Notes to Consolidated Financial Statements
(unaudited)
(in thousands, unless otherwise indicated)
Note 1—Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited consolidated financial statements include the accounts of Owens & Minor, Inc. and the subsidiaries it controls (we, us, or our) and contain all adjustments (which are comprised only of normal recurring accruals and use of estimates) necessary to conform with U.S. generally accepted accounting principles (GAAP). All significant intercompany accounts and transactions have been eliminated. The Movianto business represents a component that met accounting requirements to be classified as discontinued operations and held-for-sale beginning December 31, 2019. In accordance with GAAP, the results of operations and financial position of the Movianto business are presented as discontinued operations through June 18, 2020 (the Divestiture Date) and, as such, have been excluded from continuing operations for all periods presented. With the exception of Note 3, the Notes to Consolidated Financial Statements reflect the continuing operations of Owens & Minor, Inc. and its subsidiaries. See Note 3 for additional information regarding discontinued operations. The results of operations for interim periods are not necessarily indicative of the results expected for the full year.
Reclassifications
Certain prior year amounts have been reclassified to conform to the current year presentation.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires us to make assumptions and estimates that affect reported amounts and related disclosures. Actual results may differ from these estimates.
Cash, Cash Equivalents and Restricted Cash
Cash, cash equivalents and restricted cash includes cash and marketable securities with an original maturity or maturity at acquisition of three months or less. Cash, cash equivalents and restricted cash are stated at cost. Nearly all of our cash, cash equivalents and restricted cash are held in cash depository accounts in major banks in the United States, Europe, and Asia. Cash that is held by a major bank and has restrictions on its availability to us is classified as restricted cash. Restricted cash included in Other current assets represents $78.9 million held in a designated account as of June 30, 2020 as required by the Fifth Amendment to the Credit Agreement, which stipulates that the cash proceeds from the sale of the Movianto business is to be used to repay the 2021 Notes or the Term Loans. Restricted cash included in Other assets, net as of June 30, 2020 represents $16.3 million held in an escrow account as required by the Centers for Medicare & Medicaid Services (CMS) in conjunction with the Bundled Payments for Care Improvement (BPCI) Advanced Program.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying consolidated balance sheets that sum to the total of those same amounts presented in the accompanying consolidated statements of cash flows.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
Cash and cash equivalents
|
$
|
101,276
|
|
|
$
|
67,030
|
|
|
Restricted cash included in Other current assets
|
78,854
|
|
|
—
|
|
|
Restricted cash included in Other assets, net
|
16,323
|
|
|
16,261
|
|
|
Cash of discontinued operations
|
—
|
|
|
1,396
|
|
|
Total cash, cash equivalents and restricted cash
|
$
|
196,453
|
|
|
$
|
84,687
|
|
Note 2—Fair Value
The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable reported in the consolidated balance sheets approximate fair value due to the short-term nature of these instruments. The carrying amount of restricted cash also approximates fair value due to its nature. The fair value of debt is estimated based on quoted market prices or dealer quotes for the identical liability when traded as an asset in an active market (Level 1) or, if quoted market prices or dealer quotes are not available, on the borrowing rates currently available for loans with similar terms, credit ratings, and average remaining maturities (Level 2). See Note 6 for the fair value of debt. The fair value of interest rate swaps and foreign currency contracts is determined based on the present value of expected future cash flows considering the risks involved, including non-performance risk, and using discount rates appropriate for the respective maturities. Observable Level 2 inputs are used to determine the present value of expected future cash flows. See Note 8 for the fair value of derivatives.
Note 3—Discontinued Operations
On June 18, 2020, we completed the previously announced divestiture of our European logistics business, Movianto (the Divestiture), as well as certain support functions in our Dublin office, to Walden Group SAS (the Buyer) and EHDH (as Buyer’s guarantor) for cash consideration of $133 million. We concluded that the Movianto business met the criteria for discontinued operations as of December 31, 2019 and through the Divestiture Date, as the intention to sell represented a strategic shift and the criteria for held-for-sale were met. Movianto was previously reported in the Global Solutions segment.
Accordingly, the results of operations from the Movianto business are reported in the accompanying consolidated statements of operations as Loss from discontinued operations, net of tax for the three and six months ended June 30, 2020 and 2019, and the related assets and liabilities are classified as held-for-sale as of December 31, 2019 in the accompanying balance sheet. We are working with the Buyer on a final working capital adjustment that could result in a benefit in an amount up to $42 million. There is no benefit of any such adjustment reflected in our consolidated financial statements as of June 30, 2020.
The following table summarizes the financial results of our discontinued operations for the three and six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
Net revenue
|
$
|
104,417
|
|
|
$
|
107,495
|
|
|
$
|
226,759
|
|
|
$
|
218,043
|
|
|
|
Cost of goods sold
|
21,817
|
|
|
25,585
|
|
|
53,923
|
|
|
54,330
|
|
|
|
Gross margin
|
82,600
|
|
|
81,910
|
|
|
172,836
|
|
|
163,713
|
|
|
|
Distribution, selling, and administrative expenses
|
76,560
|
|
|
80,954
|
|
|
157,512
|
|
|
163,997
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on divestiture
|
56,392
|
|
|
—
|
|
|
65,472
|
|
|
—
|
|
|
|
Acquisition-related and exit and realignment charges
|
4,554
|
|
|
265
|
|
|
4,825
|
|
|
391
|
|
|
|
Other operating expense (income), net
|
73
|
|
|
(285)
|
|
|
(388)
|
|
|
(472)
|
|
|
|
Operating income (loss)
|
(54,979)
|
|
|
976
|
|
|
(54,585)
|
|
|
(203)
|
|
|
|
Interest expense, net
|
1,424
|
|
|
1,635
|
|
|
3,144
|
|
|
3,275
|
|
|
|
Loss from discontinued operations before income taxes
|
(56,403)
|
|
|
(659)
|
|
|
(57,729)
|
|
|
(3,478)
|
|
|
|
Income tax (benefit) provision from discontinued operations
|
(615)
|
|
|
83
|
|
|
474
|
|
|
441
|
|
|
|
Loss from discontinued operations, net of tax
|
$
|
(55,788)
|
|
|
$
|
(742)
|
|
|
$
|
(58,203)
|
|
|
$
|
(3,919)
|
|
|
We suspended depreciation and amortization on assets that are held-for-sale, including right-of-use assets recorded in accordance with ASU No. 2016-02, for the three and six months ended June 30, 2020.
All revenue and expense included in discontinued operations during the three and six months ended June 30, 2020 relates to activity through the Divestiture Date. No revenue or expense have been recorded in discontinued operations related to the disposal group subsequent to the Divestiture Date.
We have entered into transition services agreements with a subsidiary of the Buyer, pursuant to which we and a subsidiary of the Buyer will provide to each other various transitional services. Certain transition service arrangement costs and reimbursements were recorded during the three and six months ended June 30, 2020. These amounts were immaterial for the period ended June 30, 2020.
The assets and liabilities of the discontinued Movianto business reflected on the consolidated balance sheet at December 31, 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
|
|
Assets of discontinued operations
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
1,396
|
|
|
|
Accounts receivable, net
|
|
78,643
|
|
|
|
Merchandise inventories
|
|
16,058
|
|
|
|
Other current assets
|
|
188,853
|
|
|
|
Current assets of discontinued operations
|
|
284,950
|
|
|
|
Property and equipment, net
|
|
65,710
|
|
|
|
Intangible assets, net
|
|
6,579
|
|
|
|
Other assets, net
|
|
27,431
|
|
|
|
Operating lease assets
|
|
87,425
|
|
|
|
Valuation allowance on disposal group classified as held-for-sale
|
|
(32,112)
|
|
|
|
Total assets of discontinued operations
|
|
$
|
439,983
|
|
|
|
Liabilities of discontinued operations
|
|
|
|
|
Accounts payable
|
|
$
|
53,981
|
|
|
|
Other current liabilities
|
|
182,980
|
|
|
|
Current liabilities of discontinued operations
|
|
236,961
|
|
|
|
Long-term debt, excluding current portion
|
|
5,523
|
|
|
|
Operating lease liabilities, excluding current portion
|
|
76,270
|
|
|
|
Other liabilities
|
|
4,757
|
|
|
|
Total liabilities of discontinued operations
|
|
$
|
323,511
|
|
|
Assets and liabilities held-for-sale as of December 31, 2019 were classified as current since we expected the Divestiture to be completed within one year of the balance sheet date.
The following table provides operating and investing cash flow information for our discontinued operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
June 30, 2019
|
|
Operating Activities:
|
|
|
|
|
Depreciation and amortization
|
$
|
—
|
|
|
$
|
10,834
|
|
|
Loss on divestiture
|
65,472
|
|
|
—
|
|
|
|
|
|
|
|
Investing Activities:
|
|
|
|
|
Capital expenditures
|
3,027
|
|
|
14,211
|
|
Note 4—Goodwill and Intangible Assets
The following table summarizes the goodwill balances by segment and the changes in the carrying amount of goodwill through June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Solutions
|
|
Global Products
|
|
Consolidated
|
|
Carrying amount of goodwill, December 31, 2019
|
$
|
283,905
|
|
|
$
|
109,276
|
|
|
$
|
393,181
|
|
|
Currency translation adjustments
|
—
|
|
|
(1,511)
|
|
|
(1,511)
|
|
|
Carrying amount of goodwill, June 30, 2020
|
$
|
283,905
|
|
|
$
|
107,765
|
|
|
$
|
391,670
|
|
Intangible assets at June 30, 2020 and December 31, 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
|
|
December 31, 2019
|
|
|
|
|
|
|
Customer
Relationships
|
|
Tradenames
|
|
Other
Intangibles
|
|
Customer
Relationships
|
|
Tradenames
|
|
Other
Intangibles
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross intangible assets
|
$
|
269,090
|
|
|
$
|
90,000
|
|
|
$
|
43,230
|
|
|
$
|
270,693
|
|
|
$
|
90,000
|
|
|
$
|
43,055
|
|
|
Accumulated amortization
|
(107,341)
|
|
|
(20,701)
|
|
|
(11,739)
|
|
|
(92,947)
|
|
|
(16,520)
|
|
|
(9,263)
|
|
|
Net intangible assets
|
$
|
161,749
|
|
|
$
|
69,299
|
|
|
$
|
31,491
|
|
|
$
|
177,746
|
|
|
$
|
73,480
|
|
|
$
|
33,792
|
|
|
Weighted average useful life
|
10 years
|
|
11 years
|
|
8 years
|
|
10 years
|
|
11 years
|
|
8 years
|
At June 30, 2020, $71.4 million in net intangible assets were held in the Global Solutions segment and $191.1 million were held in the Global Products segment. Amortization expense for intangible assets was $10.6 million and $12.8 million for the three months ended June 30, 2020 and 2019, respectively, and $21.2 million and $22.8 million for the six months ended June 30, 2020 and 2019, respectively.
Based on the current carrying value of intangible assets subject to amortization, estimated amortization expense is $20.7 million for the remainder of 2020, $39.8 million for 2021, $38.9 million for 2022, $38.7 million for 2023, $33.9 million for 2024 and $28.2 million for 2025.
Note 5—Exit and Realignment Costs
We periodically incur exit and realignment and other charges associated with optimizing our operations which includes the consolidation of certain distribution and outsourced logistics centers, administrative offices and warehouses, and IT restructuring charges. These charges also include costs associated with our strategic organizational realignment which include management changes, certain professional fees, and costs to streamline administrative functions and processes.
Exit and realignment charges by segment for the three and six months ended June 30, 2020 and 2019 were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Global Solutions segment
|
$
|
1,713
|
|
|
$
|
1,614
|
|
|
$
|
3,542
|
|
|
$
|
2,180
|
|
|
Global Products segment
|
487
|
|
|
103
|
|
|
487
|
|
|
241
|
|
|
Total exit and realignment charges
|
$
|
2,200
|
|
|
$
|
1,717
|
|
|
$
|
4,029
|
|
|
$
|
2,421
|
|
The following table summarizes the activity related to exit and realignment cost accruals through June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
Accrued exit and realignment costs, December 31, 2019
|
|
$
|
8,162
|
|
|
Provision for exit and realignment activities:
|
|
|
|
Severance
|
|
1,391
|
|
|
Information system restructuring costs
|
|
183
|
|
|
Other
|
|
255
|
|
|
|
|
|
|
Cash payments
|
|
(5,799)
|
|
|
Accrued exit and realignment costs, March 31, 2020
|
|
4,192
|
|
|
Provision for exit and realignment activities:
|
|
|
|
Severance
|
|
809
|
|
|
Information system restructuring costs
|
|
671
|
|
|
Other
|
|
720
|
|
|
|
|
|
|
Cash payments
|
|
(2,072)
|
|
|
Accrued exit and realignment costs, June 30, 2020
|
|
$
|
4,320
|
|
|
|
|
|
|
Accrued exit and realignment costs, December 31, 2018
|
|
$
|
7,477
|
|
|
Provision for exit and realignment activities:
|
|
|
|
Severance
|
|
360
|
|
|
Information system restructuring costs
|
|
261
|
|
|
Other
|
|
83
|
|
|
|
|
|
|
Cash payments
|
|
(2,206)
|
|
|
Accrued exit and realignment costs, March 31, 2019
|
|
5,975
|
|
|
Provision for exit and realignment activities:
|
|
|
|
Severance
|
|
1,008
|
|
|
Information system restructuring costs
|
|
705
|
|
|
Other
|
|
4
|
|
|
|
|
|
|
Cash payments
|
|
(2,301)
|
|
|
Accrued exit and realignment costs, June 30, 2019
|
|
$
|
5,391
|
|
Acquisition-related and exit and realignment charges presented in our consolidated statements of operations includes acquisition-related charges of $3.9 million and $8.1 million for the three and six months ended June 30, 2020 and $3.7 million and $7.8 million for the three and six months ended June 30, 2019, respectively, and consisted primarily of transition costs for the Halyard acquisition.
Note 6—Debt
Debt consists of the following:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
|
|
December 31, 2019
|
|
|
|
|
Carrying Amount
|
|
Estimated Fair Value
|
|
Carrying Amount
|
|
Estimated Fair Value
|
|
3.875% Senior Notes, due September 2021
|
$
|
178,510
|
|
|
$
|
175,135
|
|
|
$
|
236,234
|
|
|
$
|
229,356
|
|
|
4.375% Senior Notes, due December 2024
|
244,619
|
|
|
212,994
|
|
|
273,978
|
|
|
212,086
|
|
|
Term A Loans, due July 2022
|
207,206
|
|
|
210,763
|
|
|
377,420
|
|
|
383,050
|
|
|
Term B Loan, due April 2025
|
478,729
|
|
|
445,505
|
|
|
480,337
|
|
|
442,217
|
|
|
Revolver
|
130,000
|
|
|
130,000
|
|
|
177,900
|
|
|
177,900
|
|
|
Receivables Securitization Program
|
147,339
|
|
|
150,000
|
|
|
—
|
|
|
—
|
|
|
Finance leases and other
|
12,251
|
|
|
12,251
|
|
|
13,783
|
|
|
13,783
|
|
|
Total debt
|
1,398,654
|
|
|
1,336,648
|
|
|
1,559,652
|
|
|
1,458,392
|
|
|
Less current maturities
|
(128,800)
|
|
|
(126,656)
|
|
|
(51,237)
|
|
|
(51,237)
|
|
|
Long-term debt
|
$
|
1,269,854
|
|
|
$
|
1,209,992
|
|
|
$
|
1,508,415
|
|
|
$
|
1,407,155
|
|
We have $179 million of 3.875% senior notes due in 2021 (the 2021 Notes) and $246 million of 4.375% senior notes due in 2024 (the 2024 Notes), with interest payable semi-annually. The 2021 Notes were sold at 99.5% of the principal amount with an effective yield of 3.951%. The 2024 Notes were sold at 99.6% of the principal amount with an effective yield of 4.422%. We have the option to redeem the 2021 Notes and 2024 Notes in part or in whole prior to maturity at a redemption price equal to the greater of 100% of the principal amount or the present value of the remaining scheduled payments discounted at the applicable Benchmark Treasury Rate plus 25 basis points for the 2021 Notes and the applicable Benchmark Treasury Rate plus 30 basis points for the 2024 Notes. In June 2020, we announced cash tender offers for up to $240.0 million aggregate principal amount of our outstanding 2021 Notes and 2024 Notes. As of the Early Settlement Date of June 22, 2020, $54.1 million of the 2021 Notes and $29.0 million of the 2024 Notes were repaid. On the Early Settlement Date, the 2021 Notes were redeemed at 100% of par, and the 2024 Notes were redeemed at 90% of par, resulting in a net gain on extinguishment of debt of $2.9 million. The tender offers remained open through July 2, 2020, and an additional $0.1 million of the 2021 Notes were redeemed at the Base Consideration price of 95% of par by the time the offers closed. Including the tender offer, we used $83.2 million of cash to repurchase $87.8 million aggregate principal amount of the 2021 Notes and 2024 Notes during the first six months of 2020. Consistent with the terms of the Fifth Amendment to the Credit Agreement, we used $54.1 million of the proceeds from the sale of Movianto to fund the repayment of the 2021 Notes, which were retired in the second quarter as part of the tender offer. As required by the Fifth Amendment to the Credit Agreement, the remaining $78.9 million of proceeds from the sale of Movianto were placed in a designated account and will be used to repurchase a portion of the outstanding 2021 Notes within 210 days of the Divestiture Date or repay a portion of our Term Loans. As of June 30, 2020, we classified $78.9 million of 2021 Notes as current liabilities since we intend to use the remaining $78.9 million of proceeds from the sale of Movianto to repurchase a portion of our 2021 Notes within 210 days of the Divestiture Date.
We have a Credit Agreement (last amended February 13, 2020) with a $400 million revolving credit facility and $686 million in outstanding term loans. The interest rate on our revolving credit facility and Term A Loans is based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage which varies depending on Consolidated Total Leverage Ratio (each as defined in the Credit Agreement). Our credit spread on the revolving credit facility and Term A Loans at June 30, 2020 was Eurocurrency Rate plus 4.25%. Our Term B Loan accrues interest based on 1) either the Eurocurrency Rate or the Base Rate plus 2) an Applicable Percentage of 3.50% per annum for Base Rate Loans and 4.50% per annum for Eurocurrency Rate Loans (each as defined in the Credit Agreement). Our credit spread on the Term B Loan at June 30, 2020 was Eurocurrency Rate plus 4.50%. We are charged a commitment fee of between 12.5 and 25.0 basis points on the unused portion of the revolving credit facility. Our Credit Agreement has a “springing maturity date” with respect to the revolving credit facility, the Term A Loans, and the Term B Loan. If the outstanding balance of the 2021 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2021 Notes, then the Termination Date (as defined in the Credit Agreement) of the revolving credit facility, the Term A Loans, and the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2021 Notes. Likewise, if the outstanding balance of the 2024 Notes has not been paid in full as of the date 91 days prior to the maturity date of the 2024 Notes, the Termination Date of the Term B Loan shall be the date that is 91 days prior to the maturity date of the 2024 Notes.
At June 30, 2020 and December 31, 2019, we had borrowings of $130.0 million and $177.9 million, respectively, under the revolver and letters of credit of $13.9 million and $11.7 million, respectively, outstanding under the Credit Agreement. At June 30, 2020 and December 31, 2019, we had $256.1 million and $209.3 million, respectively, available for borrowing. The December 31, 2019 availability reflected letters of credit associated with discontinued operations of $1.1 million. There were no letters of credit associated with discontinued operations as of June 30, 2020. We also had letters of credit and bank guarantees outstanding for $3.6 million, of which $2.0 million are in process of being transferred to the buyer of Movianto, and $1.5 million as of June 30, 2020 and December 31, 2019, respectively, which supports certain leased facilities
as well as other normal business activities in the United States and Europe. These letters of credit and guarantees were issued independent of the Credit Agreement.
We also have a Security and Pledge Agreement (the Security Agreement) pursuant to which we granted collateral on behalf of the holders of the 2021 Notes, the holders of the 2024 Notes, and the parties secured under the Credit Agreement (the Secured Parties) including first priority liens and security interests in (a) all present and future shares of capital stock owned by the Credit Parties (as defined) in the Credit Parties’ present and future subsidiaries of each Credit Party and (b) all present and future personal property and assets of the Credit Parties, subject to certain exceptions. The Fifth Amendment to the Credit Agreement included additional collateral requirements if the Credit Parties, including an obligation to pledge our owned U.S. real estate and the remaining equity interests in foreign subsidiaries.
On February 19, 2020, we entered into an accounts receivable securitization program (the Receivables Securitization Program). Pursuant to the Receivables Securitization Program the aggregate principal amount of the loans made by the Lenders (as defined) will not exceed $325 million outstanding at any time. The interest rate under the Receivables Securitization Program is based on a spread over the London Interbank Offered Rate (LIBOR) dependent on the tranche period thereto and any breakage fees accrued. Under the Receivables Securitization Program, certain of our subsidiaries sell substantially all of their accounts receivable balances to our wholly owned special purpose entity, O&M Funding LLC. The Receivables Securitization Program matures on February 17, 2023. In February 2020, we drew $150 million from the Receivables Securitization Program to repay portions of the Term A Loans, consistent with the terms of the Fifth Amendment to the Credit Agreement. The Fifth Amendment to the Credit Agreement requires that any additional draws on the Receivables Securitization Program are restricted for use to repay the 2021 Notes or Term A loans to the extent those instruments are outstanding.
The Credit Agreement and Senior Notes contain cross-default provisions which could result in the acceleration of payments due in the event of default of either agreement. The terms of the Credit Agreement also require the company to maintain ratios for leverage and interest coverage, including on a pro forma basis in the event of an acquisition or divestiture. We were in compliance with our debt covenants at June 30, 2020.
As of June 30, 2020, scheduled future principal payments of debt were $24.8 million in 2020, $228.6 million in 2021, $278.8 million in 2022, $155.0 million in 2023, $251.0 million in 2024, and $468.8 million thereafter.
Note 7—Retirement Plans
We have a noncontributory, unfunded retirement plan for certain retirees in the United States. Certain of our foreign subsidiaries also have defined benefit pension plans covering substantially all of their respective employees.
The components of net periodic benefit cost for the three and six months ended June 30, 2020 and 2019, respectively, were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Service cost
|
$
|
357
|
|
|
$
|
330
|
|
|
$
|
708
|
|
|
$
|
659
|
|
|
Interest cost
|
496
|
|
|
600
|
|
|
990
|
|
|
1,200
|
|
|
Recognized net actuarial loss
|
214
|
|
|
260
|
|
|
428
|
|
|
520
|
|
|
Net periodic benefit cost
|
$
|
1,067
|
|
|
$
|
1,190
|
|
|
$
|
2,126
|
|
|
$
|
2,379
|
|
Note 8—Derivatives
We are directly and indirectly affected by changes in foreign currency, which may adversely impact our financial performance and are referred to as “market risks.” When deemed appropriate, we use derivatives as a risk management tool to mitigate the potential impact of certain market risks. We do not enter into derivative financial instruments for trading purposes.
We enter into foreign currency contracts to manage our foreign exchange exposure related to certain balance sheet items that do not meet the requirements for hedge accounting. These derivative instruments are adjusted to fair value at the end of each period through earnings. The gain or loss recorded on these instruments is substantially offset by the remeasurement adjustment on the foreign currency denominated asset or liability.
We pay interest under our Credit Agreement and Receivables Securitization Program, which fluctuate based on changes in our benchmark interest rates. In order to mitigate the risk of increases in benchmark rates, we enter into interest rate swaps whereby we agree to exchange with the counterparty, at specified intervals, the difference between fixed and variable
amounts calculated by reference to the notional amount. The interest rate swaps were designated as cash flow hedges. Cash flows related to the interest rate swap agreements are included in interest expense.
We determine the fair value of our foreign currency derivatives and our interest rate swaps based on observable market-based inputs or unobservable inputs that are corroborated by market data. We do not view the fair value of our derivatives in isolation, but rather in relation to the fair values or cash flows of the underlying exposure. Our derivatives are over-the-counter instruments with liquid markets. All derivatives are carried at fair value in our consolidated balance sheets in other assets, net and other liabilities. We consider the risk of counterparty default to be minimal. We report cash flows from our hedging instruments in the same cash flow statement category as the hedged items.
The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
|
|
|
Derivative Liabilities
|
|
|
|
|
Notional Amount
|
|
Maturity Date
|
|
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
$
|
450,000
|
|
|
May 2022 and May 2025
|
|
Other assets, net
|
|
$
|
—
|
|
|
Other liabilities
|
|
$
|
32,974
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Economic (non-designated) hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts
|
$
|
22,600
|
|
|
July 2020
|
|
Other assets, net
|
|
$
|
13
|
|
|
Other liabilities
|
|
$
|
—
|
|
The following table summarizes the terms and fair value of our outstanding derivative financial instruments as of December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Assets
|
|
|
|
Derivative Liabilities
|
|
|
|
|
Notional Amount
|
|
Maturity Date
|
|
Classification
|
|
Fair Value
|
|
Classification
|
|
Fair Value
|
|
Cash flow hedges
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate swaps
|
$
|
450,000
|
|
|
May 2022 and May 2025
|
|
Other assets, net
|
|
$
|
—
|
|
|
Other liabilities
|
|
$
|
17,436
|
|
The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/(Loss) Recognized in Other Comprehensive Loss
|
|
|
|
Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
|
|
Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded
|
|
|
|
Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2020
|
|
|
|
|
Three Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2020
|
|
Three Months Ended June 30, 2020
|
|
Six Months Ended June 30, 2020
|
|
Interest rate swaps
|
$
|
(2,439)
|
|
|
$
|
(19,397)
|
|
|
Interest expense, net
|
|
|
$
|
(21,605)
|
|
|
$
|
(44,948)
|
|
|
$
|
(2,601)
|
|
|
$
|
(3,860)
|
|
The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.
The following table summarizes the effect of cash flow hedge accounting on our consolidated statements of operations for the three and six months ended June 30, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount of Gain/(Loss) Recognized in Other Comprehensive Loss
|
|
|
|
Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
|
|
Total Amount of Income/(Expense) Line Items Presented in the Consolidated Statement of Operations in Which the Effects are Recorded
|
|
|
|
Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Income
|
|
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
|
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
|
Interest rate swaps
|
$
|
(8,162)
|
|
|
$
|
(12,577)
|
|
|
Interest expense, net
|
|
|
$
|
(26,048)
|
|
|
$
|
(51,506)
|
|
|
$
|
(361)
|
|
|
$
|
(682)
|
|
|
Foreign currency contracts
|
$
|
191
|
|
|
$
|
636
|
|
|
Cost of goods sold
|
|
|
$
|
(2,090,187)
|
|
|
$
|
(4,164,407)
|
|
|
$
|
314
|
|
|
$
|
57
|
|
The amount of ineffectiveness associated with these contracts was immaterial for the periods presented.
For the three months and six months ended June 30, 2020, we recognized a gain of $1.3 million and a loss of $1.4 million, respectively, associated with our economic (non-designated) foreign currency contracts. For the three and six months ended June 30, 2019, we recognized gains of $0.5 million and $1.0 million, respectively, associated with our economic (non-designated) foreign currency contracts.
We recorded the change in fair value of derivative instruments and the remeasurement adjustment of the foreign currency denominated asset or liability in other operating (income) expense, net for our foreign exchange contracts.
Note 9—Income Taxes
The effective tax rate was 96.9% and 28.8% for the three and six months ended June 30, 2020, compared to 10.5% and 8.1% in the same periods of 2019. The change in these rates resulted from an income tax benefit recorded in the first quarter of 2020 associated with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the mixture of income and losses in jurisdictions in which we operate, and the incremental income tax expense associated with the vesting of restricted stock. The liability for unrecognized tax benefits was $11.7 million at June 30, 2020 and $11.5 million at December 31, 2019. Included in the liability at June 30, 2020 and December 31, 2019 were $2.8 million and $3.1 million, respectively, of tax positions for which ultimate deductibility is highly certain but for which there is uncertainty about the timing of such deductibility.
The Internal Revenue Services (IRS) is conducting an audit of our 2015 and 2016 Consolidated Income Tax Returns. In connection with the audit, the IRS has asserted that our taxable income for 2015 and 2016 should be higher based on their assessment of the appropriate amount of taxable income that we should report in the United States in connection with our sourcing of products by our foreign subsidiaries for sale in the United States by our domestic subsidiaries. Our amount of taxable income in the United States is based on our transfer pricing methodology, which has been consistently applied through the current date. At this point, we cannot estimate the likelihood of potential liability associated with this audit or the applicability of the IRS’ position for taxable years following 2016. However, we believe that the IRS' claims are without merit and plan to pursue all available administrative and judicial remedies necessary to resolve this matter. We regularly assess the likelihood of adverse outcomes resulting from examinations such as this to determine the adequacy of our tax reserves. We believe that the final adjudication of this matter will not have a material impact on our consolidated financial position, results of operations or cash flows and that we have adequate tax reserves for all tax matters. However, the ultimate outcome of disputes of this nature is uncertain, and if the IRS were to prevail on its assertions, the additional tax, interest, and any potential penalties could have a material adverse impact on our financial position, results of operations or cash flows.
Note 10—Net Loss per Common Share
The following summarizes the calculation of net loss per common share attributable to common shareholders for the three and six months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended
June 30,
|
|
|
|
(in thousands, except per share data)
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Weighted average shares outstanding - basic and diluted
|
61,128
|
|
|
59,805
|
|
|
60,819
|
|
|
60,403
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from continuing operations
|
$
|
161
|
|
|
$
|
(9,734)
|
|
|
$
|
(8,748)
|
|
|
$
|
(20,653)
|
|
|
Basic and diluted per share
|
$
|
—
|
|
|
$
|
(0.16)
|
|
|
$
|
(0.14)
|
|
|
$
|
(0.34)
|
|
|
|
|
|
|
|
|
|
|
|
Loss from discontinued operations
|
$
|
(55,788)
|
|
|
$
|
(742)
|
|
|
$
|
(58,203)
|
|
|
$
|
(3,919)
|
|
|
Basic and diluted per share
|
$
|
(0.91)
|
|
|
$
|
(0.01)
|
|
|
$
|
(0.96)
|
|
|
$
|
(0.07)
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(55,627)
|
|
|
$
|
(10,476)
|
|
|
$
|
(66,951)
|
|
|
$
|
(24,572)
|
|
|
Basic and diluted per share
|
$
|
(0.91)
|
|
|
$
|
(0.17)
|
|
|
$
|
(1.10)
|
|
|
$
|
(0.41)
|
|
Note 11—Shareholders' Equity
In May 2020, we entered into an equity distribution agreement, pursuant to which we may offer and sell, from time to time, shares of our common stock having an aggregate offering price of up to $50 million. We intend to use the net proceeds from the sale of our securities offered by this program for the repayment of indebtedness and/or for general corporate and working capital purposes. As of June 30, 2020, no shares were issued and $50 million of common stock remained available under the at-the-market equity financing program.
Note 12—Accumulated Other Comprehensive Loss
The following table shows the changes in accumulated other comprehensive loss by component for the three months ended June 30, 2020 and 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
Currency
Translation
Adjustments
|
|
Derivatives and Other
|
|
Total
|
|
Accumulated other comprehensive loss, March 31, 2020
|
$
|
(14,521)
|
|
|
$
|
(53,479)
|
|
|
$
|
(24,112)
|
|
|
$
|
(92,112)
|
|
|
Other comprehensive income (loss) before reclassifications
|
|
|
14,428
|
|
|
(2,439)
|
|
|
11,989
|
|
|
Income tax
|
—
|
|
|
—
|
|
|
428
|
|
|
428
|
|
|
Other comprehensive income (loss) before reclassifications, net of tax
|
—
|
|
|
14,428
|
|
|
(2,011)
|
|
|
12,417
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
639
|
|
|
15,580
|
|
|
2,601
|
|
|
18,820
|
|
|
Income tax
|
(44)
|
|
|
—
|
|
|
(666)
|
|
|
(710)
|
|
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
595
|
|
|
15,580
|
|
|
1,935
|
|
|
18,110
|
|
|
Other comprehensive income (loss)
|
595
|
|
|
30,008
|
|
|
(76)
|
|
|
30,527
|
|
|
Accumulated other comprehensive loss, June 30, 2020
|
$
|
(13,926)
|
|
|
$
|
(23,471)
|
|
|
$
|
(24,188)
|
|
|
$
|
(61,585)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
Currency Translation Adjustments
|
|
Derivatives and Other
|
|
Total
|
|
Accumulated other comprehensive loss, March 31, 2019
|
$
|
(7,949)
|
|
|
$
|
(36,758)
|
|
|
$
|
(7,328)
|
|
|
$
|
(52,035)
|
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
7,452
|
|
|
(7,971)
|
|
|
(519)
|
|
|
Income tax
|
—
|
|
|
—
|
|
|
2,678
|
|
|
2,678
|
|
|
Other comprehensive income (loss) before reclassifications, net of tax
|
—
|
|
|
7,452
|
|
|
(5,293)
|
|
|
2,159
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
260
|
|
|
—
|
|
|
47
|
|
|
307
|
|
|
Income tax
|
(63)
|
|
|
—
|
|
|
(16)
|
|
|
(79)
|
|
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
197
|
|
|
—
|
|
|
31
|
|
|
228
|
|
|
Other comprehensive income (loss)
|
197
|
|
|
7,452
|
|
|
(5,262)
|
|
|
2,387
|
|
|
Accumulated other comprehensive loss, June 30, 2019
|
$
|
(7,752)
|
|
|
$
|
(29,306)
|
|
|
$
|
(12,590)
|
|
|
$
|
(49,648)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
Currency Translation Adjustments
|
|
Derivatives and Other
|
|
Total
|
|
Accumulated other comprehensive loss, December 31, 2019
|
$
|
(14,691)
|
|
|
$
|
(25,301)
|
|
|
$
|
(12,715)
|
|
|
$
|
(52,707)
|
|
|
Other comprehensive loss before reclassifications
|
—
|
|
|
(13,750)
|
|
|
(19,397)
|
|
|
(33,147)
|
|
|
Income tax
|
—
|
|
|
—
|
|
|
5,074
|
|
|
5,074
|
|
|
Other comprehensive loss before reclassifications, net of tax
|
—
|
|
|
(13,750)
|
|
|
(14,323)
|
|
|
(28,073)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
853
|
|
|
15,580
|
|
|
3,860
|
|
|
20,293
|
|
|
Income tax
|
(88)
|
|
|
—
|
|
|
(1,010)
|
|
|
(1,098)
|
|
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
765
|
|
|
15,580
|
|
|
2,850
|
|
|
19,195
|
|
|
Other comprehensive income (loss)
|
765
|
|
|
1,830
|
|
|
(11,473)
|
|
|
(8,878)
|
|
|
Accumulated other comprehensive loss, June 30, 2020
|
$
|
(13,926)
|
|
|
$
|
(23,471)
|
|
|
$
|
(24,188)
|
|
|
$
|
(61,585)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retirement Plans
|
|
Currency
Translation
Adjustments
|
|
Derivatives and Other
|
|
Total
|
|
Accumulated other comprehensive loss, December 31, 2018
|
$
|
(8,146)
|
|
|
$
|
(32,551)
|
|
|
$
|
(4,915)
|
|
|
$
|
(45,612)
|
|
|
Other comprehensive income (loss) before reclassifications
|
—
|
|
|
3,245
|
|
|
(11,941)
|
|
|
(8,696)
|
|
|
Income tax
|
—
|
|
|
—
|
|
|
3,831
|
|
|
3,831
|
|
|
Other comprehensive income (loss) before reclassifications, net of tax
|
—
|
|
|
3,245
|
|
|
(8,110)
|
|
|
(4,865)
|
|
|
Amounts reclassified from accumulated other comprehensive loss
|
520
|
|
|
—
|
|
|
625
|
|
|
1,145
|
|
|
Income tax
|
(126)
|
|
|
—
|
|
|
(190)
|
|
|
(316)
|
|
|
Amounts reclassified from accumulated other comprehensive loss, net of tax
|
394
|
|
|
—
|
|
|
435
|
|
|
829
|
|
|
Other comprehensive income (loss)
|
394
|
|
|
3,245
|
|
|
(7,675)
|
|
|
(4,036)
|
|
|
Accumulated other comprehensive loss, June 30, 2019
|
$
|
(7,752)
|
|
|
$
|
(29,306)
|
|
|
$
|
(12,590)
|
|
|
$
|
(49,648)
|
|
We include amounts reclassified out of accumulated other comprehensive loss related to defined benefit pension plans as a component of net periodic pension cost recorded in Other (income) expense, net. For the three and six months ended June 30, 2020, we reclassified $0.6 million and $0.8 million, respectively, of actuarial net losses. For the three and six months ended June 30, 2019, we reclassified $0.2 million and $0.4 million, respectively, of actuarial net losses. Amounts reclassified from accumulated other comprehensive loss include currency translation adjustments released as a result of the Divestiture.
Note 13—Segment Information
We periodically evaluate our application of accounting guidance for reportable segments and disclose information about reportable segments based on the way management organizes the enterprise for making operating decisions and assessing performance. We report our business under two segments: Global Solutions and Global Products. The Global Solutions segment includes our United States distribution, outsourced logistics and value-added services business. Global Products manufactures and sources medical surgical products through our production and kitting operations.
We evaluate the performance of our segments based on their operating income excluding intangible amortization, acquisition-related and exit and realignment charges, certain purchase price fair value adjustments, and other substantive items that, either as a result of their nature or size, would not be expected to occur as part of our normal business operations on a regular basis.
Segment assets exclude inter-segment account balances as we believe their inclusion would be misleading and not meaningful. We believe all inter-segment sales are at prices that approximate market.
The following tables present financial information by segment:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Global Solutions
|
$
|
1,548,639
|
|
|
$
|
2,134,469
|
|
|
$
|
3,396,233
|
|
|
$
|
4,258,068
|
|
|
Global Products
|
370,401
|
|
|
363,889
|
|
|
761,593
|
|
|
710,974
|
|
|
Total segment net revenue
|
1,919,040
|
|
|
2,498,358
|
|
|
4,157,826
|
|
|
4,969,042
|
|
|
Inter-segment revenue
|
|
|
|
|
|
|
|
|
Global Products
|
(111,321)
|
|
|
(121,653)
|
|
|
(227,414)
|
|
|
(241,498)
|
|
|
Total inter-segment revenue
|
(111,321)
|
|
|
(121,653)
|
|
|
(227,414)
|
|
|
(241,498)
|
|
|
Consolidated net revenue
|
$
|
1,807,719
|
|
|
$
|
2,376,705
|
|
|
$
|
3,930,412
|
|
|
$
|
4,727,544
|
|
|
|
|
|
|
|
|
|
|
|
Operating income:
|
|
|
|
|
|
|
|
|
Global Solutions
|
$
|
(10,141)
|
|
|
$
|
17,734
|
|
|
$
|
(2,450)
|
|
|
$
|
39,375
|
|
|
Global Products
|
51,774
|
|
|
17,949
|
|
|
70,345
|
|
|
25,673
|
|
|
Inter-segment eliminations
|
(2,772)
|
|
|
(729)
|
|
|
(1,603)
|
|
|
1,017
|
|
|
Intangible amortization
|
(10,611)
|
|
|
(12,756)
|
|
|
(21,221)
|
|
|
(22,781)
|
|
|
Acquisition-related and exit and realignment charges
|
(6,054)
|
|
|
(5,390)
|
|
|
(12,118)
|
|
|
(10,254)
|
|
|
Other (1)
|
—
|
|
|
(909)
|
|
|
—
|
|
|
(529)
|
|
|
Consolidated operating income
|
$
|
22,196
|
|
|
$
|
15,899
|
|
|
$
|
32,953
|
|
|
$
|
32,501
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization:
|
|
|
|
|
|
|
|
|
Global Solutions
|
$
|
11,065
|
|
|
$
|
9,715
|
|
|
$
|
21,701
|
|
|
$
|
20,215
|
|
|
Global Products
|
13,826
|
|
|
15,246
|
|
|
27,103
|
|
|
27,853
|
|
|
Discontinued operations
|
—
|
|
|
5,221
|
|
|
—
|
|
|
10,834
|
|
|
Consolidated depreciation and amortization
|
$
|
24,891
|
|
|
$
|
30,182
|
|
|
$
|
48,804
|
|
|
$
|
58,902
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures:
|
|
|
|
|
|
|
|
|
Global Solutions
|
$
|
2,931
|
|
|
$
|
1,196
|
|
|
$
|
3,963
|
|
|
$
|
4,537
|
|
|
Global Products
|
2,135
|
|
|
3,880
|
|
|
5,152
|
|
|
6,783
|
|
|
Discontinued operations
|
1,363
|
|
|
6,176
|
|
|
3,027
|
|
|
14,211
|
|
|
Consolidated capital expenditures
|
$
|
6,429
|
|
|
$
|
11,252
|
|
|
$
|
12,142
|
|
|
$
|
25,531
|
|
(1) 2019 included interest cost and net actuarial losses related to the U.S. Retirement Plan as well as Software as a Service (SaaS) implementation costs associated with the upgrading of our global IT platforms in connection with the redesign of our global information system strategy.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30, 2020
|
|
December 31, 2019
|
|
Total assets:
|
|
|
|
|
Global Solutions
|
$
|
2,057,125
|
|
|
$
|
2,205,134
|
|
|
Global Products
|
979,385
|
|
|
930,937
|
|
|
Segment assets
|
3,036,510
|
|
|
3,136,071
|
|
|
Discontinued operations
|
—
|
|
|
439,983
|
|
|
Cash and cash equivalents
|
101,276
|
|
|
67,030
|
|
|
Consolidated total assets
|
$
|
3,137,786
|
|
|
$
|
3,643,084
|
|
The following table presents net revenue by geographic area, which were attributed based on the location from which we ship products or provide services.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
|
|
Six Months Ended June 30,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
Net revenue:
|
|
|
|
|
|
|
|
|
United States
|
$
|
1,737,615
|
|
|
$
|
2,270,768
|
|
|
$
|
3,771,069
|
|
|
$
|
4,574,680
|
|
|
International
|
70,104
|
|
|
105,937
|
|
|
159,343
|
|
|
152,864
|
|
|
Consolidated net revenue
|
$
|
1,807,719
|
|
|
$
|
2,376,705
|
|
|
$
|
3,930,412
|
|
|
$
|
4,727,544
|
|
Note 14—Recent Accounting Pronouncements
In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework— Changes to the Disclosure Requirements for Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing the requirement to disclose the amount and reasons for transfers between Level 1 and Level 2 of the fair value hierarchy and the policy for timing of such transfers. This ASU expands the disclosure requirements for Level 3 fair value measurements, primarily focused on changes in unrealized gains and losses included in other comprehensive income (loss). We adopted ASU No. 2018-13 effective beginning January 1, 2020. Its adoption did not have a material impact on our consolidated financial statements.
In August 2018, the FASB issued ASU No. 2018-15, Intangibles—Goodwill and Other (Topic 350): Internal-Use Software. This standard aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. We adopted ASU No. 2018-15 effective beginning January 1, 2020. Its adoption did not have a material impact on our consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes, which simplifies the accounting for income taxes, eliminates certain exceptions within ASC 740, Income Taxes, and clarifies certain aspects of the current guidance to promote consistency among reporting entities. ASU No. 2019-12 is effective for fiscal years beginning after December 15, 2020. Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis. We are currently evaluating the potential impact of adopting this guidance on our consolidated financial statements and disclosures.
In March 2020, the FASB issued ASU No. 2020-03, Codification Improvements to Financial Instruments. The Standard is part of FASB’s ongoing project to improve and clarify its Accounting Standards Codification and avoid unintended application. The items addressed are not expected to significantly affect current practice or create a significant administrative cost for most entities. The amendment is divided into issues 1 to 7 with different effective dates as follows: The amendments related to Issue 1, Issue 2, Issue 4, and Issue 5 are conforming amendments. The amendments are effective upon issuance of this update. The amendment related to Issue 3 is a conforming amendment that affects the guidance related to the amendments in ASU No. 2016-01, Financial Instruments-Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The effective date of this update for the amendments to ASU No. 2016-01 is for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. The amendments related to Issue 6 and Issue 7 affect the guidance in the amendments in ASU No. 2016-13, Financial 5 Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. For entities that have not yet adopted the amendments related to ASU No. 2016-13, the effective dates and the transition requirements for these amendments are the same as the effective date and transition requirements in ASU No. 2016-13, which will be effective for fiscal years beginning after December 15, 2022, including
interim periods within those fiscal years. We adopted ASU No. 2020-03 effective beginning January 1, 2020 for Issues 1 through 5. Its adoption did not have a material impact on our consolidated financial statements. We are currently evaluating the potential impact of adopting this guidance for Issues 6 and 7 on our consolidated financial statements and disclosures.
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, which provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The amendments are effective for all entities as of March 12, 2020 through December 31, 2022. We are currently evaluating the impact this guidance may have on our consolidated financial statements and disclosures.
There have been no further changes in our significant accounting policies from those contained in our Annual Report on Form 10-K for the year ended December 31, 2019.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
Hot Features
Premium
