What changed in this filing

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Item 1. Financial Statements

2021-03-31 compared with 2021-01-08 · 140 added, 163 removed, 514 unchanged (37% of the section changed)

4 unchanged sentences

(in thousands of dollars, except per share data)

Three Months Ended Six Months Ended

Nov 30, 2020 Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

Three Months Ended Nine Months Ended

Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Net sales $ 71,182 $ 69,780 $ 214,168 $ 205,825

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Other income (expense), net ( 163 ) ( 131 ) 259 ( 67 )

Total other income (expense), net ( 337 ) 121 ( 28 ) ( 442 )

Total other expense, net ( 389 ) ( 297 ) ( 417 ) ( 739 )

Loss before income tax benefit ( 4,127 ) ( 6,533 ) ( 14,113 ) ( 11,226 )

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(in thousands of dollars)

Three Months Ended Six Months Ended

Nov 30, 2020 Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

Three Months Ended Nine Months Ended

Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Net loss $ ( 3,544 ) $ ( 5,709 ) $ ( 12,080 ) $ ( 9,720 )

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(in thousands of dollars, except share data)

Nov 30, 2020 May 31, 2020

Feb 28, 2021 May 31, 2020

Current assets

27 unchanged sentences

Common stock, par value $ 0.01 per share, 75,000,000 shares authorized;

38,702,030 and 38,448,536 shares issued and 38,332,030 and 38,078,536 shares outstanding at November 30, 2020 and May 31, 2020, respectively

38,877,367 and 38,448,536 shares issued and 38,507,367 and 38,078,536 shares outstanding at February 28, 2021 and May 31, 2020, respectively

Additional paid-in capital 570,725 561,871

Accumulated deficit ( 112,398 ) ( 100,318 )

Treasury stock, 370,000 shares at November 30, 2020 and May 31, 2020, respectively

Treasury stock, 370,000 shares at February 28, 2021 and May 31, 2020, respectively

( 5,714 ) ( 5,714 )

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(in thousands of dollars)

Six Months Ended

Nov 30, 2020 Nov 30, 2019

Nine Months Ended

Feb 28, 2021 Feb 29, 2020

Cash flows from operating activities:

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Cash flows from financing activities:

Proceeds from borrowings on long-term debt — 15,000

Repayment of long-term debt ( 10,000 ) ( 132,500 )

2 unchanged sentences

Proceeds (outlays) from exercise of stock options and employee stock purchase plan 2,459 ( 706 )

Net cash provided by (used in) financing activities 481 ( 135,749 )

Net cash used in financing activities ( 7,541 ) ( 120,189 )

Effect of exchange rate changes on cash and cash equivalents 248 8

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Balance at November 30, 2020 38,702,030 $ 375 $ 566,602 $ ( 108,854 ) $ 1,934 ( 370,000 ) $ ( 5,714 ) $ 454,343

Net loss ( 3,544 ) ( 3,544 )

Exercise of stock options 81,636 1 1,353 1,354

Issuance/Cancellation of restricted stock units 9,103 ( 49 ) ( 49 )

Purchases of common stock under ESPP 84,598 1 672 673

Stock-based compensation 2,147 2,147

Other comprehensive income, net of tax 12 12

Balance at February 28, 2021 38,877,367 $ 377 $ 570,725 $ ( 112,398 ) $ 1,946 ( 370,000 ) $ ( 5,714 ) $ 454,936

Common Stock Additional

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Balance at November 30, 2019 38,363,926 $ 373 $ 557,965 $ 62,458 $ ( 1,272 ) ( 370,000 ) $ ( 5,714 ) $ 613,810

Net loss ( 5,709 ) ( 5,709 )

Exercise of stock options 2,500 30 30

Issuance/Cancellation of restricted stock units 8,034 ( 25 ) ( 25 )

Purchases of common stock under ESPP 60,297 1 588 589

Stock-based compensation 1,772 1,772

Other comprehensive income, net of tax 8 8

Balance at February 29, 2020 38,434,757 $ 374 $ 560,330 $ 56,749 $ ( 1,264 ) ( 370,000 ) $ ( 5,714 ) $ 610,475

The accompanying notes are an integral part of these consolidated financial statements.

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CONSOLIDATED FINANCIAL STATEMENTS

The Consolidated Balance Sheet as of November 30, 2020, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Loss for the three and six months ended November 30, 2020 and 2019, the Consolidated Statements of Stockholders’ Equity for the three months ended November 30, 2020 and 2019 and the Consolidated Statements of Cash Flows for the six months ended November 30, 2020 and 2019 have been prepared by the Company and are unaudited.

The Consolidated Balance Sheet as of February 28, 2021, the Consolidated Statements of Operations and the Consolidated Statements of Comprehensive Loss for the three and nine months ended February 28, 2021 and February 29, 2020, the Consolidated Statements of Stockholders’ Equity for the three months ended February 28, 2021 and February 29, 2020 and the Consolidated Statements of Cash Flows for the nine months ended February 28, 2021 and February 29, 2020 have been prepared by the Company and are unaudited.

The Consolidated Balance Sheet as of May 31, 2020 was derived from audited consolidated financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended November 30, 2020 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three and six months ended November 30, 2020 and 2019 include the accounts of AngioDynamics, Inc.

and its wholly owned subsidiaries, collectively, the “Company”.

In the opinion of management, all adjustments (consisting of normal recurring adjustments) necessary to state fairly the financial position, changes in stockholders’ equity and comprehensive income, results of operations and cash flows as of and for the period ended February 28, 2021 (and for all periods presented) have been made.

The unaudited interim consolidated financial statements for the three and nine months ended February 28, 2021 and February 29, 2020 include the accounts of AngioDynamics, Inc.

and its wholly owned subsidiaries, collectively, "us", "we" or the “Company”.

All intercompany balances and transactions have been eliminated.

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On December 17, 2019, the Company acquired the C3 Wave tip location asset from Medical Components Inc.

for an aggregate purchase price of $ 10.0 million with $ 5.0 million of potential future contingent consideration related to technical milestones.

This acquisition fills a gap in the Vascular Access portfolio and supports the Company's strategic plan.

("MedComp") for an aggregate purchase price of $ 10.0 million with $ 5.0 million of potential future contingent consideration related to technical milestones.

This acquisition filled a gap in the Vascular Access portfolio and supports the Company's strategic plan.

The Company accounted for this acquisition as an asset purchase.

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Eximo Acquisition

On October 2, 2019, the Company entered into a share purchase agreement to acquire Eximo Medical, Ltd., a pre-commercial stage medical device company and its proprietary 355nm B Laser Atherectomy technology.

On October 2, 2019, the Company entered into a share purchase agreement to acquire Eximo Medical, Ltd., a pre-commercial stage medical device company with a proprietary 355nm B Laser Atherectomy technology.

The aggregate purchase price of $ 60.7 million included an upfront payment of $ 45.8 million and contingent consideration with an estimated fair value of $ 14.9 million.

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The following tables summarize net product revenue by Global Business Unit ("GBU") and geography:

Three Months Ended Nov 30, 2020

Three Months Ended Nov 30, 2019

Three Months Ended Feb 28, 2021

Three Months Ended Feb 29, 2020

(in thousands) United States International Total United States International Total

3 unchanged sentences

Total $ 58,654 $ 12,528 $ 71,182 $ 54,889 $ 14,891 $ 69,780

Six Months Ended Nov 30, 2020

Six Months Ended Nov 30, 2019

Nine Months Ended Feb 28, 2021

Nine Months Ended Feb 29, 2020

(in thousands) United States International Total United States International Total

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Transaction prices of products are typically based on contracted rates.

Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer.

To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing the expected value method.

As such, revenue is recorded net of rebates, returns and other deductions.

Product revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products to a customer, net of any variable consideration as described below.

If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.

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Variable Consideration

Revenues from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers.

Revenue from product sales are recorded at the net sales price (transaction price), which includes estimates of variable consideration for which reserves are established for discounts, returns, rebates and allowances that are offered within contracts between the Company and its customers.

These reserves are based on the amounts earned or to be claimed on the related sales and are classified as a contra asset.

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The Company provides certain customers with rebates and allowances that are explicitly stated in the Company’s contracts and are recorded as a reduction of revenue in the period the related product revenue is recognized.

The Company establishes a liability for such amounts, which is included in accrued expenses in the accompanying Consolidated Balance Sheets.

The Company establishes reserves for such amounts, which is included in accrued expenses in the accompanying Consolidated Balance Sheets.

These rebates and allowances result from performance-based offers that are primarily based on attaining contractually specified sales volumes and administrative fees the Company is required to pay to group purchasing organizations.

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The Company currently estimates product return liabilities using its historical product return information and considers other factors that it believes could significantly impact its expected returns, including product recalls.

During the six months ended November 30, 2020, such product returns were not material.

During the nine months ended February 28, 2021, such product returns were not material.

Contract Balances with Customers

A receivable is recognized in the period the Company ships the product.

A receivable is generally recognized in the period the Company ships the product.

Payment terms on invoiced amounts are based on contractual terms with each customer and generally coincide with revenue recognition.

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The following table presents changes in the Company’s receivables, contract assets and contract liabilities with customers:

(in thousands) Nov 30, 2020 May 31, 2020

(in thousands) Feb 28, 2021 May 31, 2020

Receivables $ 33,171 $ 31,263

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Contract liabilities $ 589 $ 545

During the six months ended November 30, 2020, the Company had additions to contract liabilities of $ 0.6 million.

This was offset by $ 0.7 million in revenue that was recognized during the six months ended November 30, 2020.

During the nine months ended February 28, 2021, the Company had additions to contract liabilities of $ 1.0 million.

This was offset by $ 1.0 million in revenue that was recognized during the nine months ended February 28, 2021.

Costs to Obtain or Fulfill a Customer Contract

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Inventories consisted of the following:

(in thousands) Nov 30, 2020 May 31, 2020

(in thousands) Feb 28, 2021 May 31, 2020

Raw materials $ 21,237 $ 23,308

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The Company makes assumptions about the future demand for and market value of the inventory.

Based on these assumptions, the Company estimates the amount of

obsolete, expiring and slow moving inventory.

The total inventory reserve at November 30, 2020 and May 31, 2020 was $ 4.2 million and $ 4.7 million, respectively.

Based on these assumptions, the Company estimates the amount of obsolete, expiring and slow-moving inventory.

The total inventory reserve at February 28, 2021 and May 31, 2020 was $ 4.0 million and $ 4.7 million, respectively.

GOODWILL AND INTANGIBLE ASSETS

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The Company operates as a single operating segment with one reporting unit and consequently evaluates goodwill for impairment based on an evaluation of the fair value of the Company as a whole.

The Company determines the fair value of the reporting unit based on the market valuation approach and concluded that it was not more-likely-than-not that the fair value of the Company's reporting unit was less than its carrying value as of December 31, 2019.

In the fourth quarter of fiscal year 2020, the Company concluded that the sustained decline in its market capitalization represented an impairment indicator that required the Company to perform an interim test for goodwill impairment as of May 31, 2020 and the Company recorded a goodwill impairment charge of $158.6 million as of May 31, 2020 to write down the carrying value of the reporting unit to fair value.

The future occurrence of another potential indicator of impairment, such as a significant adverse change in legal, regulatory, business or economic conditions or a more-likely-than-not expectation that the reporting unit or a significant portion of the reporting unit will be sold or disposed of, would require another interim assessment for the reporting unit prior to the next required annual assessment as of December 31, 2020.

There were no adjustments to goodwill for the six months ended November 30, 2020 other than foreign currency translation adjustments.

Even though the Company determined that there was no goodwill impairment as of December 31, 2020, the future occurrence of a potential indicator of impairment, such as a significant adverse change in legal, regulatory, business or economic conditions or a more-likely-than-not expectation that the reporting unit or a significant portion of the reporting unit will be sold or disposed of, would require an interim assessment for the reporting unit prior to the next required annual assessment as of December 31, 2021.

There were no adjustments to goodwill for the nine months ended February 28, 2021 other than foreign currency translation adjustments.

Intangible assets consisted of the following:

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$ 327,966 $ ( 130,830 ) $ 197,136

Amortization expense for the three months ended November 30, 2020 and 2019 was $ 4.6 million and $ 4.5 million, respectively.

Amortization expense for the six months ended November 30, 2020 and 2019 was $ 9.5 million and $ 8.4 million, respectively.

Expected future amortization expense related to the intangible assets is as follows:

Amortization expense for the three months ended February 28, 2021 and February 29, 2020 was $ 4.3 million and $ 5.0 million, respectively.

Amortization expense for the nine months ended February 28, 2021 and February 29, 2020 was $ 13.8 million and $ 13.4 million, respectively.

Expected future amortization expense related to the intangible assets for each of the following fiscal years is as follows:

(in thousands)

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Accrued liabilities consisted of the following:

(in thousands) Nov 30, 2020 May 31, 2020

(in thousands) Feb 28, 2021 May 31, 2020

Payroll and related expenses $ 15,159 $ 13,059

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The Credit Agreement has a five year maturity.

Interest on the facility will be based, at the Company’s option, on a base rate of LIBOR plus an applicable margin tied to the Company’s total leverage ratio and having ranges between 0.25 % and 0.75 % for base rate loans and between 1.25 % and 1.75 % for LIBOR loans.

Interest on the facility is based, at the Company’s option, on either a base rate of LIBOR or alternate base rate, plus an applicable margin tied to the Company’s total leverage ratio and having ranges between 0.25 % and 0.75 % for base rate loans and between 1.25 % and 1.75 % for LIBOR loans.

After default, the interest rate may be increased by 2.0 %.

The facility will also carry a commitment fee of 0.20 % to 0.25 % per annum on the unused portion.

The facility also carries a commitment fee of 0.20 % to 0.25 % per annum on the unused portion.

The Company's obligations under the Revolving Facility are unconditionally guaranteed, jointly and severally, by the Company's material direct and indirect domestic subsidiaries (the “Guarantors”).

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• fixed charge coverage ratio of consolidated EBITDA minus consolidated capital expenditures* to consolidated interest expense* paid or payable in cash plus scheduled principal payments in respect of indebtedness under the Credit Agreement of not less than 1.25 to 1.00.

* The definitions of consolidated total indebtedness and consolidated EBITDA are maintained in the credit agreement included as an exhibit to Form 8-k filed on June 6, 2019.

As of November 30, 2020, there was $ 40.0 million outstanding balance on the Revolving Facility.

As of November 30, 2020 and May 31, 2020, the carrying value of long-term debt approximated its fair market value.

The interest rate on the Revolving Facility at November 30, 2020 was 1.65 %.

The Company was in compliance with the Credit Agreement covenants as of November 30, 2020.

* The definitions of consolidated total indebtedness, consolidated EBITDA, consolidated capital expenditures and consolidated interest expense are specifically defined in the credit agreement included as an exhibit to Form 8-K filed on June 6, 2019.

As of February 28, 2021, there was a $ 30.0 million outstanding balance on the Revolving Facility.

As of February 28, 2021 and May 31, 2020, the carrying value of long-term debt approximated its fair market value.

The interest rate on the Revolving Facility at February 28, 2021 was 1.63 %.

The Company was in compliance with the Credit Agreement covenants as of February 28, 2021.

The Company provides for income taxes at the end of each interim period based on the estimated effective tax rate for the full fiscal year adjusted for any discrete events, which are recorded in the period that they occur.

The estimated annual effective tax rate prior to discrete items was 16.1 % as of the second quarter of fiscal year 2021, as compared to 13.2 % for the same period in fiscal year 2020.

The estimated annual effective tax rate prior to discrete items was 15.6 % as of the third quarter of fiscal year 2021, as compared to 12.9 % for the same period in fiscal year 2020.

In fiscal year 2021, the Company’s effective tax rate differs from the U.S.

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Based on the review of all available evidence, the Company determined that it has not yet attained a sustained level of profitability and the objectively verifiable negative evidence outweighed the positive evidence.

Therefore, the Company has provided a valuation allowance on its federal and state net operating loss carryforwards, federal and state R&D credit carryforwards and other net deferred tax assets that have a limited life and are not supportable by the naked credit deferred tax liability sourced income as of November 30, 2020.

The Company will continue to assess the level of the valuation allowance required.

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SHARE-BASED COMPENSATION

The Company has three stock-based compensation plans that provide for the issuance of up to approximately 14.2 million shares of common stock.

The 2004 Stock and Incentive Award Plan (the "2004 Plan") and the 2020 Stock and Incentive Award Plan (the "2020 Plan") provide for the grant of up to 7.8 million and 2.4 million shares of common stock, respectively.

These plans provide for the grant of incentive stock options, non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other incentive awards to the Company's employees, directors and other service providers.

The Company also has an employee stock purchase plan which provides for the issuance of up to 4.0 million shares of common stock.

For the three months ended November 30, 2020 and 2019, share-based compensation expense was $ 2.4 million and $ 2.2 million, respectively.

For the six months ended November 30, 2020 and 2019, share-based compensation expense was $ 4.3 million and $ 4.2 million, respectively

During the six months ended November 30, 2020 and 2019, the Company granted stock options and restricted stock units under the 2004 and 2020 Plan to certain employees and members of the Board of Directors.

On October 13, 2020, the Company's shareholders approved the 2020 Stock and Incentive Award Plan (the “2020 Plan”).

The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock, restricted stock units, stock appreciation rights, performance share units, performance shares and other incentive awards to the Company's employees, directors and other service providers.

As of February 28, 2021, there was a maximum of 2.4 million shares of common stock available for future grant under the 2020 Plan.

Prior to the adoption of the 2020 Plan, equity awards were issued under the 2004 Stock and Incentive Award Plan (the “2004 Plan”).

The adoption of the 2020 Plan did not impact the administration of equity awards issued under the 2004 Plan but following the adoption of the 2020 Plan, equity award grants are no longer made under the 2004 Plan.

The Company also has an employee stock purchase plan.

As of February 28, 2021, there was a maximum of 4.0 million shares of common stock available for future grant under the employee stock purchase plan.

For the three months ended February 28, 2021 and February 29, 2020, share-based compensation expense was $ 2.1 million and $ 1.8 million, respectively.

For the nine months ended February 28, 2021 and February 29, 2020, share-based compensation expense was $ 6.4 million and $ 6.0 million, respectively

During the nine months ended February 28, 2021 and February 29, 2020, the Company granted stock options and restricted stock units under the 2004 Plan and 2020 Plan to certain employees and members of the Board of Directors.

Stock option awards are valued using the Black-Scholes option-pricing model and then amortized on a straight-line basis over the requisite service period of the award.

Restricted stock unit awards are valued based on the closing trading value of the Company's shares on the date of grant and then amortized on a straight-line basis over the requisite service period of the award.

During the six months ended November 30, 2020 and 2019, the Company granted performance share units under the 2004 Plan to certain employees.

The awards may be earned by achieving relative performance levels over the year requisite service period.

Restricted stock unit awards are valued based on the closing trading value of the Company’s common stock on the date of grant and then amortized on a straight-line basis over the requisite service period of the award.

During the nine months ended February 28, 2021 and February 29, 2020, the Company granted performance share units under the 2004 Plan to certain employees.

The awards may be earned by achieving relative performance levels over the requisite service period.

The performance criteria are based on achieving certain performance targets and the total shareholder return (“TSR”) of the Company’s common stock relative to the TSR of the common stock of a pre-defined industry peer-group.

The fair value of these awards are based on the closing trading value of the Company's shares on the date of grant and use a Monte Carlo simulation model.

As of November 30, 2020, there was $ 16.0 million of unrecognized compensation expense related to share-based payment arrangements.

The fair value of these awards are based on the closing trading value of the Company’s common stock on the date of grant and use a Monte Carlo simulation model.

As of February 28, 2021, there was $ 14.4 million of unrecognized compensation expense related to share-based payment arrangements.

These costs are expected to be recognized over a weighted-average period of approximately four years .

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The following table reconciles basic to diluted weighted-average shares outstanding:

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2020 Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Basic 38,360 37,999 38,281 37,924

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The table below summarizes net sales by Global Business Unit:

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2020 Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Vascular Interventions & Therapies

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Total $ 71,182 $ 69,780 $ 214,168 $ 205,825

The table below presents net sales by geographic area based on external customer location:

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2020 Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

The table below summarizes net sales by geographic area based on external customer location:

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

United States $ 58,654 $ 54,889 $ 173,446 $ 163,381

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Fair Value Measurements using inputs considered as:

Fair Value at Nov 30, 2020

Fair Value at Feb 28, 2021

(in thousands) Level 1 Level 2 Level 3

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Total Financial Liabilities $ — $ — $ 15,647 $ 15,647

There were no transfers between Level 1, 2 and 3 for the three and six months ended November 30, 2020.

There were no transfers between Level 1, 2 and 3 for the three and nine months ended February 28, 2021.

The table below presents the changes in fair value components of Level 3 instruments:

Three Months Ended Nov 30, 2020

Three Months Ended Feb 28, 2021

(in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

Balance, August 31, 2020 $ 14,994

Balance, November 30, 2020 $ 15,178

Total gains or losses (realized/unrealized):

Change in present value of contingent consideration (1)

Balance, November 30, 2020

Six Months Ended Nov 30, 2020

Currency gain from remeasurement 1

Balance, February 28, 2021

Nine Months Ended Feb 28, 2021

(in thousands) Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

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Currency gain from remeasurement 5

Balance, November 30, 2020

Balance, February 28, 2021

(1) Change in the fair value of contingent consideration is included in earnings and comprised of changes in estimated earn out payments based on projections of Company performance and amortization of the present value discount.

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Increases or decreases in any valuation inputs in isolation may result in a significantly lower or higher fair value measurement in the future.

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of November 30, 2020:

The recurring Level 3 fair value measurements of the contingent consideration liabilities include the following significant unobservable inputs as of February 28, 2021:

(in thousands) Fair Value Valuation Technique Unobservable Input Range

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Projected fiscal year of payment 2024 - 2025

At November 30, 2020, the range of estimated potential undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is $ 20.0 million.

At February 28, 2021, the range of estimated potential undiscounted future contingent consideration that the Company expects to pay as a result of all completed acquisitions is $ 20.0 million.

The revenue projections milestones associated with the contingent consideration must be reached in future periods ranging from fiscal years 2021 to 2029 in order for the associated consideration to be paid.

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The following table presents supplemental balance sheet information related to leases:

(in thousands) Balance Sheet Location Nov 30, 2020 May 31, 2020

(in thousands) Balance Sheet Location Feb 28, 2021 May 31, 2020

Operating lease ROU asset Other assets $ 9,945 $ 10,146

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Weighted average discount rate 3.8 %

The following table presents the maturities of the lease liabilities:

(in thousands) Nov 30, 2020

The maturities of the lease liabilities for each of the following fiscal years is:

(in thousands) Feb 28, 2021

Remainder of 2021 $ 675

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Long-term lease obligations $ 7,940

During the three months ended November 30, 2020 and 2019, the Company recognized $ 0.7 million and $ 0.9 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the six months ended November 30, 2020 and 2019, the Company recognized $1.6 million and $1.5 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the three months ended February 28, 2021 and February 29, 2020, the Company recognized $ 0.8 million and $ 0.9 million of operating lease expense, respectively, which includes immaterial short-term leases.

During the nine months ended February 28, 2021 and February 29, 2020, the Company recognized $ 2.4 million and $ 2.5 million of operating lease expense, respectively, which includes immaterial short-term leases.

The expenses on the Consolidated Statement of Operations were classified as follows:

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2020

Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021

Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

Cost of sales $ 209 $ 297 $ 602 $ 856

3 unchanged sentences

$ 794 $ 925 $ 2,416 $ 2,469

The following table presents supplemental cash flow and other information related to leases for the six months ended:

(in thousands) Nov 30, 2020 Nov 30, 2019

The following table presents supplemental cash flow and other information related to leases for the nine months ended:

(in thousands) Feb 28, 2021 Feb 29, 2020

Cash paid for amounts included in the measurement of lease liabilities

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(“Bard”) filed a suit in the United States District Court of Utah claiming certain of the Company's implantable port products infringe on three U.S.

patents held by Bard (the "Utah Action").

Bard’s complaint sought unspecified damages and other relief.

The Company filed petitions for reexamination in the US Patent and Trademark Office ("USPTO") seeking to invalidate all three patents asserted by Bard in the litigation.

The Company's petitions were

granted and 40 of Bard's 41 patent claims were rejected and, following further proceedings, the Patent Office issued a Final Rejection of all 40 claims subject to reexamination.

Thereafter, Bard filed appeals to the USPTO Board of Appeals and Interferences for all three reexaminations which were decided as follows:

For US Patent No.

7,785,302, the rejections of six of the ten claims under reexamination were affirmed, but were reversed on four of the ten claims.

7,959,615 the rejections of eight of the ten claims under reexamination were affirmed but the rejections of the other two of the ten claims were reversed.

In the third, for U.S.

7,947,022 the rejections of all twenty claims under reexamination were affirmed.

Thereafter, Bard sought Rehearing in all three appeals and the Company sought Rehearing in the ‘302 and ‘615 appeals.

The USPTO denied all three Rehearing Requests, but modified its characterization of one prior art reference for the ‘302 and ‘022 decisions.

Bard filed appeals to the Federal Circuit Court of Appeals in all three reexams and the Company Cross-Appealed for the ‘302 and the ‘615 reexams.

MedComp also filed an Amicus Brief in support of the Company on November 22, 2017.

Meanwhile, on July 12, 2017 Bard assigned the asserted patents to Bard Peripheral Vascular, Inc.

(“BPV”) which was added as co-Appellant before the Federal Circuit and as a co-Plaintiff in the Utah action.

An oral hearing was held on September 5, 2018 and the Court rendered its decision on September 28, 2018, affirming that claims 1-5 and 10 of the ‘615 patent were invalid, but that claims 6-7 of the 615 patent and claims 1-4 of the 302 patent were valid over the prior art references considered in the Reexamination proceedings.

The Federal Circuit also reversed the PTAB’s claim construction ruling and remanded for consideration of obviousness for the remaining claims under the new claim construction ruling and for further findings with respect to whether one of the asserted references qualified as a printed publication.

On January 28, 2019, on remand, the USPTO reversed the rejections of the ‘302 claims 1-10, ‘022 claims 1-20 and ‘615 claims 8-9.

The USPTO has since issued Inter Partes Reexamination Certificates for the ‘302 Patent for the ‘022 patent and for the ‘615 patent.

The Company thereafter filed a Motion to Unstay the Utah Case and that motion was granted.

On November 4, 2019 the Court held a joint Status Conference among the Company’s Utah Action and two other cases filed by Bard on the same patents against MedComp and Smiths.

The Court set a schedule for defendant's Motions to Dismiss or Transfer.

The Company filed its motion on November 25, 2019;

and Bard filed a responsive brief and a motion for venue discovery on December 9, 2019.

The Company filed a responsive brief on December 16, 2019 and Bard filed a reply on December 23, 2019.

On February 27, 2020, the Court referred all non-dispositive motions to the presiding Magistrate and on March 3, 2020 the Court granted Bard’s Motion for Venue Discovery and denied the Company’s transfer motion without prejudice to re-filing after completion of the venue discovery, but no later than June 30, 2020.

Following venue discovery, AngioDynamics re-filed its Motion to Dismiss or Transfer on June 30, 2020.

Bard filed an opposition brief on July 28, 2020, and the Company filed a subsequent reply.

The Court granted AngioDynamics’s Motion to Transfer on November 16, 2020.

The case is currently pending in the District of Delaware and a scheduling conference has been set for January 21, 2021.The Company believes these claims are without merit and intends to defend them vigorously.

patents held by Bard (US Patent Nos.

7,785,302, 7,959,615 (“615”) and 7,947,022).

The case was stayed pending reexamination in the US Patent and Trademark Office ("USPTO").

Following the reexamination proceedings, and the parties’ related appeals to the Federal Circuit which resulted in further proceedings at the USPTO, certain claims of the 615 patent were held invalid, while the remaining claims of the 615 patent and the other two patents were upheld over the prior art references considered in the reexamination proceedings.

Thereafter, on November 16, 2020, the court granted the Company’s motion to transfer the case from the District of Utah to the United States District Court for the District of Delaware (“District of Delaware”).

The parties filed a proposed scheduling order on March 12, 2021.

The Company believes these claims are without merit and intends to defend them vigorously.

The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

On March 10, 2015, Bard and BPV filed suit in the United States District Court for the District of Delaware (the “Delaware Action") claiming certain of the Company's implantable port products infringe on three other U.S.

patents held by Bard, which are different from those asserted in the Utah action.

Bard's complaint seeks unspecified damages and other relief.

On June 1, 2015, the Company filed two motions in response to Bard’s Complaint - one sought transfer to the District of Utah where the Utah Action is currently pending, and the other sought dismissal of the entire complaint on grounds that none of the claims in the asserted patents is directed to patent eligible subject matter under Section 101 of the Patent Statute and in light of recent authority from the U.

Supreme Court.

On January 12, 2016, the Court issued a decision denying both motions.

A Markman hearing was held on March 10, 2017 and the Court issued its Claim Construction Order on May 19, 2017.

On May 19, 2017, Bard served its Final Infringement Contentions and on June 2, 2017, the Company served its Final Invalidity Contentions.

On October 20, 2017, the scheduling order for the case was amended to, among other things, set a trial date commencing July 23, 2018.

The parties completed Expert Discovery in January 2018 and completed briefing on their respective case dispositive motions on April 27, 2018.

On June 26, 2018, the Court denied all case dispositive motions, ruling that issues of material fact remained in dispute.

On July 9, 2018, the Court continued the trial until March 2019.

On January 9, 2019 the Court held a further claim construction hearing to resolve two outstanding claim construction issues prior to trial.

A Report and Recommendation (by Magistrate-Judge Fallon) was issued on February 11, 2019 and entered by the Court on February 28, 2019.

Jury selection was held on Friday March 1, 2019 and trial began on March 4, 2019.

On day four of the jury trial, at the close of C.R.

Bard’s case, the Court granted the Company's oral motion for judgment as a matter of law under rule 50(a) as well as its motions for summary judgement on the grounds that the asserted patents are invalid, ineligible, not infringed and not willfully infringed.

On April 5, 2019, Bard filed a precautionary Notice of Appeal to the Federal Circuit.

On April 26, 2019, the District Court issued a Memorandum and Order confirming the grant of judgment in the Company’s favor of patent ineligibility, non-infringement, patent invalidity and no willful infringement.

Meanwhile, on May 10, 2019, the Company filed

a Motion for Attorney fees and non-taxable expenses under 35 USC Sec.

On May 21, 2019, the Court issued a Memorandum and Order which, inter alia, stayed proceedings on the Company’s fee Motion and the Company’s equitable claims pending appeal;

and entered Final Judgment on May 21, 2019 as well.

Bard filed a second Notice of Appeal on May 23, 2019.

Both appeals have since been consolidated and Bard’s opening brief was filed on September 27, 2019;

the Company's answering brief was filed on January 15, 2020;

and Bard’s reply brief was filed on March 4, 2020.

A hearing was held on June 1, 2020, and the court issued its decision on November 10, 2020.

The Federal Circuit reversed the judgment in part with respect to Section 101, and vacated and remanded the trial court’s invalidity and non-infringement judgments.

The Company filed a combined Petition for rehearing and rehearing en banc on December 10, 2020 which remains pending.

On March 10, 2015, Bard and Bard Peripheral Vascular filed suit in the District of Delaware claiming certain of the Company's implantable port products infringe on three U.S.

patents held by Bard (US Patent Nos.

8,475,417, 8,545,460, 8,805,478).

The case proceeded through trial which began on March 4, 2019.

On day four of the jury trial, at the close of Bard’s case, the Court granted the Company's oral motion for judgment as a matter of law as well as its motions for summary judgment on the grounds that the asserted patents are invalid, ineligible, not infringed and not willfully infringed.

On May 10, 2019, the Company filed a motion for attorney fees and non-taxable expenses under 35 USC Sec.

285, which remains stayed in the case.

Bard appealed the judgment to the Federal Circuit and on November 10, 2020, the Federal Circuit reversed the judgment in part with respect to Section 101, and vacated and remanded the trial court’s invalidity and non-infringement judgments.

The Company filed a combined Petition for rehearing and rehearing en banc on December 10, 2020, which was denied on January 15, 2021.

The Federal Circuit issued its mandate on January 22, 2021.

On March 15, 2021, the District of Delaware entered an order requiring the parties to submit status reports and denied as moot the Company’s motion for attorney’s fees and expenses.

The matter remains pending.

The Company maintains its belief that Bard’s claims are without merit.

The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

On March 8, 2021, Bard filed suit in the District of Delaware asserting certain of the Company’s port products (including certain related infusion sets) infringe U.S.

8,025,639, 9,603,992 and 9,603,993.

The Company has not yet answered, and the matter remains pending.

The Company maintains its belief that Bard’s claims are without merit.

The Company has not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

AngioDynamics, Inc.

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In this action, the Company alleges that Bard has illegally tied the sales of its tip location systems to the sales of its PICCs.

The Company alleges that this practice violates the federal antitrust laws and has had, and continues to have, an anti-competitive effect in the market for PICCs.

The Company alleges that this practice violates the federal antitrust laws and has had, and continues to have, an anti-competitive effect in the market for

The Company seeks both monetary damages and injunctive relief.

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Acquisition, restructuring and other items, net, consisted of:

Three Months Ended Six Months Ended

(in thousands) Nov 30, 2020 Nov 30, 2019 Nov 30, 2020 Nov 30, 2019

Three Months Ended Nine Months Ended

(in thousands) Feb 28, 2021 Feb 29, 2020 Feb 28, 2021 Feb 29, 2020

$ 967 $ 637 $ 2,947 $ 1,989

11 unchanged sentences

(4) Divestiture expenses incurred to transition manufacturing from Glens Falls, NY to Queensbury, NY.

Included in the $ 1.4 million in legal for the six months ended November 30, 2019 is a $ 0.4 million settlement received for the Biolitec bankruptcy litigation.

The settlement received offsets legal expenses paid related to the settlement proceedings.

Included in the $ 2.0 million in legal for the nine months ended February 29, 2020 is a $ 0.4 million settlement received for the Biolitec bankruptcy litigation.

The settlement received partially offsets legal expenses paid related to the settlement proceedings.

ACCUMULATED OTHER COMPREHENSIVE INCOME

Changes in each component of accumulated other comprehensive income, net of tax, are as follows:

Three Months Ended Nov 30, 2020

Three Months Ended Feb 28, 2021

(in thousands) Foreign currency translation income

Balance at August 31, 2020 $ 754

Balance at November 30, 2020 $ 1,934

Other comprehensive income before reclassifications, net of tax 12

1 unchanged sentence

Net other comprehensive income $ 12

Balance at November 30, 2020

Six Months Ended Nov 30, 2020

Balance at February 28, 2021

Nine Months Ended Feb 28, 2021

(in thousands) Foreign currency translation income

3 unchanged sentences

Net other comprehensive income $ 3,287

Balance at November 30, 2020

Balance at February 28, 2021

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

13 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements