2015 Q4 Form 10-Q Financial Statement

#000119312515366322 Filed on November 04, 2015

View on sec.gov

Income Statement

Concept 2015 Q4 2015 Q3 2014 Q4
Revenue $71.20M $74.12M $76.97M
YoY Change -7.49% -2.06% 7.39%
Cost Of Revenue $37.82M $40.42M $44.21M
YoY Change -14.45% -8.23% -28.45%
Gross Profit $33.38M $33.71M $32.76M
YoY Change 1.89% 6.53% 231.59%
Gross Profit Margin 46.88% 45.47% 42.56%
Selling, General & Admin $17.93M $17.84M $16.32M
YoY Change 9.87% -7.89% 5.7%
% of Gross Profit 53.71% 52.93% 49.82%
Research & Development $3.070M $2.458M $4.720M
YoY Change -34.96% -19.38% -6.16%
% of Gross Profit 9.2% 7.29% 14.41%
Depreciation & Amortization $3.000M $1.900M $3.440M
YoY Change -12.79% -13.64% -0.86%
% of Gross Profit 8.99% 5.64% 10.5%
Operating Expenses $20.99M $20.30M $21.03M
YoY Change -0.19% -9.46% 81.45%
Operating Profit $12.39M $13.41M $11.73M
YoY Change 5.63% 45.41% -786.02%
Interest Expense -$7.860M $7.100M -$10.53M
YoY Change -25.36% -167.62% -1.22%
% of Operating Profit -63.43% 52.95% -89.76%
Other Income/Expense, Net $440.0K -$183.0K $590.0K
YoY Change -25.42% -141.5% 34.09%
Pretax Income $4.970M $6.125M $1.800M
YoY Change 176.11% -763.6% -115.57%
Income Tax $1.060M $739.0K $1.570M
% Of Pretax Income 21.33% 12.07% 87.22%
Net Earnings $3.916M $5.386M $227.0K
YoY Change 1625.11% -721.22% -101.85%
Net Earnings / Revenue 5.5% 7.27% 0.29%
Basic Earnings Per Share $0.13 $0.18
Diluted Earnings Per Share $0.13 $0.18 $8.706K
COMMON SHARES
Basic Shares Outstanding 31.47M shares 30.36M shares
Diluted Shares Outstanding 30.76M shares

Balance Sheet

Concept 2015 Q4 2015 Q3 2014 Q4
SHORT-TERM ASSETS
Cash & Short-Term Investments $28.60M $21.90M $19.70M
YoY Change 45.18% -19.19% 5.91%
Cash & Equivalents $28.60M $21.92M $19.74M
Short-Term Investments
Other Short-Term Assets $3.851M $5.210M $4.374M
YoY Change -11.96% 24.05% 41.1%
Inventory $15.62M $16.58M $15.58M
Prepaid Expenses
Receivables $37.29M $39.72M $41.54M
Other Receivables $1.000M $0.00 $2.000M
Total Short-Term Assets $90.01M $83.44M $81.24M
YoY Change 10.8% -6.67% 2.57%
LONG-TERM ASSETS
Property, Plant & Equipment $95.65M $92.39M $96.01M
YoY Change -0.37% -3.86% -1.73%
Goodwill $15.71M $15.71M $15.71M
YoY Change 0.0%
Intangibles
YoY Change
Long-Term Investments
YoY Change
Other Assets $20.51M $20.12M $20.58M
YoY Change -0.34% -27.63% -36.09%
Total Long-Term Assets $152.4M $152.7M $161.9M
YoY Change -5.89% -10.49% -11.08%
TOTAL ASSETS
Total Short-Term Assets $90.01M $83.44M $81.24M
Total Long-Term Assets $152.4M $152.7M $161.9M
Total Assets $242.4M $236.1M $243.2M
YoY Change -0.32% -9.18% -6.94%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $11.66M $10.70M $15.67M
YoY Change -25.59% -30.52% -13.45%
Accrued Expenses $18.50M $20.00M $24.90M
YoY Change -25.7% -43.02% -2.35%
Deferred Revenue
YoY Change
Short-Term Debt $0.00 $0.00 $8.000M
YoY Change -100.0% -100.0% 0.0%
Long-Term Debt Due $3.650M $3.650M $0.00
YoY Change
Total Short-Term Liabilities $35.52M $34.32M $48.53M
YoY Change -26.8% -42.42% -12.72%
LONG-TERM LIABILITIES
Long-Term Debt $349.9M $350.4M $392.9M
YoY Change -10.95% -12.23% -1.54%
Other Long-Term Liabilities $34.14M $33.52M $33.60M
YoY Change 1.62% -16.21% -20.2%
Total Long-Term Liabilities $384.0M $383.9M $426.5M
YoY Change -9.96% -12.59% -3.32%
TOTAL LIABILITIES
Total Short-Term Liabilities $35.52M $34.32M $48.53M
Total Long-Term Liabilities $384.0M $383.9M $426.5M
Total Liabilities $427.7M $426.3M $482.4M
YoY Change -11.35% -14.54% -2.89%
SHAREHOLDERS EQUITY
Retained Earnings -$359.2M -$363.1M -$344.4M
YoY Change 4.28%
Common Stock $175.9M $175.4M $106.9M
YoY Change 64.54%
Preferred Stock
YoY Change
Treasury Stock (at cost) $106.0K
YoY Change
Treasury Stock Shares 0.000 shares 5.037K shares
Shareholders Equity -$185.3M -$190.1M -$239.3M
YoY Change
Total Liabilities & Shareholders Equity $242.4M $236.1M $243.2M
YoY Change -0.32% -9.18% -6.94%

Cashflow Statement

Concept 2015 Q4 2015 Q3 2014 Q4
OPERATING ACTIVITIES
Net Income $3.916M $5.386M $227.0K
YoY Change 1625.11% -721.22% -101.85%
Depreciation, Depletion And Amortization $3.000M $1.900M $3.440M
YoY Change -12.79% -13.64% -0.86%
Cash From Operating Activities $12.62M $5.420M -$3.880M
YoY Change -425.26% -73.59% 0.26%
INVESTING ACTIVITIES
Capital Expenditures -$4.730M -$2.310M -$2.840M
YoY Change 66.55% 26.92% 118.46%
Acquisitions
YoY Change
Other Investing Activities $0.00 $0.00 $0.00
YoY Change -100.0% -100.0%
Cash From Investing Activities -$4.730M -$2.310M -$2.830M
YoY Change 67.14% 44.38% -1330.43%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net
YoY Change
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities -1.040M -3.020M -360.0K
YoY Change 188.89% -58.8% 80.0%
NET CHANGE
Cash From Operating Activities 12.62M 5.420M -3.880M
Cash From Investing Activities -4.730M -2.310M -2.830M
Cash From Financing Activities -1.040M -3.020M -360.0K
Net Change In Cash 6.850M 90.00K -7.070M
YoY Change -196.89% -99.22% 84.11%
FREE CASH FLOW
Cash From Operating Activities $12.62M $5.420M -$3.880M
Capital Expenditures -$4.730M -$2.310M -$2.840M
Free Cash Flow $17.35M $7.730M -$1.040M
YoY Change -1768.27% -65.4% -59.53%

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<div> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 18pt"> <b>1.&#xA0;Business Overview</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt"> <b>Overview</b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> Holdings, a Delaware corporation, is the parent company of LMI, also a Delaware corporation.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> The Company develops, manufactures, sells and distributes innovative diagnostic medical imaging agents and products that assist clinicians in the diagnosis of cardiovascular and other diseases. The Company&#x2019;s commercial products are used by cardiologists, nuclear physicians, radiologists, internal medicine physicians, technologists and sonographers working in a variety of clinical settings. The Company sells its products to radiopharmacies, hospitals, clinics, group practices, integrated delivery networks, group purchasing organizations and, in certain circumstances, wholesalers. The Company sells its products globally and has operations in the United States, Puerto Rico, Canada and Australia and distribution relationships in Europe, Asia Pacific and Latin America.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> The Company&#x2019;s portfolio of 10 commercial products is diversified across a range of imaging modalities. The Company&#x2019;s imaging agents include contrast agents and medical radiopharmaceuticals (including technetium generators), including the following:</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; MARGIN-TOP: 0pt"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">DEFINITY is the leading ultrasound contrast imaging agent used by cardiologists and sonographers during cardiac ultrasound, or echocardiography, exams based on revenue and usage. DEFINITY is an injectable agent that, in the United States, is indicated for use in patients with suboptimal echocardiograms to assist in the visualization of the left ventricle, the main pumping chamber of the heart. The use of DEFINITY in echocardiography allows physicians to significantly improve their assessment of the function of the left ventricle.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; MARGIN-TOP: 0pt"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">TechneLite is a self-contained system, or generator, of technetium (Tc99m), a radioisotope with a six hour half-life, used by radiopharmacies to prepare various nuclear imaging agents.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; MARGIN-TOP: 0pt"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Xenon Xe 133 Gas, or Xenon, is a radiopharmaceutical gas that is inhaled and used to assess pulmonary function and also cerebral blood flow.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; MARGIN-TOP: 0pt"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Cardiolite is an injectable, technetium-labeled imaging agent, also known by its generic name sestamibi, used with Single Photon Emission Computed Tomography, or SPECT, technology in myocardial perfusion imaging, or MPI, procedures that assess blood flow distribution to the heart.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 6pt; MARGIN-TOP: 0pt"> &#xA0;</p> <table style="FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; BORDER-COLLAPSE: collapse" cellspacing="0" cellpadding="0" width="100%" border="0"> <tr> <td width="5%">&#xA0;</td> <td valign="top" width="2%" align="left">&#x2022;</td> <td valign="top" width="1%">&#xA0;</td> <td valign="top" align="left">Neurolite is an injectable, technetium-labeled imaging agent used with SPECT technology to identify the area within the brain where blood flow has been blocked or reduced due to stroke.</td> </tr> </table> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> In the United States, the Company sells DEFINITY through its sales team that calls on healthcare providers in the echocardiography space, as well as group purchasing organizations and integrated delivery networks. The Company&#x2019;s radiopharmaceutical products are primarily distributed through commercial radiopharmacies owned or controlled by third parties. In Canada, Puerto Rico and Australia, the Company owns seven radiopharmacies and sells its own radiopharmaceuticals, as well as others, directly to end users. In Europe, Asia Pacific and Latin America, the Company utilizes distributor relationships to market, sell and distribute its products.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 2%; MARGIN-TOP: 18pt"> <b><i>Basis of Consolidation and Presentation</i></b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> The financial statements have been prepared in United States dollars, in accordance with accounting principles generally accepted in the United States of America, or U.S.&#xA0;GAAP. The condensed consolidated financial statements include the accounts of Holdings and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.</p> <p style="MARGIN-BOTTOM: 0px; FONT-SIZE: 1px; MARGIN-TOP: 12px"> &#xA0;</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 0pt; TEXT-INDENT: 4%"> In the opinion of the Company&#x2019;s management, the accompanying unaudited condensed consolidated financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the Company&#x2019;s financial statements for interim periods in accordance with U.S.&#xA0;GAAP. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S.&#xA0;GAAP have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, or the SEC. The information included in this quarterly report should be read in conjunction with the Company&#x2019;s consolidated financial statements and the accompanying notes included in the Company&#x2019;s Prospectus dated June&#xA0;24, 2015 and filed with the SEC on June&#xA0;26, 2015, or the Prospectus. The Company&#x2019;s accounting policies are described in the &#x201C;Notes to Consolidated Financial Statements&#x201D; in the Prospectus and updated, as necessary, in this quarterly report. There were no changes to the Company&#x2019;s accounting policies since December&#xA0;31, 2014 except that the Company has adopted a new accounting policy as discussed further below. The year-end condensed consolidated balance sheet data presented for comparative purposes was derived from audited financial statements, but does not include all disclosures required by U.S.&#xA0;GAAP. The results of operations for the three and nine months ended September&#xA0;30, 2015 are not necessarily indicative of the operating results for the full year or for any other subsequent interim period.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 2%; MARGIN-TOP: 18pt"> <b><i>Recent Events</i></b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> On June&#xA0;25, 2015, in conjunction with its initial public offering, or IPO, the Company effected a corporate reorganization, whereby Lantheus MI Intermediate, Inc. (formerly the direct parent of LMI and the direct subsidiary of Holdings) was merged with and into Holdings, or the Merger.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> On June&#xA0;30, 2015, the Company completed an IPO of its common stock at a price to the public of $6.00 per share. The Company&#x2019;s common stock is now traded on the NASDAQ Global Select Market (NASDAQ) under the symbol &#x201C;LNTH&#x201D;. The Company issued and sold 12,256,577 shares of common stock in the IPO, including 1,423,243 shares that were offered and sold pursuant to the underwriters&#x2019; exercise in full of its overallotment option. The IPO resulted in proceeds to the Company of approximately $67.2 million, after deducting $6.4 million in underwriting discounts, commissions and related expenses.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> On June&#xA0;30, 2015, the Company also entered into a $365.0 million senior secured term loan facility, or the Term Facility. The net proceeds of the Term Facility, together with the net proceeds from the IPO and the cash use of $10.9 million were used to repay in full the aggregate principal amount of LMI&#x2019;s $400.0 million 9.750% Senior Notes due 2017, or the Notes, pay related premiums, interest and expenses and pay down the $8.0 million of outstanding borrowings under LMI&#x2019;s $50.0 million revolving credit facility, or the Revolving Facility.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> The Company currently relies on Jubilant HollisterStier, or JHS, as its sole source manufacturer of DEFINITY, Neurolite and evacuation vials for TechneLite. The Company has additional ongoing technology transfer activities at JHS for its Cardiolite product supply, which is currently manufactured by a single manufacturer. In addition, the Company has ongoing technology transfer activities at Pharmalucence for the manufacture and supply of DEFINITY, and the Company believes it will file for U.S. Food and Drug Administration, or FDA, approval to manufacture DEFINITY at Pharmalucence in 2016.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> The Company has historically been dependent on key customers and group purchasing organizations for the majority of the sales of its medical imaging products. The Company&#x2019;s ability to maintain and profitably renew these contracts and relationships with these key customers and group purchasing organizations is an important aspect of the Company&#x2019;s strategy. The Company&#x2019;s written supply agreements with a major customer relating to TechneLite, Xenon, Neurolite, Cardiolite and certain other products expired in accordance with contract terms on December&#xA0;31, 2014. Extended discussions with this customer have not yet resulted in new written supply agreements. Consequently, the Company is currently accepting and fulfilling product orders with this customer on a purchase order basis.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> Until the Company successfully becomes dual sourced for its principal products, the Company is vulnerable to future supply shortages. Disruption in the financial performance of the Company could also occur if it experiences significant adverse changes in customer mix, broad economic downturns, adverse industry or Company conditions or catastrophic external events. If the Company experiences one or more of these events in the future, it may be required to implement additional expense reductions, such as a delay or elimination of discretionary spending in all functional areas, as well as scaling back select operating and strategic initiatives.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> During 2013 and 2014, the Company has utilized its revolving line of credit as a source of liquidity from time to time. Borrowing capacity under the Revolving Facility is calculated by reference to a borrowing base consisting of a percentage of certain eligible accounts receivable, inventory and machinery and equipment minus any reserves, or the Borrowing Base. If the Company is not successful in achieving its forecasted operating results, the Company&#x2019;s accounts receivable and inventory could be negatively affected, thus reducing the Borrowing Base and limiting the Company&#x2019;s borrowing capacity. As of September&#xA0;30, 2015, the aggregate Borrowing Base was approximately $46.2 million, which was reduced by the $8.8&#xA0;million unfunded Standby Letter of Credit and $0.1 million in accrued interest, resulting in a net Borrowing Base availability of approximately $37.3 million. The Company&#x2019;s new Term Facility contains a number of affirmative, negative, reporting and financial covenants, in each case subject to certain exceptions and materiality thresholds. Incremental borrowings under the revolving line of credit may affect the Company&#x2019;s ability to comply with the covenants in the Term Facility, including the financial covenant restricting total net leverage. Accordingly, the Company may be limited in utilizing its net Borrowing Base availability as a source of liquidity.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> Based on the Company&#x2019;s current operating plans, the Company believes its existing cash and cash equivalents, results of operations and availability under the Revolving Facility will be sufficient to continue to fund the Company&#x2019;s liquidity requirements for at least the next twelve months.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 2%; MARGIN-TOP: 18pt"> <b><i>Use of Estimates</i></b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> The preparation of condensed consolidated financial statements in conformity with U.S.&#xA0;GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. The more significant estimates reflected in the Company&#x2019;s condensed consolidated financial statements include certain judgments regarding revenue recognition, goodwill, tangible and intangible asset valuation, inventory valuation, asset retirement obligations, income tax liabilities and related indemnification receivable, deferred tax assets and liabilities, accrued expenses and stock-based compensation. Actual results could materially differ from those estimates or assumptions.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 2%; MARGIN-TOP: 18pt"> <b><i>Stock Split</i></b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> In conjunction with the Merger, the Company effected a 0.355872-for-1 reverse stock split for its common stock. Upon consummation of the Merger, the par value of the common stock changed from $0.001 to $0.01. Accordingly, all references to share and per share information in the condensed consolidated financial statements have been adjusted to reflect the stock split and new par value for all periods presented.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-LEFT: 2%; MARGIN-TOP: 18pt"> <b><i>Debt Issuance Costs</i></b></p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 6pt; TEXT-INDENT: 4%"> In April 2015, the Financial Accounting Standards Board, or the FASB, issued ASU No.&#xA0;2015-03, &#x201C;<i>Interest&#x2014;Imputation of Interest (Topic 835): Simplifying the Presentation of Debt Issuance Costs</i>,&#x201D; or ASU 2015-03. Under the new ASU, debt issuance costs related to a recognized debt liability will be presented in the balance sheet as a direct deduction from the carrying amount of the related debt liability. As a result, the Company&#x2019;s balance sheet will reflect a reclassification of unamortized debt issuance costs from other long-term assets to long-term debt, net. ASU 2015-03 is effective for interim and annual periods beginning after December&#xA0;15, 2015, and early adoption is permitted. The Company has adopted this standard effective as of June&#xA0;30, 2015 and applied the changes retrospectively to the prior periods presented. Adoption of this standard has resulted in the reclassification of $6.4 million from other long-term assets to long-term debt, net on the balance sheet at December&#xA0;31, 2014. Unamortized debt issuance costs of $5.7 million are recorded as a reduction to long-term debt, net on the condensed consolidated balance sheets at September&#xA0;30, 2015.</p> <p style="MARGIN-BOTTOM: 0pt; FONT-SIZE: 10pt; FONT-FAMILY: Times New Roman; MARGIN-TOP: 12pt; TEXT-INDENT: 4%"> In August 2015, FASB issued ASU No.&#xA0;2015-15 &#x201C;<i>Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line of Credit Arrangements,</i>&#x201D; or ASU 2015-15. ASU 2015-15 indicates that the guidance in ASU 2015-03 did not address presentation or subsequent measurement of debt issuance costs related to line of credit arrangements. Given the absence of authoritative guidance within ASU 2015-03, the SEC staff has indicated that they would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the costs ratably over the term of the line of credit arrangement, regardless of whether there are any outstanding borrowings on the line of credit arrangement. The adoption of ASU 2015-15 did not have any effect on the Company&#x2019;s financial position or results of operations.</p> </div>
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