalent function):
a)		allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontrolsoverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeand report financial information; and
b)		anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantrolein the registrant’s internal controls over financial reporting.
Date: August 9, 2016
			/s/DavidPetty
			DavidPetty
			Chief Executive Officer, PresidentandDirector

EX-31.2

Exhibit31.2

CERTIFICATION

I, Joel C. Phillips, certify that:

1.	I have reviewed thisquarterly report on Form10-Q of Exactech,Inc.;
2.	Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterialfactnecessarytomakethestatementsmade,inlightofthecircumstancesunderwhichsuchstatementswere made, not misleading with respecttotheperiods covered by thisreport;
3.	Basedonmyknowledge,thefinancialstatements,andotherfinancialinformationincludedinthisreport,fairlypresentinallmaterialrespectsthefinancialcondition,resultsofoperationsandcashflowsoftheregistrantasof,and for, theperiods presented in thisreport;
4.	Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrolsandprocedures(asdefinedinExchangeActRules13a-15(e)and15d-15(e))andinternalcontroloverfinancialreporting(as defined in ExchangeActRules 13a-15(f) and 15d-15(f)) fortheregistrant and we have:
a)		designed such disclosure controls and procedures, or causedsuch disclosure controls and procedures tobe designed under our supervision,to ensure that materialinformation relatingto theregistrant, includingits consolidated subsidiaries, is made known to us by others within those entities, particularly during theperiod in which this report is being prepared; and
b)		designed such internal control over financial reporting, or caused such internal control over financialreportingto be designed under our supervision, to provide reasonable assurance regardingthe reliability offinancialreporting and thepreparation of financialstatements for external purposes in accordance withgenerally accepted accounting principles; and
c)		evaluated the effectiveness of the registrant’s disclosure controlsand procedures and presented in thisreportour conclusionsabout theeffectiveness of thedisclosure controlsand procedures, as of theend ofthe period covered by this report based on such evaluation; and
d)		disclosed in this report any change in the registrant’s internal control over financial reportingthat occurredduring the registrant’s most recent fiscalquarter (the registrant’s fourth fiscalquarter in thecase of anannualreport)thathas materiallyaffected,or is reasonablylikelytomateriallyaffect,theregistrant’sinternalcontrol over financial reporting.
5.	Theregistrant’sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationoftheinternalcontroloverfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeofregistrant’sboardofdirectors(or persons performing the equivalent function):
a)		allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontrolsoverfinancialreportingwhicharereasonablylikelytoadverselyaffecttheregistrant’sabilitytorecord,process,summarizeand report financial information; and
b)		anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantrolein the registrant’s internal controls over financial reporting.
Date: August 9, 2016
			/s/Joel C. Phillips
			Joel C. Phillips
			Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit32.1

CERTIFICATIONPURSUANTTO

18U.S.C.SECTION1350,

ASADOPTED PURSUANT TO

SECTION906OFTHESARBANES-OXLEYACTOF2002

InconnectionwiththeQuarterlyReportonForm10-QofExactech,Inc.(the“Company”)fortheperiodendedJune 30,2016asfiledwiththeSecuritiesandExchangeCommissiononthedatehereof(the“Report”),I,DavidPetty,ChiefExecutiveOfficeroftheCompany,certify,pursuantto18U.S.C.§1350,asadoptedpursuantto§906oftheSarbanes-OxleyActof2002,that:

(1) TheReportfullycomplieswiththerequirementsofsection13(a)or15(d)oftheSecuritiesExchangeActof1934; and

(2) TheinformationcontainedintheReportfairlypresent,inallmaterialrespects,thefinancialconditionand resultsof operations of theCompany.

/s/DavidPetty

DavidPetty

ChiefExecutiveOfficer

August 9, 2016

EX-32.2

Exhibit32.2

CERTIFICATIONPURSUANTTO

18U.S.C.SECTION1350,

ASADOPTED PURSUANT TO

SECTION906OFTHESARBANES-OXLEYACTOF2002

InconnectionwiththeQuarterlyReportonForm10-QofExactech,Inc.(the“Company”)fortheperiodendedJune 30,2016asfiledwiththeSecuritiesandExchangeCommissiononthedatehereof(the“Report”),I,Joel C. Phillips,ChiefExecutiveOfficeroftheCompany,certify,pursuantto18U.S.C.§1350,asadoptedpursuantto§906oftheSarbanes-OxleyActof2002,that:

(1) TheReportfullycomplieswiththerequirementsofsection13(a)or15(d)oftheSecuritiesExchangeActof1934; and

(2) TheinformationcontainedintheReportfairlypresent,inallmaterialrespects,thefinancialconditionand resultsof operations of theCompany.

/s/Joel C. Phillips

Joel C. Phillips

ChiefFinancialOfficer

August 9, 2016

XML

Document And Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 04, 2016
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2016
Document Fiscal Year Focus	2016
Trading Symbol	EXAC
Document Fiscal Period Focus	Q2
Entity Registrant Name	EXACTECH INC
Entity Central Index Key	0000913165
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		14,149,038

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2016	Dec. 31, 2015
ASSETS
Cash and cash equivalents	$ 10,052,000	$ 12,713,000
Accounts receivable, net of allowances of $1,239 and $1,011	54,143,000	52,442,000
Prepaid expenses and other assets, net	4,155,000	2,552,000
Income taxes receivable	312,000	486,000
Inventories – current	74,913,000	71,429,000
Total current assets	143,575,000	139,622,000
PROPERTY AND EQUIPMENT:
Land	4,505,000	4,494,000
Machinery and equipment	38,595,000	37,008,000
Surgical instruments	131,489,000	123,533,000
Furniture and fixtures	4,722,000	4,655,000
Facilities	21,322,000	20,348,000
Projects in process	1,835,000	1,218,000
Total property and equipment	202,468,000	191,256,000
Accumulated depreciation	(98,142,000)	(96,713,000)
Net property and equipment	104,326,000	94,543,000
OTHER ASSETS:
Deferred financing and deposits, net	891,000	858,000
Deferred tax assets	777,000
Non-current inventories	11,459,000	8,995,000
Goodwill	22,265,000	18,850,000
Total other assets	47,888,000	41,342,000
TOTAL ASSETS	295,789,000	275,507,000
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	15,888,000	13,932,000
Income taxes payable	950,000	603,000
Accrued expenses and other liabilities	11,096,000	9,498,000
Other current liabilities	2,768,000	792,000
Total current liabilities	30,702,000	24,825,000
LONG-TERM LIABILITIES:
Deferred tax liabilities	423,000	443,000
Line of credit	20,000,000	16,000,000
Other long-term liabilities	5,787,000	5,850,000
Total long-term liabilities	26,210,000	22,293,000
Total liabilities	56,912,000	47,118,000
SHAREHOLDERS’ EQUITY:
Common stock	143,000	142,000
Additional paid-in capital	85,156,000	81,963,000
Treasury Stock	(3,042,000)
Accumulated other comprehensive loss	(10,438,000)	(11,986,000)
Retained earnings	167,058,000	158,270,000
Total shareholders’ equity	238,877,000	228,389,000
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	295,789,000	275,507,000
Product licenses and designs
OTHER ASSETS:
Product licenses and designs, net	10,614,000	11,121,000
Patents and trademarks
OTHER ASSETS:
Product licenses and designs, net	1,293,000	1,426,000
Customer relationships
OTHER ASSETS:
Product licenses and designs, net	$ 589,000	$ 92,000

XML

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Statement Of Financial Position [Abstract]
Accounts receivable, allowance	$ 1,239	$ 1,011

XML

Condensed Consolidated Statements of Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Income Statement [Abstract]
NET SALES	$ 66,124	$ 61,493	$ 131,422	$ 122,869
COST OF GOODS SOLD	20,268	19,334	40,636	37,976
Gross profit	45,856	42,159	90,786	84,893
OPERATING EXPENSES:
Sales and marketing	23,835	21,464	47,154	43,314
General and administrative	5,640	5,776	11,554	11,623
Research and development	5,329	4,602	10,399	9,131
Depreciation and amortization	4,410	4,182	8,734	8,624
Total operating expenses	39,214	36,024	77,841	72,692
INCOME FROM OPERATIONS	6,642	6,135	12,945	12,201
OTHER INCOME (EXPENSE):
Interest income	2	2	6	4
Other income	32	37	72	65
Interest expense	(268)	(275)	(530)	(577)
Foreign currency gain (loss), net	98	(557)	592	(759)
Total other income (expense)	(136)	(793)	140	(1,267)
INCOME BEFORE INCOME TAXES	6,506	5,342	13,085	10,934
PROVISION FOR INCOME TAXES	2,120	1,681	4,297	3,161
NET INCOME	$ 4,386	$ 3,661	$ 8,788	$ 7,773
BASIC EARNINGS PER SHARE	$ 0.31	$ 0.26	$ 0.62	$ 0.56
DILUTED EARNINGS PER SHARE	$ 0.31	$ 0.26	$ 0.62	$ 0.55

XML

Condensed Consolidated Statements Of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement Of Income And Comprehensive Income [Abstract]
Net Income	$ 4,386	$ 3,661	$ 8,788	$ 7,773
Other comprehensive income (loss), net of tax:
Change in fair value of cash flow hedge		22	0	4
Change in currency translation	(1,024)	488	1,548	(2,786)
Other comprehensive income (loss), net of tax	(1,024)	510	1,548	(2,782)
Comprehensive income	$ 3,362	$ 4,171	$ 10,336	$ 4,991

XML

Condensed Consolidated Statements of Cash Flows - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
OPERATING ACTIVITIES:
Net income	$ 8,788,000	$ 7,773,000
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Provision for allowance for doubtful accounts and sales returns	228,000	52,000
Inventory allowance	1,748,000	529,000
Depreciation and amortization	9,367,000	9,429,000
Restricted common stock issued for services	193,000	213,000
Compensation cost of stock awards	988,000	921,000
Loss on disposal of equipment	678,000	1,126,000
Foreign currency option loss	221,000	261,000
Foreign currency exchange (gain) loss	(926,000)	498,000
Deferred income taxes	(958,000)	(1,239,000)
Changes in assets and liabilities, net of business combination effect, which provided (used) cash:
Accounts receivable	(1,986,000)	(3,070,000)
Prepaids and other assets	(1,549,000)	(1,186,000)
Inventories	(6,708,000)	3,276,000
Accounts payable	1,501,000	(1,377,000)
Income taxes receivable/payable	537,000	627,000
Accrued expense & other liabilities	741,000	501,000
Net cash provided by operating activities	12,863,000	18,334,000
INVESTING ACTIVITIES:
Purchases of property and equipment	(17,498,000)	(11,605,000)
Purchase of business, net of cash acquired	(833,000)	(2,566,000)
Proceeds from sale of property and equipment	118,000	0
Net cash used in investing activities	(18,213,000)	(14,171,000)
FINANCING ACTIVITIES:
Net borrowings on line of credit	4,000,000	0
Principal payments on debt	0	(1,500,000)
Payments of contingency consideration	669,000	0
Payments on capital leases	(25,000)	(36,000)
Debt issuance costs	0	(15,000)
Repurchase of common stock	(3,042,000)	0
Proceeds from issuance of common stock	2,433,000	2,309,000
Net cash provided by financing activities	2,697,000	758,000
Effect of foreign currency translation on cash and cash equivalents	(8,000)	(120,000)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS	(2,661,000)	4,801,000
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	12,713,000	10,051,000
CASH AND CASH EQUIVALENTS, END OF PERIOD	10,052,000	14,852,000
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest	286,000	413,000
Income taxes	5,642,000	3,930,000
Non-cash investing and financing activities:
Change in fair value of cash flow hedge	0	4,000
Capitalized lease additions	29,000	0
Purchase of equipment payable	289,000	0
Business combination, contingent consideration payable	$ 2,147,000	$ 6,349,000

XML

Basis Of Presentation

6 Months Ended

Jun. 30, 2016

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis Of Presentation

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements of Exactech, Inc. and its subsidiaries (the “Company” or “Exactech”, “we”, “us” or “our”), which are for interim periods, have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission relating to interim financial statements. These unaudited condensed consolidated financial statements do not include all disclosures provided in the Company's audited annual financial statements. The condensed financial statements should be read in conjunction with the audited financial statements and notes contained in Exactech's Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the Securities and Exchange Commission.

In the opinion of management, all adjustments considered necessary for a fair presentation have been included, consisting of normal recurring adjustments. Our subsidiaries, Exactech Asia, Exactech UK, Exactech Japan, Exactech France, Exactech Taiwan, Exactech Deutschland, Exactech Ibérica, Exactech International Operations, Blue Ortho, Exactech Australia and Exactech U.S., are consolidated for financial reporting purposes, and all intercompany balances and transactions have been eliminated. Results of operations for the six month period ended June 30, 2016 are not necessarily indicative of the results to be expected for the full year.

Certain amounts reported for prior periods have been reclassified to be consistent with the current period presentation.

During the first quarter of 2016, we changed the classification of surgical instrumentation not yet placed in service from non-current inventory in the other assets category to surgical instrumentation in the property, plant and equipment category. In order to present comparable financial statements, we reclassified $14.4 million of non-current inventory in the December 31, 2015 balance sheet to property, plant and equipment. We also reclassified the effect of the classification change on the cash flow statement for the six months ended June 30, 2015 by reducing cash used for inventory by $2.2 million in cash flow from operations and increasing the cash used for property, plant and equipment in cash flow from investing. The prior period reclassification had no impact on our condensed consolidated statements of income or equity in the condensed consolidated balance sheets.

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New Accounting Pronouncements And Standards

6 Months Ended

Jun. 30, 2016

New Accounting Pronouncements And Changes In Accounting Principles [Abstract]

New Accounting Pronouncements And Standards

2. NEW ACCOUNTING PRONOUNCEMENTS AND STANDARDS

In March 2016, the Financial Accounting Standards Board (“FASB”) issued updated guidance related to accounting for employee share-based payments. The guidance simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The guidance is effective for annual and interim periods beginning after December 15, 2016, and early adoption is permitted. We are currently assessing the impact of adopting this guidance on our financial statements.

In February 2016, the FASB issued updated guidance on leases. The new standard requires all lessees to recognize a lease liability and a right-of-use asset, measured at the present value of the future minimum lease payments, at the lease commencement date. Lessor accounting remains largely unchanged under the new guidance.  A modified retrospective approach should be applied for leases existing at the beginning of the earliest comparative period presented in the financial statements. The guidance is effective for annual and interim periods beginning after December 15, 2018, and early adoption is permitted. We are currently assessing the impact of adopting this guidance on our financial statements.

In November 2015, the FASB issued amended guidance on income taxes, which simplifies the classification of deferred income tax liabilities and assets in a classified statement of financial position. The amendment requires entities that present a classified balance sheet to classify all deferred tax liabilities and assets as a noncurrent amount. The amendment is effective for fiscal years and interim periods within those years beginning after December 15, 2016, and may be early adopted on a prospective basis or on a retrospective basis to all periods presented. In the first quarter of 2016 we adopted the amended guidance on a retrospective basis, and reclassified $1.7 million of current deferred tax assets to non-current deferred tax liabilities as of December 31, 2015.

In September 2015, the FASB issued guidance on business combination provisional adjustments during the measurement period. The new standard requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The guidance is effective for annual and interim periods beginning on or after December 15, 2017, and early application is permitted. We are currently assessing the impact of adopting this guidance on our financial statements; however, we do not expect the adoption of this guidance to have a material impact on our financial position or results of operations.

In May 2014, the FASB issued new revenue recognition guidance that supersedes the existing revenue recognition guidance and most industry-specific guidance applicable to revenue recognition. The new guidance is based on the principle that revenue is recognized upon the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance will also result in enhanced disclosures about revenue, provide guidance for transactions that were not previously addressed comprehensively, and clarify guidance for multiple-element arrangements. In July 2015, the FASB delayed the effective date of this guidance by one year. The guidance is effective for the first fiscal quarter of 2018, and early application is not permitted earlier than January 1, 2015.  We are currently assessing the impact of adopting this guidance on our financial statements.

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Fair Value Measures

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair Value Measures

3. FAIR VALUE MEASURES

Our financial instruments include cash and cash equivalents, trade receivables, debt, and foreign currency hedges. The carrying amounts of cash and cash equivalents, and trade receivables approximate fair value due to their short maturities. The carrying amount of debt approximates fair value due to the variable rate associated with the debt. The fair values of foreign currency hedges are based on dealer quotes.

The table below provides information on our liabilities that are measured at fair value on a recurring basis:

(In Thousands)	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2016
Liabilities
Contingent consideration	$	8,369	$	—	$	—	$	8,369
Total:	$	8,369	$	—	$	—	$	8,369
December 31, 2015
Liabilities
Contingent consideration	$	6,222	$	—	$	—	$	6,222
Total:	$	6,222	$	—	$	—	$	6,222

The fair value of our contingent consideration liability is management's best estimate based on the present value of estimated payment scenarios, which is determined based on inputs not observable in the market. We use assumptions we believe would be made by a market participant. We evaluate our estimates on a quarterly basis, as additional data impacting the assumptions is obtained, and recognize any changes in the unaudited condensed consolidated statements of income. See Note 12, Business Acquisition, for further discussion on the contingent consideration.

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Goodwill And Other Intangible Assets

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill And Other Intangible Assets

4. GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill – The following table provides the changes to the carrying value of goodwill for the six month period ended June 30, 2016:

(in thousands)	Extremities		Knee		Hip		Biologics and Spine		Other		Total
Balance as of December 31, 2015	$	4,461	$	5,132	$	904	$	7,553	$	800	$	18,850
Acquired goodwill		927		1,545		463		—		154		3,089
Foreign currency translation effects		129		134		40		—		23		326
Balance as of June 30, 2016	$	5,517	$	6,811	$	1,407	$	7,553	$	977	$	22,265

We test goodwill for impairment annually as of the 1^st of October. Our impairment analysis as of October 1, 2015 indicated no impairment to goodwill.

Other Intangible Assets – The following table summarizes the carrying values of our other intangible assets at June 30, 2016 and December 31, 2015:

(in thousands)	Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted Avg Amortization Period
Balance at June 30, 2016
Product licenses and designs	$	16,822	$	6,208	$	10,614		11.0
Patents and trademarks		4,678		3,385		1,293		14.2
Customer relationships		3,503		2,914		589		6.9
Balance at December 31, 2015
Product licenses and designs	$	16,675	$	5,554	$	11,121		11.0
Patents and trademarks		4,678		3,252		1,426		14.2
Customer relationships		2,923		2,831		92		6.9

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Hedging Activities And Foreign Currency Translation

6 Months Ended

Jun. 30, 2016

Foreign Currency Translation And Hedging Activities [Abstract]

Hedging Activities And Foreign Currency Translation

5. HEDGING ACTIVITIES AND FOREIGN CURRENCY TRANSLATION

Foreign Currency Transactions

The following table provides information on the components of our foreign currency activities recognized in the unaudited condensed consolidated statements of income:

(in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Foreign currency transactions gain (loss)	$	200		$	110		$	926		$	(498	)
Foreign currency option loss		(102	)		(667	)		(334	)		(261	)
Foreign currency gain (loss), net	$	98		$	(557	)	$	592		$	(759	)

Foreign Currency Transactions – Gains and losses resulting from our transactions and our subsidiaries’ transactions that are made in currencies different from our and their own are included in income as they occur and as other income (expense) in the condensed consolidated statements of income.

Foreign Currency Options – During 2016, we entered into foreign currency forward contracts as economic hedges against the exchange rate fluctuations of the U.S. Dollar (USD) against the Euro (EUR), the British Pound (GBP) and the Japanese Yen (JPY). During the six months ended June 30, 2016, we recognized losses of $0.3 million related to these instruments.  The recognized losses are recorded in other income (expense) in the unaudited condensed consolidated statements of income related to the fair value of these currency options based upon dealers’ quotes.

During 2015, we entered into foreign currency forward contracts as economic hedges against the strengthening of the USD against the EUR and the JPY. During the six months ended June 30, 2015, we recognized a loss of $0.3 million in the condensed consolidated statements of income related to the fair value of these currency options based upon dealers’ quotes.

Foreign Currency Translation

We are exposed to market risk related to changes in foreign currency exchange rates. The functional currency of substantially all of our international subsidiaries is their local currency. Transactions are translated into USD, and translation gains and losses are recognized in “Other comprehensive income (loss)”. Fluctuations in exchange rates affect our financial position and results of operations. The majority of our foreign currency exposure is to the EUR, GBP, Australian Dollar (AUD) and JPY. During the six months ended June 30, 2016, translation gains were $1.5 million, which were primarily due to the weakening of the GBP and offset partially by the strengthening of the JPY and the AUD in each case against the USD. During the six months ended June 30, 2015, translation losses were $2.8 million, which were primarily due to the weakening of the JPY against the USD, offset partially by the strengthening of the EUR and GBP against the USD. While we may experience translation gains and losses during the balance of the year ending December 31, 2016, these gains and losses are not expected to have a material adverse effect on our financial position, results of operations or cash flows.

Hedging Activities

We do not enter into or hold derivative instruments for trading or speculative purposes. During December 2015, we terminated our interest rate swap, which we had entered into to eliminate variability in future cash flows by converting LIBOR-based variable-rate interest payments into fixed-rate interest payments. The fair value of our interest rate swap agreement was based on dealer quotes. The change in fair value during the six months ended June 30, 2015 of $4,000 was recorded as accumulated other comprehensive loss in the consolidated balance sheets.

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Inventories

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Inventories

6. INVENTORIES

Inventories are valued at the lower of cost or net realizable value, using a FIFO method, and include implants consigned to customers and agents. The consigned or loaned inventory remains our inventory until we are notified of implantation. We are also required to maintain substantial levels of inventory, as it is necessary to maintain all sizes of each component to fill customer orders. The size of the component to be used for a specific patient is typically not known with certainty until the time of surgery. Due to this uncertainty, a minimum of one of each size of each component in the system to be used must be available to each sales representative at the time of surgery. As a result of this need to maintain substantial levels of inventory, we are subject to the risk of inventory obsolescence, and having to carry inventory in excess of expected sales (slow moving inventory). In the event that a substantial portion of our inventory becomes obsolete, it would have a material adverse effect on the Company. An allowance charge for slow moving inventories is recorded based upon an analysis of slow moving inventory items. For slow moving inventory, this analysis compares the quantity of inventory on hand to the historical sales of such inventory. As a result of this analysis, we record an estimated allowance for slow moving inventory. Due to the nature of slow moving inventory and changes in sales patterns and release schedules, this allowance may fluctuate up or down, as a charge or recovery. For items that we identify as obsolete, we record a charge to reduce their carrying value to net realizable value. Allowance charges for the three and six months ended June 30, 2016 were $394,000 and $1,748,000, respectively. Allowance charges for the three and six months ended June 30, 2015 were $491,000 and $529,000, respectively. The allowance charges increased as a result of our inventory builds for new and existing products. We also test our inventory levels for the amount of inventory that we expect to sell within one year. At certain times, such as when we stock new subsidiaries, add consignment locations, and launch new products, the level of inventory can exceed the forecasted level of cost of goods expected to be sold for the next twelve months.  We classify such inventory as non-current.

The following table summarizes our classifications of inventory as of June 30, 2016 and December 31, 2015: 

(in thousands)	June 30, 2016		December 31, 2015
Raw materials	$	20,622	$	19,481
Work in process		1,791		1,633
Finished goods on hand		15,403		14,497
Finished goods on loan/consignment		48,556		44,813
Inventory total		86,372		80,424
Non-current inventories		11,459		8,995
Inventories, current	$	74,913	$	71,429

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Income Tax

6 Months Ended

Jun. 30, 2016

Income Tax Disclosure [Abstract]

Income Tax

7. INCOME TAX

At June 30, 2016, net operating loss carry forwards of our foreign and domestic subsidiaries totaled $27.3 million, some of which begin to expire in 2020. For accounting purposes, the estimated tax effect of these net operating loss carry forwards results in a deferred tax asset.  The deferred tax asset associated with these losses was $8.3 million with a valuation allowance of $4.5 million charged against this deferred tax asset assuming these losses will not be fully realized. At December 31, 2015, these net operating loss carry forwards totaled $27.3 million, and the deferred tax asset was $8.5 million with a valuation allowance of $4.3 million charged against this deferred tax asset assuming these losses will not be fully realized.

Our income tax returns are subject to examination in numerous state, federal and foreign jurisdictions due to the multiple income tax jurisdictions in which we operate. We are not currently aware of any material open examinations in any such jurisdiction. As of June 30, 2016, we had no liability recorded as an uncertain tax benefit.

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Debt

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Debt

8. DEBT

Debt consisted of the following as of June 30, 2016 and December 31, 2015:

(in thousands)	June 30, 2016		December 31, 2015
Business line of credit payable on a revolving basis, plus interest based on adjustable rate as determined by one month LIBOR based on our ratio of funded debt to EBITDA, 1.75% as of June 30, 2016.		20,000		16,000
Total debt	$	20,000	$	16,000

The following is a schedule of future debt maturities as of June 30, 2016, for the years ending December 31 (in thousands):

2016	$	—
2017		—
2018		—
2019		—
2020		20,000
Thereafter		—
	$	20,000

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Commitments And Contingencies

6 Months Ended

Jun. 30, 2016

Commitments And Contingencies Disclosure [Abstract]

Commitments And Contingencies

9. COMMITMENTS AND CONTINGENCIES

Litigation

There are various claims, lawsuits, and disputes with third parties and pending actions involving various allegations against us incident to the operation of our business, principally product liability cases. While we believe that the various claims are without merit, we are unable to predict the ultimate outcome of such litigation. We therefore maintain insurance, subject to self-insured retention limits, for all such claims, and establish accruals for product liability and other claims based upon our experience with similar past claims, advice of counsel and the best information reasonably available. At June 30, 2016 and December 31, 2015, we had $125,000 and $100,000 accrued, respectively, for product liability claims. These product liability claims are subject to various uncertainties, and it is possible that they may be resolved unfavorably to us. While it is not possible to predict with certainty the outcome of the various cases, it is the opinion of management that, upon ultimate resolution, the cases will not have a material adverse effect on our consolidated financial position, results of operations or cash flows.

Our insurance policies covering product liability claims must be renewed annually. Although we have been able to obtain insurance coverage for product liability claims at a cost and on other terms and conditions that have been acceptable to us, we may not be able to procure acceptable policies in the future.

Purchase Commitments

At June 30, 2016, we had outstanding commitments for the purchase of inventory, raw materials and supplies of $18.5 million and outstanding commitments for the purchase of capital equipment of $8.1 million. Purchases under our distribution agreements were $1.7 million during the six months ended June 30, 2016.

In June 2016 we entered into an agreement to pay a total of $5.9 million for the naming of the Exactech Arena at the newly remodeled Stephen C. O’Connell Center, a sports and entertainment complex on the University of Florida’s campus. Payments will be made annually over the term of the agreement. The sponsorship gives us presence at the venue, use of University of Florida facilities and television coverage and commercial spots on Fox Sports Sun and Fox Sports Florida during arena events. The 10-year agreement will become effective December 1, 2016, and contains an option to extend for an additional five years.

Our Taiwanese subsidiary, Exactech Taiwan, entered into a license agreement with the Industrial Technology Research Institute (ITRI) and the National Taiwan University Hospital (NTUH) for the rights to technology and patents related to the repair of cartilage lesions. As of June 30, 2016, we have paid approximately $2.1 million for the licenses, patents, and equipment related to this license agreement, and we will make royalty payments when the technology becomes marketable. Using the technology, we plan to launch a cartilage repair program that will include a device and method for the treatment and repair of cartilage in the knee joint. It is expected that the project will require us to complete human clinical trials under the guidance of the Food & Drug Administration in order to obtain pre-market approval for the device in the United States. The agreement terms include a license fee based on the achievement of specific, regulatory milestones and a royalty arrangement based on sales once regulatory clearances are established.

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Segment Information

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Segment Information

10. SEGMENT INFORMATION

We evaluate our operating segments by our major product lines: extremity implants, knee implants, hip implants, biologics and spine, and other products. The “other products” segment includes miscellaneous sales categories, such as surgical instruments held for sale, bone cement, instrument rental fees, shipping charges, and other implant product lines. Evaluation of the performance of operating segments is based on their respective incomes from operations before taxes, interest income and expense, and nonrecurring items. Intersegment sales and transfers are not significant. The accounting policies of the reportable segments are the same as those described in Note 2 of the notes to our audited consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.

Total assets not identified with a specific segment are listed as “corporate” and include cash and cash equivalents, accounts receivable, income taxes receivable, deposits and prepaid expenses, deferred tax assets, land, facilities, office furniture and computer equipment, notes receivable, and other investments. Depreciation and amortization on corporate assets is allocated to the product segments for purposes of evaluating the income (loss) from operations, and capitalized surgical instruments are allocated to the appropriate product line supported by those assets.

Summarized information concerning our reportable segments is shown in the following table (in thousands):

Three Months Ended June 30,	Extremity		Knee		Hip		Biologics & Spine		Other			Corporate			Total
2016
Net sales	$	24,224	$	19,190	$	12,377	$	5,433	$	4,900		$	—		$	66,124
Segment profit (loss)		5,113		718		326		328		157			(136	)		6,506
Total assets, net		42,381		74,295		40,822		25,034		9,156			104,101			295,789
Capital expenditures		1,361		2,888		1,516		228		464			2,038			8,495
Depreciation and Amortization		727		1,772		694		233		197			1,084			4,707
2015
Net sales	$	20,479	$	18,957	$	10,944	$	5,873	$	5,240		$	—		$	61,493
Segment profit (loss)		4,199		911		497		185		343			(793	)		5,342
Total assets, net		35,440		66,031		33,280		23,241		12,803			103,691			274,486
Capital expenditures		857		1,134		761		1,059		422			220			4,453
Depreciation and Amortization		866		1,658		720		276		128			939			4,587
Six Months Ended June 30,	Extremity		Knee		Hip		Biologics & Spine		Other			Corporate			Total
2016
Net sales	$	48,384	$	38,577	$	23,712	$	10,827	$	9,922		$	—		$	131,422
Segment profit (loss)		10,037		1,706		539		457		206			140			13,085
Total assets, net		42,381		74,295		40,822		25,034		9,156			104,101			295,789
Capital expenditures		2,613		4,096		2,518		492		4,603			3,494			17,816
Depreciation and Amortization		1,439		3,760		1,363		495		369			1,941			9,367
2015
Net sales	$	41,559	$	37,395	$	21,895	$	11,013	$	11,007		$	—		$	122,869
Segment profit (loss)		8,736		2,127		1,033		325		(20	)		(1,267	)		10,934
Total assets, net		35,440		66,031		33,280		23,241		12,803			103,691			274,486
Capital expenditures		1,909		3,196		1,678		1,125		660			869			9,437
Depreciation and Amortization		1,573		3,708		1,445		559		266			1,878			9,429

Geographic distribution of our long-lived assets and inventory is shown in the following table (in thousands):

As of:	June 30, 2016						December 31, 2015
	Domestic			International			Domestic			International
Long lived assets, gross	$	166,457		$	61,014		$	161,672		$	53,859
Accumulated depreciation and amortization		(88,484	)		(22,165	)		(88,958	)		(19,391	)
Long lived assets, net		77,973			38,849			72,714			34,468
Inventory	$	50,876		$	35,496		$	43,725		$	36,699

Geographic distribution of our sales is summarized in the following table (in thousands):

Three Months Ended June 30,	2016		2015		% Inc/Decr
Domestic sales	$	44,612	$	41,295		8.0
International sales		21,512		20,198		6.5
Total sales	$	66,124	$	61,493		7.5
Six Months Ended June 30,	2016		2015		% Inc/Decr
Domestic sales	$	89,185	$	82,543		8.0
International sales		42,237		40,326		4.7
Total sales	$	131,422	$	122,869		7.0

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Shareholders' Equity

6 Months Ended

Jun. 30, 2016

Stockholders Equity Note [Abstract]

Shareholders' Equity

11. SHAREHOLDERS’ EQUITY

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for net income and net income available to common shareholders:

	Income (Numerator)		Shares (Denominator)		Per Share		Income (Numerator)		Shares (Denominator)		Per Share
	Three Months Ended						Three Months Ended
(in thousands, except per share amounts)	June 30, 2016						June 30, 2015
Net income	$	4,386					$	3,661
Basic EPS:
Net income available to common shareholders	$	4,386		14,112	$	0.31	$	3,661		13,947	$	0.26
Effect of dilutive securities:
Stock options				186						220
Diluted EPS:
Net income available to common shareholders plus assumed conversions	$	4,386		14,298	$	0.31	$	3,661		14,167	$	0.26
	Six Months Ended						Six Months Ended
(in thousands, except per share amounts)	June 30, 2016						June 30, 2015
Net income	$	8,788					$	7,773
Basic EPS:
Net income available to common shareholders	$	8,788		14,084	$	0.62	$	7,773		13,965	$	0.56
Effect of dilutive securities:
Stock options				159						238
Diluted EPS:
Net income available to common shareholders plus assumed conversions	$	8,788		14,243	$	0.62	$	7,773	$	14,203	$	0.55

For the three months ended June 30, 2016, weighted average options to purchase 185,724 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. For the three months ended June 30, 2015, weighted average options to purchase 323,201 shares of common stock were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method.

For the six months ended June 30, 2016, weighted average options to purchase 182,625 shares of common stock were outstanding but were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method. For the six months ended June 30, 2015, weighted average options to purchase 262,770 shares of common stock were not included in the computation of diluted EPS because the options were antidilutive under the treasury stock method.

Changes in Shareholders’ Equity:

The following is a summary of the changes in shareholders’ equity for the six months ended June 30, 2016:

	Common Stock				Additional Paid-In			Common Stock Held in			Retained		Accumulated Other Comprehensive
(in thousands)	Shares		Amount		Capital			Treasury			Earnings		Income (Loss)			Total
Balance December 31, 2015		14,154	$	142	$	81,963		$	—		$	158,270	$	(11,986	)	$	228,389
Net income		—		—		—			—			8,788		—			8,788
Other comprehensive income (loss), net of tax		—		—		—			—			—		1,548			1,548
Exercise of stock options		123		1		2,074			—			—		—			2,075
Issuance of restricted common stock for services		9		—		193			—			—		—			193
Issuance of common stock under Employee Stock Purchase Plan		23		—		358			—			—		—			358
Repurchase of common stock		—		—		—			(3,042	)		—		—			(3,042	)
Compensation cost of stock options		—		—		988			—			—		—			988
Tax impact on stock awards		—		—		(420	)		—			—		—			(420	)
Balance June 30, 2016		14,309	$	143	$	85,156		$	(3,042	)	$	167,058	$	(10,438	)	$	238,877

Treasury Stock:

In December 2015, our Board of Directors authorized the repurchase of up to 1.0 million shares of our common stock over a two-year period. As of June 30, 2016, we had repurchased 163,529 shares of our common stock at an average price of $18.60 per share, or an aggregate of $3.0 million.

Stock-based Compensation Awards:

We sponsor an Executive Incentive Compensation Plan, which provides for the award of stock-based compensation, including options, stock appreciation rights, restricted stock and other stock-based incentive compensation awards to key employees, directors and independent agents and consultants. We implemented a comprehensive, consolidated incentive compensation plan upon shareholder approval at our Annual Meeting of Shareholders on May 7, 2009, which was amended and restated at our 2014 Annual Meeting of Shareholders, held on May 8, 2014, to increase the maximum number of shares issuable under the 2009 Plan by 500,000. We refer to this plan, as amended, as the 2009 Plan. The maximum number of common shares issuable under the 2009 Plan is 1,500,000 plus (a) the number of shares with respect to awards previously granted under our preexisting plans that terminate without being exercised, expire, are forfeited or canceled, plus (b) the number of shares that remain available for future issuance under our preexisting plans plus (c) the number of shares that are surrendered in payment of any awards or any tax withholding with respect thereto. Common stock issued upon exercise of stock options is settled with authorized but unissued shares available. Under the 2009 Plan, the exercise price of option awards equals the market price of our common stock on the date of grant, and each award has a maximum term of ten years. As of June 30, 2016, there were 417,679 total shares remaining issuable under the 2009 Plan.

The aggregate compensation cost charged against income with respect to awards issued under the 2009 Plan and the 2009 Employee Stock Purchase Plan, referred to as the 2009 ESPP, was $1.0 million and $0.9 million for the six months ended June 30, 2016 and 2015, respectively. Income tax benefit on exercises of non-qualified stock options was $0.3 million and $0.3 million for the six months ended June 30, 2016 and 2015, respectively.  As of June 30, 2016, total unrecognized compensation cost related to unvested awards was $1.4 million and is expected to be recognized over a weighted-average period of 1.8 years.

Stock Options:

A summary of the status of stock option activity under our stock-based compensation plans as of June 30, 2016 and changes during the year to date is presented below:

	2016
	Options			Weighted Avg Exercise Price		Weighted Avg Remaining Contractual Term		Aggregate Intrinsic Value (In thousands)
Outstanding - January 1		1,217,003		$	18.70
Granted		18,500			23.00
Exercised		(122,644	)		16.92			$	446
Forfeited or Expired		(139,566	)		17.65
Outstanding - June 30		973,293		$	19.16		3.74	$	7,376
Exercisable - June 30		550,921		$	18.01		3.00	$	4,808

Outstanding options, consisting of five-year to ten-year incentive and non-qualified stock options, vest and become exercisable ratably over a three to five year period from the date of grant. The outstanding options expire from five to ten years from the date of grant or upon termination of employment with Exactech, and are contingent upon continued employment during the applicable option term. Certain non-qualified stock options are granted to non-employee sales agents and consultants, and they typically vest ratably over a period of three to four years from the date of grant and expire in five years or less from the date of grant, or upon termination of the agent's or consultant’s contract with Exactech.  Stock options for the purchase of 18,500 shares of common stock were granted during the six months ended June 30, 2016, compared to stock options for the purchase of 176,125 shares of common stock granted during the same period in 2015.

Restricted Stock Awards:

Under the 2009 Plan, we may grant restricted stock awards to eligible employees, directors, and independent agents and consultants. Restrictions on transferability, risk of forfeiture and other restrictions are determined by the Compensation Committee of the Board of Directors, or the Committee, at the time of the award. During February 2016, the Committee approved equity compensation to the outside members of the Board of Directors for their service on the Board of Directors. The annual compensation for each outside director consists of the grant of stock awards with an aggregate market value of $77,500, payable in four equal quarterly grants of common stock based on the market prices of our common stock on the respective dates of grant. The summary information of the restricted stock grants for the first three months of 2016 is presented below:

Grant date	February 29, 2016		May 31, 2016
Aggregate shares of restricted stock granted		5,190		3,925
Grant date fair value	$	97,000	$	97,000
Weighted average fair value per share	$	18.65	$	24.68

During February 2015, the Committee approved equity compensation to the outside members of the Board of Directors for their service on the Board of Directors. The annual compensation for each outside director consisted of the grant of stock awards with an aggregate market value of $77,500, payable in four equal quarterly grants of common stock based on the market prices of our common stock on the respective dates of grant. The summary information of the restricted stock grants for the first three months of 2015 is presented below:

Grant date	February 27, 2015		May 29, 2015
Aggregate shares of restricted stock granted		4,974		4,530
Grant date fair value	$	116,000	$	97,000
Weighted average fair value per share	$	23.35	$	21.38

All of the restricted stock awards in 2016 and 2015 were fully vested at each of the grant dates. The restricted stock awards require no service period and thus contain no risk of, or provision for, forfeiture.

Employee Stock Purchase Plan:

On February 18, 2009, our Board of Directors adopted the 2009 ESPP, and our shareholders approved the 2009 ESPP at our Annual Meeting of Shareholders on May 7, 2009. Under the 2009 ESPP, employees are able to purchase shares of our common stock at a fifteen percent (15%) discount via payroll deduction, up to a maximum number of shares issuable under the 2009 ESPP of 300,000. In February 2016, our Board of Directors adopted an amendment to the 2009 ESPP, to increase the maximum number of shares issuable under the 2009 ESPP to 450,000, which was approved by our shareholders at our Annual Meeting of Shareholders held on May 2, 2016.  There are four offering periods during an annual period.  As of June 30, 2016, 166,000 shares remained available for purchase under the 2009 ESPP. The fair value of the employees' purchase rights is estimated using the Black-Scholes model. Purchase information and fair value assumptions are presented in the following table:

Six Months Ended June 30,	2016			2015
Shares purchased		23,179			19,737
Dividend yield		—			—
Expected life	1 year			1 year
Expected volatility		32	%		31	%
Risk free interest rates		0.7	%		0.2	%
Weighted average per share fair value	$	4.08		$	5.08

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Business Acquisition

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Business Combination Disclosure [Text Block]

12. BUSINESS ACQUISITION

Exactech Australia

On February 1, 2016, we completed the acquisition of all of the outstanding capital stock of Exactech Australia Pty Ltd, an Australia-based company. Exactech Australia has been our independent importer and distribution partner in Australia for the past four years. The acquisition was accomplished to further the partnership between us and the team at Exactech Australia and to further service customers in the Asia Pacific area.

The aggregate purchase price for Exactech Australia will range from $3.1 million AUD to $7.6 million AUD, of which $1.6 million AUD, or $1.1 million USD at a 0.7034 AUD:USD exchange rate, was paid to the Exactech Australia shareholders in cash at the closing of the acquisition, and the remainder will be paid to such shareholders contingent on the achievement of certain future milestones. We expect the contingent payment to be paid over the next two years. Consideration also included $2.0 million USD in forgiven accounts receivable that were owed to us as of February 1, 2016. We are currently awaiting finalization of Exactech Australia’s closing balance sheet to complete purchase accounting. The estimated fair value of the contingent consideration was determined using the following assumptions: discount rates of 3.7%, probability levels of milestone range of outcomes, and expected timing of achievement of contingent consideration earn-out amounts. We financed the acquisition from our operating cash flows.

Upon completion of the acquisition, we effectively concluded a pre-existing distribution agreement for the distribution of our products, which was stated at fair value; therefore, we recognized no impact to the statement of income. The accounting for our acquisition of Exactech Australia is preliminary, pending final results of operations and deferred tax liability determination. The preliminary goodwill was determined as the excess of the consideration over the fair value of the net assets acquired, and was due to the synergies we obtained in the extended service in Australia. Goodwill was allocated to the knee, extremity and hip segments based on expected sales for the segments. Pro forma revenue and earnings for the business combination have not been presented because the effects, both individually and in the aggregate, were not material to our results of operations.  

The following table summarizes the preliminary purchase price allocation and determination of goodwill, which is not deductible for tax purposes, as of February 1, 2016 (in thousands):

	Amounts at Acquisition
Consideration:
Cash	$	1,152
Fair value of contingent consideration		2,435
Total Purchase Price		3,587
Forgiveness of pre-existing debt		2,006
		5,593
Acquisition related expenses - incurred as of June 30, 2016	$	131
Preliminary identifiable assets acquired and liabilities assumed:
Current assets acquired		1,616
Property and equipment		722
Current liabilities assumed		(208	)
Deferred tax liability assumed		(161	)
Identifiable intangible assets		535
		2,504
Goodwill		3,089
Net assets acquired	$	5,593

The identifiable intangible assets are being amortized using the straight-line method using estimated ten year useful lives, and are recorded net of accumulated amortization in Customer relationships on the unaudited condensed consolidated balance sheet.

Blue Ortho

On January 15, 2015, we completed the acquisition of all of the outstanding capital stock of Blue Ortho SAS, a France-based company. Blue Ortho is the computer-assisted surgical technology development and manufacturing firm that partnered with the Company to develop the ExactechGPS^® Guided Personalized Surgery system. We acquired Blue Ortho to further the partnership between us and the team at Blue Ortho and expand the development of ExactechGPS to other segments of our portfolio.

The aggregate purchase price for Blue Ortho is a maximum of €10.0 million, of which €2.0 million, or $2.3 million at a 1.16 USD exchange rate at closing, was paid to the Blue Ortho shareholders in cash at the closing of the acquisition, and the remainder will be paid to such shareholders contingent on the achievement of certain future surgical case milestones. The estimated fair value of the contingent consideration was determined using the following assumptions: discount rates of 4.5-6.5%, probability levels of milestone range of outcomes, and expected timing of achievement of contingent consideration earn-out amounts. We expect the contingent consideration to be paid over the next five to ten years. We financed the acquisition from our operating cash flows.

We acquired tangible assets of $1.5 million, assumed liabilities of $2.9 million, intangible assets, comprising product licenses and designs, of $7.5 million, and goodwill of $6.5 million. Pro forma revenue and earnings for the business combination have not been presented because the effects, both individually and in the aggregate, were not material to our results of operations.  

Contingent Consideration

The following table summarizes the contingent consideration balance and activity for the six month period ended June 30, 2016 (in thousands):

	Exactech Australia			Blue Ortho			Total
Beginning fair value of contingent liability, December 31, 2015	$	—		$	6,222		$	6,222
Initial fair value of contingent consideration		2,435			—			2,435
Period change in valuation		42			98			140
Payments		—			(669	)		(669	)
Foreign currency translation effects		127			114			241
Contingent liability balance, June 30, 2016		2,604			5,765			8,369
Current liability		(1,276	)		(1,411	)		(2,687	)
Non-current liability	$	1,328		$	4,354		$	5,682

Due to our expected timing of earn-out payments, a portion of the contingent consideration is classified in other current liabilities on our unaudited condensed consolidated balance sheets. The remainder is classified as other non-current liabilities. The change in the contingent consideration during the six months ended June 30, 2016 was recognized as interest expense in the unaudited condensed consolidated statements of income.

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Fair Value Measures (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis

The table below provides information on our liabilities that are measured at fair value on a recurring basis:

(In Thousands)	Total Fair Value		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2016
Liabilities
Contingent consideration	$	8,369	$	—	$	—	$	8,369
Total:	$	8,369	$	—	$	—	$	8,369
December 31, 2015
Liabilities
Contingent consideration	$	6,222	$	—	$	—	$	6,222
Total:	$	6,222	$	—	$	—	$	6,222

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Goodwill and Other Intangible Assets (Tables)

6 Months Ended

Jun. 30, 2016

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

Goodwill – The following table provides the changes to the carrying value of goodwill for the six month period ended June 30, 2016:

(in thousands)	Extremities		Knee		Hip		Biologics and Spine		Other		Total
Balance as of December 31, 2015	$	4,461	$	5,132	$	904	$	7,553	$	800	$	18,850
Acquired goodwill		927		1,545		463		—		154		3,089
Foreign currency translation effects		129		134		40		—		23		326
Balance as of June 30, 2016	$	5,517	$	6,811	$	1,407	$	7,553	$	977	$	22,265

Schedule of Finite-Lived Intangible Assets by Major Class

Other Intangible Assets – The following table summarizes the carrying values of our other intangible assets at June 30, 2016 and December 31, 2015:

(in thousands)	Carrying Value		Accumulated Amortization		Net Carrying Value		Weighted Avg Amortization Period
Balance at June 30, 2016
Product licenses and designs	$	16,822	$	6,208	$	10,614		11.0
Patents and trademarks		4,678		3,385		1,293		14.2
Customer relationships		3,503		2,914		589		6.9
Balance at December 31, 2015
Product licenses and designs	$	16,675	$	5,554	$	11,121		11.0
Patents and trademarks		4,678		3,252		1,426		14.2
Customer relationships		2,923		2,831		92		6.9

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Hedging Activities And Foreign Currency Translation (Tables)

6 Months Ended

Jun. 30, 2016

Foreign Currency Translation And Hedging Activities [Abstract]

Schedule of Foreign Exchange Contracts, Statement of Financial Position

The following table provides information on the components of our foreign currency activities recognized in the unaudited condensed consolidated statements of income:

(in thousands)	Three Months Ended June 30,						Six Months Ended June 30,
	2016			2015			2016			2015
Foreign currency transactions gain (loss)	$	200		$	110		$	926		$	(498	)
Foreign currency option loss		(102	)		(667	)		(334	)		(261	)
Foreign currency gain (loss), net	$	98		$	(557	)	$	592		$	(759	)

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Inventories (Tables)

6 Months Ended

Jun. 30, 2016

Inventory Disclosure [Abstract]

Summary of classification of Inventory

The following table summarizes our classifications of inventory as of June 30, 2016 and December 31, 2015: 

(in thousands)	June 30, 2016		December 31, 2015
Raw materials	$	20,622	$	19,481
Work in process		1,791		1,633
Finished goods on hand		15,403		14,497
Finished goods on loan/consignment		48,556		44,813
Inventory total		86,372		80,424
Non-current inventories		11,459		8,995
Inventories, current	$	74,913	$	71,429

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Debt (Tables)

6 Months Ended

Jun. 30, 2016

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

Debt consisted of the following as of June 30, 2016 and December 31, 2015:

(in thousands)	June 30, 2016		December 31, 2015
Business line of credit payable on a revolving basis, plus interest based on adjustable rate as determined by one month LIBOR based on our ratio of funded debt to EBITDA, 1.75% as of June 30, 2016.		20,000		16,000
Total debt	$	20,000	$	16,000

Schedule of Maturities of Long-term Debt

The following is a schedule of future debt maturities as of June 30, 2016, for the years ending December 31 (in thousands):

2016	$	—
2017		—
2018		—
2019		—
2020		20,000
Thereafter		—
	$	20,000

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Segment Information (Tables)

6 Months Ended

Jun. 30, 2016

Segment Reporting [Abstract]

Schedule of Segment Reporting Information, by Segment

Summarized information concerning our reportable segments is shown in the following table (in thousands):

Three Months Ended June 30,	Extremity		Knee		Hip		Biologics & Spine		Other			Corporate			Total
2016
Net sales	$	24,224	$	19,190	$	12,377	$	5,433	$	4,900		$	—		$	66,124
Segment profit (loss)		5,113		718		326		328		157			(136	)		6,506
Total assets, net		42,381		74,295		40,822		25,034		9,156			104,101			295,789
Capital expenditures		1,361		2,888		1,516		228		464			2,038			8,495
Depreciation and Amortization		727		1,772		694		233		197			1,084			4,707
2015
Net sales	$	20,479	$	18,957	$	10,944	$	5,873	$	5,240		$	—		$	61,493
Segment profit (loss)		4,199		911		497		185		343			(793	)		5,342
Total assets, net		35,440		66,031		33,280		23,241		12,803			103,691			274,486
Capital expenditures		857		1,134		761		1,059		422			220			4,453
Depreciation and Amortization		866		1,658		720		276		128			939			4,587
Six Months Ended June 30,	Extremity		Knee		Hip		Biologics & Spine		Other			Corporate			Total
2016
Net sales	$	48,384	$	38,577	$	23,712	$	10,827	$	9,922		$	—		$	131,422
Segment profit (loss)		10,037		1,706		539		457		206			140			13,085
Total assets, net		42,381		74,295		40,822		25,034		9,156			104,101			295,789
Capital expenditures		2,613		4,096		2,518		492		4,603			3,494			17,816
Depreciation and Amortization		1,439		3,760		1,363		495		369			1,941			9,367
2015
Net sales	$	41,559	$	37,395	$	21,895	$	11,013	$	11,007		$	—		$	122,869
Segment profit (loss)		8,736		2,127		1,033		325		(20	)		(1,267	)		10,934
Total assets, net		35,440		66,031		33,280		23,241		12,803			103,691			274,486
Capital expenditures		1,909		3,196		1,678		1,125		660			869			9,437
Depreciation and Amortization		1,573		3,708		1,445		559		266			1,878			9,429

Geographic Distribution of Sales, Long-Lived Assets and Inventory

Geographic distribution of our long-lived assets and inventory is shown in the following table (in thousands):

As of:	June 30, 2016						December 31, 2015
	Domestic			International			Domestic			International
Long lived assets, gross	$	166,457		$	61,014		$	161,672		$	53,859
Accumulated depreciation and amortization		(88,484	)		(22,165	)		(88,958	)		(19,391	)
Long lived assets, net		77,973			38,849			72,714			34,468
Inventory	$	50,876		$	35,496		$	43,725		$	36,699

Geographic distribution of our sales is summarized in the following table (in thousands):

Three Months Ended June 30,	2016		2015		% Inc/Decr
Domestic sales	$	44,612	$	41,295		8.0
International sales		21,512		20,198		6.5
Total sales	$	66,124	$	61,493		7.5
Six Months Ended June 30,	2016		2015		% Inc/Decr
Domestic sales	$	89,185	$	82,543		8.0
International sales		42,237		40,326		4.7
Total sales	$	131,422	$	122,869		7.0

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Shareholders' Equity (Tables)

6 Months Ended

Jun. 30, 2016

Stockholders Equity Note [Abstract]

Schedule of Earnings Per Share Reconciliation

The following is a reconciliation of the numerators and denominators of the basic and diluted EPS computations for net income and net income available to common shareholders:

	Income (Numerator)		Shares (Denominator)		Per Share		Income (Numerator)		Shares (Denominator)		Per Share
	Three Months Ended						Three Months Ended
(in thousands, except per share amounts)	June 30, 2016						June 30, 2015
Net income	$	4,386					$	3,661
Basic EPS:
Net income available to common shareholders	$	4,386		14,112	$	0.31	$	3,661		13,947	$	0.26
Effect of dilutive securities:
Stock options				186						220
Diluted EPS:
Net income available to common shareholders plus assumed conversions	$	4,386		14,298	$	0.31	$	3,661		14,167	$	0.26
	Six Months Ended						Six Months Ended
(in thousands, except per share amounts)	June 30, 2016						June 30, 2015
Net income	$	8,788					$	7,773
Basic EPS:
Net income available to common shareholders	$	8,788		14,084	$	0.62	$	7,773		13,965	$	0.56
Effect of dilutive securities:
Stock options				159						238
Diluted EPS:
Net income available to common shareholders plus assumed conversions	$	8,788		14,243	$	0.62	$	7,773	$	14,203	$	0.55

Schedule of Changes in Shareholders' Equity

The following is a summary of the changes in shareholders’ equity for the six months ended June 30, 2016:

	Common Stock				Additional Paid-In			Common Stock Held in			Retained		Accumulated Other Comprehensive
(in thousands)	Shares		Amount		Capital			Treasury			Earnings		Income (Loss)			Total
Balance December 31, 2015		14,154	$	142	$	81,963		$	—		$	158,270	$	(11,986	)	$	228,389
Net income		—		—		—			—			8,788		—			8,788
Other comprehensive income (loss), net of tax		—		—		—			—			—		1,548			1,548
Exercise of stock options		123		1		2,074			—			—		—			2,075
Issuance of restricted common stock for services		9		—		193			—			—		—			193
Issuance of common stock under Employee Stock Purchase Plan		23		—		358			—			—		—			358
Repurchase of common stock		—		—		—			(3,042	)		—		—			(3,042	)
Compensation cost of stock options		—		—		988			—			—		—			988
Tax impact on stock awards		—		—		(420	)		—			—		—			(420	)
Balance June 30, 2016		14,309	$	143	$	85,156		$	(3,042	)	$	167,058	$	(10,438	)	$	238,877

Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value

A summary of the status of stock option activity under our stock-based compensation plans as of June 30, 2016 and changes during the year to date is presented below:

	2016
	Options			Weighted Avg Exercise Price		Weighted Avg Remaining Contractual Term		Aggregate Intrinsic Value (In thousands)
Outstanding - January 1		1,217,003		$	18.70
Granted		18,500			23.00
Exercised		(122,644	)		16.92			$	446
Forfeited or Expired		(139,566	)		17.65
Outstanding - June 30		973,293		$	19.16		3.74	$	7,376
Exercisable - June 30		550,921		$	18.01		3.00	$	4,808

Schedule of Share-based Compensation, Nonemployee Director Stock Award Plan, Activity

Under the 2009 Plan, we may grant restricted stock awards to eligible employees, directors, and independent agents and consultants. Restrictions on transferability, risk of forfeiture and other restrictions are determined by the Compensation Committee of the Board of Directors, or the Committee, at the time of the award. During February 2016, the Committee approved equity compensation to the outside members of the Board of Directors for their service on the Board of Directors. The annual compensation for each outside director consists of the grant of stock awards with an aggregate market value of $77,500, payable in four equal quarterly grants of common stock based on the market prices of our common stock on the respective dates of grant. The summary information of the restricted stock grants for the first three months of 2016 is presented below:

Grant date	February 29, 2016		May 31, 2016
Aggregate shares of restricted stock granted		5,190		3,925
Grant date fair value	$	97,000	$	97,000
Weighted average fair value per share	$	18.65	$	24.68

During February 2015, the Committee approved equity compensation to the outside members of the Board of Directors for their service on the Board of Directors. The annual compensation for each outside director consisted of the grant of stock awards with an aggregate market value of $77,500, payable in four equal quarterly grants of common stock based on the market prices of our common stock on the respective dates of grant. The summary information of the restricted stock grants for the first three months of 2015 is presented below:

Grant date	February 27, 2015		May 29, 2015
Aggregate shares of restricted stock granted		4,974		4,530
Grant date fair value	$	116,000	$	97,000
Weighted average fair value per share	$	23.35	$	21.38

Schedule of Share-based Compensation, Employee Stock Purchase Plan, Activity

On February 18, 2009, our Board of Directors adopted the 2009 ESPP, and our shareholders approved the 2009 ESPP at our Annual Meeting of Shareholders on May 7, 2009. Under the 2009 ESPP, employees are able to purchase shares of our common stock at a fifteen percent (15%) discount via payroll deduction, up to a maximum number of shares issuable under the 2009 ESPP of 300,000. In February 2016, our Board of Directors adopted an amendment to the 2009 ESPP, to increase the maximum number of shares issuable under the 2009 ESPP to 450,000, which was approved by our shareholders at our Annual Meeting of Shareholders held on May 2, 2016.  There are four offering periods during an annual period.  As of June 30, 2016, 166,000 shares remained available for purchase under the 2009 ESPP. The fair value of the employees' purchase rights is estimated using the Black-Scholes model. Purchase information and fair value assumptions are presented in the following table:

Six Months Ended June 30,	2016			2015
Shares purchased		23,179			19,737
Dividend yield		—			—
Expected life	1 year			1 year
Expected volatility		32	%		31	%
Risk free interest rates		0.7	%		0.2	%
Weighted average per share fair value	$	4.08		$	5.08

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Business Acquisition (Tables)

6 Months Ended

Jun. 30, 2016

Business Combinations [Abstract]

Schedule of Business Acquisitions, by Acquisition

The following table summarizes the preliminary purchase price allocation and determination of goodwill, which is not deductible for tax purposes, as of February 1, 2016 (in thousands):

	Amounts at Acquisition
Consideration:
Cash	$	1,152
Fair value of contingent consideration		2,435
Total Purchase Price		3,587
Forgiveness of pre-existing debt		2,006
		5,593
Acquisition related expenses - incurred as of June 30, 2016	$	131
Preliminary identifiable assets acquired and liabilities assumed:
Current assets acquired		1,616
Property and equipment		722
Current liabilities assumed		(208	)
Deferred tax liability assumed		(161	)
Identifiable intangible assets		535
		2,504
Goodwill		3,089
Net assets acquired	$	5,593

Schedule of Business Acquisitions by Acquisition, Contingent Consideration

The following table summarizes the contingent consideration balance and activity for the six month period ended June 30, 2016 (in thousands):

	Exactech Australia			Blue Ortho			Total
Beginning fair value of contingent liability, December 31, 2015	$	—		$	6,222		$	6,222
Initial fair value of contingent consideration		2,435			—			2,435
Period change in valuation		42			98			140
Payments		—			(669	)		(669	)
Foreign currency translation effects		127			114			241
Contingent liability balance, June 30, 2016		2,604			5,765			8,369
Current liability		(1,276	)		(1,411	)		(2,687	)
Non-current liability	$	1,328		$	4,354		$	5,682

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Basis of Presentation (Details) $ in Millions	6 Months Ended
	Jun. 30, 2016 USD ($)
Basis Of Presentation [Line Items]
Reclassification of non-current inventory to property, plant and equipment	$ 14.4
Reclassification of non-current inventory to property, plant and equipment
Basis Of Presentation [Line Items]
Reclassification of non-current inventory to property, plant and equipment	$ 2.2

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New Accounting Pronouncements And Standards (Narrative) (Details) $ in Millions	Mar. 31, 2016 USD ($)
New Accounting Pronouncement, Early Adoption, Effect
New Accounting Pronouncements Or Change In Accounting Principle [Line Items]
Reclassification of current deferred tax asset to non-current deferred tax liabilities	$ 1.7

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Fair Value Measures (Details) - Fair Value, Measurements, Recurring [Member] - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent Consideration Fair Value	$ 8,369	$ 6,222
Liabilities, Fair Value Disclosure, Recurring	8,369	6,222
Significant Unobservable Inputs (Level 3)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Contingent Consideration Fair Value	8,369	6,222
Liabilities, Fair Value Disclosure, Recurring	$ 8,369	$ 6,222

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Goodwill And Other Intangible Assets (Goodwill) (Details) - USD ($)		6 Months Ended
	Oct. 01, 2015	Jun. 30, 2016
Goodwill [Roll Forward]
Beginning Balance		$ 18,850,000
Acquired goodwill		3,089,000
Foreign currency translation effects		326,000
Ending Balance		22,265,000
Goodwill impairment	$ 0
Extremities
Goodwill [Roll Forward]
Beginning Balance		4,461,000
Acquired goodwill		927,000
Foreign currency translation effects		129,000
Ending Balance		5,517,000
Knee
Goodwill [Roll Forward]
Beginning Balance		5,132,000
Acquired goodwill		1,545,000
Foreign currency translation effects		134,000
Ending Balance		6,811,000
Hip
Goodwill [Roll Forward]
Beginning Balance		904,000
Acquired goodwill		463,000
Foreign currency translation effects		40,000
Ending Balance		1,407,000
Biologics and Spine
Goodwill [Roll Forward]
Beginning Balance		7,553,000
Ending Balance		7,553,000
Other
Goodwill [Roll Forward]
Beginning Balance		800,000
Acquired goodwill		154,000
Foreign currency translation effects		23,000
Ending Balance		$ 977,000

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Goodwill And Other Intangible Assets (Other intangible Assets) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Product licenses and designs
Finite-Lived Intangible Assets [Line Items]
Carrying Value	$ 16,822	$ 16,675
Accumulated Amortization	6,208	5,554
Net Carrying Value	$ 10,614	$ 11,121
Weighted Avg Amortization Period	11 years	11 years
Patents and trademarks
Finite-Lived Intangible Assets [Line Items]
Carrying Value	$ 4,678	$ 4,678
Accumulated Amortization	3,385	3,252
Net Carrying Value	$ 1,293	$ 1,426
Weighted Avg Amortization Period	14 years 2 months 12 days	14 years 2 months 12 days
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Carrying Value	$ 3,503	$ 2,923
Accumulated Amortization	2,914	2,831
Net Carrying Value	$ 589	$ 92
Weighted Avg Amortization Period	6 years 10 months 24 days	6 years 10 months 24 days

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Hedging Activities And Foreign Currency Translation (Foreign Currency Transaction and Hedging Gain (Loss)) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Foreign Currency Transaction [Abstract]
Foreign currency transactions gain (loss)	$ 200	$ 110	$ 926	$ (498)
Foreign currency option loss	(102)	(667)	(334)	(261)
Foreign currency gain (loss), net	$ 98	$ (557)	$ 592	$ (759)

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Hedging Activities And Foreign Currency Translation (Foreign Currency Transaction) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Foreign currency option loss	$ (102)	$ (667)	$ (334)	$ (261)
Foreign currency translations gain (loss), net			$ 1,500	$ (2,800)

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Hedging Activities And Foreign Currency Translation (Hedging Activities) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Accumulated other comprehensive loss	$ (10,438,000)	$ (11,986,000)	$ (4,000)

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Inventories (Narrative) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Inventory Disclosure [Abstract]
Inventory allowance	$ 394,000	$ 491,000	$ 1,748,000	$ 529,000

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Inventories (Schedule of Inventory) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Inventory Disclosure [Abstract]
Raw materials	$ 20,622	$ 19,481
Work in process	1,791	1,633
Finished goods on hand	15,403	14,497
Finished goods on loan/consignment	48,556	44,813
Inventory total	86,372	80,424
Non-current inventories	11,459	8,995
Inventories, current	$ 74,913	$ 71,429

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Income Tax (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Income Tax Disclosure [Abstract]
Operating loss carryforwards	$ 27,300,000	$ 27,300,000
Deferred tax assets	8,300,000	8,500,000
Valuation allowance	4,500,000	$ 4,300,000
Liability for uncertain tax positions	$ 0

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Debt (Schedule of Long-term Debt) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
Line of credit	$ 20,000	$ 16,000
Total debt	$ 20,000	$ 16,000

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Debt (Schedule of Long-term Debt) (Parenthetical) (Details)	Jun. 30, 2016
Debt Disclosure [Abstract]
Interest rate at period end	1.75%

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Debt (Schedule of Debt Maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2016	Dec. 31, 2015
Debt Disclosure [Abstract]
2016	$ 0
2017	0
2018	0
2019	0
2020	20,000
Thereafter	0
Total debt	$ 20,000	$ 16,000

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Commitments And Contingencies (Details) - USD ($)	1 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Dec. 31, 2015
Legal Disclosure [Abstract]
Amount accrued for product liability claims	$ 125,000	$ 125,000	$ 100,000
Outstanding commitments for purchase of inventory, raw materials and supplies	18,500,000	18,500,000
Outstanding commitments for purchase of capital equipment	8,100,000	8,100,000
Purchases under distribution agreements		1,700,000
Product development payments	2,100,000	$ 2,100,000
Naming of Exactech Arena
Legal Disclosure [Abstract]
Total amount agreed to pay for the naming of the Exactech Arena	$ 5,900,000
Agreement period	10 years
Agreement effective date	Dec. 01, 2016
Optional extended agreement period	5 years

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Segment Information (Business Segments) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Segment Reporting Information [Line Items]
Net sales	$ 66,124	$ 61,493	$ 131,422	$ 122,869
Segment profit (loss)	6,506	5,342	13,085	10,934
Total assets, net	295,789	274,486	295,789	274,486	$ 275,507
Capital expenditures	8,495	4,453	17,816	9,437
Depreciation and Amortization	4,707	4,587	9,367	9,429
Extremities
Segment Reporting Information [Line Items]
Net sales	24,224	20,479	48,384	41,559
Segment profit (loss)	5,113	4,199	10,037	8,736
Total assets, net	42,381	35,440	42,381	35,440
Capital expenditures	1,361	857	2,613	1,909
Depreciation and Amortization	727	866	1,439	1,573
Knee
Segment Reporting Information [Line Items]
Net sales	19,190	18,957	38,577	37,395
Segment profit (loss)	718	911	1,706	2,127
Total assets, net	74,295	66,031	74,295	66,031
Capital expenditures	2,888	1,134	4,096	3,196
Depreciation and Amortization	1,772	1,658	3,760	3,708
Hip
Segment Reporting Information [Line Items]
Net sales	12,377	10,944	23,712	21,895
Segment profit (loss)	326	497	539	1,033
Total assets, net	40,822	33,280	40,822	33,280
Capital expenditures	1,516	761	2,518	1,678
Depreciation and Amortization	694	720	1,363	1,445
Biologics and Spine
Segment Reporting Information [Line Items]
Net sales	5,433	5,873	10,827	11,013
Segment profit (loss)	328	185	457	325
Total assets, net	25,034	23,241	25,034	23,241
Capital expenditures	228	1,059	492	1,125
Depreciation and Amortization	233	276	495	559
Other
Segment Reporting Information [Line Items]
Net sales	4,900	5,240	9,922	11,007
Segment profit (loss)	157	343	206	(20)
Total assets, net	9,156	12,803	9,156	12,803
Capital expenditures	464	422	4,603	660
Depreciation and Amortization	197	128	369	266
Corporate
Segment Reporting Information [Line Items]
Segment profit (loss)	(136)	(793)	140	(1,267)
Total assets, net	104,101	103,691	104,101	103,691
Capital expenditures	2,038	220	3,494	869
Depreciation and Amortization	$ 1,084	$ 939	$ 1,941	$ 1,878

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Segment Information (Revenue and Long-term Assets by Geographic Location) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Geographical [Line Items]
Inventory	$ 86,372		$ 86,372		$ 80,424
Net sales	$ 66,124	$ 61,493	$ 131,422	$ 122,869
Total sales, % Inc/Decr	7.50%		7.00%
Domestic [Member]
Geographical [Line Items]
Long lived assets, gross	$ 166,457		$ 166,457		161,672
Accumulated depreciation and amortization	(88,484)		(88,484)		(88,958)
Long lived assets, net	77,973		77,973		72,714
Inventory	50,876		50,876		43,725
Net sales	$ 44,612	41,295	$ 89,185	82,543
Total sales, % Inc/Decr	8.00%		8.00%
International [Member]
Geographical [Line Items]
Long lived assets, gross	$ 61,014		$ 61,014		53,859
Accumulated depreciation and amortization	(22,165)		(22,165)		(19,391)
Long lived assets, net	38,849		38,849		34,468
Inventory	35,496		35,496		$ 36,699
Net sales	$ 21,512	$ 20,198	$ 42,237	$ 40,326
Total sales, % Inc/Decr	6.50%		4.70%

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Shareholders' Equity (Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Stockholders Equity Note [Abstract]
Net Income	$ 4,386	$ 3,661	$ 8,788	$ 7,773
Net income available to common shareholders	4,386	3,661	8,788	7,773
Net income available to common shareholders plus assumed conversions	$ 4,386	$ 3,661	$ 8,788	$ 7,773
Net income available to common shareholders (in shares)	14,112	13,947	14,084	13,965
Effect of dilutive securities, stock options (in shares)	186	220	159	238
Net income available to common shareholders plus assumed conversions (in shares)	14,298	14,167	14,243	14,203
Basic earnings per share (in dollars per share)	$ 0.31	$ 0.26	$ 0.62	$ 0.56
Diluted earnings per share (in dollars per share)	$ 0.31	$ 0.26	$ 0.62	$ 0.55

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Shareholders' Equity (Earnings Per Share) (Narrative) (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share, Basic and Diluted, Other Disclosures [Abstract]
Antidilutive shares	185,724	323,201	182,625	262,770

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Shareholders' Equity (Changes in Shareholders Equity) (Details) - USD ($)					3 Months Ended		6 Months Ended
	May 31, 2016	Feb. 29, 2016	May 29, 2015	Feb. 27, 2015	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance							$ 228,389,000
Net income					$ 4,386,000	$ 3,661,000	8,788,000	$ 7,773,000
Other comprehensive income (loss), net of tax							$ 1,548,000
Exercise of stock options (in shares)							122,644
Exercise of stock options							$ 2,075,000
Issuance of restricted common stock for services (in shares)	3,925	5,190	4,530	4,974
Issuance of restricted common stock for services	$ 97,000	$ 97,000	$ 97,000	$ 116,000			$ 193,000
Issuance of common stock under Employee Stock Purchase Plan (in shares)							23,179	19,737
Issuance of common stock under Employee Stock Purchase Plan							$ 358,000
Repurchase of common stock							(3,042,000)
Compensation cost of stock options							988,000
Tax impact on stock awards							(420,000)
Balance					$ 238,877,000		$ 238,877,000
Common Stock
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance (in shares)							14,154,000
Balance							$ 142,000
Exercise of stock options (in shares)							123,000
Exercise of stock options							$ 1,000
Issuance of restricted common stock for services (in shares)							9,000
Issuance of common stock under Employee Stock Purchase Plan (in shares)							23,000
Balance (in shares)					14,309,000		14,309,000
Balance					$ 143,000		$ 143,000
Additional Paid-In Capital
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance							81,963,000
Exercise of stock options							2,074,000
Issuance of restricted common stock for services							193,000
Issuance of common stock under Employee Stock Purchase Plan							358,000
Compensation cost of stock options							988,000
Tax impact on stock awards							(420,000)
Balance					85,156,000		85,156,000
Common Stock Held in Treasury
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Repurchase of common stock							(3,042,000)
Balance					(3,042,000)		(3,042,000)
Retained Earnings
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance							158,270,000
Net income							8,788,000
Balance					167,058,000		167,058,000
Accumulated Other Comprehensive Income (Loss)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Balance							(11,986,000)
Other comprehensive income (loss), net of tax							1,548,000
Balance					$ (10,438,000)		$ (10,438,000)

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Shareholders' Equity (Treasury Stock) (Narrative) (Details) - USD ($) $ / shares in Units, $ in Millions	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Class Of Stock [Line Items]
Repurchase of shares, period	2 years
Number of common shares repurchased	163,529
Common shares reacquired, average price per share	$ 18.60
Common shares reacquired, aggregate value	$ 3.0
Maximum
Class Of Stock [Line Items]
Common shares authorized to be repurchased		1,000,000

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Shareholders' Equity (Stock-based Compensation Awards) (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended	6 Months Ended
	Feb. 29, 2016	Jun. 30, 2014	Jun. 30, 2016	Jun. 30, 2015	May 08, 2014
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Shares authorized					1,500,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	450,000	500,000
Remaining shares issuable under 2009 Plan			417,679
Allocated Share-based Compensation Expense			$ 1.0	$ 0.9
Income tax benefit			0.3	$ 0.3
Unrecognized compensation cost related to unvested awards			$ 1.4
Recognition weighted-average period			1 year 9 months 18 days
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive Stock Option Plan, Term			10 years

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Shareholders' Equity (Stock Options) (Details) - USD ($) $ / shares in Units, $ in Thousands	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Outstanding - January 1, Options (in shares)	1,217,003
Granted, Options (in shares)	18,500	176,125
Exercised, Options (in shares)	(122,644)
Forfeited or Expired, Options (in shares)	(139,566)
Outstanding - June 30, Options (in shares)	973,293
Exercisable - June 30, Options (in shares)	550,921
Outstanding - December 31, Weighted Avg Exercise Price (in dollars per share)	$ 18.70
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Weighted Average Grant Date Fair Value	23.00
Exercised, Weighted Avg Exercise Price (in dollars per share)	16.92
Forfeited or Expired, Weighted Avg Exercise Price (in dollars per share)	17.65
Outstanding - June 30, Weighted Avg Exercise Price (in dollars per share)	19.16
Exercisable - June 30, Weighted Avg Exercise Price (in dollars per share)	$ 18.01
Outstanding - March 31, Weighted Avg Remaining Contractual Term	3 years 8 months 27 days
Exercisable - March 31, Weighted Avg Remaining Contractual Term	3 years
Exercised, Aggregate Intrinsic Value (In thousands)	$ 446
Outstanding - June 30, Aggregate Intrinsic Value (In thousands)	7,376
Exercisable - June 30, Aggregate Intrinsic Value (In thousands)	$ 4,808

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Shareholders' Equity (Stock Options) (Narrative) (Details) - shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Granted, Options (in shares)	18,500	176,125
Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive Stock Option Plan, Term	10 years
Stock Options [Member] | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive Stock Option Plan, Term	5 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Expiration period of stock options	5 years
Stock Options [Member] | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Incentive Stock Option Plan, Term	10 years
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Expiration period of stock options	10 years
Non-Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Expiration period of stock options	5 years
Non-Employee Stock Option | Minimum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	3 years
Non-Employee Stock Option | Maximum
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	4 years

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Shareholders' Equity (Restricted Stock Awards) (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) period	Jun. 30, 2015 USD ($) period	Jun. 30, 2016 period
Restricted Stock Awards Disclosure [Abstract]
Restricted Stock Awards, Value, Granted To Director | $	$ 77,500	$ 77,500
Number Of Offering Period In Annual Period			4
Restricted Stock
Restricted Stock Awards Disclosure [Abstract]
Number Of Offering Period In Annual Period	4	4

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Shareholders' Equity (Restricted Stock Awards) (Details) - USD ($)					6 Months Ended
	May 31, 2016	Feb. 29, 2016	May 29, 2015	Feb. 27, 2015	Jun. 30, 2016
Restricted Stock Awards Disclosure [Abstract]
Aggregate shares of restricted stock granted (in shares)	3,925	5,190	4,530	4,974
Issuance of restricted common stock for services	$ 97,000	$ 97,000	$ 97,000	$ 116,000	$ 193,000
Weighted average fair value per share (in dollars per share)	$ 24.68	$ 18.65	$ 21.38	$ 23.35

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Shareholders' Equity (Employee Stock Purchase Plan) (Narrative) (Details)	1 Months Ended	3 Months Ended	6 Months Ended
	Feb. 29, 2016 shares	Jun. 30, 2014 shares	Jun. 30, 2016 period shares
Stockholders Equity Note [Abstract]
ESPP, discount from market price			15.00%
ESPP reserved shares			300,000
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized	450,000	500,000
Number Of Offering Period In Annual Period | period			4
ESPP remaining reserved shares			166,000

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Shareholders' Equity (Employee Stock Purchase Plan) (Details) - $ / shares	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Stockholders Equity Note [Abstract]
Shares purchased	23,179	19,737
Dividend yield	0.00%	0.00%
Expected life	1 year	1 year
Expected volatility	32.00%	31.00%
Risk free interest rates	0.70%	0.20%
Weighted average per share fair value (in dollars per share)	$ 4.08	$ 5.08

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Business Acquisition (Narrative) (Details) $ in Thousands, € in Millions, AUD in Millions					6 Months Ended
	Feb. 01, 2016 USD ($) AUD / $	Feb. 01, 2016 AUD	Jan. 15, 2015 USD ($)	Jan. 15, 2015 EUR (€) $ / €	Jun. 30, 2016 USD ($)	Feb. 01, 2016 AUD AUD / $	Dec. 31, 2015 USD ($)
Business Acquisition [Line Items]
Goodwill					$ 22,265		$ 18,850
Exactech Australia Pty Ltd [Member]
Business Acquisition [Line Items]
Business Acquisition, Effective Date of Acquisition					Feb. 01, 2016
Business Acquisition, Percentage Of Voting Interests Acquired	100.00%					100.00%
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net	$ 5,593
Business Combination, Consideration Transferred	$ 1,100	AUD 1.6
Foreign Currency Exchange Rate, Translation | AUD / $	0.7034					0.7034
Contingent consideration payment period	2 years	2 years
Business combination consideration receivable	$ 2,000
Discount rate used to calculate fair value of contingent consideration	3.70%	3.70%
Liabilities assumed	$ 208
Goodwill	$ 3,089
Exactech Australia Pty Ltd [Member] | Minimum
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | AUD						AUD 3.1
Exactech Australia Pty Ltd [Member] | Maximum
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | AUD						AUD 7.6
Blue Ortho [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | €				€ 10.0
Business Combination, Consideration Transferred			$ 2,300	€ 2.0
Foreign Currency Exchange Rate, Translation | $ / €				1.16
Acquired of tangible assets					$ 1,500
Liabilities assumed					2,900
Intangible product licenses and designs					7,500
Goodwill					$ 6,500
Blue Ortho [Member] | Minimum
Business Acquisition [Line Items]
Contingent consideration payment period			5 years	5 years
Discount rate used to calculate fair value of contingent consideration			4.50%	4.50%
Blue Ortho [Member] | Maximum
Business Acquisition [Line Items]
Contingent consideration payment period			10 years	10 years
Discount rate used to calculate fair value of contingent consideration			6.50%	6.50%

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Business Acquisition Business Combination Table (Details) $ in Thousands, € in Millions		6 Months Ended
	Feb. 01, 2016 USD ($)	Jun. 30, 2016 USD ($)	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($)	Jan. 15, 2015 EUR (€)
Business Acquisition [Line Items]
Goodwill		$ 22,265		$ 18,850
Contingent Consideration Fair Value, Beginning		6,222
Contingent Consideration, Initial Fair Value		2,435
Contingent Consideration, Period Change in Valuation		140
Contingent consideration payment		(669)	$ 0
Contingent Consideration, Translation Adjustment		241
Contingent Consideration Fair Value, Ending		8,369
Business Combination, Contingent Consideration, Liability, Current		(2,687)
Business Combination, Contingent Consideration, Liability, Noncurrent		5,682
Exactech Australia Pty Ltd [Member]
Business Acquisition [Line Items]
Business Combination, Consideration Transferred	$ 1,152
Contingent Consideration Fair Value	2,435
Business Combination, Consideration Recognized	3,587
Business Combination, Consideration Transferred, Other	2,006
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net	5,593
Business Combination, Acquisition Related Costs		131
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets	1,616
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment	722
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities	(208)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Deferred Tax Liabilities Noncurrent	(161)
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Intangible Assets, Other than Goodwill	535
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net	2,504
Goodwill	$ 3,089
Contingent Consideration, Initial Fair Value		2,435
Contingent Consideration, Period Change in Valuation		42
Contingent Consideration, Translation Adjustment		127
Contingent Consideration Fair Value, Ending		2,604
Business Combination, Contingent Consideration, Liability, Current		(1,276)
Business Combination, Contingent Consideration, Liability, Noncurrent		1,328
Blue Ortho [Member]
Business Acquisition [Line Items]
Business Combination, Recognized Identifiable Assets Acquired, Goodwill, and Liabilities Assumed, Net | €					€ 10.0
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Liabilities		(2,900)
Goodwill		6,500
Contingent Consideration Fair Value, Beginning		6,222
Contingent Consideration, Period Change in Valuation		98
Contingent consideration payment		(669)
Contingent Consideration, Translation Adjustment		114
Contingent Consideration Fair Value, Ending		5,765
Business Combination, Contingent Consideration, Liability, Current		(1,411)
Business Combination, Contingent Consideration, Liability, Noncurrent		$ 4,354