<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
Commission file number 0-26224
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 51-0317849
(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification No.)
105 Morgan Lane
Plainsboro, New Jersey 08536
(Address of principal executive offices) (Zip code)
(609) 275-0500
(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.
/X/ - Yes / / - No
As of August 10, 2000 the registrant had outstanding 16,414,516 shares of
Common Stock, $.01 par value.
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
INDEX
Page Number
-----------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2000 and
December 31, 1999 (Unaudited) 3
Consolidated Statements of Operations for the three and
six months ended June 30, 2000 and 1999 (Unaudited) 4
Consolidated Statements of Cash Flows for the
six months ended June 30, 2000 and 1999 (Unaudited) 5
Notes to Unaudited Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
Exhibits 21
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents......................................... $ 5,676 $ 19,301
Short-term investments............................................ 3,575 4,311
Accounts receivable, net of allowances of $588 and $944........... 10,908 8,365
Inventories....................................................... 15,731 10,111
Prepaid expenses and other current assets......................... 753 718
---------- ----------
Total current assets.......................................... 36,643 42,806
Property and equipment, net........................................... 12,060 9,699
Goodwill and intangible assets, net................................... 26,393 13,219
Other assets.......................................................... 1,193 529
---------- ----------
Total assets....................................................... $ 76,289 $ 66,253
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short-term loans and current maturities of long-term loans.......... $ 3,512 $ 2,254
Current portion of note payable..................................... 1,516 --
Accounts payable, trade............................................. 2,489 994
Accrued expenses and other liabilities.............................. 6,551 5,540
Income taxes payable................................................ 642 643
Customer advances and deposits...................................... 2,537 3,901
Deferred revenue.................................................... 1,053 1,460
---------- ----------
Total current liabilities..................................... 18,300 14,792
Long-term loan........................................................ 6,375 7,625
Note payable.......................................................... 1,204 --
Deferred revenue...................................................... 4,671 5,049
Deferred tax liability................................................ 2,023 392
Other liabilities..................................................... 261 406
---------- ----------
Total liabilities............................................. 32,834 28,264
---------- ----------
Commitments and contingencies
Stockholders' Equity:
Preferred stock, $.01 par value (15,000 authorized shares; 500 Series A
Convertible shares issued and outstanding at June 30, 2000 and December 31,
1999, $4,000 liquidation preference; 100 Series B Convertible shares issued
and outstanding at June 30, 2000 and December 31, 1999, $11,275 with a 10%
compounded annual dividend liquidation preference; 54 Series C Convertible
shares issued and outstanding at June 30, 2000, $5,535 with a 10% compounded
annual dividend liquidation preference)..................................... 7 6
Common stock, $.01 par value (60,000 authorized shares; 16,390 and
16,131 shares issued at June 30, 2000 and December 31, 1999,
respectively)............................................................... 164 161
Additional paid-in capital.................................................... 139,109 132,340
Treasury stock, at cost (20 and 1 shares at June 30, 2000 and December
31, 1999, respectively)..................................................... (180) (7)
Other......................................................................... (77) (143)
Accumulated other comprehensive income (loss)................................. (285) (64)
Accumulated deficit........................................................... (95,283) (94,304)
---------- ----------
Total stockholders' equity........................................... 43,455 37,989
---------- ----------
Total liabilities and stockholders' equity................................... $ 76,289 $ 66,253
========== ==========
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements
3
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
REVENUES
Product sales .................................... $15,684 $12,133 $28,920 $16,738
Other revenue .................................... 1,231 417 2,402 780
------- ------- ------- -------
Total revenues .......................... 16,915 12,550 31,322 17,518
COSTS AND EXPENSES
Cost of product sales, including depreciation
of $429, $346, $799 and $638, respectively...... 7,062 7,689 13,654 10,383
Research and development ......................... 1,929 2,255 3,757 4,195
Selling and marketing ............................ 3,868 2,914 6,785 4,474
General and administrative ....................... 3,739 4,036 7,347 6,187
Amortization and other depreciation............... 933 488 1,645 639
------- ------- ------- -------
Total costs and expenses ................ 17,531 17,382 33,188 25,878
Operating loss ................................... (616) (4,832) (1,866) (8,360)
Interest income .................................. 141 233 432 511
Interest expense ................................. (320) (230) (600) (257)
Gain on disposition of product line .............. 1,031 -- 1,146 4,161
Other income, net ................................ 9 6 132 8
------- ------- ------- -------
Income (loss) before income taxes ................ 245 (4,823) (756) (3,937)
Income tax expense (benefit) ..................... 161 (1,241) 223 (781)
------- ------- ------- -------
Net income (loss) ................................ $ 84 $(3,582) $ (979) $(3,156)
======= ======= ======= =======
Basic and diluted net loss per share ............. $ (0.02) $ (0.23) $ (0.34) $ (0.21)
Basic and diluted weighted average common
shares outstanding............................. 17,341 16,785 17,282 16,785
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
4
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
2000 1999
---- ----
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss .............................................................. $ (979) $(3,156)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization....................................... 2,444 1,277
Gain on sale of product line and investments........................ (1,356) (4,161)
Deferred tax benefit................................................ -- (1,241)
Amortization of discount and interest on investments................ (42) (211)
Amortization of unearned compensation............................... 41 217
Changes in assets and liabilities, net of business acquisitions:
Accounts receivable.............................................. (1,147) (63)
Inventories...................................................... (1,761) 2,047
Prepaid expenses and other current assets........................ 28 175
Non-current assets............................................... (561) (74)
Accounts payable, accrued expenses and other liabilities......... 11 124
Customer advances and deposits................................... (1,364) 1,466
Deferred revenue................................................. (407) 5,221
-------- --------
Net cash (used in) provided by operating activities................. (5,093) 1,621
-------- --------
INVESTING ACTIVITIES:
Proceeds from sale of product line and other assets.................... 1,600 6,354
Proceeds from sale/maturity of investments............................. 16,072 15,000
Purchases of available-for-sale investments............................ (14,928) (10,817)
Cash used in business acquisition, net of cash acquired................ (15,712) (14,161)
Purchases of property and equipment.................................... (2,223) (776)
-------- --------
Net cash used in investing activities............................... (15,191) (4,400)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from revolving credit facility............................ 1,008 13
Repayments of term loan................................................ (1,000) (375)
Proceeds from sale of preferred stock.................................. 5,375 9,924
Proceeds from exercised stock options.................................. 1,429 --
Treasury stock purchases............................................... (130) --
Collection of related party note receivable............................ 36
Preferred dividends paid............................................... (40) (40)
-------- --------
Net cash provided by financing activities........................... 6,678 9,522
-------- --------
Effect of exchange rate changes on cash and cash equivalents............... (19) --
Net (decrease) increase in cash and cash equivalents....................... (13,625) 6,743
Cash and cash equivalents at beginning of period........................... 19,301 5,277
-------- --------
Cash and cash equivalents at end of period................................. $ 5,676 $ 12,020
======== ========
Non-cash investing and financing activities:
Business acquisition costs accrued in liabilities..................... $ 634 $ 1,696
Note issued in a business acquisition................................. 2,654 --
Term loan assumed in connection with a business acquisition........... -- 11,000
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements
5
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. General
In the opinion of management, the June 30 unaudited consolidated financial
statements contain all adjustments (consisting only of normal recurring
accruals) which the Company considers necessary for a fair presentation of the
financial position and results of operations of the Company. Operating results
for the periods ended June 30, 2000 are not necessarily indicative of the
results to be expected for the entire year. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities, including disclosures of
contingent assets and liabilities and the reported amounts of revenues and
expenses during the reporting periods. Actual results could differ from those
estimates. These unaudited consolidated financial statements should be read in
conjunction with the Company's consolidated financial statements for the year
ended December 31, 1999 included in the Company's Annual Report on Form 10-K.
2. Acquisitions
On April 6, 2000, the Company purchased the Selector(R) Ultrasonic Aspirator,
Ruggles(TM) hand-held neurosurgical instruments and Spembly Medical cryosurgery
product lines, including certain assets and liabilities, from NMT Medical, Inc.
for $11.6 million in cash. On January 17, 2000, the Company purchased the
business, including certain assets and liabilities, of Clinical Neuro Systems,
Inc. ("CNS") for $6.8 million. CNS designs, manufactures and sells neurosurgical
external ventricular drainage systems, including catheters and drainage bags, as
well as cranial access kits. The purchase price of the CNS business consisted of
$4.0 million in cash and a 5% $2.8 million promissory note issued to the seller.
The promissory note, which is payable in two principal payments of $1.4 million
each, plus accrued interest, in January 2001 and 2002, is collateralized by
inventory, property and equipment of the CNS business and by a collateral
assignment of a $2.8 million promissory note from one of the Company's
subsidiaries.
These acquisitions have been accounted for using the purchase method of
accounting, and the results of operations of the acquired businesses have been
included in the consolidated financial statements since their respective dates
of acquisition. The allocation of the purchase price of these acquisitions
resulted in acquired intangible assets, consisting primarily of completed
technology, customer lists and trademarks of approximately $10.0 million, which
are being amortized on a straight-line basis over lives ranging from 5 to 15
years, and residual goodwill of approximately $4.5 million, which is being
amortized on a straight-line basis over 15 years.
The following unaudited pro forma financial information assumes that the
acquisitions had occurred as of the beginning of each period (in thousands):
For the Six Months
Ended June 30,
2000 1999
------ ------
Total revenue ............................... $ 34,252 $ 24,205
Net loss .................................... (733) (2,523)
Basic and diluted loss per share ............ $(0.33) $(0.17)
The pro forma amounts for the six month periods ended June 30, 2000 and 1999,
respectively, include $1.1 million ($0.07 per share) and $3.7 million ($0.22 per
share) gains, net of tax, from the sale of product lines. Also, included in the
historical and pro forma results for the six months ended June 30, 2000 and the
pro forma results for the six month period ended June 30, 1999 are $429,000 of
fair value inventory purchase accounting adjustments. The pro forma results do
not necessarily represent results that would have occurred if the acquisition
had taken place on the basis assumed above, nor are they indicative of the
results of future combined operations.
6
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
3. Issuance of Series C Preferred Stock
On March 29, 2000, the Company issued 54,000 shares of Series C Convertible
Preferred Stock ("Series C Preferred") and warrants to purchase 300,000 shares
of common stock at $9.00 per share to affiliates of Soros Private Equity
Partners LLC for $5.4 million, net of issuance costs. The Series C Preferred is
convertible into 600,000 shares of common stock and has a liquidation preference
of $5.4 million with a 10% annual cumulative dividend associated with the
liquidation preference. The Series C Preferred was issued with a beneficial
conversion feature that resulted in a nonrecurring, non-cash dividend of $4.2
million, which has been reflected in the net loss per share applicable to common
stock for the six months ended June 30, 2000. The beneficial conversion dividend
is based upon the excess of the closing price of the underlying common stock as
compared to the fixed conversion price of the Series C Preferred Stock, after
taking into account the value assigned to the common stock warrants.
4. Income (Loss) per Share
Basic and diluted net income (loss) per share for the periods ended June 30 were
as follows:
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
Basic and diluted loss per share:
<S> <C> <C> <C> <C>
Net income (loss) ................................. $ 84 $ (3,582) $ (979) $(3,156)
Dividends on Series A preferred stock ............. (20) (20) (40) (40)
Dividends on Series B preferred stock ............. (275) (250) (550) (250)
Dividends and beneficial conversion feature
on Series C preferred stock .................. (135) -- (4,305) --
-------- -------- -------- --------
Net loss applicable to common stock ............... $ (346) $ (3,852) $(5,874) $(3,446)
Average number of shares outstanding .............. 17,341 16,785 17,282 16,785
Basic and diluted loss per share .................. $ (0.02) $ (0.23) $ (0.34) $ (0.21)
======== ========= ======== ========
</TABLE>
Options and warrants to purchase 4,365,816 and 4,018,077 shares of common stock
and preferred stock convertible into 3,467,801 and 2,867,801 shares of common
stock at June 30, 2000 and 1999, respectively, were not included in the
computation of diluted net loss per share because their effect would have been
antidilutive.
5. Comprehensive Loss
Comprehensive loss for the three and six months ended June 30 was as
follows:
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) ................................. 84 $ (3,582) $ (979) $ (3,156)
Foreign currency translation adjustments........... (338) -- (338) --
Unrealized (loss) gain on investments ............. (7) (108) 293 (92)
Reclassification adjustment for gains included
in net income ................................ -- -- (176) --
-------- -------- -------- --------
Comprehensive loss ................................ $(261) $ (3,690) $(1,200) $(3,248)
======== ======== ======== ========
</TABLE>
7
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
6. Inventories
Inventories consist of the following:
June 30, December 31,
2000 1999
--------- -----------
(In thousands)
Finished goods........... $ 8,411 $ 3,786
Work-in-process.......... 3,456 2,224
Raw materials............ 3,864 4,101
--------- ---------
$15,731 $10,111
========= =========
7. Current Liabilities
Accrued expenses consist of the following:
June 30, December 31,
2000 1999
--------- -----------
(In thousands)
Legal fees................ $ 434 $ 526
Vacation.................. 622 533
Acquisition related costs. 730 658
Contract research......... 298 378
Other..................... 4,467 3,445
------ ------
$ 6,551 $ 5,540
====== ======
8
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. Segment Reporting
The Company's reportable business segments consist of the Integra NeuroSciences
division, which is a leading provider of implants, instruments and monitors used
in neurosurgery, neurotrauma, and related critical care, and the Integra
LifeSciences division, which develops and manufactures a variety of medical
products and devices, including products based on the Company's proprietary
tissue regeneration technology which are used to treat soft-tissue and
orthopedic conditions. Integra NeuroSciences sells primarily through a direct
sales organization, and Integra LifeSciences sells primarily through strategic
alliances and distributors. Selected financial information on the Company's
business segments is reported below (in thousands):
<TABLE>
<CAPTION>
Total
Integra Integra Reportable
NeuroSciences LifeSciences Segments Corporate Total
------------- ------------- ---------- --------- ---------
Three months ended June 30,
2000
----
<S> <C> <C> <C> <C> <C>
Product sales .......... $ 11,037 $ 4,647 $ 15,684 $ -- $ 15,684
Total revenue .......... 11,287 5,628 16,915 -- 16,915
Operating costs ........ 10,043 5,299 15,342 1,519 16,861
------
Segment profits (loss).. 1,244 329 1,573 (1,519) 54
<CAPTION>
<S> <C>
Amortization expense .... (670)
------
Operating loss .......... $ (616)
<CAPTION>
1999
----
<S> <C> <C> <C> <C> <C>
Product sales .......... $ 7,396 $ 4,737 $12,133 $ -- $ 12,133
Total revenue .......... 7,396 5,154 12,550 -- 12,550
Operating costs ........ 9,619 5,923 15,542 1,637 17,179
------
Segment profits (loss).. (2,223) (769) (2,992) (1,637) (4,629)
<CAPTION>
<S> <C>
Amortization expense .... (203)
------
Operating loss .......... $ (4,832)
<CAPTION>
Six months ended June 30,
2000
----
<S> <C> <C> <C> <C> <C>
Product sales .......... $ 19,794 $ 9,126 $ 28,920 $ -- $ 28,920
Total revenue .......... 20,294 11,028 31,322 -- 31,322
Operating costs ........ 18,117 10,491 28,608 3,431 32,039
------
Segment profits (loss).. 2,177 537 2,714 3,431 (717)
<CAPTION>
<S> <C>
Amortization expense .... (1,149)
------
Operating loss .......... $(1,866)
<CAPTION>
1999
----
<S> <C> <C> <C> <C> <C>
Product sales........... $ 7,917 $ 8,821 $16,738 $ -- $16,738
Total revenue........... 7,917 9,601 17,518 -- 17,518
Operating costs......... 10,392 12,129 22,521 3,138 25,659
------
Segment profits (loss).. (2,475) (2,528) (5,003) (3,138) (8,141)
<CAPTION>
<S> <C>
Amortization expense .... (219)
------
Operating loss .......... $(8,360)
</TABLE>
9
<PAGE>
INTEGRA LIFESCIENCES HOLDINGS CORPORATION AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
8. Segment Reporting (continued)
Included in segment operating expenses were the following amounts of
depreciation:
<TABLE>
<CAPTION>
Total
Integra Integra Reportable
NeuroSciences LifeSciences Segments Corporate Total
------------- ------------ ---------- --------- -----
<S> <C> <C> <C> <C> <C>
Three months ended June 30,
2000 299 326 625 67 692
1999 274 255 529 102 631
Six months ended June 30,
2000 559 611 1,170 125 1,295
1999 314 627 941 117 1,058
</TABLE>
For the six months ended June 30, 2000 and 1999, the Company's foreign sales,
primarily to Europe and the Asia Pacific regions, were 17% and 25% of total
product sales, respectively.
9. Legal Matters
In July 1996, the Company filed a patent infringement lawsuit in the United
States District Court for the Southern District of California against Merck
KGaA, a German corporation, Scripps Research Institute, a California nonprofit
corporation, and David A. Cheresh, Ph.D., a research scientist with Scripps,
seeking damages and injunctive relief. The complaint charged, among other
things, that the defendant Merck KGaA willfully and deliberately induced, and
continues to willfully and deliberately induce, defendants Scripps Research
Institute and Dr. David A. Cheresh to infringe certain of the Company's patents.
These patents are part of a group of patents granted to The Burnham Institute
and licensed by the Company that are based on the interaction between a family
of cell surface proteins called integrins and the arginine-glycine-aspartic acid
(known as "RGD") peptide sequence found in many extracellular matrix proteins.
The defendants filed a countersuit asking for an award of defendants' reasonable
attorney fees. This case went to trial in February 2000, and on March 17, 2000,
a jury found that Merck KgaA had willfully induced infringement of the Company's
patents and awarded the Company $15.0 million in damages. The Court has since
awarded the Company pre-judgment interest of $1.15 million. The Company
anticipates that judgment will be entered by the Court within the next sixty
days. The Company expects that Merck KgaA will appeal various decisions of the
court and request a new trial. No amounts for this favorable verdict have been
reflected in the Company's financial statements.
Bruce D. Butler, Ph.D., Bruce A. McKinley, Ph.D., and C. Lee Parmley (the "Optex
Claimants"), each parties to a Letter Agreement (the "Letter Agreement") with
Camino NeuroCare, Inc., a wholly-owned subsidiary of the Company ("Camino"),
dated as of December 18, 1996, have alleged that Camino breached the terms of
the Letter Agreement prior to the Company's acquisition of the NeuroCare Group
(Camino's prior parent company). The Letter Agreement contains arbitration
provisions, and the Company and the Optex Claimants have agreed to negotiate
rather than seek arbitration for a limited time. While we believe that Camino
has valid legal and factual defenses, the Optex Claimants have asserted
unspecified significant damages, and we believe that the Optex Claimants are
likely to pursue arbitration under the Letter Agreement if the matter is not
settled otherwise. We cannot predict the outcome of such an arbitration, were it
to take place. In addition, we have asserted a right to indemnification from the
seller of the NeuroCare businesses, but there can be no assurance that
indemnification, if any, will be obtained.
10
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion should be read in conjunction with the Company's
consolidated financial statements, the notes thereto and the other financial
information included elsewhere in this report and in the Company's 1999 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
General
The Company develops, manufactures and markets medical devices, implants and
biomaterials. The Company's operations consist of (1) Integra NeuroSciences,
which is a leading provider of implants, instruments, and monitors used in
neurosurgery, neurotrauma, and related critical care and (2) Integra
LifeSciences, which develops and manufactures a variety of medical products and
devices, including products based on our proprietary tissue regeneration
technology which are used to treat soft tissue and orthopedic conditions.
Integra NeuroSciences sells primarily through a direct sales organization, and
Integra LifeSciences sells primarily through strategic alliances and
distributors.
The Company's segment financial results for the three and six months ended June
30, 2000 and 1999 may not be directly comparable as a result of the certain
transactions occurring in 1999 and 2000. In March 1999, the Company acquired the
NeuroCare Group of companies ("NeuroCare") for $25.4 million and, in June 1999,
the Company transitioned all selling and marketing efforts related to INTEGRA(R)
Dermal Regeneration Template to Johnson & Johnson Medical (now Ethicon, Inc.)
("Ethicon") under an agreement with Ethicon (the "Ethicon Agreement"). In
January 2000, the Company acquired the business, including certain assets and
liabilities, of Clinical Neuro Systems, Inc. ("CNS") for $4.0 million in cash
and a $2.8 million note payable to the seller. CNS designs, manufactures and
sells neurosurgical external ventricular drainage systems, including catheters
and drainage bags, as well as cranial access kits. In April 2000, the Company
acquired the Selector(R) Ultrasonic Aspirator, Ruggles(TM) hand-held
neurosurgical instruments and the Spembly Medical cryosurgery product lines,
including certain assets and liabilities, from NMT Medical, Inc ("NMT") for
$11.6 million in cash.
Results of Operations
Three Months Ended June 30, 2000 Compared to Three Months Ended June 30, 1999
Overall, the Company recorded net income of $0.1 million for the three months
ended June 30, 2000, as compared to a net loss of $3.6 million for the
comparable period in 1999. Operating results for the three months ended June 30,
2000 improved by $4.2 million, with an operating loss of $0.6 million recorded
in 2000 as compared to a $4.8 million operating loss in 1999. The improvement in
2000 operating results was primarily due to continued product sales growth and
operating cost containment in the second quarter of 2000 and the effects of
certain special charges approximating $2.5 million incurred in the second
quarter of 1999 in connection with the NeuroCare acquisition. Sales growth
resulted primarily from business acquisitions and the successful launch of the
DuraGen(TM) Dural Graft Matrix in the third quarter of 1999.
Total revenues increased by $4.3 million to $16.9 million for the three months
ended June 30, 2000 as compared to $12.6 million for the three months ended June
30, 1999, primarily as a result of increased product sales. Product sales
increased by $3.6 million to $15.7 million for the three months ended June 30,
2000 as compared to $12.1 million for the three months ended June 30, 1999.
Product sales and cost of product sales were as follows (in thousands):
Integra Integra
NeuroSciences LifeSciences Consolidated
------------- ------------ ------------
Three months ended June 30, 2000:
Product sales................... $11,037 $4,647 $15,684
Cost of product sales........... 4,717 2,345 7,062
Gross margin on product sales... 6,320 2,302 8,622
Gross margin percentage......... 57% 50% 55%
11
<PAGE>
Integra Integra
NeuroSciences LifeSciences Consolidated
------------- ------------ ------------
Three months ended June 30, 1999:
Product sales................... $ 7,396 $ 4,737 $12,133
Cost of product sales........... 5,094 2,595 7,689
Gross margin on product sales... 2,302 2,142 4,444
Gross margin percentage......... 31% 45% 37%
Product sales in the Integra NeuroSciences division increased $3.6 million for
the three months ended June 30, 2000 primarily as a result of acquired product
lines and sales of the DuraGen(TM) product. Sales of products acquired in the
CNS and NMT product line acquisitions totaled $2.9 million and DuraGen(TM) sales
totaled $1.2 million for the three months ended June 30, 2000. Gross margin on
product sales increased to 57% for the three months ended June 30, 2000, with
$0.2 million of fair value purchase accounting adjustments from the acquired NMT
product lines recorded in cost of product sales in the second quarter of 2000.
Gross margin on product sales for the quarter ended June 30, 1999 was adversely
affected by $1.4 million of fair value purchase accounting adjustments and $0.5
million of inventory reserves against slow-moving products recorded in cost of
product sales. Excluding purchase accounting adjustments, gross margin on
product sales would have been 60% and 50% in the second quarter of 2000 and
1999, respectively. The increase in adjusted gross margins resulted from the
higher gross margins on the sale of products acquired in the CNS and NMT product
line acquisitions and the DuraGen(TM) product, as well as increased capacity
utilization.
Product sales in the Integra LifeSciences division decreased $0.1 million for
the three months ended June 30, 2000, with a $0.6 million decrease in sales of
INTEGRA(R) Dermal Regeneration Template to Ethicon under the Ethicon Agreement
offset by $0.5 million of sales of a product line acquired from NMT. Gross
margin on product sales increased to 50% for the three months ended June 30,
2000, as compared to 45% for the three months ended June 30, 1999. Excluding
$0.1 million and $0.3 million of fair value purchase accounting adjustments
recorded in the second quarter of 2000 and 1999, respectively, gross margin on
product sales would have been 52% in 2000 and 52% in 1999. Lower gross margins
on sales of INTEGRA(R) Dermal Regeneration Template to Ethicon during the three
months ended June 30, 2000 were offset by increased utilization of the
Plainsboro manufacturing facility during the period.
Other revenue in the Integra NeuroSciences segment increased $0.3 million to
$0.3 million for the three months ended June 30, 2000 and consisted of royalty
income. Other revenue in the Integra LifeSciences segment increased to $0.9
million for the three months ended June 30, 2000, as compared to $0.4 million
for the three months ended June 30, 1999. The majority of this increase relates
to contract research funding related to INTEGRA(R) Dermal Regeneration Template
received under the Ethicon Agreement.
Research and development expenses were as follows (in thousands):
Three Months Ended June 30,
2000 1999
---- ----
Integra NeuroSciences $ 720 $ 760
Integra LifeSciences 1,209 1,494
----- -----
Total $1,929 $2,255
Research and development activities within the Integra LifeSciences segment
decreased $0.3 million to $1.2 million for the three months ended June 30, 2000
primarily because of reduced headcount and a reduction in spending in the DePuy
cartilage program prior to moving into large animal studies. Future expenditures
will depend upon the progress of ongoing research and development programs,
including those for which the Company receives funding from third parties.
12
<PAGE>
Approximately 42% and 15% of the Company's total research and development
expenses for the three months ended June 30, 2000 and 1999, respectively, were
funded through external grants and development funding programs. The increase in
funded research in 2000 is primarily the result of research funding received
from Ethicon under the Ethicon Agreement related to research on INTEGRA(R)
Dermal Regeneration Template.
Selling and marketing expenses were as follows (in thousands):
Three Months Ended June 30,
2000 1999
---- ----
Integra NeuroSciences $ 3,005 $1,707
Integra LifeSciences 863 1,207
--- -----
Total $ 3,868 $2,914
Integra NeuroSciences selling and marketing expenses increased by $1.3 million
to $3.0 million for the three months ended June 30, 2000 due to the expansion of
the direct sales force to over 40 field personnel in 2000, increased sales
commissions incurred on higher sales, and higher tradeshow costs in the second
quarter of 2000. The decrease of $0.3 million in Integra LifeSciences selling
and marketing expenses to $0.9 million for the three months ended June 30, 2000
is the result of lower costs associated with the transition of INTEGRA(R) Dermal
Regeneration Template selling and marketing activities to Ethicon, offset by
costs associated with the Company's new distribution center, which was opened in
the second quarter of 2000.
General and administrative expenses were as follows (in thousands):
Three Months Ended June 30,
2000 1999
---- ----
Integra NeuroSciences $1,496 $1,975
Integra LifeSciences 791 525
Corporate 1,452 1,536
----- -----
Total $3,739 $4,036
Integra NeuroSciences general and administrative expenses decreased $0.5 million
to $1.5 million for the three months ended June 30, 2000. Included in general
and administrative expenses for the second quarter of 1999 were $0.8 million of
severance costs in connection with the closure of an administrative facility in
Wisconsin that was acquired in the NeuroCare acquisition. Offsetting this
decrease are general and administrative costs associated with facilities
acquired in the CNS and NMT product line acquisitions. General and
administrative expenses in the Integra LifeSciences segment increased $0.3
million to $0.8 million for the three months ended June 30, 2000 primarily due
to additional headcount. The decrease of $0.1 million in corporate general and
administrative expenses to $1.4 million for the three months ended June 30, 2000
is primarily the result of decreased legal fees associated with less activity in
the Merck KGaA litigation in the first quarter of 2000, offset by higher costs
associated with additional headcount.
The $0.4 million increase in amortization and other depreciation (excluding $0.4
million and $0.3 million of depreciation included in cost of sales for the three
months ended June 30, 2000 and 1999, respectively) to $0.9 million in the second
quarter of 2000 was the result of additional amortization related primarily to
the CNS and NMT product line acquisitions.
Interest expense increased $0.1 million for the three months ended June 30, 2000
to $0.3 million as a result of interest incurred on the $2.8 million note
payable to the seller of the CNS business and an increase in interest rates in
the second quarter of 2000 as compared to the comparable quarter in 1999.
Interest income decreased because of lower average cash and investment balances
outstanding during the second quarter of 2000.
Income tax expense increased to $0.2 million in the second quarter of 2000, as
compared to income tax benefit of $1.2 million recorded in the second quarter of
1999 that was attributed to the deferred tax benefits recognized on the
consolidated post-acquisition losses to the extent of the deferred tax liability
recorded in the NeuroCare acquisition. Income taxes recorded in the second
quarter of 2000 relate primarily to taxes incurred by a foreign subsidiary.
13
<PAGE>
Six Months Ended June 30, 2000 Compared to Six Months Ended June 30, 1999
Overall, the Company recorded a net loss of $1.0 million for the six months
ended June 30, 2000, as compared to a net loss of $3.2 million for the
comparable period in 1999. Operating results for the six months ended June 30,
2000 improved by $6.5 million, with an operating loss of $1.9 million recorded
in 2000 as compared to a $8.4 million operating loss in 1999. The improvement in
2000 operating results was primarily due to continued product sales growth and
operating cost containment in 2000 and the effects of certain nonrecurring
charges incurred in the second quarter of 1999 in connection with the NeuroCare
acquisition. Sales growth resulted primarily from business acquisitions and the
successful launch of the DuraGen(TM) Dural Graft Matrix in the third quarter of
1999.
Total revenues increased by $13.8 million to $31.3 million for the six months
ended June 30, 2000 as compared to $17.5 million for the six months ended June
30, 1999, primarily as a result of increased product sales. Product sales
increased by $12.2 million to $28.9 million for the six months ended June 30,
2000 as compared to $16.7 million for the six months ended June 30, 1999.
Product sales and cost of product sales were as follows (in thousands):
Integra Integra
NeuroSciences LifeSciences Consolidated
------------- ------------ ------------
Consolidated Six months ended
June 30, 2000:
Product sales................... $19,794 $9,126 $28,920
Cost of product sales........... 8,836 4,818 13,654
Gross margin on product sales... 10,958 4,308 15,266
Gross margin percentage......... 55% 47% 53%
Integra Integra
NeuroSciences LifeSciences Consolidated
------------- ------------ ------------
Consolidated Six months ended
June 30, 1999:
Product sales................... $ 7,917 $ 8,821 $16,738
Cost of product sales........... 5,392 4,991 10,383
Gross margin on product sales... 2,525 3,830 6,355
Gross margin percentage......... 32% 43% 38%
Product sales in the Integra NeuroSciences division increased $11.9 million for
the six months ended June 30, 2000 as a result of acquired product lines and
$2.0 million in sales of the DuraGen(TM) product. Gross margin on product sales
increased to 55% for the six months ended June 30, 2000, with $0.3 million of
fair value purchase accounting adjustments from the acquired CNS and NMT product
lines recorded in cost of product sales in 2000. Gross margin on product sales
for the six months ended June 30, 1999 was adversely affected by $1.5 million of
fair value purchase accounting adjustments and $0.5 million of inventory
reserves against slow-moving products recorded in cost of product sales.
Excluding purchase accounting adjustments, gross margin on product sales would
have been 57% and 51% in the second quarter of 2000 and 1999, respectively. The
increase in adjusted gross margins resulted from the higher gross margins on
sale of products acquired in the CNS and NMT product line acquisitions and the
DuraGen(TM) product, as well as increased capacity utilization.
Product sales in the Integra LifeSciences division increased $0.3 million for
the six months ended June 30, 2000. Sales increases included $1.6 million of
sales from acquired product lines, $0.6 million of sales from the first
commercial shipment of tyrosine polycarbonate polymers for use in clinical
development of various fixation devices and a $0.5 million increase in sales of
the Company's hemostatic agent product lines. Offsetting these increases were a
$1.2 million decrease in sales of INTEGRA(R) Dermal Regeneration Template to
Ethicon under the Ethicon Agreement and a $1.0 million decrease in sales of a
product line sold in the first quarter of 1999. Gross margin on product sales
increased to 47% for the six months ended June 30, 2000, as compared to 43% for
the six months ended June 30, 1999. Excluding $0.1 million and $0.5 million of
fair value purchase accounting adjustments recorded in the six months ended June
30, 2000 and 1999, respectively, gross margin on product sales would have been
48% in 2000 and 49% in 1999. Lower gross margins on sales of INTEGRA(R) Dermal
Regeneration Template to Ethicon during the six months ended June 30, 2000 were
offset by increased utilization of the Plainsboro manufacturing facility and
sales of higher margin acquired product lines during the period.
14
<PAGE>
Other revenue in the Integra NeuroSciences segment increased $0.5 million to
$0.5 million for the six months ended June 30, 2000 and consisted of royalty
income. Other revenue in the Integra LifeSciences segment increased to $1.9
million for the six months ended June 30, 2000, as compared to $0.8 million for
the six months ended June 30, 1999. The majority of this increase relates to
contract research funding related to INTEGRA(R) Dermal Regeneration Template
received under the Ethicon Agreement.
Research and development expenses were as follows (in thousands):
Six Months Ended June 30,
2000 1999
---- ----
Integra NeuroSciences $ 1,211 $ 873
Integra LifeSciences 2,546 3,322
----- -----
Total $ 3,757 $4,195
Research and development activities within the Integra NeuroSciences segment
increased $0.3 million for the six months ended June 30, 2000 to $1.2 million as
a result of the NeuroCare acquisition in March 1999. Research and development
activities within Integra LifeSciences segment decreased $0.8 million to $2.5
million for the six months ended June 30, 2000 primarily because of the
elimination of several research programs that were ongoing in the first quarter
of 1999, reduced headcount, and a reduction in spending in the DePuy cartilage
program prior to moving into large animal studies.
Approximately 41% and 16% of the Company's total research and development
expenses for the six months ended June 30, 2000 and 1999, respectively, were
funded through external grants and development funding programs. The increase in
funded research in 2000 is primarily the result of research funding received
from Ethicon under the Ethicon Agreement related to research on INTEGRA(R)
Dermal Regeneration Template.
Selling and marketing expenses were as follows (in thousands):
Six Months Ended June 30,
2000 1999
---- ----
Integra NeuroSciences $5,422 $1,997
Integra LifeSciences 1,363 2,477
----- -----
Total $ 6,785 $4,474
Integra NeuroSciences selling and marketing expenses increased by $3.4 million
to $5.4 million for the six months ended June 30, 2000 due to the expansion of
the direct sales force to over 40 field personnel in 2000, increased sales
commissions incurred on higher sales, and higher tradeshow costs in the second
quarter of 2000. The decrease of $1.1 million in Integra LifeSciences selling
and marketing expenses to $1.4 million for the six months ended June 30, 2000 is
the result of lower costs associated with the transition of INTEGRA(R) Dermal
Regeneration Template selling and marketing activities to Ethicon, offset by
costs associated with the Company's new distribution center, which was opened in
the second quarter of 2000.
General and administrative expenses were as follows (in thousands):
Six Months Ended June 30,
2000 1999
---- ----
Integra NeuroSciences $2,464 $2,030
Integra LifeSciences 1,580 1,152
Corporate 3,303 3,005
----- -----
<PAGE>
Total $7,347 $6,187
15
<PAGE>
Integra NeuroSciences general and administrative expenses increased $0.4 million
to $2.4 million for the six months ended June 30, 2000. This increase relates
primarily to general and administrative costs associated with acquisitions.
Offsetting this increase were $0.8 million of severance costs incurred in the
six months ended June 30, 1999 in connection with the closure of an
administrative facility in Wisconsin that was acquired in the NeuroCare
acquisition. General and administrative expenses in the Integra LifeSciences
segment increased $0.4 million to $1.6 million for the six months ended June 30,
2000 primarily due to additional headcount. The increase of $0.3 million in
corporate general and administrative expenses to $3.3 million for the six months
ended June 30, 2000 is primarily the result of increased legal fees associated
with the Merck KGaA litigation incurred in the first quarter of 2000, when the
case went to trial, and costs associated with additional headcount.
The $1.0 million increase in amortization and other depreciation (excluding $0.8
million and $0.6 million of depreciation included in cost of sales for the six
months ended June 30, 2000 and 1999, respectively) to $1.6 million in 2000 was
the result of $0.9 million of additional amortization from acquisitions and $0.1
million of additional depreciation.
Interest expense increased $0.3 million for the six months ended June 30, 2000
to $0.6 million as a result of interest incurred on the $2.8 million note
payable to the seller of the CNS business acquired in January 2000, two full
quarters of interest on debt assumed in the NeuroCare acquisition, and an
increase in interest rates in 2000 as compared to the comparable period in 1999.
For the six months ended June 30, 2000 and 1999, the Company recorded a gain of
$1.1 million and $4.2 million, respectively, in connection with the sale of
product lines.
Income tax expense increased to $0.2 million for the six months ended June 30,
2000, as compared to income tax benefit of $0.8 million recorded for the six
months ended June 30, 1999. This $0.8 million tax benefit related to $1.2
million of the deferred tax benefits recognized on the consolidated
post-acquisition losses to the extent of the deferred tax liability recorded in
the NeuroCare acquisition, offset by a $0.4 million tax provision on the sale of
a product line. Income taxes recorded in the six months ended June 30, 2000
relate primarily to taxes incurred by a foreign subsidiary and state income
taxes.
Liquidity and Capital Resources
The Company has incurred losses from operations since its inception and will
continue to incur such losses unless and until product sales and research and
collaborative arrangements generate sufficient revenue to fund continuing
operations. As of June 30, 2000, the Company had an accumulated deficit of $95.3
million.
The Company has funded its operations to date primarily through private and
public offerings of equity securities, product revenues, research and
collaboration funding, borrowings under a revolving credit line and cash
acquired in connection with business acquisitions and dispositions. At June 30,
2000, the Company had cash, cash equivalents and short-term investments of
approximately $9.3 million and $12.6 million in short and long-term borrowings.
The Company's principal uses of funds during the six months ended June 30, 2000
were $4.1 million for the acquisition of CNS, $11.6 million for the acquisition
of certain product lines from NMT, $2.2 million in purchases of property and
equipment and $5.1 million used in operations. During this same period, the
Company raised $5.4 million from the sale of Series C Preferred Stock and
warrants to affiliates of Soros Private Equity Partners LLC, $1.4 million from
the issuance of common stock through exercised stock options and $1.6 million
from the sale of product lines.
The Company maintains a term loan and the revolving credit facility from Fleet
Capital Corporation (collectively, the "Fleet Credit Facility"), which is
collateralized by all the assets and ownership interests of various subsidiaries
of the Company including Integra NeuroCare LLC, and NeuroCare Holding
Corporation (the parent company of Integra NeuroCare LLC) has guaranteed Integra
NeuroCare LLC's obligations. Integra NeuroCare LLC is subject to various
financial and non-financial covenants under the Fleet Credit Facility, including
significant restrictions on its ability to transfer funds to the Company or the
Company's other subsidiaries. The financial covenants specify minimum levels of
interest and fixed charge coverage and net worth, and also specify maximum
levels of capital expenditures and total indebtedness to operating cash flow,
among others. While the Company anticipates that Integra NeuroCare LLC will be
able to satisfy the requirements of these financial covenants, there can be no
assurance that Integra NeuroCare LLC will generate sufficient earnings before
interest, taxes, depreciation and amortization to meet the requirements of such
covenants. The term loan is subject to mandatory prepayment amounts if certain
levels of cash flow are achieved.
16
<PAGE>
Additionally, in January 2000, the Company issued a 5% $2.8 million promissory
note to the seller of the CNS business. The promissory note, which is payable in
two principal payments of $1.4 million each, plus accrued interest, in January
2001 and 2002, is collateralized by inventory, property and equipment of the CNS
business and by a collateral assignment of a $2.8 million promissory note from
one of the Company's subsidiaries.
In the short-term, the Company believes that it has sufficient resources to fund
its operations. However, in the longer-term, there can be no assurance that the
Company will be able to generate sufficient revenues to obtain positive
operating cash flows or profitability.
Other Matters
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133 "Accounting for Derivative Investments
and Hedging Activities" ("SFAS No. 133"). SFAS No. 133 establishes accounting
and reporting standards for derivatives and hedging activities and supercedes
several existing standards. SFAS No. 133, as amended by SFAS No. 137, is
effective for all fiscal quarters of fiscal years beginning after June 15, 2000.
The Company does not expect that the adoption of SFAS No. 133 will have a
material impact on the consolidated financial statements.
In December 1999 (as amended in March 2000 and June 2000) the staff of the
Securities and Exchange Commission ("SEC") issued Staff Accounting Bulletin 101,
Revenue Recognition (the "SAB"). To the extent the guidance in the SAB differs
from generally accepted accounting principles previously utilized by an SEC
registrant, the SAB indicates that the SEC staff will not object to reporting
the cumulative effect of a change in accounting principle. The Company is
currently assessing the full impact that the SAB will have on its financial
statements. Once the final assessment is complete, the total financial impact of
the SAB, if any, will be recorded as a cumulative effect of a change in
accounting principle in the fourth quarter of 2000.
17
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In July 1996, the Company filed a patent infringement lawsuit in the United
States District Court for the Southern District of California against Merck
KGaA, a German corporation, Scripps Research Institute, a California nonprofit
corporation, and David A. Cheresh, Ph.D., a research scientist with Scripps,
seeking damages and injunctive relief. The complaint charged, among other
things, that the defendant Merck KGaA willfully and deliberately induced, and
continues to willfully and deliberately induce, defendants Scripps Research
Institute and Dr. David A. Cheresh to infringe certain of the Company's patents.
These patents are part of a group of patents granted to The Burnham Institute
and licensed by the Company that are based on the interaction between a family
of cell surface proteins called integrins and the arginine-glycine-aspartic acid
(known as "RGD") peptide sequence found in many extracellular matrix proteins.
The defendants filed a countersuit asking for an award of defendants' reasonable
attorney fees. This case went to trial in February 2000, and on March 17, 2000,
a jury found that Merck KGaA had willfully induced infringement of the Company's
patents and awarded the Company $15.0 million in damages. The Court has since
awarded the Company pre-judgment interest of $1.15 million. The Company
anticipates that judgment will be entered by the Court within the next sixty
<PAGE>
days. The Company expects that Merck KGaA will appeal various decisions of the
court and request a new trial. No amounts for this favorable verdict have been
reflected in the Company's financial statements.
Item 4. Submission of Matters to a Vote of Security Holders
The Company's Annual Meeting of Stockholders was held on May 16, 2000 and in
connection therewith, proxies were solicited by management pursuant to
Regulation 14 under the Securities Exchange Act of 1934. An aggregate of
16,312,094 shares of the Company's common stock ("Common Stock"), 500,000 shares
of Series A Preferred Stock (which are convertible into 250,000 shares of Common
Stock), 100,000 shares of Series B Preferred Stock (which are convertible into
2,617,801 shares of Common Stock), and 54,000 shares of Series C Preferred Stock
(which are convertible into 600,000 shares of Common Stock) (collectively,
"Shares") were outstanding and entitled to a vote at the meeting. At the meeting
the following matters (not including ordinary procedural matters) were submitted
to a vote of the holders of Shares, with the results indicated below:
1. Approval of the Company's 2000 Equity Incentive Plan. The Company's 2000
Equity Incentive Plan was approved. The tabulation of votes was as follows:
For Against Abstentions
--- ------- -----------
13,338,101 101,156 21,049
2. Election of directors to serve until the 2001 Annual Meeting. The following
persons, all of whom were serving as directors and were management's nominees
for election, were elected. There was no solicitation in opposition to such
nominees. The tabulation of votes was as follows:
Nominee For Withheld
------- --- --------
Keith Bradley 15,251,568 34,771
Richard E. Caruso 15,251,654 34,685
Stuart M. Essig 15,250,698 35,641
George W. McKinney, III 15,251,768 34,571
Neil Moszkowski 15,250,966 35,373
James M. Sullivan 15,251,021 35,318
18
<PAGE>
3. Ratification of independent auditors. The appointment of
PricewaterhouseCoopers LLP as the Company's independent auditors for the current
fiscal year was ratified. The tabulation of votes was as follows:
For Against Abstentions
--- ------- -----------
15,244,757 17,863 24,419
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit
Number Description of Exhibit
------ ----------------------
10.1 Equipment Lease Agreement between Medicus Corporation and the Company,
dated as of June 1, 2000.
27 Financial Data Schedule
(b) Reports on Form 8-K
The Company filed with the Securities and Exchange Commission a Report on Form
8-K dated March 29, 2000 with respect to (i) the Company's acquisition of
certain assets and liabilities from NMT Medical, Inc. and (ii) the sale of
Series C Convertible Preferred Stock to investment affiliates of Soros Private
Equity Partners LLC.
19
<PAGE>
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.
INTEGRA LIFESCIENCES HOLDINGS CORPORATION
Date: August 14, 2000 /s/ Stuart M. Essig
-------------------------------------
Stuart M. Essig
President and Chief Executive Officer
Date: August 14, 2000 /s/ David B. Holtz
-------------------------------------
David B. Holtz
Vice President, Finance and Treasurer
20
<PAGE>
INDEX OF EXHIBITS
Exhibit
Number Description of Exhibit
------ ----------------------
10.1 Equipment Lease Agreement between Medicus Corporation and the Company,
dated as of June 1, 2000.
27 Financial Data Schedule
21
