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SEC Filings

10-Q
HEARTWARE INTERNATIONAL, INC. filed this Form 10-Q on 11/02/2015
Entire Document
 


Table of Contents

Inventories

Components of inventories are as follows:

 

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

Raw material

   $ 23,983       $ 28,688   

Work-in-process

     9,020         10,240   

Finished goods

     14,242         15,118   
  

 

 

    

 

 

 
   $ 47,245       $ 54,046   
  

 

 

    

 

 

 

Finished goods inventories includes inventory held on consignment at customer sites of approximately $6.3 million at September 30, 2015 and $5.8 million at December 31, 2014.

Property, Plant and Equipment, Net

Property, plant and equipment, net consists of the following:

 

     Estimated
Useful Lives
   September 30,
2015
     December 31,
2014
 
          (in thousands)  

Machinery and equipment

   1.5 to 7 years    $ 21,976       $ 21,279   

Leasehold improvements

   3 to 10 years      8,938         9,070   

Office equipment, furniture and fixtures

   5 to 7 years      2,104         2,206   

Purchased software

   1 to 7 years      6,674         6,474   
     

 

 

    

 

 

 
        39,692         39,029   

Less: accumulated depreciation

        (23,981      (19,993
     

 

 

    

 

 

 
      $ 15,711       $ 19,036   
     

 

 

    

 

 

 

In the first quarter of 2015, we ceased activities at our facility in Aachen, Germany. We recorded an impairment charge of $1.1 million related to leasehold improvements and equipment at the facility upon their discontinued use. This amount is included in research and development expenses in our condensed consolidated statements of operations.

In the first quarter of 2014, we ceased activities at our facility in Teaneck, New Jersey. We recorded an impairment charge of $0.6 million related to office equipment and software at the facility upon their discontinued use. This amount is included in selling, general and administrative expenses in our condensed consolidated statements of operations.

Long-Term Investment

In October 2013, we invested $10 million in Valtech Cardio, Ltd (“Valtech”), an early-stage, privately-held company headquartered in Or Yehuda, Israel specializing in the development of devices for mitral and tricuspid valve repair and replacement in the form of a convertible promissory note with an interest rate of 6% per annum (the “2013 Note”). On October 7, 2014 (the maturity date), the note together with accrued interest was converted pursuant to its terms into shares of its Valtech’s preferred stock which represented approximately 3.1% of its total equity ownership.

In July 2015, we invested an additional $5 million in Valtech in the form of a convertible promissory note (the “2015 Note”). Principal and interest at a rate equal to 6% per annum is due and payable at maturity. Maturity occurs at the earlier of two years or the occurrence of certain events defined in the 2015 Note, including an event of default or a change in control. Principal and interest on the 2015 Note are repayable, at the option of the issuer, in cash or shares of the most recently issued series of preferred stock or a comparable newly issued series of preferred stock.

On September 1, 2015 we entered into a Business Combination Agreement (“BCA”) with Valtech, pursuant to which HeartWare and Valtech will both become subsidiaries of a new holding company, HW Global, Inc, (“Holdco”). HeartWare stockholders would receive one share of Holdco common stock for each share of HeartWare common stock and Valtech shareholders would receive Holdco common stock as follows:

 

    5.2 million shares upon closing;

 

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