Document and Entity Information (USD $) In Millions, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Feb. 21, 2011	Jun. 30, 2010
Document and Entity Information [Abstract]
Entity Registrant Name	INTEGRA LIFESCIENCES HOLDINGS CORP
Entity Central Index Key	0000917520
Document Type	10-K
Document Period End Date	Dec. 31, 2010
Amendment Flag	false
Document Fiscal Year Focus	2010
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	Yes
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Public Float			$ 780.1
Entity Common Stock, Shares Outstanding		28,603,792

Consolidated Statements of Operations (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
Consolidated Statements of Operations [Abstract]
Total revenue, net	$ 732,068	$ 682,487	$ 654,604
Costs and Expenses:
Cost of product revenues	268,188	244,918	252,826
Research and development	48,114	44,280	60,495
Selling, general and administrative	305,055	281,102	280,997
Intangible asset amortization	12,017	14,363	12,875
Total costs and expenses	633,374	584,663	607,193
Operating income	98,694	97,824	47,411
Interest income	225	631	2,114
Interest expense	(18,356)	(23,227)	(30,085)
Other income (expense), net	1,551	(2,076)	(905)
Income before income taxes	82,114	73,152	18,535
Provision for (benefit from) income taxes	16,445	22,197	(9,192)
Net income	$ 65,669	$ 50,955	$ 27,727
Basic net income per common share	$ 2.21	$ 1.75	$ 0.98
Diluted net income per common share	$ 2.17	$ 1.74	$ 0.96
Weighted average common shares outstanding (See Note 11):
Basic	29,548	29,038	27,781
Diluted	30,149	29,292	28,378

Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009
Current Assets:
Cash and cash equivalents	$ 128,763	$ 71,891
Trade accounts receivable, net of allowances of $7,322 and $11,216	106,005	103,228
Inventories, net	146,928	140,240
Deferred tax assets	35,284	29,972
Prepaid expenses and other current assets	27,869	20,032
Total current assets	444,849	365,363
Property, plant, and equipment, net	99,456	83,526
Intangible assets, net	194,904	211,117
Goodwill	261,928	261,941
Deferred tax assets	7,894	15,841
Other assets	8,277	2,314
Total assets	1,017,308	940,102
Current Liabilities:
Borrowings under senior credit facility	108,438	0
Convertible securities	0	76,760
Accounts payable, trade	27,783	24,598
Deferred revenue	4,444	4,077
Accrued compensation	27,562	23,227
Accrued expenses and other current liabilities	31,805	28,068
Total current liabilities	200,032	156,730
Long-term borrowings under senior credit facility	139,688	160,000
Long-term convertible securities	155,154	148,754
Deferred tax liabilities	10,645	9,319
Other liabilities	11,826	20,414
Total liabilities	517,345	495,217
Commitments and contingencies
Stockholders' Equity:
Preferred Stock; no par value; 15,000 authorized shares; none outstanding	0	0
Common stock; $.01 par value; 60,000 authorized shares; 35,745 and 34,958 issued	359	350
Additional paid-in capital	552,227	520,849
Treasury stock, at cost; 7,212 and 6,354 shares	(283,658)	(252,380)
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment	(870)	9,746
Pension liability adjustment, net of tax	(771)	(860)
Unrealized (loss) gain on derivatives, net of tax	(154)	19
Retained earnings	232,830	167,161
Total stockholders' equity	499,963	444,885
Total liabilities and stockholders' equity	$ 1,017,308	$ 940,102

Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Per Share data, unless otherwise specified	Dec. 31, 2010	Dec. 31, 2009
Current Assets:
Trade accounts receivable, allowances	$ 7,322	$ 11,216
Stockholders' Equity:
Preferred Stock, par value	$ 0	$ 0
Preferred Stock, authorized shares	15,000	15,000
Preferred Stock, outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	60,000	60,000
Common stock, shares issued	35,745	34,958
Treasury stock, shares	7,212	6,354

Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2010	Dec. 31, 2009	Dec. 31, 2008
OPERATING ACTIVITIES:
Net income	$ 65,669	$ 50,955	$ 27,727
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	39,172	39,688	30,717
In-process research and development	0	277	25,240
Deferred income tax provision (benefit)	4,128	548	(33,542)
Share-based compensation	17,209	15,580	32,635
Amortization of debt issuance costs	1,490	2,400	2,431
Non-cash interest expense	7,125	9,899	12,471
Payment of accreted interest	(6,599)	(5,391)	0
Gain on convertible note repurchases	0	(480)	0
Excess tax benefits from stock-based compensation arrangements	(3,580)	(20)	(1,590)
Other, net	(3)	0	18
Changes in assets and liabilities, net of business acquisitions:
Accounts receivable	(3,783)	9,808	(4,710)
Inventories	(7,374)	9,405	10,823
Prepaid expenses and other current assets	(6,452)	(4,314)	3,974
Refundable income taxes	0	11,343	(18,821)
Other non-current assets	(179)	411	(102)
Accounts payable, accrued expenses and other current liabilities	6,736	4,550	(17,258)
Deferred revenue	(457)	(289)	(372)
Other liabilities	(7,531)	(1,135)	2,949
Net cash provided by operating activities	105,571	143,235	72,590
INVESTING ACTIVITIES:
Cash used in business acquisitions, net of cash acquired	(5,178)	(60,783)	(86,874)
Purchases of property and equipment	(37,138)	(25,238)	(13,401)
Purchases of intangible assets	0	(2,331)	0
Net cash used in investing activities	(42,316)	(88,352)	(100,275)
FINANCING ACTIVITIES:
Borrowings under senior credit facility	105,000	0	260,000
Repayments under senior credit facility	(16,875)	(100,000)	0
Repurchase of liability component of convertible notes	(71,351)	(78,005)	(119,558)
Debt issuance costs	(6,796)	0	0
Purchases of treasury stock	(31,278)	0	0
Proceeds from exercised stock options	16,146	6,643	11,504
Excess tax benefits from stock-based compensation arrangements	3,580	20	1,590
Net cash (used in) provided by financing activities	(1,574)	(171,342)	153,536
Effect of exchange rate changes on cash and cash equivalents	(4,809)	4,804	356
Net increase (decrease) in cash and cash equivalents	56,872	(111,655)	126,207
Cash and cash equivalents at beginning of period	71,891	183,546	57,339
Cash and cash equivalents at end of period	$ 128,763	$ 71,891	$ 183,546

Consolidated Statements of Changes in Stockholders' Equity (USD $) In Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)	Retained Earnings
Beginning Balance at Dec. 31, 2007	$ 287,594	$ 323	$ (252,380)	$ 431,238	$ 19,045	$ 89,368
Shares, beginning balance at Dec. 31, 2007		32,252	(6,354)
Non-employee stock compensation expense	206			1,095		(889)
Net income	27,727					27,727
Foreign currency translation	(13,454)				(13,454)
Minimum pension liability adjustment, net of tax	(236)				(236)
Total comprehensive income	14,243
Release of valuation allowance on deferred tax asset related to convertible notes	2,144			2,144
Issuance of common stock through employee benefit plans, shares		1,022
Issuance of common stock through employee benefit plans	11,453	11		11,442
Issuance of common stock for convertible note settlement, shares		768
Issuance of common stock for convertible note settlement	404	8		396
Recapture of deferred tax for convertible debt	11,453			11,453
Tax benefit related to stock option exercises and issuance of restricted stock	1,813			1,813
Share-based compensation	32,496			32,496
Issuance and commitment of common stock for acquisition, shares		310
Issuance and commitment of common stock for acquisition	10,709	2		10,707
Ending Balance at Dec. 31, 2008	372,309	344	(252,380)	502,784	5,355	116,206
Shares, ending balance at Dec. 31, 2008		34,352	(6,354)
Net income	50,955					50,955
Foreign currency translation	3,432				3,432
Minimum pension liability adjustment, net of tax	99				99
Unrealized gain on derivatives, net of tax	19				19
Total comprehensive income	54,505
Issuance of common stock through employee benefit plans, shares		606
Issuance of common stock through employee benefit plans	3,151	6		3,145
Share-based compensation	14,938			14,938
Repurchase of equity component of convertible debt	(18)			(18)
Ending Balance at Dec. 31, 2009	444,885	350	(252,380)	520,849	8,905	167,161
Shares, ending balance at Dec. 31, 2009		34,958	(6,354)
Net income	65,669					65,669
Foreign currency translation	(10,616)				(10,616)
Minimum pension liability adjustment, net of tax	89				89
Unrealized gain on derivatives, net of tax	(173)				(173)
Total comprehensive income	54,969
Issuance of common stock through employee benefit plans, shares		787
Issuance of common stock through employee benefit plans	10,618	9		10,609
Share-based compensation	20,769			20,769
Repurchase of common stock, share			(858)
Repurchase of common stock	(31,278)		(31,278)
Ending Balance at Dec. 31, 2010	$ 499,963	$ 359	$ (283,658)	$ 552,227	$ (1,795)	$ 232,830
Shares, ending balance at Dec. 31, 2010		35,745	(7,212)

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2010

Summary of Significant Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


2.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

These financial statements and the accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America and conform to Regulation S-X under the Securities Exchange Act of 1934, as amended.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. All significant intercompany accounts and transactions are eliminated in consolidation. See Note 3, “Acquisitions,” for details of new subsidiaries included in the consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent liabilities, and the reported amounts of revenues and expenses. Significant estimates affecting amounts reported or disclosed in the consolidated financial statements include allowances for doubtful accounts receivable and sales returns and allowances, net realizable value of inventories, valuation of intangible assets and in-process research and development, amortization periods for acquired intangible assets, discount rates and estimated projected cash flows used to value and test impairments of long-lived assets and goodwill, estimates of projected cash flows and depreciation and amortization periods for long-lived assets, computation of taxes, valuation allowances recorded against deferred tax assets, the valuation of stock-based compensation, valuation of pension assets and liabilities, valuation of derivative instruments and loss contingencies. These estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the current circumstances. Actual results could differ from these estimates.

RECLASSIFICATIONS

Certain amounts from the prior year’s financial statements have been reclassified in order to conform to the current year’s presentation.

CASH AND CASH EQUIVALENTS

The Company considers all short term, highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

TRADE ACCOUNTS RECEIVABLE AND ALLOWANCES FOR DOUBTFUL ACCOUNTS RECEIVABLE

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables.

The Company evaluates the collectibility of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowances for doubtful accounts is recorded against amounts due to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowances for doubtful accounts is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses. Account balances are charged off against the allowance when the Company feels it is probable that the receivable will not be recovered.

INVENTORIES

Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost, the value determined by the first-in, first-out method, or market. Inventories consisted of the following:


	December 31,
	2010		2009
	(In thousands)

Finished goods	$	87,508	$	86,080
Work in process		31,536		26,852
Raw materials		27,884		27,308

Total inventories, net	$	146,928	$	140,240

At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf-life expiration. This evaluation includes analyses of historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions, a review of the shelf life expiration dates for products, as well as the feasibility of reworking or using excess or obsolete products or components in the production or assembly of other products that are not obsolete or for which there are not excess quantities in inventory. To the extent that management determines there are excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value.

The Company capitalizes inventory costs associated with certain products prior to regulatory approval, based on management’s judgment of probable future commercialization. The Company could be required to expense previously capitalized costs related to pre-approval inventory upon a change in such judgment, due to, among other potential factors, a denial or delay of approval by necessary regulatory bodies or a decision by management to discontinue the related development program. No such amounts were capitalized at December 31, 2010 or 2009.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. The Company provides for depreciation using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life. The cost of major additions and improvements is capitalized, while maintenance and repair costs that do not improve or extend the lives of the respective assets are charged to operations as incurred.

Property, plant and equipment balances and corresponding lives were as follows:


	December 31,
	2010			2009			Lives
	(In thousands)

Land	$	2,726		$	2,803
Buildings and building improvements		6,964			6,709			5-40 years
Leasehold improvements		38,102			35,335			1-20 years
Machinery and equipment		96,692			81,572			2-15 years
Furniture, fixtures and information systems		45,406			42,526			1-15 years
Construction in progress		20,137			5,039

Total		210,027			173,984
Less: Accumulated depreciation		(110,571	)		(90,458	)

Property, plant and equipment, net	$	99,456		$	83,526

Depreciation expense associated with property, plant and equipment was $21.3 million, $18.8 million and $12.8 million for the years ended December 31, 2010, 2009 and 2008, respectively.

GOODWILL AND OTHER INTANGIBLE ASSETS

The excess of the cost over the fair value of net assets of acquired businesses is recorded as goodwill. Goodwill is not subject to amortization, but is reviewed for impairment at the reporting unit level annually, or more frequently if impairment indicators arise. The Company’s assessment of the recoverability of goodwill is based upon a comparison of the carrying value of goodwill with its estimated fair value, determined using a discounted cash flow methodology. No impairment of goodwill has been identified during any of the periods presented.

Changes in the carrying amount of goodwill in 2010 and 2009 were as follows:


	2010			2009
	(In thousands)

Goodwill	$	261,941		$	212,094
Accumulated impairment losses		—			—

Goodwill, beginning of year		261,941			212,094
Integra Spine acquisition, earnout payment and working capital adjustment		3,400			49,796
Welch Allyn, Inc. acquisition		601			—
Minnesota Scientific acquisition and working capital adjustment		—			101
Canada Microsurgical earnout payment adjustments		—			645
Integra Neurosciences Pty Ltd. earnout payment and working capital adjustments		1,016			130
Foreign currency translation and other		(5,030	)		(825	)

Goodwill, end of year	$	261,928		$	261,941

Identifiable intangible assets are initially recorded at fair market value at the time of acquisition generally using an income or cost approach. The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs over their expected useful lives.

During the second quarter of 2010, the Company recorded a $0.8 million impairment charge related to several brand names. The impairment charge relates to management’s decision with respect to the Company’s re-branding strategy for several legacy brand names. The Company has recorded the charge as a component of amortization expense.

During the third quarter of 2009, the Company recorded a $0.9 million impairment charge related to a technology-based intangible asset as a component of its cost of product revenues. The impairment charge relates to decisions made by management to discontinue development of the related technology. The Company also recorded a $0.6 million impairment charge related to a trade name in connection with the revised expected benefit from the related trade name.

The components of the Company’s identifiable intangible assets were as follows (dollars in thousands):


	Weighted		December 31, 2010							December 31, 2009
	Average				Accumulated							Accumulated
	Life		Cost		Amortization			Net		Cost		Amortization			Net

Completed technology		12 years	$	69,261	$	(28,062	)	$	41,199	$	69,632	$	(22,526	)	$	47,106
Customer relationships		12 years		99,290		(45,505	)		53,785		97,922		(36,724	)		61,198
Trademarks/brand names		35 years		33,448		(8,467	)		24,981		35,741		(8,692	)		27,049
Trademarks/brand names		Indefinite		49,384		—			49,384		49,384		—			49,384
Supplier relationships		30 years		29,300		(4,525	)		24,775		29,300		(3,647	)		25,653
All other(1)		15 years		8,440		(7,660	)		780		8,197		(7,470	)		727

			$	289,123	$	(94,219	)	$	194,904	$	290,176	$	(79,059	)	$	211,117


(1)		All other includes $0.3 million of in-process research and development at December 31, 2010, which is indefinite lived.

Amortization expense for the years ended December 31, 2010, 2009 and 2008 was $17.9 million, $21.0 million and $17.6 million, respectively. Annual amortization expense is expected to approximate $16.9 million in 2011, $16.6 million in 2012, $13.9 million in 2013, $12.9 million in 2014 and $11.4 million in 2015. Amortization of product technology-based intangible assets, which totaled $5.9 million, $6.6 million and $4.8 million for the years ended December 31, 2010, 2009 and 2008, respectively, is presented by the Company within cost of product revenues.

LONG-LIVED ASSETS

Long-lived assets held and used by the Company, including property, plant and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. For purposes of evaluating the recoverability of long-lived assets to be held and used, a recoverability test is performed using projected undiscounted net cash flows applicable to the long-lived assets. If an impairment exists, the amount of such impairment is calculated based on the estimated fair value of the asset. Impairments to long-lived assets to be disposed of are recorded based upon the difference between the carrying value and the fair value of the applicable assets.

INTEGRA FOUNDATION

The Company may periodically make contributions to the Integra Foundation, Inc. The Integra Foundation was incorporated in 2002 exclusively for charitable, educational, and scientific purposes and qualifies under IRC 501(c)(3) as an exempt private foundation. Under its charter, the Integra Foundation engages in activities that promote health, the diagnosis and treatment of disease, and the development of medical science through grants, contributions and other appropriate means. The Integra Foundation is a separate legal entity and is not a subsidiary of the Company. Therefore, its results are not included in these consolidated financial statements. The Company contributed $0.7 million, $0.6 million and $1.1 million to the Integra Foundation during the years ended December 31, 2010, 2009 and 2008, respectively. These contributions were recorded in selling, general, and administrative expense.

DERIVATIVES

The Company develops, manufactures, and sells medical devices globally and its earnings and cash flows are exposed to market risk from changes in interest rates and currency exchange rates. The Company addresses these risks through a risk management program that includes the use of derivative financial instruments, and operates the program pursuant to documented corporate risk management policies. All derivative financial instruments are recognized in the financial statements at fair value in accordance with the authoritative guidance. Under the guidance, for those instruments that are designated and qualify as hedging instruments, the hedging instrument must be designated as a fair value hedge, cash flow hedge, or a hedge of a net investment in a foreign operation, based on the exposure being hedged. The accounting for changes in the fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, further, on the type of hedging relationship. The Company’s derivative instruments do not subject its earnings or cash flows to material risk, and gains and losses on these derivatives generally offset losses and gains on the item being hedged. The Company has not entered into derivative transactions for speculative purposes and all of its derivatives are designated as hedges.

All derivative instruments are recognized at their fair values as either assets or liabilities on the balance sheet. The Company determines the fair value of its derivative instruments, using the framework prescribed by the authoritative guidance, by considering the estimated amount the Company would receive to sell or transfer these instruments at the reporting date and by taking into account: expected forward interest rates, currency exchange rates, the creditworthiness of the counterparty for assets, and its creditworthiness for liabilities. In certain instances, the Company utilizes a discounted cash flow model to measure fair value. Generally, the Company uses inputs that include quoted prices for similar assets or liabilities in active markets; other observable inputs for the asset or liability; and inputs derived principally from, or corroborated by, observable market data by correlation or other means. The Company has classified all of its derivative assets and liabilities within Level 2 of the fair value hierarchy because observable inputs are available for substantially the full term of its derivative instruments. The Company classifies hedges in the same category as the item being hedged for cash flow presentation purposes.

FOREIGN CURRENCY

All assets and liabilities of foreign subsidiaries which have a functional currency other than the U.S. dollar are translated at the rate of exchange at year-end, while elements of the income statement are translated at the average exchange rates in effect during the year. The net effect of these translation adjustments is shown as a component of accumulated other comprehensive income (loss). These currency translation adjustments are not currently adjusted for income taxes as they relate to permanent investments in non-U.S. subsidiaries. Foreign currency transaction gains and losses are reported in Other income (expense), net.

INCOME TAXES

Income taxes are accounted by using the asset and liability method in accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. A valuation allowance is provided when it is more likely than not that some portion or all of the deferred tax assets will not be realized. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period when the change is enacted.

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not to be sustained upon examination based on the technical merits of the position. Reserves are established for positions that don’t meet this recognition threshold. The reserve is measured as the largest amount of benefit determined on a cumulative probability basis that the Company believes is more likely than not to be realized upon ultimate settlement of the position. These reserves are classified as either current or long-term liabilities in the consolidated balance sheet of the Company based on when the company expects each of the items to be settled. The Company also records interest and penalties accrued in relation to uncertain tax benefits as a component of income tax expense.

While the Company believes it has identified all reasonably identifiable exposures and the reserve it has established for identifiable exposures is appropriate under the circumstances, it is possible that additional exposures exist and that exposures may be settled at amounts different than the amounts reserved. It is also possible that changes in facts and circumstances could cause the Company to either materially increase or reduce the carrying amount of its tax reserve.

The Company’s historical policy has been to leave its unremitted foreign earnings invested indefinitely outside the United States, and it intends to continue this policy. As such, taxes have not been provided on any of the remaining accumulated foreign unremitted earnings. Where it has become apparent that some or all of the undistributed earnings will be remitted in the foreseeable future, tax consequences are considered.

REVENUE RECOGNITION

Total revenues, net, include product sales, product royalties and other revenues, such as fees received under research, licensing, and distribution arrangements, research grants, and technology-related royalties.

Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred and title and risk of loss have passed to the customer, there is a fixed or determinable sales price, and collectibility of that sales price is reasonably assured. For product sales, the Company’s stated terms are primarily FOB shipping point and with most customers, title and risk of loss pass to the customer at that time. With certain United States customers, the Company retains risk of loss until the customers receive the product, and in those situations, the Company recognizes revenue upon receipt by the customer.

Each revenue transaction is evidenced by either a contract with the customer or a valid purchase order and an invoice which includes all relevant terms of sale. There are generally no significant customer acceptance or other conditions that prevent the Company from recognizing revenue in accordance with its delivery terms. In certain cases, where the Company has performance obligations that are significant to the functionality of the product, the Company recognizes revenue upon fulfillment of its obligation.

Sales invoices issued to customers contain the Company’s price for each product or service. The Company performs a review of each specific customer’s credit worthiness and ability to pay prior to accepting them as a customer. Further, the Company performs periodic reviews of its customers’ status prospectively.

The Company records a provision for estimated returns and allowances on revenues in the same period as the related revenues are recorded. These estimates are based on historical sales returns and discounts and other known factors. The provisions are recorded as a reduction to revenues.

The Company’s return policy, as set forth in its product catalogs and sales invoices, requires the Company to review and authorize the return of product in advance. Upon authorization, a credit will be issued for goods returned within a set amount of days from shipment, which is generally ninety days.

Product royalties are estimated and recognized in the same period that the royalty products are sold by our customers. The Company estimates and recognizes royalty revenue based upon communication with licensees, historical information and expected sales trends. Differences between actual revenues and estimated royalty revenues are adjusted in the period in which they become known, which is typically the following quarter. Historically, such adjustments have not been significant.

Other operating revenues include fees received under research, licensing, and distribution arrangements, technology-related royalties and research grants. Non-refundable fees received under research, licensing and distribution arrangements or for the licensing of technology are recognized as revenue when received if the Company has no continuing obligations to the other party. For those arrangements where the Company has continuing performance obligations, revenue is recognized using the lesser of the amount of non-refundable cash received or the result achieved using the proportional performance method of accounting based upon the estimated cost to complete these obligations. Research grant revenue is recognized when the related expenses are incurred.

SHIPPING AND HANDLING FEES AND COSTS

Amounts billed to customers for shipping and handling are included in revenues. The related shipping and freight charges incurred by the Company are included in cost of product revenues. Distribution and handling costs of $9.6 million, $8.3 million and $7.7 million were recorded in selling, general and administrative expense during the years ended December 31, 2010, 2009 and 2008, respectively.

PRODUCT WARRANTIES

Certain of the Company’s medical devices, including monitoring systems and neurosurgical systems, are reusable and are designed to operate over long periods of time. These products are sold with warranties generally extending for up to two years from date of purchase. The Company accrues estimated product warranty costs at the time of sale based on historical experience. Any additional amounts are recorded when such costs are probable and can be reasonably estimated.

Accrued warranty expense consisted of the following:


	December 31,
	2010			2009
	(In thousands)

Beginning balance	$	632		$	701
Net change		(84	)		(69	)

Ending balance	$	548		$	632

RESEARCH AND DEVELOPMENT

Research and development costs, including salaries, depreciation, consultant and other external fees, and facility costs directly attributable to research and development activities, are expensed in the period in which they are incurred.

In-process research and development recorded in connection with acquisitions represent the value assigned to acquired assets to be used in research and development activities and for which there is no alternative use. Value is generally assigned to these assets based on the net present value of the projected cash flows expected to be generated by those assets.

During 2010 the Company capitalized $0.3 million of in-process research and development costs related to the Welch Allyn, Inc. acquisition. In accordance with the business combination rules at the time, the Company recorded in-process research and development charges of $0.3 million related to certain assets acquired from Innovative Spinal Technologies, Inc. in 2009, and $25.2 million related to the Integra Spine acquisition in 2008. The 2009 and 2008 charges were related to technology that had not yet reached feasibility and had no alternative future use.

EMPLOYEE TERMINATION BENEFITS AND OTHER EXIT-RELATED COSTS

The Company does not have a written severance plan, and it does not offer similar termination benefits to affected employees in all restructuring initiatives. Accordingly, in situations where minimum statutory termination benefits must be paid to the affected employees, the Company records employee severance costs associated with these restructuring activities in accordance with the authoritative guidance for non-retirement post-employment benefits. Charges associated with these activities are recorded when the payment of benefits is probable and can be reasonably estimated. In all other situations where the Company pays out termination benefits, including supplemental benefits paid in excess of statutory minimum amounts and benefits offered to affected employees based on management’s discretion, the Company records these termination costs in accordance with the authoritative guidance for exit or disposal costs.

The timing of the recognition of charges for employee severance costs other than minimum statutory benefits depends on whether the affected employees are required to render service beyond their legal notification period in order to receive the benefits. If affected employees are required to render service beyond their legal notification period, charges are recognized ratably over the future service period. Otherwise, charges are recognized when management has approved a specific plan and employee communication requirements have been met.

For leased facilities and equipment that have been abandoned, the Company records estimated lease losses based on the fair value of the lease liability, as measured by the present value of future lease payments subsequent to abandonment, less the present value of any estimated sublease income on the cease-use date. For owned facilities and equipment that will be disposed of, the Company records impairment losses based on fair value less costs to sell. The Company also reviews the remaining useful life of long-lived assets following a decision to exit a facility and may accelerate depreciation or amortization of these assets, as appropriate.

STOCK-BASED COMPENSATION

The Company applies the authoritative guidance for stock-based compensation. This guidance requires companies to recognize the expense related to the fair value of their stock-based compensation awards. Since the adoption of the guidance, there have been no changes to the Company’s stock compensation plans or modifications to outstanding stock-based awards which would change the value of any awards outstanding. Stock-based compensation expense for stock option awards granted after January 1, 2006 was based on the fair value on the grant date using the binomial distribution model. The Company recognized compensation expense for stock option awards, restricted stock awards, performance stock awards and contract stock awards on a ratable basis over the requisite service period of the award. The long form method was used in the determination of the windfall tax benefit in accordance with the guidance.

PENSION BENEFITS

Defined benefit pension plans cover certain employees in the U.K. and former employees in Germany. Various factors are considered in determining the pension liability, including the number of employees expected to be paid their salary levels and years of service, the expected return on plan assets, the discount rate used to determine the benefit obligations, the timing of benefit payments and other actuarial assumptions. If the actual results and events for the pension plans differ from current assumptions, the benefit obligation may be over or under valued.

Retirement benefit plan assumptions are reassessed on an annual basis or more frequently if changes in circumstances indicate a re-evaluation of assumptions are required. The key benefit plan assumptions are the discount rate and expected rate of return on plan assets. The discount rate is based on average rates on bonds that matched the expected cash outflows of the benefit plans. The expected rate of return is based on historical and expected returns on the various categories of plan assets.

Pension contributions are expected to be consistent over the next few years since the Miltex plan was dissolved in 2008, the Germany plan is frozen and the U.K. plan is closed to new participants. Contributions to the plans during the years ended December 31, 2010, 2009 and 2008 were $1.1 million, $0.4 million and $0.5 million, respectively.

CONCENTRATION OF CREDIT RISK

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash and cash equivalents, which are held at major financial institutions, investment-grade marketable debt securities and trade receivables. The Company’s products are sold on an uncollateralized basis and on credit terms based upon a credit risk assessment of each customer.

SUPPLEMENTAL CASH FLOW INFORMATION

Cash paid for interest for the years ended December 31, 2010, 2009 and 2008 was $8.8 million, $11.3 million and $17.3 million, respectively. Cash paid for income taxes for the years ended December 31, 2010, 2009 and 2008 was $23.4 million, $20.5 million and $41.2 million, respectively. Property and equipment purchases included in liabilities at December 31, 2010, 2009 and 2008 was $1.1 million, $1.0 million and $0.6 million, respectively.

During the year ended December 31, 2010, 282,086 stock options were exercised, whereby in lieu of a cash payment for the exercise price, an option holder tendered 73,546 shares of Company stock that had a fair market value of approximately $3.1 million. These tendered shares were then immediately retired.

In connection with the amendment and restatement of the Company’s Senior Credit Facility during the year ended December 31, 2010, $150.0 million of the Company’s revolving credit facility was converted into a term loan.

- Definition

Description containing the entire organization, consolidation and basis of presentation of financial statements disclosure. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements.

+ References+ Details

Acquisitions

12 Months Ended

Dec. 31, 2010

Acquisitions [Abstract]

ACQUISITIONS


3.	ACQUISITIONS

BUSINESS COMBINATIONS

Culley Investments Pty. Ltd.

In September 2010, the Company acquired certain assets as well as the distribution rights for its extremity reconstruction product lines in Australia from Culley Investments Pty. Ltd. (“Culley”) for approximately $1.6 million (1.7 million Australian dollars) in cash. The Company has determined that this acquisition met the definition of a business under the authoritative guidance. For eight years, Culley has been the Company’s distributor of these products in Australia. The acquisition provides the Company with the ability to sell orthopedic products directly to its Australian customers.

The final purchase price has been allocated as follows (in thousands):


Inventory	$	878
Property, plant and equipment		319
Intangible assets — Customer relationships		373	Wtd. Avg. Life 12 years

Total net assets acquired	$	1,570

Welch Allyn, Inc.

In May 2010, the Company acquired certain assets and liabilities of the surgical headlight business of Welch Allyn, Inc. (“Welch”) for approximately $2.4 million in cash and $0.2 million of working capital adjustments. The Company determined that this acquisition met the definition of a business under the authoritative guidance. The Company believes that the assets acquired will further its goal of expanding its reach into the surgical headlight market. The goodwill recorded in connection with this acquisition was based on the benefits the Company expects to generate from Welch’s future cash flows and is not deductible for tax purposes.

The final purchase price has been allocated as follows (in thousands):


Accounts receivable	$	518
Inventory		138
Property, plant and equipment		280
Intangible assets			Wtd. Avg. Life
Customer relationships		490	15 years
Technology		263	6 years
In-Process research and development		312	Indefinite
Goodwill		601

Total net assets acquired	$	2,602

Integra Neurosciences Pty Ltd.

In October 2008, the Company acquired Integra Neurosciences Pty Ltd. in Australia and Integra Neurosciences Pty Ltd. in New Zealand for $4.0 million (6.0 million Australian dollars) in cash at closing, $0.3 million in acquisition expenses and working capital adjustments, and up to $2.1 million (3.1 million Australian dollars) in future payments based on the performance of business in the three years after closing. Approximately $0.9 million (1.0 million Australian dollars) of this potential revenue performance obligation was paid in November 2009, and an additional $1.0 million (1.0 million Australian dollars) was paid in December 2010. With this acquisition of the Company’s long-standing distributor, the Company has a direct selling presence in Australia and New Zealand.

Theken

In August 2008 the Company acquired Theken Spine, LLC, Theken Disc, LLC and Therics, LLC (collectively, “Integra Spine”) for $75.0 million in cash, subject to certain adjustments, acquisition expenses of $2.4 million, working capital adjustments of $3.9 million, and up to $125.0 million in future payments based on the revenue performance of the business in each of the two years after closing. The Company paid approximately $52.0 million for the first year revenue performance obligation in November 2009 and accrued an additional $3.4 million in September 2010 related to the disputed settlement amount (See Note 12, “Commitments and Contingencies”). The Company believes that there are no additional amounts due for the second performance year. Integra Spine, based in Akron, Ohio, designs, develops and manufactures spinal fixation products, synthetic bone substitute products and spinal arthroplasty products.

Management determined the preliminary fair value of assets acquired during the third quarter of 2008 and the purchase price allocation was finalized during the third quarter of 2009 with only minor adjustments to goodwill. The in-process research and development had not yet reached technological feasibility and had no alternative future use at the date of acquisition. The Company recorded an in-process research and development charge of $25.2 million in the third quarter of 2008 in connection with this acquisition, which was included in research and development expense. The goodwill recorded in connection with this acquisition was based on the benefits the Company expects to generate from Theken’s future cash flows and is deductible for tax purposes.

The fair value of the in-process research and development was determined by estimating the costs to develop the acquired technology into commercially viable products and estimating the net present value of the resulting net cash flows from these projects. These cash flows were based on our best estimates of revenue, cost of sales, research and development costs, selling, general and administrative costs and income taxes from the development projects. A summary of the estimates used to calculate the net cash flows for the projects is as follows:

Year Net

Discount Rate

Cash In-

Including Factor

Acquired in-

Flows

to Account for

Process

Expected to

Uncertainty of

Research and

Project

Begin

Success

Development

eDisc artificial lumbar disc

2013

13.0 million

eDisc artificial cervical disc

2016

7.2 million

Spinal fixation implants

2009

4.7 million

All other

2009

0.3 million

Currently, the Company has suspended the development of the eDisc products and is considering other opportunities for the technology. Of the 13 implant systems in development at the time of acquisition, 12 were successfully launched and one was discontinued. These changes in plans will not have a significant impact on the Company’s overall financial condition.

Pro Forma Results

Due to a lack of readily available audited financial statements and immateriality, the Company has not presented pro forma results for 2010 or 2009 to include the impact of the Culley or Welch operations.

Debt

12 Months Ended

Dec. 31, 2010

Debt [Abstract]

DEBT


4.	DEBT

2010 and 2012 Senior Convertible Notes

On June 11, 2007, the Company issued $165.0 million aggregate principal amount under its 2010 Notes and $165.0 million aggregate principal amount under its 2012 Notes (collectively the “Notes”). The 2010 Notes and the 2012 Notes bear interest at a rate of 2.75% per annum and 2.375% per annum, respectively, in each case payable semi-annually in arrears on December 1 and June 1 of each year. The fair value of the 2012 Notes at December 31, 2010 was approximately $169.4 million. The 2010 Notes were paid off during June 2010 in accordance with their terms. In 2009, the Company repurchased the principal amount of $32.1 million, $18.7 million, $17.7 million, and $18.6 million in March, June, September and December, respectively, of the 2010 Notes. The total cash paid for the Notes was $83.3 million, of which $78.0 million related to the repurchase of the liability component. The Company recognized a gain of $0.5 million on these repurchases. For all of these transactions the bond hedge contracts were terminated on a pro-rata basis and the number of options was adjusted to reflect the number of convertible securities outstanding that together have a total principal amount of $77.9 million. Also, in connection with the above repurchases, in separate transactions, the Company has amended the warrant transactions to reduce the number of warrants outstanding to reflect such number of convertible securities outstanding.

The 2012 Notes are senior, unsecured obligations of the Company, and are convertible into cash and, if applicable, shares of its common stock based on an initial conversion rate, subject to adjustment of 15.3935 shares per $1,000 principal amount of notes for the 2012 Notes (which represents an initial conversion price of approximately $64.96 per share). The Company will satisfy any conversion of the 2012 Notes with cash up to the principal amount of the 2012 Notes pursuant to the net share settlement mechanism set forth in the indenture and, with respect to any excess conversion value, with shares of the Company’s common stock. The 2012 Notes are convertible only in the following circumstances: (1) if the closing sale price of the Company’s common stock exceeds 130% of the conversion price during a period as defined in the indenture; (2) if the average trading price per $1,000 principal amount of the 2012 Notes is less than or equal to 97% of the average conversion value of the 2012 Notes during a period as defined in the indenture; (3) at any time on or after December 15, 2011; or (4) if specified corporate transactions occur. The issue price of the 2012 Notes was equal to their face amount, which is also the amount holders are entitled to receive at maturity if the 2012 Notes are not converted. As of December 31, 2010, none of these conditions existed with respect to the 2012 Notes. As a result, the 2012 Notes are classified as long term.

Holders of the 2012 Notes, who convert their notes in connection with a qualifying fundamental change, as defined in the related indenture, may be entitled to a make-whole premium in the form of an increase in the conversion rate. Additionally, following the occurrence of a fundamental change, holders may require that the Company repurchase some or all of the 2012 Notes for cash at a repurchase price equal to 100% of the principal amount of the notes being repurchased, plus accrued and unpaid interest, if any.

The 2012 Notes, under the terms of the private placement agreement, are guaranteed fully by Integra LifeSciences Corporation, a subsidiary of the Company. The Notes will be the Company’s direct senior unsecured obligations and will rank equal in right of payment to all of the Company’s existing and future unsecured and unsubordinated indebtedness.

In connection with the issuance of the Notes, the Company entered into call transactions and warrant transactions, primarily with affiliates of the initial purchasers of the Notes (the “hedge participants”), in connection with each series of Notes. The cost of the call transactions to the Company was approximately $46.8 million. The Company received approximately $21.7 million of proceeds from the warrant transactions. The call transactions involve the Company’s purchasing call options from the hedge participants, and the warrant transactions involve the Company’s selling call options to the hedge participants with a higher strike price than the purchased call options.

The initial strike price of the remaining call transactions is approximately $64.96 for the 2012 Notes, subject to anti-dilution adjustments. The initial strike price of the warrant transactions is (i) for the 2010 Notes, approximately $77.96 per share of Common Stock, which expired at various dates through January 2011, and (ii) for the 2012 Notes, approximately $90.95, in each case subject to customary anti-dilution adjustments.

Amended and Restated Senior Credit Agreement

On August 10, 2010, the Company entered into an amended and restated credit agreement (the “Senior Credit Facility”) with a syndicate of lending banks. The Senior Credit Facility increased the size of the Company’s prior revolving credit facility from $300.0 million to $450.0 million, provided for a $150.0 million term loan component and allowed the Company to further increase the size of either the term loan or the revolving credit facility, or a combination thereof, by an aggregate of $150.0 million with additional commitments. The Senior Credit Facility extended the prior revolving credit facility’s maturity date from December 21, 2011 to August 10, 2015 and increased the applicable rates used for borrowings and the annual commitment fee. The Senior Credit Facility is collateralized by substantially all of the assets of the Company’s U.S. subsidiaries, excluding intangible assets.

Amounts borrowed under the Senior Credit Facility bear interest, at the Company’s option, at a rate equal to (i) the Eurodollar Rate (as defined in the Senior Credit Facility) in effect from time to time plus the applicable rate (ranging from 1.75% to 2.5%) or (ii) the highest of (x) the weighted average overnight Federal funds rate, as published by the Federal Reserve Bank of New York, plus 0.5%, (y) the prime lending rate of Bank of America, N.A. or (z) the one-month Eurodollar Rate plus 1.0%. The applicable fixed rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness less cash in excess of $40.0 million that is not subject to any restriction on the use or investment thereof to (b) consolidated earnings before interest, taxes, depreciation and amortization) at the time of the applicable borrowing.

The Company also pays an annual commitment fee (ranging from 0.2% to 0.5%, based on the Company’s consolidated total leverage ratio) on the daily amount by which the revolving credit facility exceeds the outstanding loans and letters of credit under the credit facility.

The Senior Credit Facility also modified certain financial and negative covenants. In particular, it:


	•	reduced the maximum consolidated total leverage ratio that the Company is permitted to have from 4.50 to 1.00, to either (i) 3.75 to 1.00 during any consecutive four fiscal quarter period ending on or before March 31, 2012 or (ii) 3.5 to 1.00 during any period thereafter,

	•	eliminated the senior secured leverage ratio covenant,

	•	increased the amount of permitted unsecured debt,

	•	provided the Company more ability to repurchase stock and make restricted payments, and

	•	provided for capital expenditures in any fiscal year equal to 10% of the revenues during the prior fiscal year, subject to carry over to the next following fiscal year.

On August 10, 2010, the Company also entered into an interest rate swap effective December 31, 2010 with an investment grade bank which converts a portion of the Company’s variable interest payments to fixed interest payments (see Note 5, “Derivative Instruments”).

Prior to amending the Senior Credit Facility in 2010, the Company borrowed $75.0 million under the revolving credit facility in connection with the maturity of its 2010 Notes (defined below) and also repaid $15.0 million of outstanding borrowings. Subsequent to the amendment, the Company borrowed an additional $30.0 million in October 2010 to repay certain intercompany loans. During June 2009 and August 2009, the Company repaid $60.0 million and $40.0 million, respectively, of its outstanding borrowings under its prior credit facility.

At December 31, 2010 and 2009, there was $100.0 million and $160.0 million outstanding, respectively, under the revolving credit facility at a weighted average interest rate of 2.5% and 0.98%, respectively. At December 31, 2010, there was approximately $350.0 million available for borrowing under this facility. The fair value of outstanding borrowings under the revolving credit facility at December 31, 2010 was approximately $100.5 million. The Company considers the 2010 balance to be current in nature based on its current intent and ability to repay the borrowing during the next twelve-month period.

At December 31, 2010, there was $148.1 million outstanding under the term loan at an interest rate of 2.6% — of this amount, the Company considers $8.4 million as short-term and $139.7 million as long-term based on the terms of the loan agreement. Under the term loan, principal payments to be made during the calendar years are as follows: $8.4 million in 2011, $12.2 million in 2012, $15.0 million in 2013, $15.0 million in 2014 and $97.5 million in 2015. The fair value of outstanding borrowings on the term loan at December 31, 2010 was approximately $143.4 million.

2008 Contingent Convertible Subordinated Notes

The Company was required to make interest payments on its 2008 Notes at an annual rate of 2.5% each September 15 and March 15. The Company paid contingent interest on the 2008 Notes approximating $1.8 million during the quarter ended March 31, 2008. The contingent interest paid was for each of the last three years the 2008 Notes remained outstanding in an amount equal to the greater of (1) 0.50% of the face amount of the 2008 Notes and (2) the amount of regular cash dividends paid during each such year on the number of shares of common stock into which each 2008 Note was convertible. Holders of the 2008 Notes could convert the 2008 Notes under certain circumstances, including when the market price of its common stock on the previous trading day was more than $37.56 per share, based on an initial conversion price of $34.15 per share. As of December 31, 2008, all of the 2008 Notes had been converted to common stock or cash.

The 2008 Notes were general, unsecured obligations of the Company and were subordinate to any senior indebtedness. The Company could not redeem the 2008 Notes prior to their maturity, and the 2008 Notes’ holders could have compelled the Company to repurchase the 2008 Notes upon a change of control. On March 5, 2008 the Company borrowed $120.0 million under its senior secured revolving credit facility. The Company used these funds to repay the 2008 Notes upon conversion or maturity. As a result of the conversions, the Company issued 768,221 shares of the Company’s common stock. There were no financial covenants associated with the convertible 2008 Notes.

In conjunction with the 2008 Notes, the Company had previously recognized a deferred tax liability related to the conversion feature of the debt. As a result of the repayment of the 2008 Notes, the Company reversed the remaining balance of the deferred tax liability which resulted in the recognition of a $2.4 million valuation allowance on a deferred tax asset, a $4.8 million increase to current income taxes payable and $11.5 million of additional paid-in capital for the year ended December 31, 2008.

On September 27, 2006, the Company exchanged $115.2 million (out of a total of a $120.0 million) of its 2.5% Contingent Convertible Subordinated Notes due 2008 (the “old notes”) for the equivalent amount of 2.5% Contingent Convertible Subordinated Notes due 2008 (the “new notes”). The terms of the new notes were substantially similar to those of the old notes, except that the new notes had a net share settlement feature and included “takeover protection,” whereby the Company would pay a premium to holders who convert their notes upon the occurrence of designated events, including a change in control. The net share settlement feature required that, upon conversion of the new notes, the Company pay holders in cash for up to the principal amount of the converted new notes with any amounts in excess of this cash amount settled, at the election of the Company, in cash or shares of its common stock. Holders who exchanged their old notes in the exchange offer received an exchange fee of $2.50 per $1,000 principal amount of their old notes. We paid approximately $0.3 million of exchange fees to tendering holders of the existing notes plus expenses totaling approximately $0.3 million in connection with the offer. The Company recorded a $1.2 million write-off of the unamortized debt issuance costs and $0.3 million of fees associated with the exchange of the old notes.

On October 20, 2006 an additional $4.3 million of old notes were tendered, bringing the total amount of exchanges to $119.5 million, or 99.6% of the original $120.0 million principal amount.

Holders were able to convert their notes at an initial conversion price of $34.15 per share, upon the occurrence of certain conditions, including when the market price of Integra’s common stock on the previous trading day was more than 110% of the conversion price. The notes are general, unsecured obligations of the Company and were subordinate to any future senior indebtedness of the Company. The Company was not able to redeem the notes prior to their maturity. Holders of the notes were able to require the Company to repurchase the notes upon a change in control.

Derivative Instruments

12 Months Ended

Dec. 31, 2010

Derivative Instruments [Abstract]

DERIVATIVE INSTRUMENTS


5.	DERIVATIVE INSTRUMENTS

Foreign Currency Hedging

The Company’s designated foreign currency hedge contract outstanding as of December 31, 2009 was a cash flow hedge under the authoritative guidance intended to protect the U.S. dollar value of certain forecasted foreign currency denominated intercompany transactions. There were no foreign currency hedge contracts outstanding as of December 31, 2010. The Company records the effective portion of any change in the fair value of foreign currency cash flow hedges in accumulated other comprehensive income (“AOCI”), net of tax, until the hedged item impacts earnings. Once the related hedged item effects earnings, the Company reclassifies the effective portion of any related unrealized gain or loss on the foreign currency cash flow hedge to earnings. If the hedged forecasted transaction does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to earnings at that time.

The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in euros. The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activity during periods of currency volatility. In addition, changes in currency exchange rates related to any unhedged transactions may impact its earnings and cash flows.

Interest Rate Hedging

The Company’s interest rate risk relates to U.S. dollar denominated variable LIBOR interest rate borrowings. The Company uses an interest rate swap derivative instrument entered into on August 10, 2010 with an effective date of December 31, 2010 to manage its earnings and cash flow exposure to changes in interest rates by converting a portion of its floating-rate debt into fixed-rate debt beginning on December 31, 2010. This interest rate swap expires on August 10, 2015.

The Company designates this derivative instrument as a cash flow hedge. The Company records the effective portion of any change in the fair value of a derivative instrument designated as a cash flow hedge as unrealized gains or losses in AOCI, net of tax, until the hedged item affects earning, at which point the effective portion of any gain or loss will be reclassified to earnings. If the hedged cash flow does not occur, or if it becomes probable that it will not occur, the Company will reclassify the amount of any gain or loss on the related cash flow hedge to interest expense at that time.

The Company expects that approximately $2.1 million of pre-tax losses recorded net in AOCI could be reclassified to earnings within the next twelve months related to the interest rate hedge.

Counterparty Credit Risk

The Company manages its concentration of counterparty credit risk on its derivative instruments by limiting acceptable counterparties to a group of major financial institutions with investment grade credit ratings, and by actively monitoring their credit ratings and outstanding positions on an on-going basis. Therefore, the Company considers the credit risk of the counterparties to be low. Furthermore, none of the Company’s derivative transactions is subject to collateral or other security arrangements, and none contains provisions that are dependent on the Company’s credit ratings from any credit rating agency.

Fair Value of Derivative Instruments

The following table summarizes the fair value, notional amounts presented in U.S. dollars, and presentation in the consolidated balance sheet for derivatives designated as hedging instruments as of December 31, 2010 and December 31, 2009 (in thousands):


	Fair Value as of				Notional Amount as of
	December 31,		December 31,		December 31,		December 31,
Location on Balance Sheet (1):	2010		2009		2010		2009

Derivative Liabilities:
Interest rate swap — Accrued expenses and other current liabilities(2)	$	270	$	—
Currency hedge contracts — Accrued expenses and other current liabilities		—		418	$	—	$	11,696

Total Derivative Liabilities	$	270	$	418


(1)		The Company classifies derivative assets and liabilities as current based on the cash flows expected to be incurred within the following 12 months.

(2)		The total notional amount related to the interest rate swap is $148.1 million. In the next twelve months this amount will be reduced by $8.4 million.

The following presents the effect of derivative instruments designated as cash flow hedges on the accompanying consolidated statements of operations during the years ended December 31, 2010 and 2009 (in thousands):


				Amount of Gain
	Amount of Gain			(Loss) Reclassified
	(Loss) Recognized			from AOCI Into			Location in
	in AOCI			Earnings			Statements of
	(Effective Portion)			(Effective Portion)			Operations

Year Ended December 31, 2010
Currency hedge contracts	$	2,756		$	2,782		Other income (expense)
Interest rate swap		(270	)		—		Interest (expense)

	$	2,486		$	2,782

Year Ended December 31, 2009
Currency hedge contracts	$	(418	)	$	(444	)	Other income (expense)

The Company recognized no gains or losses due to ineffectiveness for the years ended December 31, 2010 and 2009.

Treasury Stock

12 Months Ended

Dec. 31, 2010

Treasury Stock [Abstract]

TREASURY STOCK


6.	TREASURY STOCK

On October 30, 2007, the Company’s Board of Directors authorized the Company to repurchase shares of its common stock for an aggregate purchase price not to exceed $75.0 million through December 31, 2008. The Company did not purchase any shares of its common stock under this repurchase program during the year ended December 31, 2008. On October 30, 2008, the Company’s Board of Directors terminated the repurchase authorization it adopted in October 2007 and authorized the Company to repurchase shares of its common stock for an aggregate purchase price not to exceed $75.0 million through December 31, 2010. On October 29, 2010, the Company’s Board of Directors terminated the repurchase authorization it adopted in October 2008 and authorized the Company to repurchase shares of the Company’s common stock for an aggregate purchase price not to exceed $75.0 million through December 31, 2012. Shares may be purchased either in the open market or in privately negotiated transactions. As of December 31, 2010, there remained $75.0 million available for share repurchases under this latest authorization. The following table sets forth the Company’s treasury stock activity (amounts in thousands):


	Years Ended December 31,
	2010				2009
	$		# of Shares		$		# of Shares

Shares repurchased in the open market in connection with the Board approved buyback program	$	31,278		858	$	—		—

Stock Purchase and Award Plans

12 Months Ended

Dec. 31, 2010

Stock Purchase and Award Plans [Abstract]

STOCK PURCHASE AND AWARD PLANS


7.	STOCK PURCHASE AND AWARD PLANS

Employee stock-based compensation expense recognized under the authoritative guidance was as follows (in thousands):


	Years Ended December 31,
	2010		2009		2008

Selling, general and administrative	$	16,694	$	14,958	$	31,704
Research and development expense		426		492		674
Cost of product revenues		89		130		257

Total employee stock-based compensation expense		17,209		15,580		32,635
Total tax benefit related to employee stock-based compensation expense		7,006		6,253		13,053

Net effect on net income	$	10,203	$	9,327	$	19,582

The Company has never paid cash dividends and does not currently intend to pay cash dividends, and thus has assumed a 0% dividend yield. Expected volatilities are based on the historical volatility of the Company’s stock price with forward-looking assumptions. The expected life of stock options is estimated based on historical data on exercise of stock options, post-vesting forfeitures and other factors to estimate the expected term of the stock options granted. The risk-free interest rates are derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected life of the options. In addition, the Company applies an expected forfeiture rate when amortizing stock-based compensation expenses. The estimate of the forfeiture rates is based primarily upon historical experience of employee turnover. As individual grant awards become fully vested, stock-based compensation expense is adjusted to recognize actual forfeitures. The following weighted-average assumptions were used in the calculation of fair value:


	Years Ended December 31,
	2010	2009	2008

Dividend yield	0%	0%	0%
Expected volatility	30%	29%	29%
Risk free interest rate	2.82%	2.0%	2.11% to 4.01%
Expected life of option from grant date	8 years	8 years	6.8 years

The effect of the change in estimate has been accounted for on a prospective basis. The Company values stock option grants using the binomial distribution model. Management believes that the binomial distribution model is preferable to the Black-Scholes model because the binomial distribution model is a more flexible model that considers the impact of non-transferability, vesting and forfeiture provisions in the valuation of employee stock options.

EMPLOYEE STOCK PURCHASE PLAN

The purpose of the Employee Stock Purchase Plan (the “ESPP”) is to provide eligible employees of the Company with the opportunity to acquire shares of common stock at periodic intervals by means of accumulated payroll deductions. Under the ESPP, a total of 1.5 million shares of common stock are reserved for issuance. These shares will be made available either from the Company’s authorized but unissued shares of common stock or from shares of common stock reacquired by the Company as treasury shares. At December 31, 2010, 1.1 million shares remain available for purchase under the ESPP. During the years ended December 31, 2010, 2009 and 2008, the Company issued 5,515 shares, 7,263 shares and 11,873 shares under the ESPP for $0.2 million, $0.3 million and $0.4 million, respectively.

The ESPP was amended in 2005 to reduce the discount available to participants to five percent and to fix the price against which such discount would be applied. Accordingly, the ESPP is a non-compensatory plan.

EQUITY AWARD PLANS

As of December 31, 2010, the Company had stock options, restricted stock awards, and contract stock outstanding under six plans, the 1996 Incentive Stock Option and Non-Qualified Stock Option Plan (the “1996 Plan”), the 1998 Stock Option Plan (the “1998 Plan”), the 1999 Stock Option Plan (the “1999 Plan”), the 2000 Equity Incentive Plan (the “2000 Plan”), the 2001 Equity Incentive Plan (the “2001 Plan”), and the 2003 Equity Incentive Plan (the “2003 Plan”, and collectively, the “Plans”). No new awards may be granted under the the 1996 Plan, the 1998 Plan, the 1999 Plan or the 2000 Plan.

In July 2008 and May 2010, the stockholders of the Company approved amendments to the 2003 Plan to increase by 750,000 and 1,750,000, respectively, the number of shares of common stock that may be issued under the 2003 Plan. The Company has reserved 750,000 shares of common stock for issuance under both the 1993 Plan and 1996 Plan, 1,000,000 shares under the 1998 Plan, 2,000,000 shares under each of the 1999 Plan, the 2000 Plan and the 2001 Plan, and 6,500,000 shares under the 2003 Plan. The 1993 Plan, 1996 Plan, 1998 Plan, and the 1999 Plan permit the Company to grant both incentive and non-qualified stock options to designated directors, officers, employees and associates of the Company. The 2000 Plan, 2001 Plan, and 2003 Plan permit the Company to grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, contract stock, performance stock, or dividend equivalent rights to designated directors, officers, employees and associates of the Company. Stock options issued under the Plans become exercisable over specified periods, generally within four years from the date of grant for officers, employees and consultants, and generally expire six years from the grant date. The transfer and non-forfeiture provisions of restricted stock issued under the Plans lapse over specified periods, generally at three years after the date of grant.

Stock Options

The following table summarizes the Company’s stock option activity:


				Weighted		Weighted
				Average		Average		Aggregate
				Exercise		Contractual		Intrinsic
Stock Options	Shares			Price		Term in Years		Value
	(In thousands)							(In thousands)

Outstanding at December 31, 2009		2,408		$	33.65
Granted		59			41.75
Exercised		(884	)		26.27
Forfeited or Expired		(23	)		34.02

Outstanding at December 31, 2010		1,560		$	38.13		5.0	$	14,567

Vested or expected to vest at December 31, 2010		1,560		$	38.13		5.0	$	14,567

Exercisable at December 31, 2010		1,427		$	37.62		4.8	$	14,021

The intrinsic value of options exercised for the years ended December 31, 2010, 2009 and 2008 was $14.4 million, $1.0 million and $9.2 million, respectively. The weighted average grant date fair value of options granted during the years ended December 31, 2010, 2009 and 2008 was $17.03, $8.12 and $18.08, respectively. Cash received from option exercises was $16.1 million, $6.6 million and $11.5 million, for the years ended December 31, 2010, 2009 and 2008, respectively.

As of December 31, 2010, there was approximately $1.9 million of total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of approximately 1.1 years.

Awards of Restricted Stock, Performance Stock and Contract Stock

The following table summarizes the Company’s awards of restricted stock, performance stock and contract stock for the year ended December 31, 2010 (shares in thousands):


	Restricted Stock Awards					Performance Stock and Contract Stock Awards
				Wtd. Avg.					Wtd. Avg
				Fair Value					Fair Value
	Shares			Per Share		Shares			Per Share

Unvested, December 31, 2009		482		$	32.29		294		$	36.15
Granted		192			42.42		152			46.47
Cancellations		(34	)		33.66		—			—
Released		(227	)		35.73		(12	)		44.37
Vested but not released		—			—		(157	)		37.39

Unvested, December 31, 2010		413		$	34.98		277		$	40.74

The Company recognized $13.5 million, $10.5 million and $25.5 million in expense related to such awards during the years ended December 31, 2010, 2009 and 2008, respectively. The total fair market value of shares vested in 2010, 2009 and 2008 was $11.5 million, $4.7 million and $25.5 million, respectively.

Performance stock awards have performance features associated with them. Performance stock, restricted stock and contract stock awards generally have requisite service periods of three years. The fair value of these awards is being expensed on a straight-line basis over the vesting period. As of December 31, 2010, there was approximately $17.2 million of total unrecognized compensation costs related to unvested awards. These costs are expected to be recognized over a weighted-average period of approximately 2.2 years.

In December 2000, the Company issued 1,250,000 Restricted Units under the 2000 Plan as a fully vested equity based bonus to the Company’s Chief Executive Officer (the “Executive”) in connection with the extension of his employment agreement. Each Restricted Unit represents the right to receive one share of the Company’s common stock. In January 2006, the Company released 750,000 shares of the Company’s common stock to the Executive pursuant to the obligations with respect to these Restricted Units, and in March 2008, the Company released the remaining 500,000 shares. In July 2004, the Company renewed the Executive’s employment agreement and the Executive received fully vested Restricted Units providing for the payment of 750,000 shares of Integra common stock which shall generally be delivered to the Executive following his termination of employment or retirement, or i) later under certain circumstances, ii) earlier if he is terminated without cause, or iii) if he leaves his position for good reason or upon a change of control or certain tax related events. In August 2008, the Company and the Executive renewed the Executive’s employment agreement through December 31, 2011. In connection with the renewal of the agreement, the Executive received fully vested Restricted Units providing for the payment of 375,000 shares of Integra common stock which shall be delivered to the Executive within the 30-day period immediately following the six month anniversary of his separation of service from the Company. As the Restricted Units vested on the grant date, a charge of approximately $18.0 million was recognized upon issuance, which was included in selling, general and administrative expenses. The Restricted Units granted in 2004 and 2008 were granted under the 2003 Plan and, as of December 31, 2010, the related shares have not been issued. The Executive has demand registration rights under the Restricted Unit grants.

At December 31, 2010, in addition to the Restricted Units discussed above, there are approximately 300,000 additional vested Restricted Units held by various employees for which the related shares have not yet been issued. Included in this amount are 34,868 shares issued in October 2010 in connection with the Company’s hiring of a new President and Chief Operating Officer for which the Company expensed $1.5 million as these shares were fully vested.

At December 31, 2010, there were 2,119,988 shares available for grant under the Plans.

Retirement Benefit Plans

12 Months Ended

Dec. 31, 2010

Retirement Benefit Plans [Abstract]

RETIREMENT BENEFIT PLANS


8.	RETIREMENT BENEFIT PLANS

The Company recognizes the overfunded or underfunded status of a defined benefit postretirement plan as an asset or liability in its statement of financial position and to recognize changes in that funded status in the year in which the changes occur through comprehensive income. The Company currently recognizes the unfunded liability for each of its plans. Therefore, the implementation of this statement had no effect on the financial statements upon its adoption.

DEFINED BENEFIT PLANS

The Company maintains defined benefit pension plans that cover employees in its manufacturing plants located in Andover, United Kingdom (the “UK Plan”) and Tuttlingen, Germany (the “Germany Plan”). The plan covering employees in the manufacturing plant located in York, Pennsylvania (the “Miltex Plan”) was frozen and all future benefits were curtailed prior to the acquisition of Miltex by the Company. During 2008, the Miltex Plan was terminated with all distributions made to participants. The Company recognized approximately $0.4 million in additional costs to fund these distributions. Accordingly, the Miltex Plan had no assets or liabilities remaining at December 31, 2010 and 2009. The Company closed the Tuttlingen, Germany plant in December 2005. However, the Germany Plan was not terminated and the Company remains obligated for the accrued pension benefits related to this plan. The plans cover certain current and former employees. The plans are no longer open to new participants. The Company uses a December 31 measurement date for all of its pension plans.

Net periodic benefit costs for these defined benefit pension plans included the following amounts:


	Years Ended December 31,
	2010			2009			2008
	Non U.S.			Non U.S.			U.S.		Non U.S.
	Plans			Plans			Plan		Plans
	(In thousands)

Service cost	$	93		$	121		$	—	$	141
Interest cost		645			605			14		718
Expected return on plan assets		(515	)		(413	)		—		(493	)
Recognized net actuarial loss		86			307			—		553

Net periodic benefit cost	$	309		$	620		$	14	$	919

The following weighted average assumptions were used to develop net periodic pension benefit cost and the actuarial present value of projected pension benefit obligations:


	Years Ended December 31,
	2010			2009			2008
	Non U.S.			Non U.S.			Non U.S.
	Plans			Plans			Plans

Discount rate		5.4	%		5.9	%		6.6	%
Expected return on plan assets		5.2	%		5.4	%		5.2	%
Rate of compensation increase		3.4	%		3.7	%		3.1	%

The expected return on plan assets represents the average rate of return expected to be earned on plan assets over the period the benefits included in the benefit obligation are to be paid. In developing the expected rate of return, the Company considers long-term compound annualized returns of historical market data as well as actual returns on the plan assets and applies adjustments that reflect more recent capital market experience. Using this reference information, the long-term return expectations for each asset category are developed according to the allocation among those investment categories. In 2010 and 2009, the discount rate was prescribed as the current yield on corporate bonds with an average rating of AA of equivalent currency and term to the liabilities. In 2008, the discount rate was prescribed as the current yield on corporate bonds with an average rating of AAA of equivalent currency and term to the liabilities.

The following sets forth the change in projected benefit obligations and the change in plan assets for the years ended December 31, 2010 and 2009 and a reconciliation of the funded status at December 31, 2010 and 2009:


	December 31,
	2010			2009
	Non-U.S.			Non-U.S.
	Plans			Plans
	(In thousands)

CHANGE IN PROJECTED BENEFIT OBLIGATION
Projected benefit obligation, beginning of year	$	11,550		$	9,616
Service cost		93			121
Interest cost		645			605
Participant contributions		17			22
Benefits paid		(464	)		(481	)
Actuarial loss (gain)		551			712
Effect of foreign currency exchange rates		(350	)		955

Projected benefit obligation, end of year	$	12,042		$	11,550

CHANGE IN PLAN ASSETS
Plan assets at fair value, beginning of year	$	9,302		$	7,433
Actual return on plan assets		1,070			1,129
Employer contributions		1,157			409
Participant contributions		17			22
Benefits paid		(444	)		(454	)
Effect of foreign currency exchange rates		(268	)		763

Plan assets at fair value, end of year	$	10,834		$	9,302


	December 31,
	2010			2009
	Non-U.S.			Non-U.S.
	Plans			Plans
	(In thousands)

RECONCILIATION OF FUNDED STATUS
Funded status, projected benefit obligation in excess of plan assets	$	(1,208	)	$	(2,248	)
Unrecognized net actuarial loss		1,061			1,190
Accumulated other comprehensive loss		(1,061	)		(1,190	)

Amounts recognized	$	(1,208	)	$	(2,248	)

The accrued benefit liability recorded at December 31, 2010 and 2009 is included in other liabilities, and the current portion is included in accrued expenses.

The combined accumulated benefit obligation for the defined benefit plans was $11.9 million and $11.5 million as of December 31, 2010 and 2009, respectively. The accumulated benefit obligation for each plan exceeded that plan’s assets for all periods presented.

The investment strategy for the Company’s defined benefit plans is both to meet the liabilities of the plans as they fall due and to maximize the return on invested assets within appropriate risk tolerances. The U.K. Plan invests in pooled funds which provide a diversification that supports the overall investment objectives. Neither the Miltex nor Germany Plans had any assets at December 31, 2010 or December 31, 2009.

Based on the assets which comprise each of the funds, the weighted-average allocation of plan assets by asset category is as follows:


	December 31,
	2010			2009
	Non-U.S.			Non-U.S.
	Plans			Plans

Equity securities		19	%		18	%
Corporate bonds		33	%		34	%
Government bonds		46	%		47	%
Cash		2	%		1	%

		100	%		100	%

The fair value of the Company’s pension plan assets at December 31, 2010 and 2009 is as follows (in thousands):


		Fair Value Measurements at December 31, 2010:
				Quoted Prices in
				Active Markets		Significant		Significant
				for Identical		Observable		Unobservable
				Assets		Inputs		Inputs
Manager/Fund	Asset Category	Total		(Level 1)		(Level 2)		(Level 3)

Bank account	Cash	$	254	$	254	$	—	$	—
Baillie Gifford-Managed Pension Fund(a)	Equity securities		2,012		—		2,012		—
	Corporate bonds		134		—		134		—
	Cash		46		46		—		—
Baillie Gifford-Investment Grade Long Bond Fund(b)	Corporate bonds		3,439		—		3,439		—
Legal & General-Over 15 Year Index Linked Gilts Index(c)	Index-linked government bonds		4,949		—		4,949		—

Total		$	10,834	$	300	$	10,534	$	—


		Fair Value Measurements at December 31, 2009:
				Quoted Prices in
				Active Markets		Significant		Significant
				for Identical		Observable		Unobservable
				Assets		Inputs		Inputs
Manager/Fund	Asset Category	Total		(Level 1)		(Level 2)		(Level 3)

Bank account	Cash	$	50	$	50	$	—	$	—
Baillie Gifford-Managed Pension Fund(a)	Equity securities		1,681		—		1,681		—
	Overseas government bonds		4		—		4		—
	Corporate bonds		203		—		203		—
	Cash		48		48		—		—
Baillie Gifford-Investment Grade Long Bond Fund(b)	Corporate bonds		3,159		—		3,159		—
Legal & General-Over 15 Year Index Linked Gilts Index(c)	Index-linked government bonds		4,157		—		4,157		—

Total		$	9,302	$	98	$	9,204	$	—


(a)		This category represents a pooled fund consisting of holdings in a range of UK and overseas equities and bonds, and cash.

(b)		This category represents a diversified portfolio of investment-grade fixed-interest securities.

(c)		This category represents a fund consisting of index-linked gifts and is designated to follow a benchmark index.

The Level 2 investments are single priced. The fund prices are calculated by the trustee by taking the closing market price of each underlying investment using a variety of independent pricing sources (i.e., quoted market prices). The prices also include income receivable and expenses payable, where applicable.

Based on year-end exchange rates, the Company anticipates contributing approximately $0.7 million to its defined benefit plans in 2011. Also based on year-end exchange rates, the Company expects to pay the following estimated future benefit payments in the years indicated (in thousands):


2011	$	435
2012		478
2013		516
2014		548
2015		581
2016-2020		3,361

Included in Accumulated Other Comprehensive Income is $1.1 million of unrecognized net actuarial loss, a portion of which is expected to be recognized as a component of net periodic benefit cost in 2011.

DEFINED CONTRIBUTION PLANS

The Company also has various defined contribution savings plans that cover substantially all employees in the United States, the United Kingdom and Puerto Rico. The Company matches a certain percentage of each employee’s contributions as per the provisions of the plans. Total contributions by the Company to the plans were $2.0 million, $1.7 million and $1.4 million for the years ended December 31, 2010, 2009 and 2008, respectively.

- Definition

Description containing the entire pension and other postretirement benefits disclosure as a single block of text.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 158

-Paragraph 7, 21, 22

Reference 2: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5, 6, 7, 8

Reference 3: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 8

-Subparagraph m

Reference 4: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 106

-Paragraph 518

Reference 5: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 87

-Paragraph 264

Reference 6: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph b

Reference 7: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph a

Reference 8: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph h

Reference 9: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Statement of Financial Accounting Standard (FAS)

-Number 132R

-Paragraph 5

-Subparagraph q

Reference 10: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name FASB Staff Position (FSP)

-Number FAS106-2

-Paragraph 20, 21, 22

Reference 11: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Emerging Issues Task Force (EITF)

-Number 03-2

-Paragraph 8

Reference 12: http://www.xbrl.org/2003/role/presentationRef

-Publisher AICPA

-Name Accounting Principles Board Opinion (APB)

-Number 30

-Paragraph 26

Reference 13: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Implementation Guide (Q and A)

-Number FAS88

-Paragraph 63

+ Details

Leases and Related Party Leases

12 Months Ended

Dec. 31, 2010

LEASES AND RELATED PARTY LEASES


9.	LEASES AND RELATED PARTY LEASES

The Company leases administrative, manufacturing, research and distribution facilities and various manufacturing, office and transportation equipment through operating lease agreements. Future minimum lease payments under operating leases at December 31, 2010 were as follows:


	Related		Third
	Parties		Parties		Total
	(In thousands)

2011	$	942	$	7,260	$	8,202
2012		945		6,560		7,505
2013		918		5,798		6,716
2014		918		4,998		5,916
2015		866		2,473		3,339
Thereafter		2,343		4,372		6,715

Total minimum lease payments	$	6,932	$	31,461	$	38,393

Total rental expense for the years ended December 31, 2010, 2009 and 2008 and was $8.2 million, $8.1 million and $5.9 million, respectively, and included $0.8 million, $0.9 million and $0.5 million in related party rental expense, respectively.

Related Party Leases

The Company leases certain production equipment from a corporation whose sole stockholder is a general partnership, of which the Company’s Chairman is a partner and the President. The term of the lease is through March 31, 2022, and the Company has an option to renew through March 31, 2032. Under the terms of the lease agreement, the Company pays $0.1 million per year to the related party lessor. The Company also leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50% owned by a corporation whose shareholders are trusts, whose beneficiaries include family members of the Company’s Chairman. The term of the current lease agreement is through October 31, 2017 at an annual rate of approximately $0.3 million per year. The current lease agreement also provides a ten-year option for the Company to extend the lease from November 1, 2017 through October 31, 2027 at an annual rate of approximately $0.3 million per year.

Income Taxes

12 Months Ended

Dec. 31, 2010

Income Taxes [Abstract]

INCOME TAXES


10.	INCOME TAXES

Income (loss) before income taxes consisted of the following:


	Years Ended December 31,
	2010		2009		2008
	(In thousands)

United States operations	$	40,028	$	42,113	$	(1,016	)
Foreign operations		42,086		31,039		19,551

Total	$	82,114	$	73,152	$	18,535

A reconciliation of the U.S. Federal statutory rate to the Company’s effective tax rate is as follows:


	Years Ended December 31,
	2010			2009			2008

Federal statutory rate		35.0	%		35.0	%		35.0	%
Increase (reduction) in income taxes resulting from:
State income taxes, net of federal tax benefit		2.6	%		2.6	%		3.2	%
Foreign operations		(10.3	)%		(9.9	)%		(19.3	)%
Incentive stock option expense		(0.3	)%		(0.2	)%		0.7	%
Change in valuation allowances		1.7	%		4.4	%		(4.8	)%
Uncertain tax positions		(4.6	)%		—	%		—	%
German tax restructuring		—			—	%		(53.5	)%
Other		(4.1	)%		(1.6	)%		(10.9	)%

Effective tax rate		20.0	%		30.3	%		(49.6	)%

In the fourth quarter of 2010, the Company recorded the full year income tax benefit related to the passing of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. In the fourth quarter of 2008, the Company reported a $10.0 million deferred income tax benefit related to the restructuring of a German subsidiary.

At December 31, 2010, the Company had net operating loss carryforwards of $9.4 million for federal income tax purposes, $135.6 million for foreign income tax purposes and $35.1 million for state income tax purposes to offset future taxable income. The federal net operating loss carryforwards expire through 2027, $46.0 million of the foreign net operating loss carryforwards expire through 2018 with the remaining $89.6 million having an indefinite carry forward period. The state net operating loss carryforwards expire through 2029.

At December 31, 2010 and 2009, several of the Company’s subsidiaries had unused net operating loss carryforwards and tax credit carryforwards arising from periods prior to the Company’s ownership which expire through 2027. The Internal Revenue Code limits the timing and manner in which the Company may use any acquired net operating losses or tax credits.

Income taxes are not provided on certain undistributed earnings of non-U.S. subsidiaries because such earnings are expected to be permanently reinvested. Undistributed earnings of such foreign subsidiaries totaled $140.2 million, $101.4 million and $72.7 million at December 31, 2010, 2009 and 2008, respectively.

The provision for (benefit from) income taxes consisted of the following:


	Years Ended December 31,
	2010		2009			2008
	(In thousands)

Current:
Federal	$	2,686	$	9,106		$	13,793
State		1,136		4,021			4,808
Foreign		8,495		8,522			5,749

Total current		12,317		21,649			24,350
Deferred:
Federal		2,522		1,281			(19,253	)
State		835		(672	)		(2,790	)
Foreign		771		(61	)		(11,499	)

Total deferred		4,128		548			(33,542	)

Provision for (benefit from) income taxes	$	16,445	$	22,197		$	(9,192	)

The income tax effects of significant temporary differences that give rise to deferred tax assets and liabilities, shown before jurisdictional netting, are presented below:


	December 31,
	2010			2009
	(In thousands)

Current assets:
Doubtful accounts	$	2,033		$	3,404
Inventory reserves		25,131			18,542
Tax credits		1,469			1,731
Accrued vacation		2,082			1,762
Accrued bonus		3,126			2,190
Other		5,088			2,263

Total current deferred tax assets		38,929			29,892
Less valuation allowance		(852	)		(503	)

Current deferred tax assets after valuation allowance		38,077			29,389

Current liabilities:
Other		(3,872	)		(492	)

Total current deferred tax liabilities		(3,872	)		(492	)


Net current deferred tax assets	$	34,205		$	28,897


	December 31,
	2010			2009
	(In thousands)

Non-current assets:
Benefits and compensation	$	9,616		$	9,790
Stock compensation		19,770			19,650
Deferred revenue		389			805
Net operating loss carryforwards		35,223			38,056
Financing costs		4,493			8,517
Federal & state tax credits		1,705			2,133
Other		2,801			5,143

Total non-current deferred tax assets		73,997			84,094
Less valuation allowance		(35,782	)		(35,628	)

Non-current deferred tax assets after valuation allowance		38,215			48,466

Non-current liabilities:
Intangible & fixed assets		(31,751	)		(28,319	)
Deferred gain		(449	)		(351	)
Non-cash interest amortization		(4,713	)		(8,502	)
Other		(4,053	)		(4,786	)

Total non current deferred tax liabilities		(40,966	)		(41,958	)

Net non-current deferred tax assets/(liabilities)		(2,751	)		6,508

Total net deferred tax assets/(liabilities)	$	31,454		$	35,405

A valuation allowance of $36.6 million, $36.1 million and $36.0 million is recorded against the Company’s gross deferred tax assets of $112.9 million, $114.0 million and $114.4 million recorded at December 31, 2010, 2009 and 2008, respectively. This valuation allowance relates to deferred tax assets for certain items that will be deductible for income tax purposes under very limited circumstances and for which the Company believes it is not more likely than not that it will realize the associated tax benefit. The Company does not anticipate additional income tax benefits through future reductions in the valuation allowance. However, in the event that the Company determines that it would be able to realize more or less than the recorded amount of net deferred tax assets, an adjustment to the deferred tax asset valuation allowance would be recorded in the period such a determination is made.

The Company’s valuation allowance increased by $0.5 million in 2010 and increased by $0.1 million in 2009. The movement for both years was mainly the result of future realizability of net operating losses.

The Company adopted the authoritative guidance on accounting for uncertainty in income taxes on January 1, 2007. A reconciliation of the beginning and ending amount of uncertain tax benefits is as follows:


	2010			2009			2008
	(In thousands)

Balance, beginning of year	$	10,909		$	9,033		$	8,833
Additions for tax positions of prior years		1,685			3,785			948
Settlements		(5,264	)		—			—
Lapse of statute		(1,800	)		(1,909	)		(748	)

Balance, end of year	$	5,530		$	10,909		$	9,033

The balance of approximately $5.5 million at December 31, 2010 relates to uncertain tax positions that, if recognized, would affect the annual effective tax rate. Included in the balance of uncertain tax positions at December 31, 2010 is $3.2 million related to tax positions for which it is reasonably possible that the total amounts could significantly change during the twelve months following December 31, 2010, as a result of expiring statutes of limitations.

The Company recognizes interest and penalties relating to uncertain tax positions in income tax expense. During the year ended December 31, 2010, the Company recognized a net benefit of approximately $0.9 million in interest and penalties which was reflected in the income statement. During the year ended December 31, 2009, the Company recognized approximately $0.5 million in interest and penalties, all of which was reflected in the income statement. During the year ended December 31, 2008, the Company recognized approximately $0.5 million in interest and penalties of which $0.7 million was reflected in the consolidated statement of operations and $0.2 million was a balance sheet adjustment. The Company had approximately $2.1 million, $3.0 million and $2.5 million of interest and penalties accrued at December 31, 2010, 2009 and 2008, respectively.

At December 31, 2009 the Federal income tax returns for the years 2005 through 2007 were under review by the Internal Revenue Service (the “IRS”) and the Company had accrued $8.5 million for uncertain tax positions at that time. During 2010, the scope of this review was expanded to include the 2008 tax year as well. During 2010, the Company settled the review for the years 2005 to 2007 with the IRS which resulted in $4.0 million in taxes being reclassified from long-term liabilities to current taxes payable and deferred taxes, and $4.5 million being recorded in the consolidated statement of operations as an income tax benefit. This settlement is currently in Joint Committee with the IRS which is an administrative procedure that is customary with settlements of this size. These amounts include interest and penalties related to the settlement and tax benefit.

The Company files Federal income tax returns, as well as multiple state, local and foreign jurisdiction tax returns. The Company is no longer subject to examinations of its Federal income tax returns by the IRS through fiscal year 2004 and as noted above, 2005 through 2007 are currently being reviewed by Joint Committee. All significant state and local matters have been concluded through fiscal 2004. All significant foreign matters have been settled through fiscal 2003.

Net Income Per Share

12 Months Ended

Dec. 31, 2010

Net Income Per Share [Abstract]

NET INCOME PER SHARE


11.	NET INCOME PER SHARE

In January 2009 the Company adopted the authoritative guidance related to determining whether instruments issued in share-based payment transactions are participating securities. Certain of the Company’s unvested restricted share units contain rights to receive nonforfeitable dividends, and thus, are participating securities requiring the two-class method of computing earnings per share. The participating securities had an insignificant impact on the calculation of earnings per share (impacts the rounding by $0.01 or less per share); therefore, the Company does not present the full calculation below.

Amounts used in the calculation of basic and diluted net income per share were as follows:


	Years Ended December 31,
	2010		2009		2008
	(In thousands,
	except per share amounts)

Basic net income per common share:
Net income	$	65,669	$	50,955	$	27,727
Weighted average common shares outstanding		29,548		29,038		27,781
Basic net income per common share	$	2.21	$	1.75	$	0.98
Diluted net income per common share:
Net income	$	65,669	$	50,955	$	27,727
Weighted average common shares outstanding — Basic		29,548		29,038		27,781
Effect of dilutive securities:
Stock options and restricted stock		601		254		597

Weighted average common shares for diluted earnings per share		30,149		29,292		28,378
Diluted net income per common share	$	2.17	$	1.74	$	0.96

Common stock of approximately 691,000 shares, 2,097,000 shares and 530,000 shares at December 31, 2010, 2009 and 2008, respectively, that are issuable through exercise or conversion of dilutive securities were not included in the computation of diluted net income per share because their effect would have been antidilutive.

Performance Shares and Restricted Units that entitle the holders to approximately 1,400,000 shares of common stock are included in the basic and diluted weighted average shares outstanding calculation from their date of issuance because no further consideration is due related to the issuance of the underlying common shares.

Commitments and Contingencies

12 Months Ended

Dec. 31, 2010

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES


12.	COMMITMENTS AND CONTINGENCIES

In consideration for certain technology, manufacturing, distribution and selling rights and licenses granted to the Company, the Company has agreed to pay royalties on the sales of products that are commercialized relative to the granted rights and licenses. Royalty payments under these agreements by the Company were not significant for any of the periods presented.

Various lawsuits, claims and proceedings are pending or have been settled by the Company. The most significant of these are described below.

In January 2010, the Company received a notice from the seller’s representative of the former Theken companies of a disagreement in the calculation of “trade sales” used in calculating a revenue performance payment that the Company made in November 2009 related to the first performance year that ended September 30, 2009. The notice alleged that the Company owed an additional $6.7 million. In January 2011, the Company received a notice from the seller’s representative that the alleged amount owed had been reduced to $5.7 million. The Company is currently discussing this matter with the seller’s representative in an attempt to resolve the dispute in accordance with the provisions contained in the asset purchase agreement governing the transaction. The Company has accrued $3.4 million at December 31, 2010 for the settlement in this matter. The Company believes that there are no additional amounts due under the asset purchase agreement for the second performance year that ended September 30, 2010.

The Company has various product liability claims pending against it for which it currently has accruals totaling $2.1 million recorded in the financial statements. All matters are covered by the Company’s insurance policies and it has recorded a corresponding receivable. Therefore, there is no impact on the Company’s consolidated statements of operations.

In addition to these matters, we are subject to various claims, lawsuits and proceedings in the ordinary course of the Company’s business, including claims by current or former employees, distributors and competitors and with respect to its products. In the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected, individually or in the aggregate, to result in a material adverse effect on our financial condition. However, it is possible that the Company’s results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.

The Company accrues for loss contingencies when it is deemed probable that a loss has been incurred and that loss is estimable. The amounts accrued are based on the full amount of the estimated loss before considering insurance proceeds, and do not include an estimate for legal fees expected to be incurred in connection with the loss contingency. The Company consistently accrues legal fees expected to be incurred in connection with loss contingencies as those fees are incurred by outside counsel as a period cost.

Segment and Geographic Information

12 Months Ended

Dec. 31, 2010

Segment and Geographic Information [Abstract]

SEGMENT SEGMENT AND GEOGRAPHIC INFORMATIONGEOGRAPHIC INFORMATION


13.	SEGMENT AND GEOGRAPHIC INFORMATION

The Company’s management reviews financial results and manages the business on an aggregate basis. Therefore, financial results are reported in a single operating segment, the development, manufacture and marketing of medical devices for use in cranial and spinal procedures, peripheral nerve repair, small bone and joint injuries, and the repair and reconstruction of soft tissue.

Revenue consisted of the following:


	Years Ended December 31,
	2010		2009		2008
	(In thousands)

Orthopedics	$	290,050	$	262,170	$	217,953
Neurosurgery		275,046		256,544		256,869
Instruments		166,972		163,773		179,782

Total revenue, net	$	732,068	$	682,487	$	654,604

The Company attributes revenue to geographic areas based on the location of the customer. Total revenue, net and long-lived assets (tangible) by major geographic area are summarized below:


	United				Asia		Other
	States		Europe		Pacific		Foreign		Consolidated
	(In thousands)

Total revenue, net:
2010	$	561,240	$	89,381	$	40,584	$	40,863	$	732,068
2009		519,203		93,414		32,788		37,082		682,487
2008		494,459		98,848		28,509		32,788		654,604
Long-lived assets:
December 31, 2010	$	81,496	$	25,885	$	352	$	—	$	107,733
December 31, 2009		61,527		24,202		111		—		85,840

Selected Quarterly Information - Unaudited

12 Months Ended

Dec. 31, 2010

Selected Quarterly Information - Unaudited [Abstract]

SELECTED QUARTERLY INFORMATION ? UNAUDITED


14.	SELECTED QUARTERLY INFORMATION — UNAUDITED


	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
	(In thousands, except per share data)

Total revenue, net:
2010	$	172,698	$	178,595	$	186,641	$	194,134
2009		160,950		165,725		172,286		183,526
Gross margin:
2010	$	109,474	$	114,131	$	117,447	$	122,828
2009		102,802		105,921		109,265		119,581
Net income (loss):
2010	$	15,222	$	15,157	$	16,483	$	18,807
2009		9,567		11,225		14,432		15,731
Basic net income (loss) per common share(1):
2010	$	0.51	$	0.51	$	0.56	$	0.64
2009		0.33		0.38		0.49		0.54
Diluted net income (loss) per common share(1):
2010	$	0.50	$	0.50	$	0.55	$	0.63
2009		0.32		0.38		0.49		0.53


(1)		Per common share amounts for the quarters and full years have been calculated separately. Accordingly, quarterly amounts do not necessarily add to the annual amount because of differences in the weighted average common shares outstanding during each period principally due to the effect of the Company’s issuing shares of its common stock during the year.

- Definition

This element can be used to disclose the entire quarterly financial data disclosure in the annual financial statements as a single block of text. The disclosure includes a tabular presentation of financial information for each fiscal quarter for the current and previous year, including revenues, gross profit, income (loss) before extraordinary items and cumulative effect of a change in accounting principle and earnings per share data. It also includes an indication if the information in the note is unaudited, comments on the aggregate effect of year-end adjustments, and an explanation of matters or transactions that affect comparability or are pertinent to an understanding of the information furnished. Alternatively, the details of this disclosure can be reported using the elements in this group, or by using other taxonomy elements and applying the appropriate quarterly date and period contexts when creating an instance document. For example, the element for "Interest and Dividend Income, Operating" may be used by financial institutions from the Statement of Income, applying the appropriate quarterly date and period context when creating an instance document.

+ References+ Details

Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2010

Valuation and Qualifying Accounts [Abstract]

VALUATION AND QUALIFYING ACCOUNTS

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS


	Balance at		Charged to			Charged to						Balance at
	Beginning of		Costs and			Other						End of
Description	Period		Expenses			Accounts(1)			Deductions			Period
	(In thousands)

Year ended December 31, 2010:
Allowance for doubtful accounts and sales returns and allowances	$	11,216	$	(2,167	)	$	—		$	(1,727	)	$	7,322
Deferred tax asset valuation allowance		36,131		431			1,160			(1,088	)		36,634
Year ended December 31, 2009:
Allowance for doubtful accounts and sales returns and allowances	$	10,052	$	2,645		$	—		$	(1,481	)	$	11,216
Deferred tax asset valuation allowance		35,968		3,649			(3,286	)		(200	)		36,131
Year ended December 31, 2008:
Allowance for doubtful accounts and sales returns and allowances	$	7,816	$	3,016		$	—		$	(780	)	$	10,052
Deferred tax asset valuation allowance		40,925		—			(2,436	)		(2,521	)		35,968


(1)		In 2010, $1.2 million of deferred tax liability was reclassified to the valuation allowance with no impact to the consolidated statement of operations. In 2009, the balance was reduced by $3.3 million, which was no longer required as a result of the estimated expiration of the carryforward period of a net operating loss carryforward for which a deferred tax asset had been previously recorded. In 2008, $2.0 million was charged to additional paid-in capital.