Form 10-Q
Table of Contents

 

 

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 September 30, 2015

Or

 

¨ 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 001-33092

 

 

LEMAITRE VASCULAR, INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware

 

04-2825458

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

43 Second Avenue, Burlington, Massachusetts

 

01803

(Address of principal executive offices)   (Zip Code)

(781) 221-2266

 

(Registrant’s telephone number, including area code)

63 Second Avenue

Burlington, MA 01803

(Former name or former address, if changed since last report)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer   ¨    Accelerated filer   ¨
Non-accelerated filer   ¨  (Do not check if a smaller reporting company)    Smaller reporting company   x

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    Yes  ¨    No  x

The registrant had 18,116,429 shares of common stock, $.01 par value per share, outstanding as of November 2, 2015.

 

 

 


Table of Contents

LEMAITRE VASCULAR

FORM 10-Q

TABLE OF CONTENTS

 

              Page  
Part I.  

Financial Information:

  
  Item 1.    Financial Statements   
     Consolidated Balance Sheets as of September 30, 2015 (unaudited) and December 31, 2014      3   
     Unaudited Consolidated Statements of Operations for the three-month and nine-month periods ended September 30, 2015 and 2014      4   
     Unaudited Consolidated Statements of Comprehensive Income for the three-month and nine-month periods ended September 30, 2015 and 2014      5   
     Unaudited Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2015 and 2014      6   
     Notes to Unaudited Consolidated Financial Statements      7   
  Item 2.    Management’s Discussion and Analysis of Financial Condition and Results of Operations      18   
  Item 3.    Quantitative and Qualitative Disclosure about Market Risk      29   
  Item 4.    Controls and Procedures      29   
Part II.  

Other Information:

  
  Item 1.    Legal Proceedings      30   
  Item 1A.    Risk Factors      30   
  Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds      30   
  Item 6.    Exhibits      31   
 

Signatures

     32   
 

Index to Exhibits

     33   

 

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Part I. Financial Information

Item 1. Financial Statements

LeMaitre Vascular, Inc.

Consolidated Balance Sheets

 

     (unaudited)        
     September 30,
2015
    December 31,
2014
 
     (in thousands, except share data)  

Assets

    

Current assets:

    

Cash and cash equivalents

   $ 23,629      $ 18,692   

Accounts receivable, net of allowances of $253 at September 30, 2015 and $242 at December 31, 2014

     11,339        10,803   

Inventory

     15,920        16,714   

Prepaid expenses and other current assets

     3,089        2,379   
  

 

 

   

 

 

 

Total current assets

     53,977        48,588   

Property and equipment, net

     6,788        6,878   

Goodwill

     17,717        17,281   

Other intangibles, net

     6,656        7,157   

Deferred tax assets

     1,306        1,418   

Other assets

     168        170   
  

 

 

   

 

 

 

Total assets

   $ 86,612      $ 81,492   
  

 

 

   

 

 

 

Liabilities and stockholders’ equity

    

Current liabilities:

    

Accounts payable

   $ 931      $ 1,127   

Accrued expenses

     7,598        7,479   

Acquisition-related obligations

     304        1,435   
  

 

 

   

 

 

 

Total current liabilities

     8,833        10,041   

Deferred tax liabilities

     2,917        2,919   

Other long-term liabilities

     676        325   
  

 

 

   

 

 

 

Total liabilities

     12,426        13,285   

Stockholders’ equity:

    

Preferred stock, $0.01 par value; authorized 3,000,000 shares; none outstanding

     —          —     

Common stock, $0.01 par value; authorized 37,000,000 shares; issued 19,499,818 shares at September 30, 2015, and 18,778,436 shares at December 31, 2014

     195        188   

Additional paid-in capital

     80,188        75,389   

Retained earnings

     6,356        3,248   

Accumulated other comprehensive loss

     (4,033     (2,365

Treasury stock, at cost; 1,431,139 shares at September 30, 2015, and 1,407,211 shares at December 31, 2014

     (8,520     (8,253
  

 

 

   

 

 

 

Total stockholders’ equity

     74,186        68,207   
  

 

 

   

 

 

 

Total liabilities and stockholders’ equity

   $ 86,612      $ 81,492   
  

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

 

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Table of Contents

LeMaitre Vascular, Inc.

Consolidated Statements of Operations

(unaudited)

 

     For the three months
ended September 30,
    For the nine months
ended September 30,
 
     2015     2014     2015     2014  
     (in thousands, except per share data)  

Net sales

   $ 19,025      $ 17,501      $ 57,869      $ 52,416   

Cost of sales

     5,509        5,498        18,106        16,813   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     13,516        12,003        39,763        35,603   

Sales and marketing

     5,489        5,091        16,866        16,857   

General and administrative

     3,455        3,765        10,375        10,376   

Research and development

     1,421        1,109        3,904        3,590   

Medical device excise tax

     190        178        554        518   

Restructuring charges

     —          8        —          500   

Impairment charges

     —          —          —          161   

Gain on divestiture

     (360     —          (360     —     
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     10,195        10,151        31,339        32,002   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     3,321        1,852        8,424        3,601   

Other income (expense):

        

Interest income

     3        1        7        2   

Interest expense

     —          (6     —          (6

Foreign currency gain (loss)

     (185     52        (142     30   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     3,139        1,899        8,289        3,627   

Provision for income taxes

     1,047        965        3,061        1,628   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 2,092      $ 934      $ 5,228      $ 1,999   
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share of common stock:

        

Basic

   $ 0.12      $ 0.05      $ 0.30      $ 0.12   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.11      $ 0.05      $ 0.29      $ 0.12   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted-average shares outstanding:

        

Basic

     17,865        17,348        17,625        16,358   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     18,497        17,709        18,136        16,772   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash dividends declared per common share

   $ 0.040      $ 0.035      $ 0.120      $ 0.105   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

 

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LeMaitre Vascular, Inc.

Consolidated Statements of Comprehensive Income

(unaudited)

 

     Three months
ended
September 30,
    Nine months ended
September 30,
 
     2015     2014     2015     2014  
     (in thousands)  

Net income

   $ 2,092      $ 934      $ 5,228      $ 1,999   

Other comprehensive loss:

        

Foreign currency translation adjustment, net

     (508     (1,378     (1,668     (1,375
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other comprehensive loss

     (508     (1,378     (1,668     (1,375
  

 

 

   

 

 

   

 

 

   

 

 

 

Comprehensive income (loss)

   $ 1,584      $ (444   $ 3,560      $ 624   
  

 

 

   

 

 

   

 

 

   

 

 

 

See accompanying notes to consolidated financial statements.

 

 

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LeMaitre Vascular, Inc.

Consolidated Statements of Cash Flows

(unaudited)

 

     For the nine months
ended September 30,
 
     2015     2014  
     (in thousands)  

Operating activities

    

Net income

   $ 5,228      $ 1,999   

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

    

Depreciation and amortization

     2,497        2,422   

Stock-based compensation

     1,088        982   

Accrued contingent earnout

     —          138   

Impairment charges

     —          161   

Provision of doubtful accounts

     156        31   

Provision for inventory write-downs

     462        508   

Excess tax benefits from stock-based compensation awards

     —          (28

Loss on disposal of property and equipment

     —          4   

Gain on divestitures

     (360     —     

Foreign currency transaction gain

     130        2   

Changes in operating assets and liabilities:

    

Accounts receivable

     (1,078     (194

Inventory

     (33     (2,488

Prepaid expenses and other assets

     (791     (403

Accounts payable and other liabilities

     214        (304
  

 

 

   

 

 

 

Net cash provided by operating activities

     7,513        2,830   

Investing activities

    

Purchases of property and equipment

     (1,558     (774

Proceeds from disposal of property and equipment

     15        —     

Proceeds from divestitures, net of expenses

     360        —     

Payments related to acquisitions, net of cash acquired

     (1,426     (5,577

Purchase of intellectual property

     (6     (9
  

 

 

   

 

 

 

Net cash used in investing activities

     (2,615     (6,360

Financing activities

    

Payments of long-term debt

     —          (1,133

Payment of deferred acquisition consideration

     (1,100     (366

Proceeds from issuance of common stock

     3,718        10,834   

Purchase of treasury stock

     (266     (211

Common stock cash dividend paid

     (2,120     (1,700

Excess tax benefits from stock-based compensation awards

     —          28   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     232        7,452   

Effect of exchange rate changes on cash and cash equivalents

     (193     (279
  

 

 

   

 

 

 

Net increase in cash and cash equivalents

     4,937        3,643   

Cash and cash equivalents at beginning of period

     18,692        14,711   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 23,629      $ 18,354   
  

 

 

   

 

 

 

Supplemental disclosures of cash flow information (see Note 13)

See accompanying notes to consolidated financial statements.

 

 

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Table of Contents

LeMaitre Vascular, Inc.

Notes to Consolidated Financial Statements

September 30, 2015

(unaudited)

1. Organization and Basis for Presentation

Description of Business

Unless the context requires otherwise, references to LeMaitre Vascular, we, our, and us refer to LeMaitre Vascular, Inc. and our subsidiaries. We develop, manufacture, and market medical devices and implants used primarily in the field of vascular surgery. We operate in a single segment in which our principal product lines include the following: valvulotomes, balloon catheters, carotid shunts, biologic patches, biologic grafts, radiopaque marking tape, anastomotic clips, remote endarterectomy devices, laparoscopic cholecystectomy devices, vascular grafts, angioscopes, and powered phlebectomy devices. Our offices are located in Burlington, Massachusetts; Mississauga, Canada; Sulzbach, Germany; Milan, Italy; Madrid, Spain; North Melbourne, Australia; Tokyo, Japan; and Shanghai, China.

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal, recurring adjustments considered necessary for a fair presentation of the results of these interim periods have been included. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are updated as appropriate. The results for the nine months ended September 30, 2015 are not necessarily indicative of results to be expected for the entire year. The information contained in these interim financial statements should be read in conjunction with our audited consolidated financial statements as of and for the year ended December 31, 2014, including the notes thereto, included in our Form 10-K filed with the Securities and Exchange Commission (SEC).

Consolidation

Our consolidated financial statements include the accounts of LeMaitre Vascular and the accounts of our wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued a new accounting standard that provides for a comprehensive model to use in the accounting for revenue arising from contracts with customers that will replace most existing revenue recognition guidance in GAAP. Under this standard, revenue will be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard will be effective for annual reporting periods beginning after December 15, 2017, allows for either full retrospective or modified retrospective application, and early adoption is not permitted. We are assessing the new standard and which adoption method we will apply. We have not yet determined the impact on our results of operations.

2. Income Tax Expense

As part of the process of preparing our consolidated financial statements we are required to determine our income taxes in each of the jurisdictions in which we operate. This process involves estimating our actual current tax expense together with assessing temporary differences resulting from recognition of items for income tax and accounting purposes.

 

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These differences result in deferred tax assets and liabilities, which are included within our consolidated balance sheet. We must then assess the likelihood that our deferred tax assets will be recovered from taxable income during the carryback period or in the future; and to the extent we believe that recovery is not more likely than not, we must establish a valuation allowance. To the extent we establish a valuation allowance or increase this allowance in a period, we must reflect this increase as an expense within the tax provision in the statement of operations. We do not provide for income taxes on undistributed earnings of foreign subsidiaries, as our intention is to permanently reinvest these earnings.

We recognize, measure, present and disclose in our financial statements any uncertain tax positions that we have taken, or expect to take on a tax return. We operate in multiple taxing jurisdictions, both within and without the United States, and may be subject to audits from various tax authorities. Management’s judgment is required in determining our provision for income taxes, our deferred tax assets and liabilities, liabilities for uncertain tax positions, and any valuation allowance recorded against our net deferred tax assets. We will monitor the realizability of our deferred tax assets and adjust the valuation allowance accordingly.

Our policy is to classify interest and penalties related to unrecognized tax benefits as income tax expense.

Our 2015 income tax expense varies from the statutory rate mainly due to certain permanent items, offset by lower statutory rates from our foreign entities and a discrete item for stock option exercises. Our 2014 income tax expense varies from the statutory rate mainly due to certain permanent items, offset by lower statutory rates from our foreign entities, and discrete items related to certain foreign branch losses previously not deductible and the release of a valuation allowance on certain foreign loss carryforwards.

We have reviewed the tax positions taken, or to be taken, in our tax returns for all tax years currently open to examination by a taxing authority. As of September 30, 2015, the gross amount of unrecognized tax benefits exclusive of interest and penalties was $72,000. We remain subject to examination until the statute of limitations expires for each respective tax jurisdiction. The statute of limitations will be open with respect to these tax positions until 2024. A reconciliation of the beginning and ending amount of our unrecognized tax benefits is as follows:

 

     2015  
     (in
thousands)
 

Unrecognized tax benefits at the beginning of year

   $ 23   

Additions for tax positions of current year

     49   

Additions for tax positions of prior years

     —     

Reductions for settlements with taxing authorities

     —     

Reductions for lapses of the applicable statutes of limitations

     —     
  

 

 

 

Unrecognized tax benefits at the end of the period

   $ 72   
  

 

 

 

In September 2015, the Internal Revenue Service notified us that our 2013 Federal tax return would be audited. We expect the audit to commence during the fourth quarter of 2015. We believe there will be no material changes to our income tax liability as a result of this audit. As of September 30, 2015, a summary of the tax years that remain subject to examination in our taxing jurisdictions is as follows:

 

United States

     2012 and forward   

Foreign

     2008 and forward   

 

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3. Inventories

Inventories consist of the following:

 

     September 30,
2015
     December 31,
2014
 
     (in thousands)  

Raw materials

   $ 3,269       $ 3,367   

Work-in-process

     2,875         3,464   

Finished products

     9,776         9,883   
  

 

 

    

 

 

 

Total inventory

   $ 15,920       $ 16,714   
  

 

 

    

 

 

 

We held inventory on consignment of $1.0 and $0.8 million as of September 30, 2015 and December 31, 2014, respectively.

4. Acquisition and Divestitures

Clinical Instruments International, Inc.

In July 2013, we entered into an asset purchase agreement with Clinical Instruments International, Inc. (Clinical Instruments) to acquire substantially all the assets of Clinical Instruments for $1.1 million. We paid $0.9 million at the closing and paid the remaining $0.2 million in October 2014. We accounted for the acquisition as a business combination. Assets acquired include inventory and intellectual property. We recorded $0.2 million of inventory, $0.3 million of intangible assets and $0.6 million of goodwill. The weighted-average amortization period for the acquired intangible assets as of July 31, 2013 was 5.7 years. The goodwill will be deductible for tax purposes over 15 years.

InaVein LLC

In August 2013, we entered into an asset purchase agreement with InaVein LLC (InaVein) to acquire substantially all the assets of InaVein for $2.5 million and potential acquisition-related contingent consideration totaling up to $1.4 million in 2014 and 2015 dependent on the sales performance of the acquired business and the timing of regulatory approval in China. We paid $2.1 million at the closing and paid the remaining $0.4 million in September 2014. We accounted for the acquisition as a business combination. Assets acquired include receivables, inventory, equipment, and intellectual property. Liabilities assumed include payables and service contracts. We recorded $0.8 million of tangible assets, $1.1 million of intangible assets, $0.7 million of goodwill, and $0.1 million of assumed liabilities. The weighted-average amortization period for the acquired intangible assets as of August 31, 2013 was 6.7 years. The goodwill will be deductible for tax purposes over 15 years.

The contingent consideration was initially valued at the date of acquisition and is remeasured each reporting period until the contingency is resolved. Based upon stronger than expected sales to China, we recorded an increase of $0.1 million in the contingent consideration dependent on the sales performance of the acquired business in the first year following the closing as a charge to general and administrative expense in 2014. In October 2014, we paid $0.2 million for the first sales related milestone. The milestone related to the timing of the regulatory approval in China was not achieved. The final potential milestone payment was dependent on sales performance of the acquired business from August 2014 to August 2015. This milestone was not achieved.

Xenotis Pty Ltd

In August 2014, we entered into a stock purchase agreement with the shareholders of Xenotis Pty Ltd (Xenotis) to acquire all of the capital stock of Xenotis for $6.7 million based on foreign exchange rates in effect at the time of the closing, with a mechanism for a purchase price adjustment based on the net tangible assets of Xenotis at closing. Xenotis is the parent company of Bio Nova International, the manufacturer and marketer of the Omniflow II biosynthetic vascular graft for lower extremity bypass and AV access. We paid $5.1 million at the closing with the final payment of $1.1 million made in August 2015.

 

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The net tangible asset purchase price adjustment of $0.2 million was paid in November 2014. We accounted for the acquisition as a business combination. Assets acquired include receivables, inventory, equipment, a building, and intellectual property. We recorded $2.1 million of tangible assets, $2.1 million of property and equipment, $1.8 million of intangible assets, and $2.5 million of goodwill. The weighted-average amortization period for the acquired intangible assets as of August 31, 2014 was 6.8 years. Liabilities assumed include payables and debt which totaled $1.7 million and included $1.1 million of assumed debt, which we paid in full in August 2014. The purchase accounting is complete.

The goodwill of $2.5 million will not be deductible for tax purposes. In addition, we acquired deferred tax assets of $2.4 million which consist primarily of net operating loss carry-forwards and capital loss carry-forwards. We recorded a full valuation allowance on these deferred tax assets.

In September 2014, we entered into definitive agreements with eight former Xenotis distributors in Europe to terminate their distribution of our Omniflow II biosynthetic vascular grafts for $1.3 million. We paid approximately $1.1 million in 2014 and $0.2 million in 2015 with the remaining approximately $20,000 due in December 2015. We recorded $0.4 million of inventory and $0.9 million of intangible assets. We allocated the payment to the tangible and intangible assets acquired based on the estimated fair value of each of these elements to the transactions. The weighted-average amortization period for the acquired intangible assets as of September 30, 2014 was 5.0 years.

Tru-Incise Valvulotome

In May 2015, we entered into an asset purchase agreement with UreSil, LLC (UreSil) to acquire the production and distribution rights of UreSil’s Tru-Incise valvulotome for sales outside the United States for $1.4 million. We paid $1.1 million with the remaining $0.3 million payable at various points in 2016 and 2017. We accounted for the acquisition as a business combination. Assets acquired include inventory and intellectual property. We did not assume any liabilities. The purchase accounting is complete.

The following table summarizes the purchase price allocation at the date of the acquisition:

 

     Allocated
Fair
Value
 
     (in
thousands)
 

Inventory

   $ 88   

Intangible assets

     545   

Goodwill

     742   
  

 

 

 

Purchase price

   $ 1,375   
  

 

 

 

The goodwill will be deductible for tax purposes over 15 years.

 

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The following table reflects the allocation of the acquired intangible assets and related estimated useful lives:

 

     Allocated
Fair Value
     Weighted
Average
Useful Life
 
     (in thousands)         

Non-compete agreement

   $ 120         5.0 years   

Tradename license

     17         3.0 years   

Technology

     391         7.0 years   

Customer relationships

     17         3.0 years   
  

 

 

    

Total intangible assets

   $ 545      
  

 

 

    

Other Items

Following the Tru-Incise valvulotome acquisition, we entered into definitive agreements with seven UreSil distributors to terminate their distribution of the Tru-Incise valvulotome for $0.2 million. We paid approximately $0.1 million to date with the remainder primarily due in 2015. We recorded approximately $0.2 million of intangible assets with a weighted-average amortization period of 3.0 years.

In August 2015, we entered into a definitive agreement with Grex Medical Oy (Grex) our distributor in Finland in order to terminate their distribution of our products and we will begin selling direct to hospitals in Finland as of January 1, 2016. The agreement required us to pay approximately $0.2 million in exchange for the purchase of customer lists and a non-compete agreement.

Our acquisitions have historically been made at prices above the fair value of the acquired identifiable assets, resulting in goodwill, due to expectations of synergies that will be realized by combining businesses. These synergies include the use of our existing sales channel to expand sales of the acquired businesses’ products, consolidation of manufacturing facilities, and the leveraging of our existing administrative infrastructure.

Non-occlusive Modeling Catheter Divestiture

In July 2015, we entered into an asset sales agreement with Merit Medical Ireland Limited to sell our inventory, intellectual property, and customer lists associated with our non-occlusive modeling catheter product line for $0.4 million which was recognized as a gain on divestiture in the three months ended September 30, 2015. During the nine months ended September 30, 2014, we recognized an impairment charge of $0.2 million on our non-occlusive modeling catheter product line. Additionally, we recognized a $0.3 million charge to cost of sales related to the non-occlusive modeling catheter inventory.

The fair market valuations associated with these transactions fall within Level 3 of the fair value hierarchy, due to the use of significant unobservable inputs to determine fair value. The fair value measurements were calculated using unobservable inputs, primarily using the income approach, specifically the discounted cash flow method. The amount and timing of future cash flows within our analysis was based on our due diligence models, most recent operational budgets, long range strategic plans and other estimates.

 

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5. Goodwill and Other Intangibles

Goodwill consists of the following:

 

     (in thousands)  

Balance at beginning of year

   $ 17,281   

Additions for acquisitions

     742   

Effects of currency exchange

     (306
  

 

 

 

Balance at September 30, 2015

   $ 17,717   
  

 

 

 

Other intangibles consist of the following:

 

     September 30, 2015      December 31, 2014  
     Gross
Carrying
Value
     Accumulated
Amortization
     Net
Carrying
Value
     Gross
Carrying
Value
     Accumulated
Amortization
     Net
Carrying
Value
 
     (in thousands)  

Product technology

   $ 7,083       $ 3,052       $ 4,031       $ 7,134       $ 2,777       $ 4,357   

Trademarks and licenses

     1,556         1,190         366         1,557         1,074         483   

Customer relationships

     3,791         2,054         1,737         3,694         1,781         1,913   

Other intangible assets

     1,295         773         522         1,084         680         404   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total identifiable intangible assets

   $ 13,725       $ 7,069       $ 6,656       $ 13,469       $ 6,312       $ 7,157   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

These intangible assets are being amortized over their useful lives ranging from 1 to 13 years. The weighted-average amortization period for these intangibles as of September 30, 2015 is 7.3 years. Amortization expense is included in general and administrative expense and is as follows:

 

     Three months
ended
September 30,
     Nine months ended
September 30,
 
     2015      2014      2015      2014  
     (in thousands)  

Amortization expense

   $ 387       $ 359       $ 1,135       $ 1,098   
  

 

 

    

 

 

    

 

 

    

 

 

 

Estimated amortization expense for the remainder of 2015 and each of the five succeeding fiscal years is as follows:

 

     2015      2016      2017      2018      2019      2020  
     (in thousands)  

Amortization expense

   $ 365       $ 1,456       $ 1,199       $ 1,012       $ 827       $ 578   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

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6. Accrued Expenses

Accrued expenses consist of the following:

 

     September 30,
2015
     December 31,
2014
 
     (in thousands)  

Compensation and related taxes

   $ 4,539       $ 4,819   

Income and other taxes

     657         444   

Professional fees

     476         496   

Other

     1,926         1,720   
  

 

 

    

 

 

 

Total

   $ 7,598       $ 7,479   
  

 

 

    

 

 

 

7. Restructuring

In February 2014, we committed to a plan intended to improve operational efficiencies, which included a reduction in force of approximately 10% of our workforce and other cost-cutting measures, including the transfer of our Clinical Instruments manufacturing to our Burlington headquarters and corresponding closure of our Southbridge manufacturing facility. As a result, we recorded approximately $0.4 million of severance related restructuring expense for the three months ended March 31, 2014. We made approximately $0.1 million of severance related payments during the three months ended March 31, 2014.

In April 2014, we committed to an additional reduction in force of approximately seven employees. As a result, we recorded approximately $0.1 million of severance related restructuring expense for the three months ended June 30, 2014.

We did not incur restructuring charges during the nine months ended September 30, 2015.

8. Commitments and Contingencies

Purchase Commitments

As of September 30, 2015, as part of our normal course of business, we have commitments to purchase $2.5 million of inventory through 2017.

9. Segment and Enterprise-Wide Disclosures

The FASB establishes standards for reporting information regarding operating segments in financial statements. Operating segments are identified as components of an enterprise about which separate, discrete financial information is evaluated by the chief operating decision-maker in making decisions on how to allocate resources and assess performance. We view our operations and manage our business as one operating segment. No discrete operating information is prepared by us except for product sales by product line and by legal entity for local reporting purposes.

 

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Most of our revenues were generated in the United States, Germany, Italy, Japan, Canada, and other European countries, and substantially all of our assets are located in the United States. Net sales to unaffiliated customers by country were as follows:

 

     Three months ended      Nine months ended  
     September 30, 2015      September 30, 2015  
     2015      2014      2015      2014  
     (in thousands)  

United States

   $ 11,171       $ 10,605       $ 33,774       $ 31,221   

Germany

     2,208         1,789         6,900         5,551   

Italy

     579         635         1,991         1,976   

Other countries

     5,067         4,472         15,204         13,668   
  

 

 

    

 

 

    

 

 

    

 

 

 

Net Sales

   $ 19,025       $ 17,501       $ 57,869       $ 52,416   
  

 

 

    

 

 

    

 

 

    

 

 

 

10. Share-based Compensation

Our 2006 Stock Option and Incentive Plan allows for granting of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, unrestricted stock awards, and deferred stock awards to our officers, employees, directors, and consultants.

The components of share-based compensation expense were as follows:

 

     Three months
ended
     Nine months
ended
 
     September 30,      September 30,  
     2015      2014      2015      2014  
     (in thousands)  

Stock option awards

   $ 327       $ 294       $ 752       $ 687   

Restricted stock units

     152         145         336         295   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total share-based compensation

   $ 479       $ 439       $ 1,088       $ 982   
  

 

 

    

 

 

    

 

 

    

 

 

 

We have computed the weighted average fair values of employee stock options for option grants issued during the nine months ended September 30, 2015 and 2014 using the Black-Scholes option model with the following assumptions:

 

     2015     2014  

Dividend yield

     1.4     1.8

Volatility

     28.6     45.2

Risk-free interest rate

     1.8     2.0

Weighted average expected option term (in years)

     5.6        5.5   

Weighted average fair value per share of options granted

   $ 2.80      $ 2.81   

The weighted-average fair value per share of restricted stock unit grants issued for the nine months ended September 30, 2015 was $11.32. The weighted-average fair value per share of restricted stock unit grants issued for the nine months ended September 30, 2014 was $7.87.

We issued approximately 721,000 and 175,000 shares of common stock following the exercise or vesting of underlying stock options or restricted stock units in the nine months ended September 30, 2015 and 2014, respectively.

 

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11. Net Income per Share

The computation of basic and diluted net income per share was as follows:

 

     Three months ended
September 30,
     Nine months ended
September 30,
 
     2015      2014      2015      2014  
     (in thousands, except per share data)  

Basic:

           

Net income available for common stockholders

   $ 2,092       $ 934       $ 5,228       $ 1,999   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted average shares outstanding

     17,865         17,348         17,625         16,358   
  

 

 

    

 

 

    

 

 

    

 

 

 

Basic earnings per share

   $ 0.12       $ 0.05       $ 0.30       $ 0.12   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted:

           

Net income available for common stockholders

   $ 2,092       $ 934       $ 5,228       $ 1,999   
  

 

 

    

 

 

    

 

 

    

 

 

 

Weighted-average shares outstanding

     17,865         17,348         17,625         16,358   

Common stock equivalents, if diluted

     632         361         510         414   
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares used in computing diluted earnings per common share

     18,497         17,709         18,136         16,772   
  

 

 

    

 

 

    

 

 

    

 

 

 

Diluted earnings per share

   $ 0.11       $ 0.05       $ 0.29       $ 0.12   
  

 

 

    

 

 

    

 

 

    

 

 

 

Shares excluded in computing diluted earnings per share as those shares would be anti-dilutive

     40         356         81         228   
  

 

 

    

 

 

    

 

 

    

 

 

 

12. Stockholders’ Equity

Share Offering

On June 4, 2014, we issued 1,644,500 shares of our common stock, $0.01 par value per share, at a price to the public of $7.00 per share less underwriting discounts. The net proceeds, after deducting the underwriting discounts and other estimated offering expenses, were approximately $10.5 million. We deployed the net proceeds from the offering on acquisitions consummated in 2014 and used the remainder for general corporate purposes, including continued development of our products, working capital and capital expenditures, payments under our quarterly dividend program, and payments related to acquisitions.

 

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Dividends

In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis. The dividend activity for the periods presented is as follows:

 

Record Date

   Payment Date      Per
Share
Amount
     Dividend
Payment
 
                   (in thousands)  

Fiscal Year 2015

        

March 20, 2015

     April 3, 2015       $ 0.040       $ 700   

May 22, 2015

     June 5, 2015       $ 0.040       $ 705   

August 20, 2015

     September 3, 2015       $ 0.040       $ 715   

Fiscal Year 2014

        

March 20, 2014

     April 3, 2014       $ 0.035       $ 546   

May 22, 2014

     June 5, 2014       $ 0.035       $ 547   

August 21, 2014

     September 4, 2014       $ 0.035       $ 607   

November 20, 2014

     December 4, 2014       $ 0.035       $ 608   

On October 22, 2015 our Board of Directors approved a quarterly cash dividend on our common stock of $0.04 per share payable on December 4, 2015 to stockholders of record at the close of business on November 20, 2015, which will total approximately $0.7 million.

13. Supplemental Cash Flow Information

 

     Nine months ended
September 30,
 
     2015      2014  
     (in thousands)  

Cash paid for income taxes, net

   $ 3,341       $ 1,276   

Common stock repurchased for RSU tax withholdings

   $ 266       $ 211   

14. Fair Value Measurements

The fair value accounting guidance requires that assets and liabilities carried at fair value be classified and disclosed in one of the following three categories:

 

    Level 1 — Quoted prices in active markets for identical assets or liabilities.

 

    Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

 

    Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of September 30, 2015, we had cash equivalents in a money market fund that was valued using Level 1 inputs (quoted market prices for identical assets) at a fair value of $12.0 million.

We had no Level 2 assets being measured at fair value on a recurring basis as of September 30, 2015.

As discussed in Note 4, we had one remaining acquisition-related contingent liability which is remeasured each reporting period using Level 3 techniques based on an assessment of the probability that we will be required to make such future payment. There were no changes in estimated liability associated with this milestone as we were not required to pay the second sales related milestone.

 

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15. Accumulated Other Comprehensive Loss

Changes to our accumulated other comprehensive loss consisted of foreign currency translation for the nine months ended September 30, 2015 and 2014, respectively.

 

     Nine months ended
September 30,
 
     2015      2014  

Beginning balance

   $ (2,365    $ (253

Other comprehensive loss before reclassifications

     (1,668      (1,375
  

 

 

    

 

 

 

Ending Balance

   $ (4,033    $ (1,628
  

 

 

    

 

 

 

 

 

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

This Quarterly Report on Form 10-Q contains forward-looking statements (within the meaning of the federal securities law) that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this report regarding our strategy, future operations, future financial position, future net sales, projected costs, projected expenses, prospects and plans and objectives of management are forward-looking statements. The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would,” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. We have based these forward-looking statements on our current expectations and projections about future events. Although we believe that the expectations underlying any of our forward-looking statements are reasonable, these expectations may prove to be incorrect, and all of these statements are subject to risks and uncertainties. Should one or more of these risks and uncertainties materialize, or should underlying assumptions, projections, or expectations prove incorrect, our actual results, performance, or financial condition may vary materially and adversely from those anticipated, estimated, or expected. These risks and uncertainties include, but are not limited to: the risk that the Company may not realize the anticipated benefits of its strategic activities; risks related to the integration of acquisition targets; the risk that assumptions about the market for the Company’s products and the productivity of the Company’s direct sales force and distributors may not be correct; risks related to product demand and market acceptance of the Company’s products and pricing; the risk that the introduction of the HYDRO valvulotome will not be well received in the marketplace; risks related to attracting, training and retaining sales representatives and other employees in new markets such as Finland and New Zealand; adverse or fluctuating conditions in the general domestic and global economic markets; and the risk that the Company is not successful in transitioning to a direct-selling model in new territories.

Forward-looking statements reflect management’s analysis as of the date of this quarterly report. Further information on potential risk factors that could affect our business and financial results is detailed in Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in our other filings with the Securities and Exchange Commission, including under the section headed “Risk Factors” in our most recent Annual Report on Form 10-K. Given these risks, uncertainties and other factors, you should not place undue reliance on these forward-looking statements. The following discussion and analysis should be read in conjunction with our consolidated financial statements and the related notes included in this report and our other SEC filings, including our audited consolidated financial statements and the related notes contained in our Annual Report on Form 10-K for the year ended December 31, 2014, as filed with the SEC on March 18, 2015. We do not assume any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Unless the context requires otherwise, references to “LeMaitre Vascular,” “we,” “our,” and “us” in this Quarterly Report on Form 10-Q refer to LeMaitre Vascular, Inc. and its subsidiaries.

LeMaitre, AlboSure, Omniflow, and XenoSure are registered trademarks of LeMaitre Vascular or one of its subsidiaries. This Quarterly Report on Form 10-Q also includes the registered and unregistered trademarks of other persons, which are the property of their respective owners.

Overview

We are a medical device company that develops, manufactures, and markets medical devices and implants for the treatment of peripheral vascular disease. Our principal product offerings are sold throughout the world, primarily in North America, Europe and, to a lesser extent, Asia and the Pacific Rim. We estimate that the annual worldwide market for all peripheral vascular devices approximates $4 billion, within which our core product lines address roughly $750 million. We have grown our business by using a three-pronged strategy: competing for sales of niche products, expanding our worldwide direct sales force, and acquiring and developing complementary vascular devices. We have used acquisitions as a primary means of further accessing the larger peripheral vascular device market, and we expect to continue to pursue this strategy in the future. Additionally, we have increased our efforts to expand our vascular device offerings through new product development. We currently manufacture most of our product lines in our Burlington, Massachusetts headquarters.

 

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Our products are used by vascular surgeons who treat peripheral vascular disease through both open surgical methods and endovascular techniques. In contrast to interventional cardiologists and interventional radiologists, neither of whom are certified to perform open surgical procedures, vascular surgeons can perform both open surgical and minimally invasive endovascular procedures, and are therefore uniquely positioned to provide a wider range of treatment options to patients.

Our principal product lines include the following: valvulotomes, balloon catheters, carotid shunts, biologic vascular patches, radiopaque marking tape, anastomotic clips, remote endarterectomy devices, laparoscopic cholecystectomy devices, vascular grafts, biosynthetic vascular grafts, angioscopes, and powered phlebectomy devices.

To assist us in evaluating our business strategies, we regularly monitor long-term technology trends in the peripheral vascular device market. Additionally, we consider the information obtained from discussions with the medical community in connection with the demand for our products, including potential new product launches. We also use this information to help determine our competitive position in the peripheral vascular device market and our manufacturing capacity requirements.

Our business opportunities include the following:

 

    the long-term growth of our sales force in North America, Europe, Asia and the Pacific Rim, sometimes in connection with terminations of certain distributor relationships in order to expand our sales presence in new countries;

 

    the addition of complementary products through acquisitions;

 

    the updating of existing products and introduction of new products through research and development;

 

    the introduction of our products in new territories upon receipt of regulatory approvals in these territories; and

 

    the consolidation of product manufacturing into our Burlington, Massachusetts corporate headquarters facility.

We sell our products primarily through a direct sales force. As of September 30, 2015, our sales force was comprised of 82 sales representatives in North America, Europe, Japan, Australia, and New Zealand. We also sell our products in other countries through distributors. Our worldwide headquarters is located in Burlington, Massachusetts. Our international operations are headquartered in Sulzbach, Germany. We also have sales offices located in Tokyo, Japan; Mississauga, Canada; Madrid, Spain; Milan, Italy; Shanghai, China; and North Melbourne, Australia. In the nine months ended September 30, 2015, approximately 93% of our net sales were generated in territories in which we employ direct sales representatives.

We have experienced success in niche product segments, for example the market segments for biologic patches and valvulotome devices. In the biologic patch market segment, we believe that we have been able to increase segment share and increase selling prices. In the valvulotome market segment, we believe that we have been able to increase selling prices without significantly compromising market segment share. There can be no assurance that we will not meet resistance to increased selling prices in the future, particularly with respect to the recent introduction of our HYDRO valvulotome. In contrast, we have experienced less success in highly competitive product segments such as polyester and ePTFE grafts, where we face stronger competition from larger companies with greater resources. We have also experienced less success in segments such as radiopaque tape, where we face recently introduced competitive products. While we believe that these challenging market dynamics can be mitigated by our strong relationships with our vascular surgeon customers, there can be no assurance that we will be successful in highly competitive market segments or market segments or geographies where there is pricing sensitivity.

 

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In recent years we have also experienced comparatively greater success in geographic markets outside of the United States, including Europe and other non-traditional markets for our devices such as China and Saudi Arabia. Sales to these geographies generally include comparatively lower average selling prices, and to the extent that we continue to be successful in these markets which carry a lower margin, we will likely experience downward pressure on our gross margin.

Because we believe that direct-to-hospital sales engender closer customer relationships, and allow for higher selling prices and gross margins, we periodically enter into transactions with our distributors to transition their sales of our medical devices to our direct sales organization:

 

    In 2014, we entered into definitive agreements with eight former Xenotis distributors in Europe in order to terminate their distribution of our Omniflow II biosynthetic vascular grafts and begin selling direct to hospitals in those geographies. The agreements required us to pay approximately $1.3 million in exchange for the purchase of customer lists and inventory.

 

    In 2015, we entered into definitive agreements with seven UreSil, LLC (UreSil) distributors in Europe in order to terminate their distribution of our newly acquired valvulotome and begin selling direct to hospitals in those geographies. The agreements required us to pay approximately $0.2 million in exchange for the purchase of customer lists and inventory.

 

    In August 2015, we entered into a definitive agreement with Grex Medical Oy (Grex) our distributor in Finland in order to terminate their distribution of our products and begin selling direct to hospitals in Finland as of January 1, 2016. The agreement required us to pay approximately $0.2 million in exchange for the purchase of customer lists and a non-compete agreement.

Our strategy for growing our business includes the acquisition of complementary product lines and companies and occasionally the discontinuance or divestiture of products or activities that are no longer complementary:

 

    In August 2014, we acquired all of the capital stock of Xenotis Pty Ltd (Xenotis) for $6.7 million plus the assumption of $1.1 million of debt. Xenotis is the parent company of Bio Nova International, the manufacturer and marketer of the Omniflow II biosynthetic vascular graft for lower extremity bypass and AV access.

 

    In September 2014, we acquired substantially all of the assets related to the angioscope product line from Applied Medical Resource Corporation (Applied Medical) for $0.4 million.

 

    In September 2014, we terminated our non-occlusive modeling catheter product line. In July 2015, we entered into an asset sales agreement with Merit Medical Ireland Limited to sell our inventory, intellectual property, and customer lists associated with the non-occlusive modeling catheter product line for $0.4 million.

 

    In May 2015, we acquired the production and distribution rights of UreSil’s Tru-Incise valvulotome for sales outside the United States for $1.4 million.

 

    As of December 31, 2015 we will terminate our InvisiGrip vein stripper product line, and we wrote down $0.1 million of related inventory in the third quarter of 2015.

In addition to relying upon acquisitions to grow our business, we also rely on our product development efforts to bring differentiated technology and next-generation products to market. These efforts have led to the following recent product developments:

 

    In May 2013, we launched the 1.5mm Expandable LeMaitre Valvulotome.

 

    In June 2013, we launched the AlboSure Vascular Patch.

 

    In June 2014, we launched the 1.5mm HYDRO LeMaitre Valvulotome.

 

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In addition to our sales growth strategies, we have also executed several operational initiatives designed to consolidate and streamline manufacturing within our Burlington, Massachusetts facilities. We expect that these plant consolidations will result in improved control over our production capacity as well as reduced costs over the long-term. Our most recent manufacturing transitions included:

 

    In January 2014, we initiated a project to transfer the manufacturing of the Clinical Instruments devices to our facility in Burlington. We closed the Clinical Instruments facility in March and completed the manufacturing transfer during the second quarter of 2014.

 

    In March 2015, we initiated the transfer of the manufacturing of our newly acquired angioscope product line to our facility in Burlington. We have been purchasing the devices from Applied Medical since the acquisition. We expect the manufacturing transfer to be complete by December 2015.

 

    In May 2015, we initiated plans to establish a production line for our newly acquired Tru-Incise valvulotome product line in our facility in Burlington. We have been purchasing the devices from UreSil since the acquisition. We expect the establishment of the production line to be complete by March 2016.

We currently expect to maintain the manufacturing operations of the recently acquired North Melbourne, Australia facility for the foreseeable future.

Our execution of these business opportunities may affect the comparability of our financial results from period to period and may cause substantial fluctuations from period to period, as we incur related restructuring and other non-recurring charges, as well as longer term impacts to revenues and operating expenditures. For example, in 2014, we incurred $0.5 million of restructuring charges related to reductions in force and our Clinical Instruments facility closure and relocation to Burlington, Massachusetts.

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies, primarily the Euro, affect our financial results. For the nine months ended September 30, 2015, approximately 42% of our sales were from outside the United States. We expect that foreign currencies will continue to represent a similarly significant percentage of our sales in the future. Selling, marketing, and administrative costs related to these sales are largely denominated in the same respective currency, thereby partially mitigating our transaction risk exposure. However, most of our foreign sales are denominated in local currency, and if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases we will receive less in U.S. dollars than we did before the rate increase went into effect. For the nine months ended September 30, 2015, the negative effects of foreign exchange reduced sales by $4.5 million. As of October 27, 2015, we estimate that the strong U.S. dollar could decrease our 2015 revenues by approximately $5.1 million, reduce gross margin by 1.6%, and reduce operating income by approximately $2.4 million as compared to the exchange rates for the year ended December 31, 2014. However, the actual impact of fluctuations in exchange rates in 2015 may vary materially and adversely from these estimates.

Net Sales and Expense Components

The following is a description of the primary components of our net sales and expenses:

Net sales. We derive our net sales from the sale of our products, less discounts and returns. Net sales include the shipping and handling fees paid for by our customers. Most of our sales are generated by our direct sales force and are shipped and billed to hospitals or clinics throughout the world. In countries where we do not have a direct sales force, sales are primarily generated by shipments to distributors who, in turn, sell to hospitals and clinics. In those cases where our products are held on consignment at a hospital or clinic, we generate sales at the time the product is used in surgery rather than at shipment.

Cost of sales. We manufacture nearly all of the products that we sell. Our cost of sales consists primarily of manufacturing personnel, raw materials and components, depreciation of property and equipment, and other allocated manufacturing overhead, as well as freight expense we pay to ship products to customers.

Sales and marketing. Our sales and marketing expense consists primarily of salaries, commissions, stock based compensation, travel and entertainment, attendance at medical society meetings, training programs, advertising and product promotions, direct mail, and other marketing costs.

 

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General and administrative. General and administrative expense consists primarily of executive, finance and human resource expense, stock based compensation, legal and accounting fees, information technology expense, intangible amortization expense, and insurance expense.

Research and development. Research and development expense includes costs associated with the design, development, testing, enhancement, and regulatory approval of our products, principally salaries, laboratory testing, and supply costs. It also includes costs associated with design and execution of clinical studies, regulatory submissions and costs to register, maintain, and defend our intellectual property, and royalty payments associated with licensed and acquired intellectual property.

Restructuring. Restructuring expense includes costs directly associated with distribution agreement termination expenses, severance and retention costs for terminated employees, factory relocation costs, and other expenses associated with restructuring our operations.

Other income (expense). Other income (expense) primarily includes interest income and expense, foreign currency gains (losses), and other miscellaneous gains (losses).

Income tax expense. We are subject to federal and state income taxes for earnings generated in the United States, which include operating losses in certain foreign jurisdictions for certain years depending on tax elections made, and foreign taxes on earnings of our wholly-owned Canadian, German, Italian, and Chinese subsidiaries. Our consolidated tax expense is affected by the mix of our taxable income (loss) in the United States and foreign subsidiaries, permanent items, discrete items, unrecognized tax benefits, and amortization of goodwill for U.S tax reporting purposes.

Results of Operations

Comparison of the three and nine months ended September 30, 2015 to the three and nine months ended September 30, 2014.

The following tables set forth, for the periods indicated, our results of operations, net sales by geography, and the change between the specified periods expressed as a percentage increase or decrease:

 

     Three months ended
September 30,
    Nine months ended
September 30,
 
(unaudited)    2015      2014      Percent
change
    2015      2014      Percent
change
 
     ($ in thousands)  

Net sales

   $ 19,025       $ 17,501         9   $ 57,869       $ 52,416         10

Net sales by geography:

                

Americas

   $ 11,916       $ 11,102         7   $ 35,870       $ 32,566         10

International

     7,109         6,399         11     21,999         19,850         11
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 19,025       $ 17,501         9   $ 57,869       $ 52,416         10
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Net sales. Net sales increased 9% to $19.0 million for the three months ended September 30, 2015, compared to $17.5 million for the three months ended September 30, 2014. Sales increases for the three months ended September 30, 2015 were primarily driven by increased sales of our biologic vascular patches of $0.9 million, biosynthetic vascular grafts of $0.8 million and valvulotomes of $0.2 million, and were partially offset by decreased sales of shunts of $0.3 million and catheters of $0.2 million, and the negative effects of changes in foreign currency exchange rates of $1.3 million. The recent introduction of the higher priced HYDRO LeMaitre Valvulotome in 2014 in the United States and in 2015 outside the United States, may adversely impact unit sales going forward.

 

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Net sales increased 10% to $57.9 million for the nine months ended September 30, 2015, compared to $52.4 million for the nine months ended September 30, 2014. Sales increases for the nine months ended September 30, 2015 were primarily driven by increased sales of our biosynthetic vascular grafts of $2.8 million, biologic vascular patches of $2.1 million, and valvulotomes of $1.3 million (driven by the HYDRO LeMaitre Valvulotome conversion), and were partially offset by decreased sales of embolectomey catheters of $0.6 million, and cholangiogram catheters of $0.3 million, and the negative effects of changes in foreign currency exchange rates of $4.5 million.

Direct-to-hospital net sales were 93% for the nine months ended September 30, 2015, versus 92% for the nine months ended September 30, 2014.

Net sales by geography. Net sales in the Americas increased $0.8 million for the three months ended September 30, 2015. The increase was primarily driven by biologic vascular patches, vessel closure systems and radiopaque tape, and was partially offset by decreased sales of shunts and occlusion catheters. International net sales increased $0.7 million for the three months ended September 30, 2015. The increase was primarily driven by sales of our newly acquired biosynthetic vascular graft, increased sales in biologic vascular patches and valvulotomes, and was partially offset by decreased sales of vessel closure systems and shunts.

Net sales in the Americas increased $3.3 million for the nine months ended September 30, 2015. The increase was primarily driven by biologic vascular patches, valvulotomes, and radiopaque tape, and was partially offset by decreased sales of cholangiogram catheters, occlusion catheters, and remote endarterectomy devices. International net sales increased $2.1 million for the nine months ended September 30, 2015. The increase was primarily driven by sales of our newly acquired biosynthetic vascular graft, biologic vascular patches and valvulotomes, and was partially offset by decreased sales of radiopaque tape.

 

     Three months ended September 30,     Nine months ended September 30,  
(unaudited)    2015     2014     $ Change      Percent
change
    2015     2014     $ Change      Percent
change
 
     ($ in thousands)  

Gross profit

   $ 13,516      $ 12,003      $ 1,513         13   $ 39,763      $ 35,603      $ 4,160         12

Gross margin

     71.0     68.6     *         2.4     68.7     67.9     *         0.8
* Not applicable

Gross Profit. Gross profit increased $1.5 million to $13.5 million for the three months ended September 30, 2015, while gross margin increased 2.4% to 71.0% in the period. The gross margin increase was largely driven by improved manufacturing efficiencies related to biologic vascular patches and prosthetic grafts, and average selling price increases, which were partially offset by the negative impact of changes in foreign currency exchange rates on our international sales, unfavorable geographic mix, and the write-off of inventory related to the discontinuation of our InvisiGrip vein stripper. The gross profit increase was a result of higher sales and a higher gross margin.

Gross profit increased $4.2 million to $39.8 million for the nine months ended September 30, 2015, while gross margin increased to 68.7% in the period. The gross margin was favorably impacted by the completion of the biologic vascular patch manufacturing transition in the first half of 2014 resulting in reduced manufacturing costs in the current year, other manufacturing efficiencies, and by higher average selling prices across nearly all product lines. These increases were partially offset by the negative impact of changes in foreign currency exchange rates on our international sales and unfavorable geographic mix. The gross profit increase was a result of higher sales and a higher gross margin.

 

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     Three months ended September 30,     Nine months ended September 30,  
(unaudited)    2015     2014      $ Change     Percent
change
    2015     2014      $ Change     Percent
change
 
     ($ in thousands)  

Sales and marketing

   $ 5,489      $ 5,091       $ 398        8   $ 16,866      $ 16,857       $ 9        0

General and administrative

     3,455        3,765         (310     (8 %)      10,375        10,376         (1     0

Research and development

     1,421        1,109         312        28     3,904        3,590         314        9

Medical device excise tax

     190        178         12        7     554        518         36        7

Restructuring charges

     —          8         (8     *        —          500         (500     *   

Impairment charges

     —          —           —          *        —          161         (161     *   

Gain on divestiture

     (360     —           (360     *        (360     —           (360     *   
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

Total

   $ 10,195      $ 10,151       $ 44        0   $ 31,339      $ 32,002       $ (663     (2 %) 
  

 

 

   

 

 

    

 

 

   

 

 

   

 

 

   

 

 

    

 

 

   

 

 

 

 

     Three months ended September 30,     Nine months ended September 30,  
     2015 %
of Net Sales
    2014 %
of Net Sales
    Change     2015 %
of Net Sales
    2014 %
of Net Sales
    Change  

Sales and marketing

     29     29     0     29     32     (3 %) 

General and administrative

     18     22     4     18     20     (2 %) 

Research and development

     7     6     1     7     7     0

Medical device excise tax

     1     1     0     1     1     0

Restructuring charges

     0     0     0     0     1     (1 %) 

Impairment charges

     0     0     0     0     0     0

Gain on divestiture

     (2 %)      0     (2 %)      (1 %)      0     (1 %) 
* Not a meaningful percentage relationship.

Sales and marketing. For the three months ended September 30, 2015, sales and marketing expense increased $0.4 million to $5.5 million. The increase was driven primarily by increased sales compensation, commission, recruiting and travel and entertainment expenses, which were partially offset by changes in foreign currency exchange rates of $0.4 million.

For the nine months ended September 30, 2015, sales and marketing expenses were flat at $16.9 million. Changes in foreign currency exchange rates decreased expenses by $1.4 million and were offset by increased sales meetings and recruiting costs. As a percentage of net sales, sales and marketing expense were 29% in the nine months ended September 30, 2015. We plan to increase the size of our sales force in the fourth quarter of 2015, and we expect that selling and marketing expenses will increase commensurately.

General and administrative. For the three months ended September 30, 2015, general and administrative expenses decreased $0.3 million to $3.5 million. The decrease was driven by higher acquisition related costs in the prior year related to the Xenotis and AngioScope acquisitions, as well as the effects of changes in foreign currency exchange rates of $0.2 million.

For the nine months ended September 30, 2015, general and administrative expense were flat at $10.4 million. General and administrative expense were driven by higher compensation and recruiting costs, which were offset by lower acquisition costs and changes in foreign currency exchange rates of $0.5 million. Contingent consideration expense related to the InaVein acquisition of $0.2 million was incurred in 2014. As a percentage of net sales, general and administrative expense was 18% in the nine months ended September 30, 2015. We expect general and administrative expenses to increase in 2015 in part due to an increase in personnel in our China and Australia subsidiaries.

Research and development. For the three months ended September 30, 2015, research and development expense increased $0.3 million to $1.4 million. Product development expenses increased $0.1 million primarily driven by product testing costs, process engineering costs increased $0.1 million largely due to the manufacturing transfer of the AngioScope and Tru-Incise product lines to our Burlington facility, and clinical and regulatory expenses were flat. The effects of changes in foreign currency exchange rates were minimal.

For the nine months ended September 30, 2015, research and development expenses increased $0.3 million to $3.9 million. Product development expenses increased $0.2 million primarily driven by product testing costs, process engineering increased $0.2 million largely due to the manufacturing transfer of the AngioScope and Tru-

 

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Incise product lines to our Burlington facility, and clinical and regulatory expenses decreased $0.1 million primarily due to costs related to regulatory submissions for new products in geographies such as China and Australia completed in 2014. The effects of changes in foreign currency exchange rates were minimal.

Restructuring. In February 2014, we committed to a plan intended to improve operational efficiencies, which included a reduction in force of approximately 10% of our workforce and other cost-cutting measures, including the transfer of our recently acquired Clinical Instruments manufacturing to our Burlington headquarters and corresponding closure of our Southbridge manufacturing facility. As a result, we recorded approximately $0.4 million of severance related restructuring expense for the three months ended March 31, 2014. In April 2014, we committed to an additional reduction in force of approximately seven employees. As a result, we recorded approximately $0.1 million of severance related restructuring expense for the three months ended June 30, 2014. We did not incur restructuring charges during the nine months ended September 30, 2015.

Impairment charges. During the nine months ended September 30, 2014, we recognized an intangible asset impairment charge of $0.2 million upon the terminaton of our non-occlusive modeling catheter product line. We did not incur impairment charges during the nine months ended September 30, 2015.

Gain on Divestiture. In July 2015, we entered into an asset sales agreement with Merit Medical Ireland Limited to sell our inventory, intellectual property, and customer lists associated with our non-occlusive modeling catheter product line for $0.4 million which was recognized as a gain on divestiture in the three months ended September 30, 2015.

Medical device excise tax. The medical device excise tax was relatively flat for the three months and nine months ended September 30, 2015 and 2014, respectively.

Income tax expense. We recorded a provision for taxes of $1.0 million on pre-tax income of $3.1 million for the three months ended September 30, 2015, compared to $1.0 million on pre-tax income of $1.9 million for the three months ended September 30, 2014. We recorded a provision for taxes of $3.1 million on pre-tax income of $8.3 million for the nine months ended September 30, 2015, compared to $1.6 million on pre-tax income of $3.6 million for the nine months ended September 30, 2014. Our 2015 provision was based on the estimated annual effective tax rate of 36.3%, comprised of estimated federal and state income taxes of approximately $3.8 million, as well as foreign income taxes of $0.3 million. Our income tax expense for the current period varies from the statutory rate amounts mainly due to certain permanent items, offset by lower statutory rates from our foreign entities and a discrete item for stock option exercises. Our 2014 provision was based on the estimated annual effective tax rate of 38.7%, comprised of estimated federal and state income taxes of approximately $2.4 million, as well as foreign income taxes of $0.3 million. Our 2014 income tax expense varied from the statutory rate amounts mainly due to certain permanent items, offset by lower statutory rates from our foreign entities, and discrete items related to certain foreign branch losses previously not deductible and the release of a valuation allowance on certain foreign loss carryforwards. We monitor the mix of profitability by tax jurisdiction and adjust our annual expected rate on a quarterly basis as needed. While it is often difficult to predict the final outcome or timing of the resolution for any particular tax matter, we believe that our tax reserves reflect the probable outcome of known contingencies.

We have assessed the need for a valuation allowance against our deferred tax assets and concluded that as of September 30, 2015, we carried a valuation allowance against $3.2 million of deferred tax assets, principally foreign net operating loss and capital loss carry-forwards and state research and development credit carry-forwards, which based on the available evidence, we believe it is more likely than not that such assets will not be realized.

Our effective tax rate for 2015 assumes that the Federal research and development tax credit will not be reinstated for 2015. If legislation is enacted to reinstate the Federal research and development tax credit for 2015, then we expect our effective tax rate will be similar to our effective tax rate in 2014.

Liquidity and Capital Resources

At September 30, 2015, our cash and cash equivalents were $23.6 million as compared to $18.7 million at December 31, 2014. Our cash and cash equivalents are highly liquid investments with maturities of 90 days or less at the date of purchase, consist of money market funds, and are stated at cost, which approximates fair value. All of our cash held outside of the United States is available for corporate use.

 

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Operating and Capital Expenditure Requirements

We require cash to pay our operating expenses, make capital expenditures, and pay our long-term liabilities. Since our inception, we have funded our operations through public offerings and private placements of equity securities, short-term borrowings, and funds generated from our operations.

We recognized income from operations of $8.4 million for the nine months ended September 30, 2015. For the year ended December 31, 2014, we recognized income from operations of $6.3 million. We expect to fund any increased costs and expenditures from our existing cash and cash equivalents, though our future capital requirements depend on numerous factors. These factors include, but are not limited to, the following:

 

    the revenues generated by sales of our products;

 

    payments associated with potential future quarterly cash dividends to our common stockholders;

 

    future acquisition related payments;

 

    payments associated with U.S income and other taxes, such as the medical device tax;

 

    the costs associated with expanding our manufacturing, marketing, sales, and distribution efforts;

 

    the costs associated with our initiatives to sell direct-to-hospital in new countries;

 

    the costs of obtaining and maintaining FDA and other regulatory clearances of our existing and future products; and

 

    the number, timing, and nature of acquisitions and other strategic transactions.

Our cash balances may decrease as we continue to use cash to fund our operations, make acquisitions, make payments under our quarterly dividend program, and make deferred payments related to prior acquisitions. We believe that our cash, cash equivalents, investments and the interest we earn on these balances will be sufficient to meet our anticipated cash requirements for at least the next twelve months. If these sources of cash are insufficient to satisfy our liquidity requirements beyond the next twelve months, we may seek to sell additional equity or debt securities or borrow funds from, or establish a revolving credit facility, with a financial institution. The sale of additional equity and debt securities may result in dilution to our stockholders. If we raise additional funds through the issuance of debt securities, such securities could have rights senior to those of our common stock and could contain covenants that would restrict our operations and possibly our ability to pay dividends. We may require additional capital beyond our currently forecasted amounts. Any such required additional capital may not be available on reasonable terms, if at all.

Share Offering

On June 4, 2014, we issued 1,644,500 shares of our common stock, $0.01 par value per share, at a price to the public of $7.00 per share less underwriting discounts. The net proceeds, after deducting the underwriting discounts and other estimated offering expenses, were approximately $10.5 million. We deployed the net proceeds from the offering on acquisitions consummated in 2014 and used the remainder for general corporate purposes, including continued development of our products, working capital and capital expenditures, payments under our quarterly dividend program, and payments related to acquisitions.

 

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Dividends

In February 2011, our Board of Directors approved a policy for the payment of quarterly cash dividends on our common stock. Future declarations of quarterly dividends and the establishment of future record and payment dates are subject to approval by our Board of Directors on a quarterly basis. The dividend activity for the periods presented is as follows:

 

Record Date

   Payment Date      Per Share
Amount
     Dividend
Payment
 
                   (in thousands)  

Fiscal Year 2015

        

March 20, 2015

     April 3, 2015       $ 0.040       $ 700   

May 22, 2015

     June 5, 2015       $ 0.040       $ 705   

August 20, 2015

     September 3, 2015       $ 0.040       $ 715   

Fiscal Year 2014

        

March 20, 2014

     April 3, 2014       $ 0.035       $ 546   

May 22, 2014

     June 5, 2014       $ 0.035       $ 547   

August 21, 2014

     September 4, 2014       $ 0.035       $ 607   

November 20, 2014

     December 4, 2014       $ 0.035       $ 608   

On October 22, 2015 our Board of Directors approved a quarterly cash dividend on our common stock of $0.04 per share payable on December 4, 2015 to stockholders of record at the close of business on November 20, 2015, which will total approximately $0.7 million.

Cash Flows

 

     Nine months ended September 30,  
     (in thousands)  
     2015      2014      Net
Change
 

Cash and cash equivalents

   $ 23,629       $ 18,354       $ 5,275   

Cash flows provided by (used in):

        

Operating activities

   $ 7,513       $ 2,830       $ 4,683   

Investing activities

     (2,615      (6,360      3,745   

Financing activities

     232         7,452         (7,220

Net cash provided by operating activities. Net cash provided by operating activities was $7.5 million for the nine months ended September 30, 2015, and consisted of $5.2 million net income, adjusted for non-cash items of $4.2 million (including depreciation and amortization of $2.5 million, stock-based compensation of $1.1 million, and provision for inventory write-offs of $0.5 million) and was offset by changes in working capital of $1.7 million. The net cash used by changes in working capital was driven by increases in accounts receivable of $1.1 million and prepaid expenses and other assets of $0.8 million, and was partially offset by increases in accounts payable and other liabilities of $0.2 million.

Net cash provided by operating activities was $2.8 million for the nine months ended September 30, 2014, and consisted of a $2.0 million net income, adjusted for non-cash items of $4.2 million (including depreciation and amortization of $2.4 million, stock-based compensation of $1.0 million, provision for inventory write-offs of $0.5 million, impairment charges of $0.2 million, and increases in accrued contingent consideration of $0.1 million) and was offset by changes in working capital of $3.4 million. The net cash used by changes in working capital was driven by increases in inventory of $2.5 million, primarily related to powered phlebectomy devices and biologic vascular patches and accounts receivable of $0.2 million, and decreases in accounts payable and other liabilities of $0.3 million.

Net cash used in investing activities. Net cash used in investing activities was $2.6 million for the nine months ended September 30, 2015. This use of cash was driven by the Tru-Incise acquisition and related distributor buyouts of $1.3 million, and purchases of property and equipment of $1.6 million, partially offset by proceeds from the sale of the UnBalloon modeling catheter assets of $0.4 million.

 

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Net cash used in investing activities was $6.4 million for the nine months ended September 30, 2014. This was driven by acquisition related payments of $5.6 million, primarily to Xenotis and Applied Medical, and the purchase of property and equipment of $0.8 million.

Net cash used in financing activities. Net cash provided by financing activities was $0.2 million for the nine months ended September 30, 2015, driven primarily by proceeds from stock option exercises of $3.7 million, offset by payments of common stock dividends of $2.1 million and deferred payments related to the Xenotis acquisition of $1.1 million.

Net cash provided by financing activities was $7.5 million for the nine months ended September 30, 2014, driven primarily by proceeds from our secondary stock offering of $10.5 million and proceeds from stock option exercises of $0.3 million and partially offset by payments of common stock dividends of $1.7 million, payment of the debt assumed in the Xenotis acquisition of $1.1 million, and deferred acquisition payments of $0.4 million.

Contractual obligations. Our principal contractual obligations consist of operating leases and inventory purchase commitments. The following table summarizes our commitments to settle contractual obligations as of September 30, 2015:

 

Contractual obligations

   Total      Less
than 1
year
     1-3
years
     3-5
years
     More
than 5
years
 
     (in thousands)  

Operating leases

   $ 7,203       $ 1,214       $ 1,677       $ 1,684       $ 2,628   

Purchase commitments for inventory

     2,515         2,422         92         —           —     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total contractual obligations

   $ 9,718       $ 3,636       $ 1,769       $ 1,684       $ 2,628   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

The commitments under our operating leases consist primarily of lease payments for our facilities in North America, Europe, Asia, and Australia. They also include automobile and equipment leases.

The purchase commitments for inventory are intended to be used in operations in the normal course of business and do not represent excess commitments or loss contracts.

Off-Balance Sheet Arrangements

We did not have any off-balance sheet arrangements as of September 30, 2015. We do not currently have, nor have we ever had, any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange traded contracts. As a result, we are not materially exposed to any financing, liquidity, market, or credit risk that could arise if we had engaged in these relationships.

Critical Accounting Policies and Estimates

We have adopted various accounting policies to prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. Our most significant accounting policies are described in note 1 to our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. There have been no material changes in our critical accounting policies during the nine months ended September 30, 2015. The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Our estimates and assumptions, including those related to bad debts, inventories, intangible assets, sales returns and discounts, share-based compensation, and income taxes are reviewed on an ongoing basis and updated as appropriate. Actual results may differ from those estimates.

 

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Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued a new accounting standard that provides for a comprehensive model to use in the accounting for revenue arising from contracts with customers that will replace most existing revenue recognition guidance in GAAP. Under this standard, revenue will be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. This standard will be effective for annual reporting periods beginning after December 15, 2017, allows for either full retrospective or modified retrospective application, and early adoption is not permitted. We are assessing the new standard and which adoption method we will apply. We have not yet determined the impact on our results of operations.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

This item is not applicable to us as a smaller reporting company.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Securities Exchange Act of 1934 is reported, processed, and summarized within the time periods specified in the SEC’s rules and forms. As of September 30, 2015, or the Evaluation Date, our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control

There have been no changes in our internal control over financial reporting for the quarter ended September 30, 2015, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations of Internal Controls

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

 

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Part II. Other Information

Item 1. Legal Proceedings.

In the ordinary course of business, we are from time to time involved in lawsuits, claims, investigations, proceedings, and threats of litigation relating to employment, product liability, commercial arrangements, intellectual property, and other matters. While the outcome of these proceedings and claims cannot be predicted with certainty, there are no matters, as of November  6, 2015, that management believes would have a material adverse effect on our financial position, results of operations or cash flows.

Item 1A. Risk Factors

In addition to the information set forth in this report, you should consider the risks and uncertainties discussed in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014, which could materially affect our business, financial condition, or future results. There have been no substantive changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014, which was filed with the Securities and Exchange Commission on March 18, 2015.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Recent Sales of Unregistered Securities

None.

Issuer Purchases of Equity Securities

 

     Issuer Purchases of Equity Securities  

Period

   Total
Number of
Shares (or
Units)
Purchased (1)
     Average Price
Paid Per
Share (or Unit)
     Total Number of
Shares (or Units)
Purchased as
Part of Publicly
Announced Plans
or Program
     Maximum Number
(or Approximate
Dollar Value) of
Shares (or Units)
that may yet be
Purchased under
the Plans or
Program
 

July 1, 2015 through July 31, 2015

     23,180       $ 11.24         N/A         N/A   

August 1, 2015 through August 31, 2015

     —         $ —           N/A         N/A   

September 1, 2015 through September 30, 2015

     —         $ —           N/A         N/A   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total

     23,180       $ 11.24         N/A         N/A   
  

 

 

    

 

 

    

 

 

    

 

 

 

 

(1) For the three months ended September 30, 2015, we repurchased 23,180 shares of our common stock to satisfy employees’ obligations with respect to minimum statutory withholding taxes in connection with the vesting of restricted stock units.

 

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Item 6. Exhibits

 

          Incorporated by
Reference
    

Exhibit

Number

   Exhibit Description    Form    Date    Number   

Filed

Herewith

  31.1    Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).             X
  31.2    Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).             X
  32.1    Certification by the Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).*             X
  32.2    Certification by the Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).*             X
101.INS    XBRL Instance Document.             X
101.SCH    XBRL Taxonomy Extension Schema Document.             X
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document.             X
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document             X
101.LAB    XBRL Taxonomy Extension Label Linkbase Document.             X
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.             X

 

* The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of LeMaitre Vascular, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 6, 2015.

 

LEMAITRE VASCULAR, INC
/s/ George W. LeMaitre
George W. LeMaitre
Chairman and Chief Executive Officer
/s/ Joseph P. Pellegrino, Jr.
Joseph P. Pellegrino, Jr.
Chief Financial Officer

 

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Table of Contents

EXHIBIT INDEX

 

          Incorporated by
Reference
      

Exhibit

Number

   Exhibit Description    Form    Date    Number   

Filed

Herewith

 
  31.1    Certification of Chief Executive Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).               X   
  31.2    Certification of Chief Financial Officer, as required by Rule 13a-14(a) or Rule 15d-14(a).               X   
  32.1    Certification by the Chief Executive Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).*               X   
  32.2    Certification by the Chief Financial Officer, as required by Rule 13a-14(b) or Rule 15d-14(b) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350).*               X   
101.INS    XBRL Instance Document.               X   
101.SCH    XBRL Taxonomy Extension Schema Document.               X   
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document.               X   
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document               X   
101.LAB    XBRL Taxonomy Extension Label Linkbase Document.               X   
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.               X   

 

* The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany this Quarterly Report on Form 10-Q, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of LeMaitre Vascular, Inc. under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.

 

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