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Item 9A. Controls and Procedures

2022-02-24 compared with 2021-02-23 · 557 added, 559 removed, 1452 unchanged (43% of the section changed)

18 unchanged sentences

Not applicable.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

INCORPORATION BY REFERENCE

10 unchanged sentences

The following financial statements and financial statement schedules are filed as a part of this report:

Report of Independent Registered Public Accounting Firm

Report of Independent Registered Public Accounting Firm (PricewaterhouseCoopers LLP, Florham Park, New Jersey, PCAOB ID# 238 )

Consolidated Statements of Operations for the years ended December 31, 2021, 2020 and 2019

11 unchanged sentences

2.1(a) Put Option Agreement, dated September 29, 2020, between the Company and certain of its subsidiaries and Smith & Nephew USD Limited, a subsidiary of Smith+Nephew (including the Purchase and Sale Agreement attached as Appendix 1 thereto) (Incorporated by reference to Exhibit 2.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020).

2.1(b) Agreement and Plan of Merger by among Integra LifeSciences Holdings Corporation and ACell Inc.

dated as of December 15, 2020 (Incorporated by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020)

2.2 Stock and Asset Purchase Agreement by and among Medtronic, Inc., Medtronic Xomed Instrumentation, SAS, and Integra LifeSciences Corporation, dated as of September 12, 2014 (Incorporated by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K filed on October 27, 2014)

15 unchanged sentences

3.2(b) Second Amended and Restated Bylaws of Integra LifeSciences Holdings Corporation, effective as of December 11, 2018 (Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-k filed on December 12, 2018)

4.1 Purchase Agreement, dated June 9, 2011, by and between Integra LifeSciences Holdings Corporation and J.P.

Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan Stanley & Co.

LLC, Deutsche Bank Securities Inc., RBC Capital Markets, LLC and Wells Fargo Securities, LLC (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 15, 2011)

4.2 Indenture, dated June 15, 2011, by and between Integra LifeSciences Holdings Corporation and Wells Fargo Bank, National Association, as trustee (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on June 15, 2011)

4.2 (a) Indenture, dated as of February 7, 2020, by and between Integra LifeSciences Holdings Corporation and Citibank, N.A., as trustee (Incorporated by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on February 7, 2020) ( Indenture, dated as of February 7, 2020, by and between Integra LifeSciences Holdings Corporation and Citibank, N.A., as trustee (Incorporated by reference to Exhibit 4.

1 to the Company’s Current Report on Form 8-K filed on February 7, 2020).

4.2 (b) First Supplemental Indenture, by and between Integra LifeSciences Holdings Corporation and Citibank, N.A., as trustee (Incorporated by reference to Exhibit 4.

1 to the Company’s Current Report on Form 8-K filed on December 9, 2020)

4.3 Security Agreement, dated as of December 22, 2005, among Integra LifeSciences Holdings Corporation and the additional grantors party thereto in favor of Bank of America, N.A., as administrative and collateral agent (Incorporated by reference to Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)

4.4 Pledge Agreement, dated as of December 22, 2005, among Integra LifeSciences Holdings Corporation and the additional grantors party thereto in favor of Bank of America, N.A., as administrative and collateral agent (Incorporated by reference to Exhibit 4.5 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)

4.5 Subsidiary Guaranty Agreement, dated as of December 22, 2005, among the guarantors party thereto and individually as a “Guarantor”), in favor of Bank of America, N.A., as administrative and collateral agent (Incorporated by reference to Exhibit 4.6 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2005)

4.6 Indenture, dated June 11, 2007, among Integra LifeSciences Holdings Corporation, Integra LifeSciences Corporation and Wells Fargo Bank, N.A., as trustee (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 12, 2007)

4.7 Form of 2.75% Senior Convertible Note due 2010 (included in Exhibit 4.8) (Incorporated by reference to Exhibit B to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on June 12, 2007)

4.8 Indenture, dated June 11, 2007, among Integra LifeSciences Holdings Corporation, Integra LifeSciences Corporation and Wells Fargo Bank, N.A., as trustee (Incorporated by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on June 12, 2007)

4.9 Form of 2.375% Senior Convertible Note due 2012 (included in Exhibit 4.10) (Incorporated by reference to Exhibit B to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on June 12, 2007)

4.10(a) Registration Rights Agreement, dated June 11, 2007, among Integra LifeSciences Holdings Corporation, Banc of America Securities LLC, J.P.

Morgan Securities Inc.

and Morgan Stanley & Co., Incorporated, as representatives of the several initial purchasers (Incorporated by reference to Exhibit 4.5 to the Company’s Current Report on Form 8-K filed on June 12, 2007)

4.10(b) Registration Rights Agreement, dated June 11, 2007, among Integra LifeSciences Holdings Corporation, Banc of America Securities LLC, J.P.

Morgan Securities Inc.

and Morgan Stanley & Co., Incorporated, as representatives of the several initial purchasers (Incorporated by reference to Exhibit 4.6 to the Company’s Current Report on Form 8-K filed on June 12, 2007)

4.1 Indenture, dated as of February 7, 2020, by and between Integra LifeSciences Holdings Corporation and Citibank, N.A., as trustee (including Form of 0.50% Convertible Senior Notes due 2025) (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 7, 2020).

4.2 First Supplemental Indenture, by and between Integra LifeSciences Holdings Corporation and Citibank, N.A., as trustee (Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on December 9, 2020)

4.3 Integra LifeSciences Deferred Compensation Plan, effective as of May 16, 2019 (Incorporated by reference to Exhibit 4.13 to the Company's Current Form S-8 Registration Statement filed on May 23, 2019)

4.12 Indenture, dated as of February 7, 2020, by and between Integra LifeSciences Holdings Corporation and Citibank, N.A., as trustee.

(Incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on February 7, 2020)

4.4 Description of Securities+

2 unchanged sentences

10.1(c) Lease Modification #4 entered into as of April 20, 2017, by and between Plainsboro Associates and Integra LifeSciences Corporation (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 25, 2017)

10.2 Equipment Lease Agreement between Medicus Corporation and the Company, dated as of June 1, 2000 (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2000)

10.2(a) Form of Indemnification Agreement for Non-Employee Directors and Officers (effective prior to February 15, 2019) (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 24, 2008)*

10.3(b) 10.3 (c) Form of Indemnification Agreement for Non-Employee Director and Officers effective February 15, 2019.

10.2(b) Form of Indemnification Agreement for Non-Employee Director and Officers effective February 15, 2019.

10.3 1996 Incentive Stock Option and Non-Qualified Stock Option Plan (as amended through December 27, 1997) (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on February 3, 1998)*

10 unchanged sentences

10.7(f) Amendment to the Integra LifeSciences Holdings Corporation Fourth Amended and Restated 2003 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020)*

10.7(g) Integra LifeSciences Holdings Corporation Fifth Amended and Restated 2003 Equity Incentive Plan (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 18, 2021)*

10.8 Additional Call Option Transaction Confirmation, dated as of February 5, 2020, between Integra LifeSciences Holdings Corporation and Morgan Stanley & Co.

International plc.

(Incorporated by reference to Exhibit 10.11 of the Company’s Current Report on Form 8-K filed on February 7, 2020)

10.9(a) Letter Agreement dated June 7, 2012 between Stuart M.

8 unchanged sentences

Essig (Incorporated by reference to Exhibit B of Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004)*

10.13 Second Amended and Restated 2005 Employment Agreement between the Company and John B.

Henneman, III (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 23, 2014)*

10.14 Consulting Agreement, dated October 12, 2010, between the Company and Inception Surgical (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 12, 2010)*

10.12 Issuer Forward Repurchase Transaction Confirmation, dated as of February 5, 2020, between Integra LifeSciences Holdings Corporation and JPMorgan Chase Bank, National Association, New York Branch.

10.16 Severance Agreement between Judith O’Grady and the Company dated as of January 3, 2012 (Incorporated by reference to Exhibit 10.16(c) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011)*

10.17 Third Amended and Restated Employment Agreement between the Company and Peter J.

Arduini (Incorporated by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on October 26, 2017)*

10.17(a) Amendment to the Third Amendment to the Third Amended and Restated Employment Agreement between the Company and Peter J.

Arduini (Incorporated by reference to the Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020)*

10.18 Form of Notice of Stock Option Grant with Eight-Year Term for Peter J.

Arduini (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed December 23, 2011)*

10.19 Letter Agreement dated February 19, 2013 between Peter J.

Arduini and Integra LifeSciences Holdings Corporation (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on February 25, 2013)*

(Incorporated by reference to Exhibit 10.17 of the Company’s Current Report on Form 8-K filed on February 7, 2020)

10.13(a) Lease Contract, dated April 1, 2005, between the Puerto Rico Industrial Development Company and Integra CI, Inc.

36 unchanged sentences

Essig (Incorporated by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2011)*

10.30(a) Form of Performance Stock Agreement for Stuart M.

10.23 Form of Performance Stock Agreement for Stuart M.

Essig (Incorporated by reference to Exhibit 10.9 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008)*

10.30(b) Form of Restricted Stock Agreement for Stuart M.

10.24 Form of Restricted Stock Agreement for Stuart M.

Essig for 2009 (Incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed April 13, 2009)*

5 unchanged sentences

10.25(e) Form of Performance Stock Agreement for Peter J.

Arduini (Incorporated by reference to Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)*

Arduini (Incorporated by reference to Exhibit 10.

2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018)*

10.26 Performance Incentive Compensation Plan effective January 1, 2013 (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2013)*

9 unchanged sentences

10.34 Form of Stock Option Agreement for Glenn Coleman (Incorporated by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015)*

10.41 Agreement and General Release by and between Robert Paltridge and Integra LifeSciences Corporation (Incorporated by reference to Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015)*

10.42 Agreement and General Release by and between Richard D.

Gorelick and Integra LifeSciences Corporation

10.35 Form of Change in Control Severance Program (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 19, 2020)*

7 unchanged sentences

10.38(c) New Form of Restricted Stock Agreement for Executive Officers - Cliff Vesting (Incorporated by reference to Exhibit 10.38(h) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2012)*

10.47(a) Form of Restricted Stock Agreement for Mr.

Henneman for 2008 and 2009 (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on April 13, 2009)*

10.47(b) Form of Contract Stock/Restricted Units Agreement pursuant to 2003 Equity Incentive Plan for Mr.

Henneman (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on December 24, 2008)*

10.47(c) Form of Option Agreement for John B.

Henneman, III (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 6, 2008)*

10.47(d) Form of Performance Stock Agreement for John B.

Henneman, III (Incorporated by reference to Exhibit 10.37(b) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007)*

10.48(a) Form of Contract Stock/Restricted Units Agreement (for Signing Grant) for Mr.

Arduini (Incorporated by reference to Exhibit 10.4 to the Company’s Current Report on Form 8-K filed on October 12, 2010)*

10.48(b) Form of Contract Stock/Restricted Units Agreement (for Annual Equity Awards) for Mr.

Arduini (Incorporated by reference to Exhibit 10.5 to the Company’s Current Report on Form 8-K filed on October 12, 2010)*

10.49 Form of Non-Qualified Stock Option Agreement for Mr.

Arduini (Incorporated by reference to Exhibit 10.6 to the Company’s Current Report on Form 8-K filed on October 12, 2010)*

10.50(a) Form of Restricted Stock Agreement for Mr.

Henneman (Incorporated by reference to Exhibit 10.7 to the Company’s Current Report on Form 8-K filed on October 12, 2010)*

10.50(b) Form of Restricted Stock Agreement (Annual Vesting) for Mr.

Henneman (Incorporated by reference to Exhibit 10.39(n) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2011)*

10.39 Davis Promotion Summary, effective December 1, 2016 (Incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 5, 2016)*

3 unchanged sentences

10.43 Amended and Restated Management Incentive Compensation Plan, as of January 1, 2008 (Incorporated by reference to Exhibit 10.43(c) to the Company’s Annual Report on Form 10-K for the year ended December 31, 2007)*

10.56 Piggyback Registration Rights Agreement dated December 22, 2008 between Integra LifeSciences Holdings Corporation and George Heenan, Thomas Gilliam and Michael Evers, as trustees of The Bruce A.

LeVahn 2008 Trust and Steven M.

LeVahn (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 29, 2008)

10.44(a) Lease Agreement between 109 Morgan Lane, LLC and Integra LifeSciences Corporation, dated May 15, 2008 (Incorporated by reference to Exhibit 10.10 to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2008)

1 unchanged sentence

10.44(c) Lease Agreement dated as of July 1, 2013, between 109 Morgan Lane, LLC and Integra LifeSciences Corporation (Incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on July 1, 2013)

10.58 Receivables Financing Agreement, dated as of December 21, 2018, by and among Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Association, as Administrative Agent, PNC Capital Markets LLC, as Structuring Agent, and certain lenders and group agents that are parties thereto from time to time (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 28, 2018)

10.45(a) Receivables Financing Agreement, dated as of December 21, 2018, by and among Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Association, as Administrative Agent, PNC Capital Markets LLC, as Structuring Agent, and certain lenders and group agents that are parties thereto from time to time (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 28, 2018)

10.45(b) Amendment No.

1 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of March 29, 2019, by and among Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Associations, as Administrative Agent, Committed Lender and Group Agent, Mizuho Bank, Ltd., as Committed Lender and Group Agent and PNC Capital Markets LLC, as Structuring Agent, and certain lenders and group agents that are parties thereto from time to time (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021)

10.45(c) Amendment No.

2 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of July 17, 2020, by and among, Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Associations, as Administrative Agent, Committed Lender and Group Agent, Mizuho Bank, Ltd., as Committed Lender and Group Agent and PNC Capital Markets LLC, as Structuring Agent, and certain lenders and group agents that are parties thereto from time to time (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021)

10.45(d) Amendment No.

3 to Receivables Financing Agreement and Reaffirmation of Performance Guaranty, dated as of May 28, 2021, by and among, Integra Receivables LLC, Integra LifeSciences Sales LLC, as Servicer, PNC Bank, National Associations, as Administrative Agent, PNC Capital Markets LLC, as Structuring Agent, Committed Lender and Group Agent, and certain lenders and group agents that are parties thereto from time to time (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021)

10.46 Purchase and Sale Agreement, dated as of December 21, 2018, by and among Integra LifeSciences Sales LLC, Integra LifeSciences Corporation and Integra Receivables LLC (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 28, 2018)

41 unchanged sentences

(Incorporated by reference to Exhibit 10.17 to the Company’s Current Report on Form 8-K filed on February 7, 2020)

2.1(b) Agreement and Plan of Merger by among Integra LifeSciences Holdings Corporation and ACell Inc.

dated as of December 15, 2020+

10.65 Employment Agreement, dated October 28, 2021, by and between Integra LifeSciences Holdings Corporation, Integra LifeSciences Corporation and Jan De Witte (Incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 28, 2021)*

21.1 Subsidiaries of the Company+

29 unchanged sentences

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

/s/ Jan De Witte

President and Chief Executive Officer

1 unchanged sentence

/s/ Carrie L.

Executive Vice President, Chief Financial Officer, and Treasurer

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

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Signature Title Date

Arduini President and Chief Executive Officer, February 23, 2021

Arduini and Director (Principal Executive Officer)

/s/ Jan De Witte President and Chief Executive Officer, February 24, 2022

Jan De Witte and Director (Principal Executive Officer)

/s/ Carrie L.

Anderson Executive Vice President, Chief Financial Officer, February 23, 2021

Anderson and Treasurer (Principal Financial Officer)

Anderson Executive Vice President and Chief Financial Officer February 24, 2022

Anderson (Principal Financial Officer)

/s/ Jeffrey A.

8 unchanged sentences

Keith Bradley, Ph.D.

/s/ Shaundra Clay Director February 24, 2022

Shaundra Clay

/s/ Barbara B.

Hill Director February 24, 2022

Director February 23, 2021

/s/ Donald E.

7 unchanged sentences

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of

Integra LifeSciences Holdings Corporation

To the Board of Directors and Stockholders of Integra LifeSciences Holdings Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

3 unchanged sentences

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

Changes in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2019 and revenues from contracts with customers in 2018.

Change in Accounting Principle

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for convertible instruments in 2021 and leases in 2019.

Basis for Opinions

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Excess or Obsolete Inventory Adjustments

As described in Note 2 to the consolidated financial statements, the Company’s inventory is stated at the lower of cost, the value determined by the first-in, first-out method, or net realizable value, and the net inventory balance was $362.9 million as of December 31, 2020, $52.8 million of which is presented separately as Assets held for sale.

At each balance sheet date, management evaluates inventories for excess quantities, obsolescence or shelf life expiration.

This evaluation by management includes analysis 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, management adjusts the carrying value to estimated net realizable value.

The principal considerations for our determination that performing procedures relating to excess or obsolete inventory adjustments is a critical audit matter are the significant judgment by management when developing the estimate for excess or obsolete inventory adjustments, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s analysis and significant assumptions related to projections of future demand and risk of technological or competitive obsolescence for products.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of inventory, including controls over the estimate for excess or obsolete inventory adjustments and management’s projection of future demand and the risk of technological or competitive obsolescence for products.

These procedures also included, among others, testing management’s process for developing the estimate for excess or obsolete inventory adjustments, evaluating the appropriateness of the method, testing the completeness, accuracy, and relevance of underlying data used in the estimate;

and evaluating the reasonableness of significant assumptions related to projections of future demand and risk of technological or competitive obsolescence for products.

Evaluating the reasonableness of management’s assumption related to projections of future demand involved considering the product’s historical performance.

Evaluating the reasonableness of management’s assumption related to the risk of technological or competitive obsolescence for products involved considering the technological or competitive obsolescence experiences during the product life cycle of existing products.

Valuation of Transferred Intellectual Property Rights That Give Rise to Deferred Tax Benefits

As described in Note 13 to the consolidated financial statements, in December 2020, the Company completed an intra-entity transfer of certain intellectual property rights to one of its subsidiaries in Switzerland.

While the transfer did not result in a taxable gain, the Company’s Swiss subsidiary received a step-up in tax basis based on the fair value of the transferred intellectual property rights.

Management determined the fair value using a discounted cash flow model based on management’s expectations of revenue growth rates, royalty rates, discount rates and useful lives of the intellectual

The Company recorded a $59.2 million deferred tax benefit in Switzerland related to the amortizable tax basis in the transferred intellectual property.

The principal considerations for our determination that performing procedures relating to the valuation of transferred intellectual property rights that give rise to deferred tax assets is a critical audit matter are the significant judgment by management in developing the fair value of the intangible assets transferred, which is used as the basis for the recording of the deferred tax assets.

This in turn led to significant auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s estimates and assumptions related to revenue growth rates, royalty rates, discount rates and useful lives.

In addition, the audit effort involved the use of professionals with specialized skill and knowledge.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Acquisition - Valuation of Developed Technology Intangible Assets

As described in Notes 2, 4 and 7 to the consolidated financial statements, in January 2021, the Company acquired ACell Inc.

for an acquisition purchase price of $306.9 million plus contingent consideration of up to $100 million, which resulted in $245M of developed technology intangible assets being recorded.

The estimated fair value of the developed technology acquired was determined by management using the multi-period excess earnings method of the income approach.

Management’s significant assumptions used in the estimate of fair value included the estimated net cash flows, net revenues, cost of sales, selling and marketing costs, discount rates and each asset’s life cycle.

The principal considerations for our determination that performing procedures relating to the valuation of developed technology intangible assets from the acquisition of ACell Inc.

is a critical audit matter are the (i) the significant judgment by management in developing the fair value of the acquired developed technology intangible assets, (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s assumptions related to net revenues, cost of sales, selling and marketing costs, discount rates and each asset’s life cycle;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the valuation of the intangible assets transferred.

These procedures also included, among others, testing management’s process for developing the fair value of the intangible assets transferred;

evaluating the appropriateness of the discounted cash flow model;

testing the completeness, accuracy, and relevance of underlying data used in the model;

and evaluating the reasonableness of significant assumptions used by management related to revenue growth rates, royalty rates, discount rates and useful lives.

Evaluating the reasonableness of management’s assumptions related to revenue growth rates and useful lives involved considering current and past performance of the products associated with the intellectual property rights and evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s discounted cash flow model and the royalty rate and discount rate significant assumptions.

These procedures included testing the effectiveness of controls relating to the acquisition accounting, including controls over management’s valuation of the intangible assets and controls over the development of significant assumptions related to net revenues, cost of sales, selling and marketing costs, discount rates and each asset’s life cycle.

These procedures also included, among others (i) reading the purchase agreement and (ii) testing management’s process for developing the fair value of the developed technology intangible assets.

Testing management’s process included evaluating the appropriateness of the multi-period excess earnings method, testing the completeness, accuracy, and relevance of underlying data used in the method, and evaluating the reasonableness of significant assumptions used by management related to net revenues, cost of sales, selling and marketing costs, discount rates and each asset’s life cycle.

Evaluating the reasonableness of management’s assumptions related to net revenues, cost of sales, selling and marketing costs and each asset’s life cycle involved considering (i) current and past performance of the products associated with the developed technology acquired, as well as the performance of the reporting unit that assumed the products associated with the developed technology acquired;

(ii) the consistency with external market and industry data;

and (iii) and whether the assumptions are consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s multi-period excess earnings method and the discount rates and each asset’s life cycle assumptions.

/s/ PricewaterhouseCoopers LLP

4 unchanged sentences

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Dollars in thousands, except per share amounts)

Years Ended December 31,

11 unchanged sentences

Interest expense ( 50,395 ) ( 71,581 ) ( 53,957 )

Gain from sale of business 41,798 — —

Other income, net 19,307 4,434 9,522

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Dollars in thousands)

Years Ended December 31,

2021 2020 2019

(In thousands)

Net income $ 169,075 $ 133,892 $ 50,201

Other comprehensive income (loss), before tax:

Other comprehensive (loss) income, before tax:

Change in foreign currency translation adjustments ( 17,362 ) 53,363 ( 174 )

2 unchanged sentences

Reclassification adjustments for gain (loss) included in net income 17,024 ( 24,442 ) 14,865

Unrealized loss on derivatives ( 72,395 ) ( 28,536 ) ( 1,691 )

Unrealized gain (loss) on derivatives 51,168 ( 72,395 ) ( 28,536 )

Defined benefit pension plan - net gain (loss) arising during period 6,998 4,604 ( 8,973 )

Total other comprehensive loss, before tax ( 14,428 ) ( 37,683 ) ( 21,493 )

Income tax benefit (expense) related to items in other comprehensive loss 16,771 6,724 ( 143 )

Total other comprehensive loss, net of tax 2,343 ( 30,959 ) ( 21,636 )

Total other comprehensive gain (loss), before tax 40,804 ( 14,428 ) ( 37,683 )

Income tax (expense) benefit related to items in other comprehensive loss ( 11,900 ) 16,771 6,724

Total other comprehensive gain (loss), net of tax 28,904 2,343 ( 30,959 )

Comprehensive income, net of tax $ 197,979 $ 136,235 $ 19,242

2 unchanged sentences

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Dollars in thousands, except per share amounts)

Current Assets:

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Inventories, net 317,386 310,117

Assets held for sale 162,105 —

Prepaid expenses and other current assets 91,051 69,282

Assets held for sale — 162,105

Total current assets 1,153,716 1,237,202

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Accrued compensation 92,656 76,117

Liabilities held for sale 11,751 —

Accrued expenses and other current liabilities 120,458 94,194

Liabilities held for sale — 11,751

Total current liabilities 340,021 401,013

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in thousands)

Years Ended December 31,

2021 2020 2019

(In thousands)

OPERATING ACTIVITIES:

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Non-cash impairment charges 2,754 — 5,764

Income tax expense (benefit) ( 64,138 ) ( 19,046 ) ( 8,184 )

Deferred income tax (benefit) provision ( 2,755 ) ( 64,138 ) ( 19,046 )

Share-based compensation 36,210 19,590 21,255

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Loss on disposal of property and equipment and construction in-progress 2,240 7,855 1,821

Gain from the sale of business ( 41,798 ) — —

Change in fair value of contingent consideration and others ( 2,162 ) 951 1,119

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Purchases of property and equipment ( 48,022 ) ( 38,890 ) ( 69,537 )

Proceeds from sale of Extremity Orthopedics Business 190,468 — —

Acquired in-process research and development and intangibles ( 58 ) ( 25,000 ) ( 64,995 )

Proceeds from note receivable — — 752

Cash used in business acquisitions, net of cash acquired — ( 30,509 ) 26,704

Cash paid for business acquisitions, net of cash acquired ( 303,910 ) — ( 30,509 )

Proceeds from sales of property and equipment 3 3,657 37

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Proceeds from exercised stock options 6,824 5,232 6,948

Net cash paid for contingent consideration — — ( 38,196 )

Proceeds from the issuance of common stock, net of issuance costs — — 349,590

Cash taxes paid in net equity settlement ( 4,801 ) ( 5,075 ) ( 6,514 )

Net cash provided by (used in) financing activities 121,625 ( 8,766 ) ( 180,872 )

Net cash (used in) provided by financing activities ( 98,226 ) 121,625 ( 8,766 )

Effect of exchange rate changes on cash and cash equivalents ( 9,476 ) 13,871 74

Net increase (decrease) in cash and cash equivalents 271,255 60,073 ( 36,097 )

Net increase in cash and cash equivalents 43,282 271,255 60,073

Cash and cash equivalents at beginning of period 470,166 198,911 138,838

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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(Dollars in thousands)

Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Loss Retained Earnings Total Equity

Shares Amount Shares Amount

(In thousands)

Balance, January 1, 2019 88,044 $ 880 ( 2,881 ) $ ( 120,615 ) $ 1,192,601 $ ( 45,443 ) $ 348,373 $ 1,375,796

Adoption of Update No.

2014-09 — — — — — — 1,854 1,854

Adoption of Update No.

2018-02 — — — — — — 532 532

Net income — — — — — — 50,201 50,201

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Issuance of common stock for vesting of share-based awards, net of shares withheld for taxes 674 7 16 672 ( 961 ) — — ( 282 )

700 4 46 1,030 52 — — 1,086

Equity offering

6,038 60 — — 349,529 — — 349,589

Share-based compensation — — — — 21,264 — — 21,264

Balance, December 31, 2019 88,735 887 ( 2,865 ) ( 119,943 ) 1,213,620 ( 76,402 ) 398,574 1,416,736

88,044 880 ( 2,881 ) ( 120,615 ) 1,192,601 ( 45,443 ) 348,373 1,375,796

Net income — — — — — — 133,892 133,892

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Issuance of common stock through employee stock purchase plan 13 — — — 694 — — 694

17 — — — 716 — — 716

Issuance of common stock for vesting of share-based awards, net of shares withheld for taxes 503 2 11 526 ( 1,066 ) — — ( 538 )

674 7 16 672 ( 961 ) — — ( 282 )

Share-based compensation — 4 — — 19,397 — — 19,401

Balance, December 31, 2019

Share repurchase and equity component of the convertible note issuance, net — — — — 42,539 — — 42,539

Accelerated shares repurchased — — ( 2,060 ) ( 115,724 ) 15,724 — — ( 100,000 )

Adoption of Update No.

2016-13 — — — — — — ( 200 ) ( 200 )

Balance, December 31, 2020 89,251 893 ( 4,914 ) ( 235,141 ) 1,290,908 ( 74,059 ) 532,266 1,514,867

Net income — — — — — — 169,075 169,075

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Issuance of common stock through employee stock purchase plan 18 — — 1,127 — — 1,127

13 — — — 694 — — 694

Issuance of common stock for vesting of share-based awards, net of shares withheld for taxes 331 1 15 693 201 — — 895

503 2 11 526 ( 1,066 ) — — ( 538 )

Share-based compensation — 2 — — 35,981 — — 35,983

Share repurchase and equity component of the convertible note issuance, net — — — — 42,539 — — 42,539

Accelerated shares repurchased — — ( 2,060 ) ( 115,724 ) 15,724 — — ( 100,000 )

Adoption of Update No.

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Integra LifeSciences Holdings Corporation (the “Company”) was incorporated in Delaware in 1989.

The Company, a worldwide leader in medical devices, is dedicated to limiting uncertainty for surgeons through the development, manufacturing, and marketing of cost-effective surgical implants and medical instruments.

Its products are used primarily in neurosurgery, reconstruction and general surgery.

The Company is a worldwide leader in medical technology.

The Company was founded with the acquisition of an engineered collagen technology platform used to repair and regenerate tissue.

Since then, Integra has developed numerous product lines from this technology for applications ranging from burn and deep tissue wounds to the repair of dura mater in the brain, as well as nerves and tendons.

The Company has expanded its base regenerative technology business to include surgical instruments, neurosurgical products and advanced wound care through global acquisitions and product development to meet the evolving needs of its customers and enhance patient care.

The Company sells its products directly through various sales forces and through a variety of other distribution channels.

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PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned.

All intercompany accounts and transactions are eliminated in consolidation.

See Note 5, Acquisitions , for details of new subsidiaries included in the consolidation.

The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries.

Intercompany accounts and transactions have been eliminated in consolidation.

See Note 4, Acquisitions and Divestitures , for details of new subsidiaries included in the consolidation.

USE OF ESTIMATES

The preparation of consolidated financial statements is in conformity with generally accepted accounting principles in the United States ("GAAP") which 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, in-process research and development ("IPR&D"), valuation of intangible assets including 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 derivative instruments, valuation of the equity component of convertible debt instruments, valuation of contingent liabilities, the fair value of debt instruments and loss contingencies.

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 including 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 derivative instruments, valuation of contingent liabilities, the fair value of debt 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.

The novel coronavirus (“COVID-19”) pandemic and the resulting adverse impacts to global economic conditions, as well as our operations, may impact future estimates including, but not limited to, inventory valuations, fair value measurements, goodwill and long-lived asset impairments, the effectiveness of the Company’s hedging instruments, deferred tax valuation allowances, and allowances for doubtful accounts receivable.

As the Company continues to navigate the novel coronavirus ("COVID-19") pandemic and recent variants of the virus as well as the adverse impacts to global economic conditions, supply chain and the operations, there may be impact to future estimates including, but not limited to, inventory valuations, fair value measurements, goodwill and long-lived asset impairments, the effectiveness of the Company’s hedging instruments, deferred tax valuation allowances, and allowances for doubtful accounts receivable.

RECLASSIFICATIONS

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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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company evaluates the collectability of accounts receivable based on a combination of factors.

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For all other customers, the Company evaluates measurement of all expected credit losses for trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The Company adopted this guidance on January 1, 2020 using a modified retrospective transition method which requires a cumulative-effect adjustment to the opening balance of retained earnings to be recognized on the date of adoption with no change to financial results reported in prior periods.

The cumulative-effect adjustment recorded on January 1, 2020 was not material.

The adoption of this ASU did not have a significant impact on the Company's consolidated financial statements and related disclosures.

The Company's exposure to credit losses may increase if its customers are adversely affected by changes in healthcare laws, coverage, and reimbursement, economic pressures or uncertainty associated with local or global economic recessions, disruption associated with the COVID-19 pandemic and recent variants of the virus, and other customer-specific factors.

Although the Company has historically not experienced significant credit losses, it is possible that there could be an adverse impact due to customer and governmental responses to the COVID-19 pandemic.

Provisions to the allowances for doubtful accounts are recorded to selling, general and administrative expenses.

Account balances are charged off against the allowance when it is probable that the receivable will not be recovered.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Provision for doubtful accounts net of recoveries, associated with accounts receivable, included in selling, general and administrative expense, were $ 3.6 million, $ 2.1 million, and $ 0.6 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Provision for doubtful accounts net of recoveries, associated with accounts receivable, included in selling, general and administrative expense, was recoveries of $ 1.1 million for the year ended December 31, 2021, and charges of $ 3.6 million, and $ 2.1 million for the years ended December 31, 2020 and 2019, respectively.

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 net realizable value.

Inventories consisted of the following:

(In thousands)

Dollars in thousands 2021 2020

Finished goods 162,528 $ 180,301

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At December 31, 2020, $ 52.8 million of inventories, net was presented separately as "Assets held for sale" in conjunction with the sale of the Extremity Orthopedics business.

See Note 3, Assets and Liabilities Held for Sale .

See Note 4, Acquisitions and Divestitures .

At each balance sheet date, the Company evaluates inventories for excess quantities, obsolescence or shelf life expiration.

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No such amounts were capitalized at December 31, 2021 or 2020.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

PROPERTY, PLANT AND EQUIPMENT

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The cost of computer software developed or obtained for internal use is accounted for in accordance with the Accounting Standards Codification 350-40, Internal-Use Software.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

2020 2019 Useful Lives

(In thousands)

Dollars in thousands 2021 2020 Useful Lives

Land $ 1,512 $ 1,541

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At December 31, 2020, $ 37.9 million of property, plant and equipment, net was presented separately as "Assets held for sale" in conjunction with the sale of the Extremity Orthopedics business.

See Note 3, Assets and Liabilities Held for Sale .

Depreciation expense associated with property, plant and equipment was $ 42.1 million, $ 42.6 million, and $ 44.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

See Note 4, Acquisitions and Divestitures .

Depreciation expense associated with property, plant and equipmen t was $ 39.4 million , $ 42.1 million, and $ 42.6 million for the years ended December 31, 2021, 2020 and 2019, respectively.

During the fourth quarter of 2020, the Company wrote-off certain construction in progress of $ 6.7 million related to a manufacturing project that the Company decided to discontinue.

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Results of operations of acquired companies are included in the Company’s results of operations as of the respective acquisition dates.

Acquired businesses are accounted for using the acquisition method of accounting, which requires that assets acquired and liabilities assumed be recorded at fair value, with limited exceptions.

Any excess of the purchase price over the fair value of the net assets acquired is recorded as goodwill.

The Company accounts for the acquisition of a business in accordance with ASC 805, Business Combinations (ASC 805).

Amounts paid to acquire a business are allocated to the assets acquired and liabilities assumed based on their fair values at the date of acquisition.

Any excess of the purchase price over the fair value of the net assets acquired in recorded as goodwill.

Transaction costs and costs to restructure the acquired company are expensed as incurred.

The operating results of the acquired business are reflected in the consolidated financial statements after the date of acquisition.

Acquired IPR&D is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use.

Contingent consideration is recognized at the estimated fair value on the acquisition date.

Subsequent changes to the fair value of contingent payments are recognized in selling, general and administrative expense in consolidated statements of operations.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contingent consideration is recorded at fair value as measured on the date of acquisition.

The value recorded is based on estimates of future financial projections under various potential scenarios using either a Monte Carlo simulation or the probability-weighted income approach derived from revenue estimates and probability assessment with respect to the likelihood of achieving contingent obligations.

Contingent payments related to acquisitions consist of development, regulatory, and commercial milestone payments, in addition to sales-based payments, and are valued using discounted cash flow techniques.

The fair value of development, regulatory, and commercial milestone payments reflects management’s expectations of the probability of payment and increases or decreases as the probability of payment or expectation of timing of payments changes.

The fair value of sales-based payments is based upon probability-weighted future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payments changes.

Each quarter until such contingent amounts are earned, the fair value of the liability is remeasured at each reporting period and adjusted as a component of operating expenses based on changes to the underlying assumptions.

The change in the fair value of sales-based payments is based upon future revenue estimates and increases or decreases as revenue estimates or expectation of timing of payment charges.

The estimates used to determine the fair value of the contingent consideration liability are subject to significant judgment and actual results are likely to differ from the amounts originally recorded.

The Company determi nes the fair value of acquired intangible assets based on detailed valuations that use certain information and assumptions provided by management.

The Company allocates any excess purchase price over the fair value of the net tangible and intangible assets acquired to goodwill.

Determining the fair value of these intangible assets, acquired as part of a business combination requires the Company to make significant estimates.

These estimates include the amount and timing of projected future cash flows, the discount rate used to discount those cash flows to present value, the assessment of the asset’s life cycle, and the consideration of legal, technical, regulatory, economic, and competitive risks.

The fair value assigned to other intangible assets is determined by estimating the future cash flows of each project or technology and discounting the net cash flows back to their present values.

The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies.

Acquired IPR&D is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use.

The Company uses the income approach to determine the fair value of developed technology and IPR&D acquired in a business combination.

This approach determines fair value by estimating the after-tax cash flows attributable to the respective asset over its useful life and then discounting these after-tax cash flows back to a present value.

Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each product including net revenues, cost of sales, R&D costs, selling and marketing costs, the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends impacting the asset and each cash flow stream.

The Company also uses the income approach, as described above, to determine the estimated fair value of certain other identifiable intangible assets including customer relationships, trade names and business licenses.

Customer relationships represent established relationships with customers, which provide a ready channel for the sale of additional products and services.

Trade names represent acquired company and product names.

IPR&D acquired in a business combination is capitalized as an indefinite-lived intangible asset.

Development costs incurred after the acquisition are expensed as incurred.

Upon receipt of regulatory approval, the indefinite-lived intangible asset is then accounted for as a finite-lived intangible asset and amortized on a straight-line basis or accelerated basis, as appropriate, over its estimated useful life.

If the research and development project is subsequently abandoned, the indefinite-lived intangible asset is charged to expense.

IPR&D acquired outside of a business combination is expensed immediately.

Due to the uncertainty associated with research and development projects, there is risk that actual results will differ materially from the original cash flow projections and that the research and development project will result in a successful commercial product.

The risks associated with achieving commercialization include, but are not limited to, delay or failure to obtain regulatory approvals to conduct clinical trials, delay or failure to obtain required market clearances, delays or issues with patent

issuance, or validity and litigation.

If the acquired net assets do not constitute a business under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill is recognized.

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Payments that would be recognized as contingent consideration in a business combination are expensed when probable in an asset acquisition.

Refer to Note 5, Acquisitions for more information.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Refer to Note 4, Acquisitions and Divestitures for more information.

GOODWILL AND OTHER INTANGIBLE ASSETS

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Refer to Note 7, Goodwill and Other Intangibles for more information.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company has two reportable segments with three underlying reporting units.

Refer to Note 16, Segment and Geographic Information for more information on reportable segments.

When the Company acquires a business, the assets acquired, including IPR&D, and liabilities assumed are recorded at their respective fair values as of the acquisition date.

The Company's policy defines IPR&D as the fair value of those projects for which the related products have not received regulatory approval and have no alternative future use.

Determining the fair value of intangible assets, including IPR&D, acquired as part of a business combination requires the Company to make significant estimates.

The fair value assigned to other intangible assets is determined by estimating the future cash flows of each project or technology and discounting the net cash flows back to their present values.

The discount rate used is determined at the time of measurement in accordance with accepted valuation methodologies.

IPR&D acquired in a business combination is capitalized as an indefinite-lived intangible asset.

Development costs incurred after the acquisition are expensed as incurred.

If the research and development project is subsequently abandoned, the indefinite-lived intangible asset is charged to expense.

IPR&D acquired outside of a business combination is expensed immediately.

Other intangible assets include patents, trademarks, purchased technology, and supplier and customer relationships.

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.

The Company capitalizes costs incurred to renew or extend the term of recognized intangible assets and amortizes those costs

over their expected useful lives.

The Company tests intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC Topic 350.

Additionally, the Company may perform interim tests if an event occurs or circumstances change that could potentially reduce the fair value of a indefinite lived intangible asset below its carrying amount.

The Company tests for impairment by either performing a qualitative evaluation or a quantitative test.

The qualitative evaluation is an assessment of factors, including specific operating results as well as industry, market and general economic conditions, to determine whether it is more likely than not that the fair values of the intangible asset is less than its carrying amount.

The Company may elect to bypass this qualitative evaluation and perform a quantitative test.

Product rights and other definite-lived intangible assets are tested periodically for impairment in accordance with ASC Topic 360 when events or changes in circumstances indicate that an asset's carrying value may not be recoverable.

The impairment testing involves comparing the carrying amount of the asset or asset group to the forecasted undiscounted future cash flows.

In the event the carrying value of the asset exceeds the undiscounted future cash flows, the carrying value is considered not recoverable and impairment exists.

An impairment loss is measured as the excess of the asset's carrying value over its fair value, calculated using discounted future cash flows.

The computed impairment loss is recognized in the period that the impairment occurs.

LONG-LIVED ASSETS

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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 from time to time, the Company may enter into derivatives that are not designated as hedging instruments in order to protect itself from currency volatility due to intercompany balances.

All derivative instruments are recognized at their fair values as either assets or liabilities on the balance sheet.

The Company has not entered into derivative transactions for speculative purposes.

From time to time, the Company may enter into derivatives that are not designated as hedging instruments in order to protect itself from currency volatility due to intercompany balances.

All derivative instruments are recognized at the 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:

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The Company classifies derivatives designated as hedges in the same category as the item being hedged for cash flow presentation purposes.

The Company entered into a foreign currency forward contract that is not designated as a hedging instrument for accounting purposes.

This contract is recorded at fair value, with the changes in fair value recognized into other income, net on the consolidated financial statements.

The Company entered into foreign currency forward and foreign currency swap contracts that are not designated as a hedging instruments for accounting purposes.

These contracts are recorded at fair value, with the changes in fair value recognized into other income, net on the consolidated financial statements.

Refer to Note 6, Derivative Instruments for more information.

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subsidiaries.

Foreign currency transaction losses of $ 1.6 million, $ 0.3 million and $ 1.7 million are reported in other income, net in the statements of operations, for the year ended December 31, 2020, 2019 and 2018, respectively.

Foreign currency transaction net gains of less than $ 0.1 million, and net losses of $ 1.6 million and $ 0.3 million are reported in other income, net in the statements of operations, for the year ended December 31, 2021, 2020 and 2019, respectively.

Income taxes are accounted for by using the asset and liability method.

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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.

While the Company believes it has identified all reasonable exposures and the reserve it has established 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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company continues to indefinitely reinvest substantially all of its foreign earnings.

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cash needs without requiring the repatriation of foreign cash.

The Tax Cuts and Jobs Act (the “2017 Tax Act”), enacted in December 2017,

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

imposed a toll tax on a deemed repatriation of undistributed earnings of foreign subsidiaries.

One time or unusual items that may impact the ability or intent to keep the foreign earnings and cash indefinitely reinvested include significant U.S.

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REVENUE RECOGNITION

On January 1, 2018, the Company adopted Topic 606 using the modified retrospective method applied to all contracts which were not completed as of January 1, 2018.

Results of operations for the reporting periods after January 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Topic 605, Revenue Recognition .

The adoption of Topic 606 resulted in an increase to the opening retained earnings of $ 1.9 million, which was recorded net of taxes as of January 1, 2018 to reflect the change in timing of the recognition of revenue related to the Company's private label business from point in time to over time during the manufacturing process and goods in transit for which control was transferred to customers at the time of shipment.

The total assets and liabilities increased by $ 7.1 million and $ 5.2 million, respectively, as of January 1, 2018.

Revenue is recognized upon the transfer of control of promised products or services to the customers in an amount that reflects the consideration the Company expects to receive in exchange for those products and services.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the year ended December 31, 2020, the Company incurred restructuring costs of $ 4.9 million in cost of goods sold, $ 1.2 million in selling, general and administrative and $ 0.3 million in research and development related to employee terminations associated with a future plant closure in the consolidated statement of operations.

As of December 31, 2020, the restructuring costs of $ 6.4 million were included in other liabilities in the consolidated balance sheet.

The Company incurred restructuring costs of $ 3.4 million and $ 4.9 million in cost of goods sold, $ 0.5 million and $ 1.2 million in selling, general and administrative and $ 0.3 million and $ 0.3 million in research and development related to employee terminations associated with a future plant closure in the consolidated statement of operations for the years ended December 31, 2021 and 2020, respectively.

Restructuring costs of $ 10.2 million were included in a ccrued expenses and other current liabilities and $ 6.4 million were included in other liabilities in the consolidated balance sheet for the year ended December 31, 2021 and 2020, respectively.

STOCK-BASED COMPENSATION

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Deferred Compensation Plan

In May 2019, the Company adopted the Integra LifeSciences Deferred Compensation Plan (the “Plan”).

Under the Plan, certain employees of the Company may defer the payment and taxation of up to 75 % of their base salary and up to 100 % of bonus amounts and other eligible cash compensation.

The Company maintains a deferred compensation plan in which certain employees of the Company may defer the payment and taxation of up to 75 % of their base salary and up to 100 % of bonus amounts and other eligible cash compensation.

This deferred compensation is invested in funds offered under the Plan and is valued based on Level 1 measurements in the fair value hierarchy.

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No ne of the Company's customers accounted for 10 % or more of the consolidated net sales during the years ended December 31, 2021, 2020 and 2019.

RECENT ACCOUNTING PRONOUNCEMENTS

In February 2016, the FASB issued ASU No.

2016-02, Leases (Topic 842) (the New Lease Standard).

The New Lease Standard requires that lessees recognize virtually all of its leases on the balance sheet by recording a right-of-use asset and lease liability (other than leases that meet the definition of a "short-term lease").

This update became effective for all annual periods and interim reporting periods beginning after December 15, 2018.

The Company adopted the New Lease Standard as of January 1, 2019 using a modified retrospective transition.

Under this method, financial results reported in periods prior to January 1, 2019 are unchanged.

The Company elected the ‘package of practical expedients’ which permits the Company not to reassess the prior conclusions about lease identification, lease classification and initial direct costs under the new standard.

The Company also

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

elected the use-of-hindsight practical expedient.

As most of the leases do not provide an implicit rate, the Company used the collateralized incremental borrowing rate based on the information available at the lease implementation date in determining the present value of the lease payments.

The adoption of the New Lease Standard had an initial impact on the consolidated balance sheet due to the recognition of $ 76.4 million of lease liabilities with corresponding right-of-use assets ("ROU") of $ 67.3 million for operating leases.

The difference between lease liabilities and right-of-use assets is primarily attributed to unamortized lease incentives which is amortized over the term of each respective lease.

Refer to Note 12, Leases and Related Party Leases for more information.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments .

The ASU is intended to improve financial reporting by requiring timelier recording of credit losses on loans and other financial instruments held by financial institutions and other organizations.

The ASU requires the measurement of all expected credit losses for financial assets including trade receivables held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts.

Financial institutions and other organizations will now use forward-looking information to better inform their credit loss estimates.

The ASU became effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019.

The cumulative-effect adjustment recorded on January 1, 2020 is not material.

The adoption of this ASU did not have a significant impact on the Company's consolidated financial statements and related disclosures.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2018, the FASB issued ASU 2018-14, Compensation-Retirement Benefits-Defined Benefit Plans-General (Subtopic 715-20):

Disclosure Framework-Changes to the Disclosure Requirements for Defined Benefit Plans .

This guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans, including removing certain previous disclosure requirements, adding certain new disclosure requirements, and clarifying certain other disclosure requirements.

This guidance modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.

The ASU is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years.

Early adoption was permitted.

The Company adopted this guidance for the year ended December 31, 2020.

The Company adopted this guidance during the year ended December 31, 2020.

The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU No.

2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) , relating to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (e.g., a service contract).

In August 2018, the FASB issued ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40) , relating to a customer's accounting for implementation, set-up, and other upfront costs incurred in a cloud computing arrangement that is hosted by a vendor (e.g., a service contract).

Under this guidance, a customer will apply the same criteria for capitalizing implementation costs as it would for an arrangement that has a software license.

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The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In December 2019, the FASB issued ASU No.

2019-12, Income Taxes :

In December 2019, the FASB issued ASU 2019-12, Income Taxes :

Simplifying the Accounting for Income Taxes, intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences.

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The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted.

The Company will adopt ASU No.

2019-12 effective January 1, 2021.

The Company adopted ASU 2019-12 as of January 1, 2021.

Adoption of the standard requires certain changes to be made prospectively, with some changes to be made retrospectively.

The Company does not expect this guidance to have a material impact on our results or financial position.

The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform , which provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting.

This amendment applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

This ASU became effective immediately and may be applied prospectively to contract modifications made and hedging

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

relationships entered into or evaluated on or before December 31, 2022.

In January of 2021, the FASB also issued ASU No.

2021-01, Reference Rate Reform- Scope which clarified certain optional expedients and exceptions to entities that are affected because of the reference rate reform.

The amendments in this ASU affect the guidance in ASU No.

2020-04 and are effective in the same timeframe as ASU No.

The Company is currently assessing the impact that this ASU will have on its consolidated financial statements and related disclosures.

In August 2020, the FASB issued ASU No.

2020-06 Debt- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40)-Accounting For Convertible Instruments and Contracts in an Entity's Own Equity .

This amendment applies to all entities, subject to meeting certain criteria, that have contracts, hedging relationships, and other transactions that reference London Inter-Bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued because of reference rate reform.

This ASU is effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.

In January 2021, the FASB also issued ASU 2021-01, Reference Rate Reform- Scope which clarified certain optional expedients and exceptions to entities that are affected because of the reference rate reform.

The amendments in this ASU affect the guidance in ASU 2020-04 and are effective in the same timeframe as ASU 2020-04.

The Company currently has contracts that are indexed to LIBOR and are continuing to monitor this activity and evaluate the associated risk.

The Company is continuing to evaluate the scope of impacted contracts and the potential impact.

The Company is also monitoring the developments regarding alternative rates and may amend certain contracts to accommodate those rates if the contract does not already specify a replacement rate.

While the notional value of agreements potentially indexed to LIBOR is material, the Company does not expect a material impact consolidated financial statements and related disclosures associated with this transition.

In August 2020, the FASB issued ASU 2020-06, Debt- Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts in Entity's Own Equity (Subtopic 815-40):Accounting for Convertible Instruments and Contracts in an Entity's Own Equity .

The guidance simplifies accounting for convertible instruments by removing major separation models required under current GAAP.

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The guidance also simplifies the diluted net income per share calculation in certain areas.

The ASU will be effective for annual and interim periods beginning after December 15, 2021, and early adoption is permitted for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years.

The Company will adopt this standard on January 1, 2021 using the modified retrospective method.

The estimated impact includes the convertible debt instrument being accounted for as a single liability measured at its amortized cost and elimination of the non-cash interest expense as the Company will not separately present the equity embedded conversion feature in such debt.

The Company also expects to adopt the if-converted method for earnings per share.

In October 2020, the FASB issued ASU 2020-10, Codification Improvements , which updates various codification topics by clarifying or improving disclosure requirements to align with the SEC’s regulations.

The Company will adopt ASU 2020-10 as of the reporting period beginning January 1, 2021.

The adoption of this update is not expected to have a material effect on the Company’s consolidated financial statements.

There are no other recently issued accounting pronouncements that are expected to have a significant effect on the Company's financial position, results of operations or cash flows.

As detailed in Note 5, Debt , on February 4, 2020, the Company issued $ 575.0 million aggregate principal amount of its 0.5 % Convertible Senior Notes due 2025 (the "2025 Notes").

The 2025 Notes are subject to the guidance included in ASU 2020-06.

The Company adopted this guidance on January 1, 2021 using the modified retrospective approach which resulted in a cumulative-effect adjustment that increased (decreased) the following consolidated balance sheet accounts:

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

ADJUSTMENT CONSOLIDATED BALANCE SHEET CLASSIFICATION AMOUNT

(in millions)

Deferred tax impact of cumulative-effect adjustment Deferred tax liabilities $ ( 20.6 )

Debt discount reclassification Long-term convertible securities 89.1

Equity issuance costs reclassification Long-term convertible securities ( 2.5 )

Debt discount amortization and equity costs reclassification, net of tax Retained Earnings ( 2.8 )

Net impact of cumulative-effect adjustment Additional paid-in capital ( 63.3 )

On December 9, 2020, the Company made an irrevocable election under the indenture to require the principal portion of its 2025 Notes to be settled in cash and any excess in shares.

Following the irrevocable notice, only the amounts settled in excess of the principal will be considered in diluted earnings per share under the “if-converted” method.

Upon adoption of ASU 2020-06, the Company’s 2025 Notes were reflected entirely as a liability since the embedded conversion feature will no longer be separately presented within stockholders’ equity.

Additionally, from January 1, 2021, the Company is no longer incurring non-cash interest expense for the amortization of debt discount, therefore the interest expense for the 2025 Notes, which is included in the interest expense on the consolidated statements of operations and comprehensive loss, is lower as compared to the fiscal year of 2020.

Securities and Exchange Commission (the "SEC") .

The ASU has been effective for the Company for annual and interim periods beginning after January 1, 2021.

The Company adopted this standard on the January 1, 2021.

The adoption of this guidance did not have a significant impact on the Company's consolidated financial statements and related disclosures.

In May 2021, the FASB issued ASU 2021-04, Earnings Per Share (Topic 260), Debt—Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40):

Issuer’s Accounting for Certain Modifications or Exchanges of Freestanding Equity-Classified Written Call Options which provides guidance to clarify and reduce diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified after modification or exchange.

The amendments in this ASU No.

2021-04 are effective for all entities for fiscal years beginning after December 15, 2021, and interim periods within those fiscal years, with early adoption permitted, including interim periods within those fiscal years.

The amendment currently has no impact to the Company as the effect will largely depend on the terms of written call options or financings issued or modified in the future.

There are no other recently issued accounting pronouncements that are expected to have any significant effect on the Company's financial position, results of operations or cash flows.

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

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Property and equipment purchases included in liabilities at December 31, 2021, 2020 and 2019 were $ 4.7 million, $ 1.6 million and $ 11.0 million, respectively.

In December 2019, the Company achieved the first developmental milestone which triggered a $ 5.0 million obligation to be paid to former shareholders of Rebound Therapeutics Corporation ("Rebound").

During the fourth quarter of 2021, the Company achieved its final developmental milestone which triggered a $ 5.0 million obligation to be paid to former shareholders of Rebound Therapeutics Corporation ("Rebound").

The Company recorded $ 5.0 million as an intangible asset in the consolidated balance sheet upon achieving the milestone.

The remaining obligation was included in accrued liabilities at December 31, 2021 in the consolidated balance sheets.

The milestone is expected to be fully paid during the first quarter of 2022.

During the fourth quarter of 2020, the Company achieved another developmental milestone which triggered a $ 20.0 million obligation to be paid to the former shareholders of Rebound.

The Company recorded $ 20.0 million as an intangible asset in the consolidated balance sheet upon achieving the milestone.

The milestone was paid during the fourth quarter of 2020.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the fourth quarter of 2019, the Company achieved the first developmental milestone which triggered a $ 5.0 million obligation to be paid to former shareholders of Rebound.

In addition, the Company recorded $ 5.0 million as in-process research and development expense in the consolidated statements of operations.

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The milestone was paid during the first quarter of 2020.

ASSETS AND LIABILITIES HELD FOR SALE

On September 29, 2020, the Company and certain of its subsidiaries entered into an agreement to sell its Extremity Orthopedics business to Smith & Nephew USD Limited for approximately $ 240 million in cash.

The transaction includes the sale of the Company’s upper and lower Extremity Orthopedics product portfolio, including ankle and shoulder arthroplasty and hand and wrist product lines.

In connection with the transaction, the Company will pay $ 41.5 million to the Consortium of Focused Orthopedists, LLC (“CFO”) pursuant to the terms of certain agreements between Integra and CFO relating to the development of shoulder arthroplasty products.

On January 4, 2021, upon the terms and conditions set forth in the Divestiture agreement, the Company completed its previously announced sale of its Extremity Orthopedics business to Smith & Nephew USD Limited and received an aggregate purchase price of $ 240.0 million.

Refer to Note 18.

Subsequent Events for details of the transaction.

The Company considered the assets and liabilities associated with the Extremity Orthopedics business to be accounted as held for-sale as the six criteria under ASC 260 were met during the third quarter of 2020.

Upon designation of the assets and liabilities as held for sale, the Company recorded the assets at the lower of their carrying value or their estimated fair value, less

estimated costs to sell.

Goodwill was allocated to the assets and liabilities held for sale using the relative fair value method of the Extremity Orthopedics business to the Company's Orthopedics and Tissue Technologies reporting unit.

The fair value of the business less costs to sell exceeded the related carrying value.

The Extremity Orthopedics business was treated as a single disposal group and presented separately in the consolidated balance sheet as assets and liabilities held for sale as of December 31, 2020.

These balances are presented as current assets and liabilities as they are expected to be sold within twelve months.

The major classes of assets and liabilities classified as a held for sale consisted of the following as of December 31, 2020 (amounts in thousands):

Prepaid expenses and other current assets 713

Right of use asset - operating leases and Other assets 3,186

Deferred tax assets 6,589

Intangible assets, net 13,332

Property, plant and equipment, net 37,893

Goodwill 47,546

Inventories 52,845

Total assets held for sale 162,104

Other liabilities 336

Current portion of lease liability - operating leases 539

Accrued compensation 1,767

Deferred tax liabilities 3,440

Lease liability - operating leases 5,669

Total liabilities held for sale 11,751

REVENUES FROM CONTRACTS WITH CUSTOMERS

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The Company has no significant revenues recognized on payments expected to be received more than one year after the transfer of control of products or services to customers.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contract Asset and Liability

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A portion of the transaction price allocated to the performance obligations to be satisfied in the future periods is recognized as contract liability.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarized the changes in the contract asset and liability balances for the year ended December 31, 2021:

(amounts in thousands)

Dollars in thousands Total

Contract Asset

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Contract liability, December 31, 2021 $ 11,946

At December 31, 2020, the short-term portion of the contract liability of $ 5.3 million and the long-term portion of $ 6.7 million were included in accrued expenses and other current liabilities and other liabilities in the consolidated balance sheet.

At December 31, 2021, the short-term portion of the contract liability of $ 5.3 million and the long-term portion of $ 6.7 million is included in current liabilities and other liabilities, respectively, in the consolidated balance sheet.

As of December 31, 2021, the Company is expected to recognize revenue of approximately $ 5.3 million in 2022, $ 2.9 million in 2023, $ 1.8 million in 2024, $ 0.9 million in 2025, $ 0.6 million in 2026, and $ 0.4 million thereafter.

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The Company elected to exclude from the measurement of the transaction price all taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction and collected by the entity from a customer.

Disaggregated Revenue

The following table presents revenues disaggregated by the major sources of revenues for years-ended December 31, 2020, 2019 and 2018 (amounts in thousands):

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Disaggregated Revenue

The following table presents revenues disaggregated by the major sources of revenues for years-ended December 31, 2021, 2020 and 2019 (dollar amounts in thousands):

Year Ended December 31, 2021 Year Ended December 31, 2020 Year Ended December 31, 2019

(amounts in thousands)

Neurosurgery 802,959 716,339 767,793

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Total Codman Specialty Surgical 1,025,232 894,831 996,206

Wound Reconstruction 293,038 322,739 311,565

Wound Reconstruction and Care (2)

392,463 293,038 322,739

Extremity Orthopedics (1)

— 78,316 90,082

Private Label 124,753 105,683 108,530

Total Orthopedics and Tissue Technologies 477,037 521,351 508,512

Total Tissue Technologies 517,216 477,037 521,351

Total revenue $ 1,542,448 $ 1,371,868 $ 1,517,557

(1) On January 4, 2021, the Company completed its sale of its Extremity Orthopedics business.

In conjunction with the sale of this business, the Company rebranded the Orthopedics and Tissue Technologies segment as Tissue Technologies in the first quarter of 2021.

Acquisitions and Divestitures, for details.

(2) See Note 4.

Acquisitions and Divestitures, for details around the ACell acquisition.

Prior period amounts were reclassified between categories within the Codman Specialty Surgical segment to conform to the current period presentation.

See Note 16, Segment and Geographical Information , for details of revenues based on the location of the customer.

ACQUISITIONS AND DIVESTITURES

Sale of Extremity Orthopedics Business

On January 4, 2021, the Company completed the sale of its Extremity Orthopedics business to Smith & Nephew USD Limited ("Smith & Nephew").

The transaction included the sale of the Company's upper and lower Extremity Orthopedics product portfolio, including ankle and shoulder arthroplasty and hand and wrist product lines.

The Company received an aggregate purchase price of $ 240.0 million from Smith & Nephew and concurrently paid $ 41.5 million to the Consortium of Focused Orthopedists, LLC ("CFO") effectively terminating the licensing agreement between Integra and CFO relating to the development of shoulder arthroplasty products.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Assets and liabilities divested consisted of the following as of December 31, 2020 (dollar amounts in thousands):

Prepaid expenses and other current assets $ 713

Right of use asset - operating leases and Other assets 3,186

Deferred tax assets 6,589

Intangible assets, net 13,332

Property, plant and equipment, net 37,893

Goodwill 47,546

Inventories 52,845

Total assets held for sale $ 162,104

Other liabilities $ 336

Current portion of lease liability - operating leases 539

Accrued compensation 1,767

Deferred tax liabilities 3,440

Lease liability - operating leases 5,669

Total liabilities held for sale $ 11,751

The divestiture does not represent a strategic shift that will have a major effect on the Company's operations and financial statements.

Goodwill was allocated to the assets and liabilities divested using the relative fair value method of the Extremity Orthopedics business to the Company's Tissue Technologies reporting unit.

In connection with the sale, the Company recognized a gain of $ 41.8 million that is presented in Gain from the sale of business in the consolidated statement of operations for the year ended December 31, 2021.

The Company finalized the net working capital and paid an additional $ 1.3 million to Smith & Nephew as of December 31, 2021.

The Company also entered into a transition services agreement with Smit h & Nephew which requires the Company to provide certain services on behalf of Smith & Nephew for the duration of the period subsequent to the sale of the business as defined in the agreement.

The Company recognized a payable due to Smith & Nephew of $ 9.1 million as of December 31, 2021, included in the consolidated balance sheet within accrued expenses and other current liabilities.

On January 20, 2021, the Company acquired ACell, Inc.

(the "ACell Acquisition") for an acquisition purchase price of $ 306.9 million plus contingent considerations of up to $ 100 million, that may be payable upon achieving certain revenue-based performance milestones in 2022, 2023 and 2025.

The final working capital adjustments of $ 1.3 million was finalized and paid as of June 30, 2021.

ACell was a privately-held company that offered a portfolio of regenerative products for complex wound management, including developing and commercializing products based on MatriStem Urinary Bladder Matrix, a technology platform derived from porcine urinary bladder extracellular matrix.

Assets Acquired and Liabilities Assumed at Fair Value

The ACell Acquisition has been accounted for using the acquisition method of accounting.

This method requires that assets acquired and liabilities assumed in a business combination are recognized at their fair values as of the acquisition date.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date:

Dollars in thousands Final Valuation Weighted Average Life

Current assets:

Trade accounts receivable, net 16,469

Inventories, net 18,299

Prepaid expenses and other current assets 1,498

Total current assets $ 38,992

Property, plant and equipment, net 13,769

Intangible assets 245,000 13 - 14 years

Goodwill 94,147

Right of use asset - operating leases 9,259

Deferred tax assets 7,465

Other assets 148

Total assets acquired $ 408,780

Current liabilities:

Accounts payable $ 718

Accrued expenses 5,966

Current portion of lease liability - operating leases 1,673

Total current liabilities $ 8,357

Other long-term liability 276

Lease liability - operating leases 7,585

Deferred tax liability 61,724

Contingent consideration 23,900

Total liabilities assumed 101,842

Net assets acquired $ 306,938

Intangible Assets

The estimated fair value of the developed technology acquired was determined using the multi-period excess earnings method of the income approach, which estimates value based on the present value of future economic benefits.

The Company used a discount rate of 8.5 % to arrive at the present value for the acquired intangible assets to reflect the rate of return a market participant would expect to earn and incremental commercial uncertainty in the cash flow projections.

No assurances can be given that the underlying assumptions used to prepare the discounted cash flow analysis will not change.

For these and other reasons, actual results may vary significantly from estimated results.

The Company allocated goodwill related to the ACell acquisition to the Tissue Technologies segment.

Goodwill is the excess of the consideration transferred over the net assets recognized and represents the expected synergies of the combined company and assembled workforce.

Goodwill recognized as a result of this acquisition is non-deductible for income tax purposes.

Contingent Consideration

As part of the acquisition, the Company is required to make payments to the former shareholders of ACell up to $ 100 million based on the achievement of certain revenue-based performance milestones in 2022, 2023, and 2025.

T he Company used iterations of the Monte Carlo simulation to calculate the fair value of the contingent consideration that considered the possible outcomes of scenarios related to each specific milestone.

The Company estimated the fair value of the contingent consideration to be $ 23.9 million at the acquisition date.

The estimated fair value as of December 31, 2021 was $ 21.8 million.

This amount is included in other liabilities at December 31, 2021 in the consolidated balance sheets of the Company.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company determined the acquisition date fair value of contingent consideration obligations using a Monte Carlo simulation, as well as significant unobservable inputs, reflecting the Company’s assessment of the assumptions market participants would use to value these liabilities.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined using the fair value concepts in ASC 820.

The resultant most likely payouts are discounted using an appropriate effective annual interest rate.

At each reporting date, the contingent consideration obligations is revalued to estimated fair value and changes in fair value will be reflected as income or expense in our consolidated statement of operations.

Changes in the fair value of the contingent considerations may result from changes in discount periods and rates and changes in the timing and amount of revenue estimates.

Deferred Tax Liabilities

Deferred tax liabilities result from identifiable intangible assets’ fair value adjustments.

These adjustments create excess book basis over tax basis which is tax-effected by the statutory tax rates of applicable jurisdictions.

Pro Forma Results (unaudited)

Pro forma revenues for the year ended December 31, 2021 and 2020 were $ 1,547.0 million and $ 1,466.8 million, respectively.

Pro forma net income and earnings per share are not presented for this acquisition as they are not material.

Arkis BioSciences Inc.

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The following table summarizes the final fair values of the assets acquired and liabilities assumed at the acquisition date:

Final Valuation Weighted Average Life

(Dollars in thousands)

Dollars in thousands Final Valuation Weighted Average Life

Other current assets 751

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The estimated fair value of the intangible assets was determined using the income approach, which is a valuation technique that provides an estimate of the fair value of an asset based on market participant expectations of the cash flows an asset would generate over its remaining useful life.

Some of the more significant assumptions inherent in the development of those asset valuations include the estimated net cash flows for each year for each asset (including net revenues, cost of sales, R&D costs, selling and marketing costs, and working capital/contributory asset charges), the appropriate discount rate to select in order to measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends impacting the asset and each cash flow stream.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

measure the risk inherent in each future cash flow stream, the assessment of each asset’s life cycle, and competitive trends impacting the asset and each cash flow stream.

The Company used a discount rate of 14.5 % to arrive at the present value for the acquired intangible assets to reflect the rate of return a market participant would expect to earn and incremental commercial uncertainty in the cash flow projections.

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Contingent Consideration

The Company determines the acquisition date fair value of contingent consideration obligations based on a probability-weighted income approach derived from revenue estimates and a probability assessment with respect to the likelihood of achieving contingent obligations.

The Company determined the acquisition date fair value of contingent consideration obligations based on a probability-weighted income approach derived from revenue estimates and a probability assessment with respect to the likelihood of achieving contingent obligations.

The fair value measurement is based on significant inputs not observable in the market and thus represents a Level 3 measurement as defined using the fair value concepts in ASC 820.

The resultant probability-weighted cash flows are discounted using an appropriate effective annual interest rate.

At each reporting date, the contingent consideration obligation will be revalued to estimated fair value and changes in fair value will be reflected as income or expense in our consolidated statement of operations.

At each reporting date, the contingent consideration obligation is revalued to estimated fair value and changes in fair value will be reflected as income or expense in our consolidated statement of operations.

Changes in the fair value of the contingent consideration obligations may result from changes in discount periods and rates, changes in the timing and amount of revenue estimates and changes in probability assumptions with respect to the likelihood of achieving the various contingent payment obligations.

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The milestone was paid during the first quarter of 2020.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the fourth quarter of 2020, the Company achieved another developmental milestone which triggered a $ 20.0 million obligation to be paid to the former shareholders of Rebound.

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The milestone was paid during the fourth quarter of 2020.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the fourth quarter of 2021, the Company achieved its final developmental milestone which triggered a $ 5.0 million obligation to be paid to the former shareholders of Rebound.

The Company recorded $ 5.0 million as an intangible asset in the consolidated balance sheet upon achieving the milestone.

The remaining obligation was included in accrued expenses and other current liabilities at December 31, 2021 in the consolidated balance sheets.

The milestone is expected to be fully paid during the first quarter of 2022.

Integrated Shoulder Collaboration, Inc.

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In connection with the sale of the Company's Extremity Orthopedic business, on January 4, 2021 the Company paid $ 41.5 million to CFO pursuant to the terms of certain agreements between the Company and CFO relating to the sale of shares of ISC effectively terminating our licensing agreement with ISC.

See Note 3, Assets and Liabilities Held for Sale and Note 18.

Subsequent Events for details of the transaction.

Amendment to the Sixth Amended and Restated Senior Credit Agreement

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The Company continues to have the aggregate principal amount of up to approximately $ 2.2 billion available to it through the following facilities:

(i) $ 877.5 million Term Loan facility, and (ii) a $ 1.3 billion revolving credit facility, which includes a $ 60.0 million sublimit for the issuance of standby letters of credit and a $ 60.0 million sublimit for swingline loans.

On July 14, 2020, the Company entered into an amendment (the "July 2020 Amendment") to the February 2020 Amendment of the Senior Credit Facility to increase financial flexibility in light of the unprecedented impact and uncertainty of the COVID-19 pandemic on the global economy.

The July 2020 amendment does not increase the Company’s total indebtedness.

(i) a $ 877.5 million Term Loan facility, and (ii) a $ 1.3 billion revolving credit facility, which includes a $ 60 million sublimit for the issuance of standby letters of credit and a $ 60 million sublimit for swingline loans.

On July 14, 2020, the Company entered into an amendment (the "July 2020 Amendment") to the February 2020 Amendment of the Senior Credit Facility to increase financial flexibility through June 30, 2021, in light of the unprecedented impact and uncertainty of the COVID-19 pandemic on the global economy.

The July 2020 amendment did not increase the Company’s total indebtedness.

In connection with the July 2020 amendment, the Company’s maximum consolidated total leverage ratio in the financial covenants (as defined in the Senior Credit Facility) was modified to the following:

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the one-month Eurodollar Rate plus 1.00 %

The applicable rates are based on the Company’s consolidated total leverage ratio (defined as the ratio of (a) consolidated funded indebtedness as of such date less cash that is not subject to any restriction on the use or investment thereof to (b) consolidated EBITDA as defined by the July 2020 amendment, for the period of four consecutive fiscal quarters ending on such date).

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(b) consolidated EBITDA (as defined by the July 2020 amendment), for the period of four consecutive fiscal quarters ending on such date).

The Company will pay an annual commitment fee (ranging from 0.15 % to 0.30 %), based on the Company's consolidated total leverage ratio, on the amount available for borrowing under the revolving credit facility.

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subsidiaries, excluding intangible assets.

The Senior Credit Facility is subject to various financial and negative covenants and at December 31, 2020, the Company was in compliance with all such covenants and is expected to be in compliance over the next year.

The Senior Credit Facility is subject to various financial and negative covenants and at December 31, 2021, the Company was in compliance with all such covenants.

In connection with the February 2020 Amendment, the Company capitalized $ 4.6 million of financing costs in connection with modification of the Senior Credit Facility and wrote off $ 1.2 million of previously capitalized financing costs during the first quarter of 2020.

In connection with the July 2020 amendment, the Company expensed $ 3.3 million of incremental financing costs in connection with the modification of the Senior Credit Facility during the third quarter of 2020.

At December 31, 2020 and 2019, there was $ 97.5 million and $ 375.0 million outstanding, respectively, under the revolving portion of the Senior Credit Facility at weighted average interest rates of 1.5 % and 3.2 %, respectively.

At December 31, 2020 and 2019, there was $ 877.5 million outstanding, respectively, under the Term Loan component of the Senior Credit Facility at weighted average interest rates of 1.5 % and 3.2 %, respectively.

At December 31, 2020, $ 33.8 million million of the Term Loan component of the Senior Credit Facility is classified as current on the consolidated balance sheet as the first mandatory repayment is due June 30, 2021.

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit facility and Term Loan component at December 31, 2020 were approximately $ 98.4 million and $ 883.6 million, respectively.

At December 31, 2021 and 2020, there was $ 31.3 million and $ 97.5 million, respectively, outstanding under the revolving portion of the Senior Credit Facility at weighted average interest rates of 1.4 % and 1.5 %, respectively.

At December 31, 2021 and 2020, there was $ 843.8 million and $ 877.5 million, respectively, outstanding, under the Term Loan component of the Senior Credit Facility at weighted average interest rate of 1.4 % and 1.5 % , respectively.

At December 31, 2021 and 2020, there was $ 45.0 million and $ 33.8 million, respectively, of the Term Loan component of the Senior Credit Facility was classified as current on the consolidated balance sheets.

The fair value of outstanding borrowings of the Senior Credit Facility's revolving credit and Term Loan components at December 31, 2021 were $ 31.0 million and $ 838.4 million, re spectively.

These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company.

1 unchanged sentence

Level 2 inputs represent inputs that are observable for the asset or liability, either directly or indirectly, and are other than active market observable inputs that reflect unadjusted quoted prices for identical assets or liabilities

Letters of credit outstanding as of December 31, 2020 and 2019 totaled $ 1.6 million and $ 0.8 million, respectively.

There were no amounts drawn as of December 31, 2020.

Contractual repayments of the Term Loan component of Senior Credit Facility are due as follows:

Letters of credit outstanding as of December 31, 2021 and 2020 totaled $ 1.6 million.

Ther e were no amounts drawn as of December 31, 2021.

Contractual repayments of the Term Loan component of the Senior Credit Facility are due as follows:

Year-ended December 31, 2021 Principal Repayment

(In thousands)

Dollars in thousands

2022 $ 45,000

2023 $ 61,875

2024 $ 67,500

2025 $ 669,375

Future interest payments on the term loan component of the Senior Credit Facility based on current interest rates are expected to approximate $ 11.0 million in 2022, $ 10.3 million in 2023, $ 9.4 million in 2024, and $ 0.9 million in 2025.

Interest is calculated on the term loan portion of the Senior Credit Facility based on LIBOR plus the spread paid by the Company.

As the revolving credit facility and Securitization Facility can be repaid at any time, no interest has been included in the calculation.

The outstanding balance of the revolving credit component of the Senior Credit Facility is due on February 3, 2025.

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The 2025 Notes will mature on August 15, 2025 and bear interest at a rate of 0.5 % per annum payable semi-annually in arrears, unless earlier converted, repurchased or redeemed in accordance with the terms of the 2025 Notes.

The portion of debt proceeds that was classified as equity at the time of the offering was $ 104.5 million, and that amount is being amortized to interest expense using the effective interest method through August 2025.

The effective interest rate implicit in the liability component is 4.2 %.

The portion of debt proceeds that was classified as equity at the time of the offering was $ 104.5 million.

The effective interest rate implicit in the liability component was 4.2 %.

In connection with this offering, the Company capitalized $ 13.2 million of financing fees.

At December 31, 2020, the carrying amount of the liability component was $ 485.9 million, the remaining unamortized discount was $ 89.1 million, and the principal amount outstanding was $ 575.0 million.

The fair value of the 2025 Notes at December 31, 2020 was $ 638.1 million.

The 2025 Notes are senior, unsecured obligations of the Company, and are convertible into cash and shares of its common stock based on initial conversion rate, subject to adjustment of 13.5739 shares per $1,000 principal amounts of the 2025 Notes (which represents an initial conversion price of $ 73.67 per share).

1 unchanged sentence

(1) if the closing price of the Company's common stock has been at least 130 % of the conversion price during the period;

(2) if the average trading price per $1000 principal amount of the 2025 Notes is less than or equal to 98 % of the average conversion value of the 2025 Notes during a period as defined in the indenture;

(3) at any time on or after February 20, 2023;

(2) if the average trading price per $1,000 principal amount of the 2025 Notes is less than or equal to 98 % of the average conversion

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

specified corporate transactions occur.

value of the 2025 Notes during a period as defined in the indenture;

(3) at any time on or after February 20, 2023;

or (4) if specified corporate transactions occur.

As of December 31, 2021, none of these conditions existed with respect to the 2025 Notes and as a result the 2025 Notes are classified as long term.

9 unchanged sentences

The initial strike price of the warrant transactions was $ 113.34 for the 2025 Notes, subject to customary anti-dilution adjustments.

During the twelve months ended December 31, 2020, the Company recognized cash interest related to the contractual interest coupon of $ 2.6 million and amortization of the discount on the liability component of $ 15.4 million for a total interest charge of $ 18.0 million on the 2025 Notes.

On January 1, 2021, the Company adopted ASU 2020-06 using the modified retrospective method.

See Note 2, Summary of Significant Accounting Policies , for further details.

At December 31, 2021, the carrying amount of the liability was $ 575.0 million.

The fair value of the 2025 Notes at December 31, 2021 was $ 640.5 million.

Factors that the Company considered when estimating the fair value of the 2025 Notes included recent quoted market prices or dealer quote.

The level of the 2025 Notes is considered as Level 1.

As a result of the adoption of ASU 2020-06, the Company recognized only cash interest related to the contractual interest coupon of $ 2.9 million on the 2025 Notes for the year ended December 31, 2021.

Prior to the adoption, during the year ended December 31, 2020, the Company recognized cash interest of $ 2.6 million and amortization of the discount on the liability component of $ 15.4 million for a total interest charge of $ 18.0 million on the 2025 Notes.

Securitization Facility

3 unchanged sentences

The amount of outstanding borrowings on the Securitization Facility at any one time is limited to $ 150.0 million.

The Securitization Facility Agreement ("Securitization Agreement") is for an initial three-year term and may be extended.

The Securitization Agreement governing the Securitization Facility contains certain covenants and termination events.

The Securitization Facility Agreement ("Securitization Agreement") governing the Securitization Facility contains certain covenants and termination events.

An occurrence of an event of default or a termination event under this Securitization Agreement may give rise to the right of its counterparty to terminate this facility.

As of December 31, 2021, the Company was in compliance with the covenants and none of the termination events had occurred.

The Company had $ 112.5 million and $ 104.5 million of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 1.3 % and 2.8 % as of December 31, 2020 and 2019, respectively.

At December 31, 2020, the total amount outstanding under the Securitization Facility is classified as current on the consolidated balance sheet as the total amount is due on December 21, 2021.

The fair value of the outstanding borrowing of the Securitization facility at December 31, 2020 was approximately $ 112.3 million.

On May 28, 2021, the Company entered into an amendment (the "May 2021 Amendment") of the Securitization Facility which extended the maturity date from December 21, 2021 to May 28, 2024.

The May 2021 Amendment does not increase the Company’s total indebtedness.

At both December 31, 2021 and 2020, the Company had $ 112.5 million, of outstanding borrowings under its Securitization Facility at a weighted average interest rate of 1.1 % and 1.3 %, respectively.

The fair value of the outstanding borrowing of the Securitization Facility at December 31, 2021 was $ 111.8 million.

These fair values were determined by using a discounted cash flow model based on current market interest rates available to the Company.

These inputs are corroborated by observable market data for similar liabilities and therefore classified within Level 2 of the fair value hierarchy.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

DERIVATIVE INSTRUMENTS

4 unchanged sentences

These interest rate swaps apply a fixed interest rate on a portion of the Company's expected LIBOR-indexed floating-rate borrowings.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company held the following interest rate swaps as of December 31, 2021 and 2020 (dollar amounts in thousands):

2 unchanged sentences

Asset (Liability)

3-month USD LIBOR $ — $ 50,000 February 6, 2017 June 30, 2017 June 30, 2020 1.834 % $ — $ ( 2 )

1-month USD LIBOR — 100,000 February 6, 2017 June 30, 2017 June 30, 2020 1.652 % — 12

1-month USD LIBOR 100,000 100,000 March 27, 2017 December 31, 2017 June 30, 2021 1.971 % ( 929 ) ( 581 )

1-month USD LIBOR 150,000 150,000 December 13, 2017 January 1, 2018 December 31, 2022 2.201 % ( 6,152 ) ( 2,880 )

1-month USD LIBOR 150,000 150,000 December 13, 2017 January 1, 2018 December 31, 2022 2.201 % ( 6,405 ) ( 2,880 )

1-month USD LIBOR 100,000 100,000 December 13, 2017 July 1, 2019 June 30, 2024 2.423 % ( 7,724 ) ( 3,517 )

1-month USD LIBOR 50,000 50,000 December 13, 2017 July 1, 2019 June 30, 2024 2.423 % ( 3,778 ) ( 1,778 )

1-month USD LIBOR 200,000 200,000 December 13, 2017 January 1, 2018 December 31, 2024 2.313 % ( 16,243 ) ( 6,595 )

1-month USD LIBOR 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.220 % ( 9,836 ) ( 5,750 )

1-month USD LIBOR 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.199 % ( 9,826 ) ( 5,747 )

1-month USD LIBOR 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.209 % ( 9,783 ) ( 5,807 )

1-month USD LIBOR 100,000 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.885 % ( 10,407 ) ( 4,930 )

1-month USD LIBOR 100,000 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.867 % ( 10,431 ) ( 4,691 )

1-month USD LIBOR 125,000 — December 15, 2020 July 31, 2025 December 31, 2027 1.415 % ( 382 ) —

1-month USD LIBOR 50,000 — December 15, 2020 July 1, 2025 December 31, 2027 1.404 % ( 162 ) —

1-month USD LIBOR 225,000 — December 15, 2020 July 31, 2025 December 31, 2027 1.415 % ( 846 ) —

1-month USD LIBOR 225,000 — December 15, 2020 July 31, 2025 December 31, 2027 1.415 % ( 679 ) —

1-month USD LIBOR 75,000 — December 15, 2020 July 1, 2025 December 31, 2027 1.404 % ( 187 ) —

Total interest rate derivatives designated as cash flow hedge $ 1,875,000 $ 1,325,000 $ ( 93,769 ) $ ( 45,145 )

1-month USD LIBOR Loan — 100,000 March 27, 2017 December 31, 2017 June 30, 2021 1.971 % $ — $ ( 929 )

1-month USD LIBOR Loan 300,000 300,000 December 13, 2017 January 1, 2018 December 31, 2022 2.201 % ( 5,268 ) ( 12,557 )

1-month USD LIBOR Loan 150,000 150,000 December 13, 2017 July 1, 2019 June 30, 2024 2.423 % ( 5,520 ) ( 11,502 )

1-month USD LIBOR Loan 200,000 200,000 December 13, 2017 January 1, 2018 December 31, 2024 2.313 % ( 7,421 ) ( 16,243 )

1-month USD LIBOR Loan 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.220 % ( 5,512 ) ( 9,836 )

1-month USD LIBOR Loan 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.199 % ( 5,464 ) ( 9,826 )

1-month USD LIBOR Loan 75,000 75,000 October 10, 2018 July 1, 2020 June 30, 2025 3.209 % ( 5,494 ) ( 9,783 )

1-month USD LIBOR Loan 100,000 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.885 % ( 6,886 ) ( 10,407 )

1-month USD LIBOR Loan 100,000 100,000 December 18, 2018 December 30, 2022 December 31, 2027 2.867 % ( 6,764 ) ( 10,431 )

1-month USD LIBOR Loan 575,000 575,000 December 15, 2020 July 31, 2025 December 31, 2027 1.415 % 3,552 ( 1,907 )

1-month USD LIBOR Loan 125,000 125,000 December 15, 2020 July 1, 2025 December 31, 2027 1.404 % 821 ( 348 )

$ 1,775,000 $ 1,875,000 $ ( 43,957 ) $ ( 93,769 )

The Company has designated these derivative instruments as cash flow hedges.

5 unchanged sentences

The Company assesses the effectiveness of the contracts that are designated as hedging instruments.

The changes in fair value of foreign currency cash flow hedges are recorded in AOCL, net of tax, until the hedged item affects earnings.

Once the related hedged item affects earnings, the Company reclassifies amounts recorded in AOCL to earnings.

The changes in fair value of foreign currency cash flow hedges are recorded in AOCL, net of tax.

Those amounts are subsequently reclassified to earnings from AOCL as impacted by the hedged item when the hedged item affects 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.

2 unchanged sentences

The contracts are not designated as hedging instruments.

The Company recognized a $ 0.2 million loss from the change in fair value of the contracts, which was included in other income, net in the consolidated statement of operations.

The Company subsequently settled its foreign currency forward contracts associated with the intercompany receivables denominated in JPY during the first quarter of 2021.

The Company recognized a $ 0.2 million loss from the change in fair value of the contracts, which was included in other income, net in the consolidated statement of operations as of December 31, 2021 and 2020, respectively.

The fair value of the foreign currency forward contracts denominated in CAD was $ 0.2 million as of December 31, 2021.

The fair value of the foreign currency forward contracts was $ 0.2 million as of December 31, 2020.

The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in foreign currency.

The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences

During the second quarter of 2021, the Company entered into a foreign currency swap, with a notional of $ 7.3 million to mitigate the risk from fluctuations in foreign currency exchange rates associated with certain intercompany loan denominated in

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

between forecasted and actual activities during periods of currency volatility.

Japanese Yen ("JPY").

In a foreign currency swap transaction, the Company agrees with another party to exchange, at specified intervals, the difference between one currency and another currency at a fixed exchange rate, generally set at inception, calculated by reference to an agreed upon notional amount.

The notional amount of each currency is exchanged at the inception and termination of the currency swap by each party.

The change in fair value of the foreign currency swap was $ 0.6 million as of December 31, 2021.

The success of the Company’s hedging program depends, in part, on forecasts of certain activity denominated in foreign currency.

The Company may experience unanticipated currency exchange gains or losses to the extent that there are differences between forecasted and actual activities during periods of currency volatility.

In addition, changes in currency exchange rates related to any unhedged transactions may affect earnings and cash flows.

4 unchanged sentences

The CHF-denominated intercompany loan was the result of an intra-entity transfer of certain intellectual property rights to a subsidiary in Switzerland completed during the fourth quarter of 2020.

The intercompany loan requires quarterly payments of CHF 5.8 million plus accrued interest.

As a result, the aggregate notional amount of the related cross-currency swaps will decrease by a corresponding amount.

The objective of these cross-currency swaps is to reduce volatility of earnings and cash flows associated with changes in the foreign currency exchange rate.

2 unchanged sentences

dollars from the counterparties.

The Company held the following cross-currency rate swaps as of December 31, 2020 (dollar amounts in thousands):

December 31, 2020

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value (Liability)

The Company held the following cross-currency rate swaps as of December 31, 2021 and 2020 (dollar amounts in thousands):

December 31, 2021 December 31, 2020 December 31, 2021 December 31, 2020

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value Asset (Liability)

Pay CHF October 2, 2017 October 4, 2021 1.85 % CHF — 48,533 — ( 4,335 )

6 unchanged sentences

On October 4, 2021 in accordance with the termination date, the Company settled a cross-currency swap designated as a cash flow hedge of an intercompany loan with an aggregate notional amount of $ 50.0 million.

The gain recorded by the Company upon the settlement of the swap was not material for the period.

On October 2, 2020 in accordance with the termination date, the Company settled a cross-currency swap designated as a cash flow hedge of an intercompany loan with an aggregate notional amount of $ 33.3 million.

As a result of the settlement, the Company recorded a loss of $ 0.3 million in other income, net in the consolidated statement of operations.

The Company held the following cross-currency rate swaps as of December 31, 2019 (dollar amounts in thousands):

December 31, 2019

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value (Liability)

Pay CHF October 2, 2017 October 2, 2020 1.75 % CHF 32,355 $ ( 101 )

Receive U.S.$ 4.38 % $ 33,333

Pay CHF October 2, 2017 October 2, 2021 1.85 % CHF 48,533 ( 119 )

Receive U.S.$ 4.46 % $ 50,000

Pay CHF October 2, 2017 October 2, 2022 1.95 % CHF 145,598 ( 289 )

Receive U.S.$ 4.52 % $ 150,000

Total $ ( 509 )

The cross-currency swaps are carried on the consolidated balance sheet at fair value, and changes in the fair values are recorded as unrealized gains or losses in AOCL.

For the years ended December 31, 2021 and 2020, the Company recorded a gain of $ 23.8 million and loss of $ 21.7 million, respectively, in other income, net related to change in fair value related to the foreign currency rate tran slation to offset the gains or losses recognized on the intercompany loans.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

During the year ended December 31, 2019, the Company settled cross-currency swaps designated as cash flow hedges of an intercompany loan with an aggregate notional amount of $ 66.7 million.

The original maturity dates were October 2, 2020 however, as the intercompany loan settlement was consummated, the cross-currency swap was settled simultaneously.

As a result of the settlements, the Company recorded a loss of $ 0.4 million in other income, net in the consolidated statement of operations.

The cross-currency swaps are carried on the consolidated balance sheet at fair value, and changes in the fair values are recorded as unrealized gains or losses in AOCL.

For the years ended December 31, 2020 and 2019, the Company recorded a loss of $ 21.7 million and loss of $ 4.0 million, respectively, in other income, net related to change in fair value related to the foreign currency rate tran slation to offset the gains or losses recognized on the intercompany loans.

For the years ended December 31, 2020 and 2019, the Company reco rded a loss of $ 17.1 million and a gain of $ 9.3 million, respectively, in AOCL related to change in fair value of the cross-currency swaps.

For the years ended December 31, 2020 and 2019, the Company recor ded gains of $ 5.8 million and $ 7.0 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to other income, net from AOCL as of December 31, 2020 within the next twelve months is $ 3.3 million.

For the years ended December 31, 2021 and 2020, the Company reco rded a gain of $ 24.3 million and a loss of $ 17.1 million, respectively, in AOCL related to change in fair value of the cross-currency swaps.

For the years ended December 31, 2021 and 2020, the Company reco rded gains of $ 9.1 million an d $ 5.8 million, respectively, in other income, net included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated loss that is expected to be reclassified to other income, net from AOCL as of December 31, 2021 within the next twelve months is $ 3.4 million.

As of December 31, 2021, the Company does not expect any gains or losses will be reclassified into earnings as a result of the discontinuance of these cash flow hedges because the original forecasted transaction will not occur.

3 unchanged sentences

On October 1, 2018 and December 16, 2020, the Company entered into cross-currency swap agreements designated as net investment hedges to partially offset the effects of foreign currency on foreign subsidiaries.

The Company held the following cross-currency rate swaps designated as net investment hedges as of December 31, 2020 (dollar amounts in thousands):

December 31, 2020

The Company held the following cross-currency rate swaps designated as net investment hedges as of December 31, 2021 and 2020 (dollar amounts in thousands):

December 31, 2021 December 31, 2020

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value

9 unchanged sentences

Total $ 3,858 $ ( 6,036 )

On September 30, 2021, in accordance with the termination date, the Company settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $ 52 million equivalent to 44.9 million Euros.

As a result of the settlement, the Company recorded a gain of $ 0.1 million in AOCL.

During the year ended December 31, 2020, the Company settled cross-currency swaps designated as net investment hedge with an aggregate notional amount of $ 167.5 million and 128.3 million Pound Sterling respectively as a result of an intra-entity transfer of certain intellectual property rights to a subsidiary.

1 unchanged sentence

As a result of the settlement, the Company recorded a loss of $ 7.8 million in AOCL.

The cross-currency swaps were carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in AOCL.

For the year ended December 31, 2021 and 2020, the Company recorded a gain of $ 16.5 million and a loss of $ 14.9 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the years ended December 31, 2021 and 2020, the Company recorded a gain of $ 6.5 million an d $ 7.6 million, respectively, in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company held the following cross-currency rate swaps designated as net investment hedges as of December 31, 2019 (dollar amounts in thousands):

December 31, 2019

Effective Date Termination Date Fixed Rate Aggregate Notional Amount Fair Value Asset (Liability)

Pay EUR October 3, 2018 September 30, 2021 — EUR 44,859 $ 2,459

Receive U.S.$ 3.01 % $ 52,000

Pay EUR October 3, 2018 September 30, 2023 — EUR 51,760 3,087

Receive U.S.$ 2.57 % $ 60,000

Pay EUR October 3, 2018 September 30, 2025 — EUR 38,820 2,032

Receive U.S.$ 2.19 % $ 45,000

Pay GBP October 3, 2018 September 30, 2025 1.67 % GBP 128,284 ( 154 )

Receive U.S.$ 2.71 % $ 167,500

Pay CHF October 3, 2018 September 30, 2025 — CHF 165,172 1,221

Receive GBP 1.67 % GBP 128,284

Total $ 8,645

During the year ended December 31, 2019, the Company settled a cross-currency swap designated as a net-investment hedge of with an aggregate notional amount of $ 30.0 million.

The original termination date was September 30, 2021.

As a result of the settlement, the Company recorded a gain of $ 1.6 million in AOCL.

The cross-currency swaps were carried on the consolidated balance sheet at fair value and changes in the fair values were recorded as unrealized gains or losses in AOCL.

For the year ended December 31, 2020 and 2019, the Company recorded a loss of $ 14.9 million and a gain of $ 20.5 million, respectively, in AOCL related to the change in fair value of the cross-currency swaps.

For the years ended December 31, 2020 and 2019, the Company recorded a gain of $ 7.6 million and $ 9.6 million, respectively, in interest income included in the consolidated statements of operations related to the interest rate differential of the cross-currency swaps.

The estimated gain that is expected to be reclassified to interest income from AOCL as of December 31, 2021 within the next twelve months is $ 5.1 million.

11 unchanged sentences

Fair Value as of December 31,

Dollars in thousands 2021 2020

Location on Balance Sheet (1) :

(In thousands)

Derivatives designated as hedges — Assets:

1 unchanged sentence

Cash Flow Hedges

Interest rate swap (2)

Cross-currency swap 4,900 7,623

21 unchanged sentences

Cross-currency swap 3,366 9,449

Total Derivative designated as hedges — Liabilities $ 136,165 $ 53,470

Total derivatives designated as hedges — Liabilities 64,838 136,165

(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 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following presents the effect of derivative instruments designated as cash flow hedges and net investment hedges on the accompanying consolidated statements of operations during the years ended December 31, 2020 and 2019:

Balance in AOCL

The following presents the effect of derivative instruments designated as cash flow hedges and net investment hedges on the accompanying consolidated statement of operations during the years ended December 31, 2021 and 2020:

Dollars in thousands Balance in AOCL

Year Amount of

5 unchanged sentences

Statements of

(In thousands)

Year Ended December 31, 2021

17 unchanged sentences

The assumptions used in evaluating goodwill for impairment are subject to change and are tracked against historical results by management.

The quantitative test estimates the fair value of its three reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty.

The quantitative test estimates the fair value of the three reporting units using a discounted cash flow model, which incorporates significant estimates and assumptions made by management which, by their nature, are characterized by uncertainty.

Inputs used to fair value the Company's reporting units are considered inputs of the fair value hierarchy.

4 unchanged sentences

The terminal value reflects the Company's assumptions related to long-term growth rates and profitability, which are based on several factors, including local and macroeconomic variables, market opportunities, and future growth plans.

• The discount rate used to measure the present value of the projected future cash flows is set using a weighted-average cost of capital method that considers market and industry data as well as the Company's specific risk factors that are

The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

likely to be considered by a market participant.

The weighted-average cost of capital is the Company's estimate of the overall after-tax rate of return required by equity and debt holders of a business enterprise.

The Company elected to perform a qualitative analysis for its three reporting units as of July 31, 2020.

The Company determined, after performing qualitative analysis, that there was no evidence that it is more likely than not that the fair value of any identified reporting unit was less that the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test.

During the third quarter of 2021, the Company elected to perform a qualitative analysis for its three reporting units.

The Company determined, after performing the qualitative analysis, that there was no evidence that it is more likely than not that the fair value was less that the carrying amounts, therefore, it was not necessary to perform a quantitative impairment test.

Changes in the carrying amount of goodwill in 2021 and 2020 were as follows:

Codman Specialty Surgical Orthopedics and Tissue Technologies Total

(In thousands)

Dollars in thousands Codman Specialty Surgical Tissue Technologies Total

Goodwill at January 1, 2020 $ 653,500 $ 300,780 $ 954,280

Arkis Acquisition

27,600 — 27,600

Transfer to assets held for sale — ( 47,546 ) ( 47,546 )

Foreign currency translation 18,475 7,158 25,633

Goodwill at December 31, 2020 $ 671,975 $ 260,392 $ 932,367

ACell Acquisition — 94,147 94,147

Foreign currency translation ( 8,547 ) ( 4,509 ) ( 13,056 )

Transfer to assets held for sale (See Note 3.

Assets Held for Sale )

$ — $ ( 47,546 ) $ ( 47,546 )

Goodwill at December 31, 2021 $ 663,428 $ 350,030 $ 1,013,458

On January 4, 2021, the Company completed its sale of its Extremity Orthopedics business.

In conjunction with the sale of this business, the Company rebranded the Orthopedics and Tissue Technologies segment as Tissue Technologies in the first quarter of 2021.

Acquisitions and Divestitures , for details.

Other Intangible Assets

1 unchanged sentence

December 31, 2021

Dollars in thousands Weighted

Life Cost Accumulated Amortization Net

(Dollars in Thousands)

Completed technology 18 years

7 unchanged sentences

30,211 ( 16,192 ) 14,019

All other (1)

All other 11 years

6,258 ( 3,891 ) 2,367

1 unchanged sentence

December 31, 2020

Dollars in thousands Weighted

Life Cost Accumulated Amortization Net

(Dollars in Thousands)

Completed technology 19 years

11 unchanged sentences

$ 1,421,087 $ ( 431,651 ) $ 989,436

(1) Prior period amounts were reclassified as it relates to All Other within this table to conform to the current period presentation

At December 31, 2020, $ 13.3 million of Intangible assets, net were presented separately as "Assets held for sale" in conjunction with the sale of the Extremity Orthopedics business.

The increase in the Company's identifiable intangible assets at December 31, 2021 as compared to the year ended December 31, 2020, was primarily driven from intangible assets acquired in conjunction with the ACell Acquisition.

See Note 4, Acquisitions and Divestitures , for details.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

(1) At December 31, 2020 and 2019, all other included IPR&D of $ 1.0 million, which was indefinite-lived.

At December 31, 2020, this IPR&D asset was presented separately as "assets held for sale" in conjunction with the sale of the Extremity Orthopedics business which is expected to be sold within twelve months.

See Note 3, Assets and Liabilities Held for Sale , for details.

At December 31, 2020, $ 13.3 million of Intangible assets, net were presented separately as "assets held for sale" in conjunction with the sale of the Extremity Orthopedics business.

See Note 3, Assets and Liabilities Held for Sale .

Intangible Assets with Indefinite Lives

The Company tests intangible assets with indefinite lives for impairment annually in the third quarter in accordance with ASC Topic 350.

The Company elected to bypass the qualitative evaluation for its Codman tradename intangible asset and perform quantitative test during the third quarter of 2020.

In performing the test, the Company utilized a range of projected sales growth rates, a royalty rate of 5.0 %, a tax rate of 24.0 % and a discount rate of 11.5 %.

The assumptions used in evaluating the Codman tradename for impairment are subject to change and are tracked against historical results by management.

Based on the results of the quantitative test, the Company recorded no impairment to the Codman tradename intangible asset.

The Company tests for impairment by either performing a qualitative evaluation or a quantitative test.

The Company may elect to bypass this qualitative evaluation and perform a quantitative test.

During the third quarter of 2021, the Company elected to perform a qualitative analysis for its intangible asset with indefinite lives.

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The computed impairment loss is recognized in the period that the impairment occurs.

During the second quarter of 2019, a contract manufacturing customer of the private label product line received a notification from the FDA ordering them to remove their product from the market.

The Company recorded an impairment charge of $ 5.8 million in intangible asset amortization in the consolidated statement of operations related to the customer relationship intangible asset acquired from TEI Biosciences, Inc.

and TEI Medical Inc.

(collectively "TEI") due to revised future projections based on the contract termination.

Amortization expense (including amounts reported in cost of product revenues) for the years ended December 31, 2021, 2020 and 2019 was $ 83.3 million, $ 74.5 million and $ 72.8 million, respectively.

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TREASURY STOCK

As of December 31, 2020 and 2019, there were 4.9 million and 2.9 million shares of treasury stock outstanding with a cost of $ 235.1 million and $ 119.9 million, at a weighted average cost per share of $ 47.86 and $ 41.87 , respectively.

As of December 31, 2021 and 2020, there were 4.9 million shares of treasury stock outstanding with a cost of $ 234.4 million and $ 235.1 million, respectively, at a weighted average cost per share of $ 47.86 .

On December 7, 2020, the Board of Directors authorized the Company to repurchase up to $ 225 million of the Company’s common stock.

1 unchanged sentence

The repurchase authorization expires in December 2022.

This stock repurchase authorization replaces the previous $ 225 million stock repurchase authorization, of which $ 125 million remained authorized at the time of its replacement, and which was otherwise set to expire on December 31, 2020.

The price and timing of any future purchases under the share repurchase program will depend on factors such as levels of cash generation from operations, the volume of stock option exercises by employees, cash requirements for acquisitions, dividends, economic and market conditions and stock price, and such repurchases may be discontinued at any time.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the year ended December 31, 2021, there were no repurchases of the Company’s common stock as part of the share repurchase authorization.

On January 12, 2022, the Company entered into a $ 125.0 million accelerated share repurchase ("2022 ASR") and received 1.5 million shares of Company common stock at inception of the 2022 ASR, which represented approximately 80 % of the expected total shares under the 2022 ASR.

The remaining 20 % of the expected total shares is expected to settle in the first half of 2022, upon which additional shares of common stock may be delivered to the Company or, under certain circumstances, the Company may be required to make a cash payment or may elect to deliver shares of our common stock to the 2022 ASR counterparty in each case pursuant to the terms of the 2022 ASR agreement between the Company and the 2022 ASR counterparty.

The total number of shares to be delivered or the amount of such payment, as well as the final average price per share, will be based on the volume-weighted average price, less a discount, of the Company's common stock during the term of the transaction.

As a result of this transaction, $ 100 million remains available under the $ 225 million stock repurchase authorization .

During the twelve months ended December 31, 2020, the Company repurchased 2.1 million shares of Integra’s common stock as part of the previous share repurchase authorization.

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Upon settlement of the 2020 ASR in June 2020, the Company received an additional 0.6 million shares determined using the volume-weighted average price of the Company's common stock during the term of the transaction.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

STOCK-BASED COMPENSATION

1 unchanged sentence

Years Ended December 31,

2020 2019 2018

(In thousands)

Dollars in thousands 2021 2020 2019

Cost of goods sold 470 344 317

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EQUITY AWARD PLANS

As of December 31, 2020, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under three plans, 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”)).

As of December 31, 2021, the Company had stock options, restricted stock awards, performance stock awards, contract stock awards and restricted stock unit awards outstanding under the Integra LifeSciences Holdings Corporation Fifth Amended and Restated 2003 Equity Incentive Plan (the “2003 Plan”).

The 2000 and 2001 Equity Incentive Plans were terminated as of February 19, 2021, and no further awards may be issued under the plans.

In May 2010 and May 2017, the stockholders of the Company approved amendments to the 2003 Plan to increase by 3.5 million and 1.7 million, respectively, the number of shares of common stock that may be issued under the 2003 Plan.

The Company has reserved 4.0 million shares under each of the 2000 Plan and the 2001 Plan, and 14.7 million shares under the 2003 Plan.

The Plans 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 and employees, and within one year from the date of the grant for members of the Board of Directors.

The awards generally expire eight years from the grant date for employees and from six to ten years for directors and certain executive officers.

Restricted stock issued under the Plans vests ratably over specified periods, generally three years after the date of grant.

The Plans permit the Company to grant incentive and non-qualified stock options, stock appreciation rights,

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 2003 Plan became exercisable over specified periods, generally within four years from the date of grant for officers and employees, and within one year from the date of the grant for members of the Board of Directors.

The awards generally expire eight years from the grant date for employees and from six to ten years for directors and certain executive officers, except in certain instances that result in accelerated vesting due to death, disability, retirement age or change in control provisions within their grant agreements.

Restricted stock issued under the 2003 Plan vests ratably over specified periods, generally three years after the date of grant.

The vesting of performance stock issued under the 2003 Plan is subject to service and performance conditions.

Stock Options

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The Company accounts for forfeitures as they occur.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The following weighted-average assumptions were used in the calculation of fair value:

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

Weighted Average Exercise Price Weighted Average Contractual Term in Years Aggregate Intrinsic Value

Shares Weighted Average Exercise Price Weighted Average Contractual Term in Years Aggregate Intrinsic Value

Stock Options (In thousands) (In thousands)

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Cash received from option exercises and employee stock purchase plan was $ 6.8 million, $ 5.2 million and $ 6.9 million, for the years ended December 31, 2021, 2020 and 2019, respectively.

The realized tax benefit from options exercised were $ 1.7 million, $ 3.0 million and $ 3.1 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The realized tax benefit from options exercised w ere $ 2.2 mi llion, $ 1.7 million and $ 3.0 million for the years ended December 31, 2021, 2020 and 2019, respectively.

As of December 31, 2021, there was approximately $ 2.9 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 two years .

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Awards of Restricted Stock, Performance Stock and Contract Stock

10 unchanged sentences

Unvested, December 31, 2021 422 $ 58.78 55 70.74

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The Company recognized $ 31.2 million, $ 16.4 million and $ 18.1 million in expense related to such awards during the years ended December 31, 2021, 2020 and 2019, respectively.

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As of December 31, 2021, there were approximately 0.5 million vested Restricted Units and 0.1 million vested performance share units held by various employees for which the related shares have not yet been issued.

The final determination of the number of shares to be issued is made by the Company's Compensation Committee of the Board of Directors which is is contingent upon achieving certain revenue and organic revenue growth performance metric.

At December 31, 2020, there were approximately 1.9 million shares available for grant under the Plans.

The final determination of the number of shares to be issued is made by the Company's Compensation Committee of the Board of Directors which is contingent upon achieving certain revenue and organic revenue growth performance metric.

At December 31, 2021, there were approximately 3.5 million shares available for grant under the 2003 Plan.

The Company capitalized into inventory, share based compensation costs of $ 0.5 million, $ 0.4 million and $ 0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Such share-based compensation was recognized as cost of goods sold when related inventory was sold.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

RETIREMENT BENEFIT PLANS

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Using this reference information, the long-term return expectations for each asset category are developed according to the allocation among those investment categories.

The assessment is determined using projections from external financial sources, long-term historical averages, actual returns by asset class and the various asset class allocations by market.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

The assessment is determined using projections from external financial sources, long-term historical averages, actual returns by asset class and the various asset class allocations by market.

The following sets forth the change in projected benefit obligations and the change in plan assets for the years ended December 31, 2021 and 2020 and a reconciliation of the funded status at December 31, 2021 and 2020, respectively (amounts in thousands):

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The unfunded benefit obligations are included in other liabilities in the consolidated balance sheets at December 31, 2021 and 2020, respectively.

During the periods ended December 31, 2020 and 2019, the Company had a net gain of $ 4.6 million and a net loss of $ 9.0 million, respectively, recognized within accumulated other comprehensive loss that has not been recognized as a component of net periodic benefit cost.

During the periods ended December 31, 2021 and 2020 , the Company had a net gain of $ 7.0 million and $ 4.6 million, respectively, recognized within accumulated other comprehensive loss that has not been recognized as a component of net periodic benefit cost.

The gain recognized during the period ended December 31, 2021, is primarily attributed to a change in the discount rate used to estimate the projected benefit obligation for defined benefit plans which cover certain employees in Switzerland.

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DEFERRED COMPENSATION PLAN

The Company maintains a Deferred Compensation Plan in which certain employees of the Company may defer the payment and taxation of up to 75 % of their base salary and up to 100 % of bonus amounts and other eligible cash compensation.

During the first quarter of 2020, employees participating in the Company's deferred compensation plan began to defer their compensation.

1 unchanged sentence

Assets of the Company's deferred compensation plan are included in Other current assets and recorded at fair value based on their quoted market prices.

The fair value of these assets at December 31, 2020 was $ 2.0 million.

The fair value of these assets at December 31, 2021 and 2020 was $ 3.8 million and $ 2.0 million.

Offsetting liabilities relating to the deferred compensation plan are included in Other liabilities.

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Leased vehicles 2.6 % 2.3 %

Supplemental cash flow information related to leases was as follows for the year ended December 31, 2020 (in thousands):

Supplemental cash flow information related to leases was as follows:

December 31, 2021

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Related Party Leases

The Company leases its manufacturing facility in Plainsboro, New Jersey, from a general partnership that is 50 % owned by a corporation whose stockholders are trusts, whose beneficiaries include family members of the Company’s former director.

The term of the current lease agreement is through October 31, 2029 at an annual rate of approximately $ 0.3 million per year.

2 unchanged sentences

Years Ended December 31,

2020 2019 2018

(In thousands)

Dollars in thousands 2021 2020 2019

United States operations $ 91,150 $ 15,082 $ ( 38,359 )

1 unchanged sentence

Total $ 214,677 $ 93,520 $ 60,104

The 2017 U.S.

Tax Act was signed into law on December 22, 2017.

The 2017 Tax Act made significant changes to the previous tax law, which included the reduction of the federal statutory rate from 35% to 21% and the recognition of a one-time repatriation tax on accumulated untaxed earnings of foreign subsidiaries.

As of December 31, 2018, the Company finalized its calculations and completed its accounting for the income tax effect of the 2017 Tax Act, for which the finalization adjustments recognized during 2018 were not significant.

A number of these provisions continue to have an impact on our effective tax rate, including limitations on the deductibility of executive compensation and the elimination of certain tax deductions.

Additionally, the implementation of a territorial tax system, which subjects certain foreign earnings to additional taxation as global intangible low-taxed income, continues to adversely affect income tax expense.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A reconciliation of the U.S.

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Excess tax benefits from stock compensation ( 1.2 ) % ( 1.0 ) % ( 5.6 ) %

Charitable contributions ( 0.3 ) % ( 0.6 ) % ( 1.2 ) %

Nondeductible meals and entertainment 0.1 % 0.4 % 1.5 %

1 unchanged sentence

Nondeductible facilitative costs 0.2 % 1.4 % 0.8 %

Changes in valuation allowances 0.1 % 0.2 % 0.2 %

Uncertain tax positions 0.5 % 0.2 % 0.4 %

Research and development credit ( 1.2 ) % ( 1.6 ) % ( 2.9 ) %

2 unchanged sentences

Nondeductible executive compensation 0.9 % 2.4 % 3.0 %

Carryback of Federal net operating loss ("NOL") — % 0.1 % ( 3.7 ) %

Other 0.5 % 0.4 % — %

Fair market value step up on intra-entity transfer of intellectual property

— % ( 63.3 ) % — %

Gain from sale of business - book to tax differences 3.9 % 2.8 % — %

Swiss tax holiday — % — % ( 15.7 ) %

IPR&D expense

Nondeductible R&D expense

— % — % 22.7 %

Foreign-Derived Intangible Income ( 0.8 ) % — % — %

Transfer of Intra-entity of certain intellectual property - Rate Differential

on FMV Step-Up ( 63.3 ) % — % — %

Assets held for sale - Outside Basis Difference 2.8 % — % — %

Other ( 0.2 ) % — % 0.2 %

Effective tax rate 21.2 % ( 43.2 ) % 16.5 %

Our effective tax rate was 21.2 % and ( 43.2 )% of income before income taxes for the years ended December 31, 2021 and December 31, 2020, respectively.

In 2020, the Company’s lower worldwide effective tax rate, as compared to 2019, is primarily driven by an $ 59.2 million income tax benefit on an intra-entity transfer of certain intellectual property, substantially completed during the fourth quarter in 2020.

Excluding this transaction, the effective worldwide tax rate for 2020 is 20.2 %.

In 2021, the Company's higher effective tax rate was driven in part by an $ 8.5 million income tax expense for nondeductible goodwill related to the sale of the Extremity Orthopedics business, offset by a $ 3.1 million income tax benefit related to excess tax benefits from stock compensation.

In 2020, the Company’s lower worldwide effective tax rate was primarily driven by an $ 59.2 million income tax benefit on an intra-entity transfer of certain intellectual property, substantially completed during the fourth quarter in 2020.

Excluding this transaction, the effective worldwide tax rate for 2020 was 20.2 %.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

In December 2020, the Company completed an intra-entity transfer of certain intellectual property rights to one of its subsidiaries in Switzerland.

2 unchanged sentences

The Co mpany recorded a $ 59.2 million deferred tax benefit in Switzerland related to the amortizable tax basis in the transferred intellectual property.

During 2020, the Company’s foreign operations generated a $ 48.2 million decrease in income tax expense when compared to the same period in 2019, because of the intra-entity transfer of certain intellectual property, geographic and business mix of taxable earnings and losses, among other factors.

During 2021, the Company’s foreign operations generated a $ 63.6 million increase in income tax expense when compared to the same period in 2020, because of the intra-entity transfer of certain intellectual property in 2020, geographic and business mix of taxable earnings and losses, among other factors.

The 2021 foreign effective tax rate is 15.2 %, compared to ( 57.1 )% in 2020.

The Company’s foreign tax rate is primarily based upon statutory rates and is also impacted by the intra-entity transfer of certain intellectual property as described above.

During 2019, the Company's foreign operations generated a $ 5.7 million decrease in income tax expense when compared with 2018, because of geographic and business mix of taxable earnings and losses, among other factors.

The Company’s foreign tax rate is primarily based upon statutory rates and is also impacted by the intra-entity transfer of certain intellectual property as described above for 2020.

During 2020, the Company’s foreign operations generated a $ 48.2 million decrease in income tax expense when compared to the same period in 2019 due to the intra-entity transfer of certain intellectual property, geographic and business mix of taxable earnings and losses, among other factors.

The 2020 foreign effective tax rate is ( 57.1 )%, compared to 3.5 % in 2019.

The Company's foreign tax rate is primarily based upon statutory rates and is also impacted by the tax holiday in Switzerland, described below.

The Company’s foreign tax rate is primarily based upon statutory rates and is also impacted by the intra-entity transfer of certain intellectual property as described above for 2020.

During 2019, the Company finalized negotiations related to tax holidays in Switzerland, on a federal, cantonal, and communal level.

1 unchanged sentence

The Company also received a reduction in its rate for the cantonal and communal level taxes during the third quarter of 2019, pursuant to tax reform in Switzerland.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Changes to income tax laws and regulations, in any of the tax jurisdictions in which the Company operates, could impact the effective tax rate.

Various governments, both U.S.

and non-U.S., are increasingly focused on tax reform and revenue-raising legislation.

The current U.S.

administration has proposed tax reform which, if enacted, may increase the Company’s U.S.

federal income tax liability.

Further, legislation in foreign jurisdictions may be enacted, in response to the base erosion and profit-sharing (BEPS) project begun by the Organization for Economic Cooperation and Development (OECD).

The OECD recently finalized major reform of the international tax system with respect to implementing a global minimum tax rate.

Such changes in U.S.

jurisdictions could have an adverse effect on the Company’s effective tax rate.

The provision for income taxes consisted of the following:

Years Ended December 31,

2020 2019 2018

(In thousands)

Dollars in thousands 2021 2020 2019

Federal $ 31,938 $ 6,184 $ 14,597

7 unchanged sentences

Provision for income taxes $ 45,602 $ ( 40,372 ) $ 9,903

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

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

(In thousands)

Dollars in thousands 2021 2020

Doubtful accounts $ 2,029 $ 2,207

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Total net deferred tax assets (liabilities) $ 11,162 $ 57,500

Prior period amounts were reclassified as it relates to Leases and Other between deferred tax asset and liabilities within this table to conform to the current period presentation.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

At December 31, 2021, the Company had net operating loss carryforwards of $ 71.7 million for federal income tax purposes, $ 26.6 million for foreign income tax purposes and $ 39.0 million for state income tax purposes to offset future taxable income.

The majority of the federal net operating loss carryforwards expire through 2037, while $ 4.1 million have an indefinite carry forward period.

For foreign net operating loss carryforwards, $ 0.3 million expire through 2025, and the remaining $ 36.4 million have an indefinite carry forward period.

For foreign net operating loss carryforwards, the remaining $ 26.6 million have an indefinite carry forward period.

The state net operating loss carryforwards expire through 2036.

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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 less than $ 0.1 million, increased by $ 2.9 million and decreased by $ 1.0 million at December 31, 2020, 2019 and 2018, respectively.

The 2020 valuation allowance primarily remained unchanged from the prior period.The 2019 overall increase in the valuation allowance primarily resulted from certain assets from the Rebound and Arkis acquisitions.

As of December 31, 2020, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested.

Such taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed.

The Company’s valuation allowance decreased by less than $ 0.1 million, increased by less than $ 0.1 million and increased by $ 2.9 million at December 31, 2021, 2020 and 2019, respectively.

The 2021 and 2020 valuation allowance primarily remained unchanged from the prior period.

As of December 31, 2021, the Company has not provided deferred income taxes on unrepatriated earnings from foreign subsidiaries as they are deemed to be indefinitely reinvested unless there is a manner under which to remit the earnings with no material tax cost.

Material taxes would primarily be attributable to foreign withholding taxes and local income taxes when such earnings are distributed.

The Company will repatriate foreign earnings when there is no need for reinvestment overseas and no material tax cost to bring the earnings back to the United States.

Reinvestment considerations would include future acquisitions, transactions, and capital expenditure plans.

As such, the Company has determined the tax impact of repatriating these earnings would no t be material as of December 31, 2021.

The Company does not anticipate the need to repatriate earnings from foreign subsidiaries as a result of the impact of the COVID-19 pandemic.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

A reconciliation of the beginning and ending amount of uncertain tax benefits is as follows:

Years Ended December 31,

2020 2019 2018

Dollars in thousands 2021 2020 2019

(In thousands)

3 unchanged sentences

Prior years' tax positions — 26 —

Gross decreases:

Statute of limitations lapses — — ( 21 )

Other ( 26 ) — ( 53 )

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All significant foreign matters have been settled through fiscal 2012.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

NET INCOME PER SHARE

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Years Ended December 31,

2020 2019 2018

(In thousands, except per share amounts)

Dollars in thousands, except per share amounts 2021 2020 2019

Basic net income per share:

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Performance Shares and Restricted Units that entitle the holders to approximately 0.5 million 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.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in accumulated other comprehensive loss by component between December 31, 2021 and 2020 are presented in the table below, net of tax:

Gains and Losses on Derivatives Defined Benefit Pension Items Foreign Currency Items Total

(In thousands)

Dollars in thousands Gains and Losses on Derivatives Defined Benefit Pension Items Foreign Currency Items Total

Balance at December 31, 2020

6 unchanged sentences

$ ( 42,981 ) $ 1,893 $ ( 4,067 ) $ ( 45,155 )

For the year ended December 31, 2020, the Company reclassified a loss of $ 12.2 million and $ 6.6 million from accumulated other comprehensive loss to other income, net and interest income, respectively.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

For the year ended December 31, 2021, the Company reclassified a gain of $ 25.3 million and a loss of $ 12.2 million from accumulated other comprehensive loss to other income, net and interest income, respectively.

COMMITMENTS AND CONTINGENCIES

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A reconciliation of the opening balances to the closing balances of these Level 3 measurements for the years ended December 31, 2021 and 2020 is as follows (in thousands):

Year Ended December 31, 2020 Contingent Consideration Liability Related to Acquisition of Arkis (See Note 5) Contingent Consideration Liability Related to Acquisition of Derma Sciences Location in Financial Statements

Short-term Long-term Long-term

Year Ended December 31, 2021 Contingent Consideration Liability Related to Acquisition of:

(See Note 4) Location in Financial Statements Derma Sciences ACell Inc.

(See Note 4) Location in Financial Statements

Short-term Long-term Long-term Long-term

Balance as of January 1, 2021 $ 3,415 $ 11,746 $ 230 $ —

Additiions — — — 23,900

Transfers from long-term to current portion 276 ( 276 ) — —

Loss from change in fair value of contingent consideration liabilities — 951 — Research and development

Change in fair value of contingent consideration liabilities — $ ( 62 ) Research and development — ( 2,100 ) Selling, general and administrative

Balance as of December 30, 2021 $ 3,691 $ 11,408 $ 230 $ 21,800

Year Ended December 31, 2019 Contingent Consideration Related to Acquisition of Arkis (See Note 5) Contingent Consideration Liability Related to Acquisition of Derma Sciences Location in Financial Statements

Long-term Long-term

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Contingent Consideration Liability Related to Acquisition of:

Year Ended December 31, 2020 Arkis

(See Note 4) Derma Sciences Location in Financial Statements

Short-term Long-term Long-term

Balance as of January 1, 2020 $ — $ 14,210 $ 230

Additions from acquisition of Arkis 13,100 —

Transfers from long-term to current portion 3,415 ( 3,415 ) —

Loss from change in fair value of contingent consideration liabilities — 951 — Research and development

Balance as of December 31, 2020 $ 3,415 $ 11,746 $ 230

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Derma Sciences

The Company assumed contingent consideration incurred by Derma Sciences, Inc.

("Derma Sciences") related to its acquisitions of BioD and the intellectual property related to Medihoney products.

The Company accounted for the contingent liabilities by recording their fair value on the date of the acquisition based on a probability weighted income approach.

The Company has already paid $ 33.3 million related to the aforementioned contingent liabilities.

One contingent milestone remains which relates to net sales of Medihoney™ products exceeding certain amounts defined in the agreement between the Company and Derma Sciences.

The potential maximum undiscounted payment amounts to $ 3.0 million.

The estimated fair value as of December 31, 2021 and 2020 was $ 0.2 million.

SEGMENT AND GEOGRAPHIC INFORMATION

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• The Codman Specialty Surgical segment includes (i) the Neurosurgery business, which sells a full line of products for neurosurgery and neuro critical care such as tissue ablation equipment, dural repair products, cerebral spinal fluid management devices, intracranial monitoring equipment, and cranial stabilization equipment and (ii) the Instruments business, which sells more than 40,000 instrument patterns and surgical and lighting products to hospitals, surgery centers, dental, podiatry, and veterinary offices.

• The Orthopedics and Tissue Technologies segment includes such offerings as skin and wound repair, bone and joint fixation implants in the upper and lower extremities, bone grafts, and nerve and tendon repair products.

• The Tissue Technologies segment includes such offerings as skin and wound repair, plastics & surgical reconstruction products, bone grafts, and nerve and tendon repair products.

In conjunction with the sale of the Extremity Orthopedics business, the Company rebranded the Orthopedics and Tissue Technologies segment as Tissue Technologies in the first quarter of 2021.

The Corporate and other category includes (i) various executive, finance, human resource, information systems and legal functions, (ii) brand management, and (iii) share-based compensation costs.

1 unchanged sentence

Net sales and profit by reportable segment for the years ended December 31, 2021, 2020 and 2019 are as follows:

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

Years Ended December 31,

2020 2019 2018

(In thousands)

Dollars in thousands 2021 2020 2019

Segment Net Sales

Codman Specialty Surgical $ 1,025,232 $ 894,831 $ 996,206

Orthopedics and Tissue Technologies 477,037 521,351 508,512

Tissue Technologies 517,216 477,037 521,351

Total revenues $ 1,542,448 $ 1,371,868 $ 1,517,557

1 unchanged sentence

Codman Specialty Surgical $ 439,471 $ 356,657 $ 395,019

Orthopedics and Tissue Technologies 159,630 144,638 149,510

Tissue Technologies 228,199 159,630 144,638

Segment profit 667,670 516,287 539,657

6 unchanged sentences

Total revenue, net and long-lived assets (tangible) by major geographic area are summarized below:

United States* Europe Asia Pacific Rest of the World Consolidated

(In thousands)

Dollars in thousands United States (1)

Europe Asia Pacific Rest of the World Consolidated

Total revenue, net:

6 unchanged sentences

(1) Includes long-lived assets in Puerto Rico.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

SUBSEQUENT EVENTS

Sale of Extremity Orthopedics Business

On January 4, 2021, upon the terms and conditions set forth in the Divestiture agreement (see Note 3, Assets and Liabilities Held for Sale), the Company completed its previously announced sale of its Extremity Orthopedics business to Smith & Nephew USD Limited.

The Company received an aggregate purchase price of $ 240.0 million from Smith and Nephew and concurrently paid $ 41.5 million to CFO effectively terminating our licensing agreement (see Note 5, Acquisitions) .

The transaction included the sale of the Company's upper and lower Extremity Orthopedics product portfolio, including ankle and shoulder arthroplasty and hand and wrist product lines.

On January 20, 2021, the Company acquired ACell, Inc.

for an acquisition purchase price of $ 300 million.

Under the terms of the definitive merger agreement, the Company paid the consideration for the merger as an upfront cash payment subject to a customary post-closing adjustment for certain working capital.

The Company is also required to pay the former shareholders of ACell Inc.

up to $ 100 million based upon achieving certain revenue-based performance milestones in 2022, 2023 and 2025.

Equity Award Plans

The 2000 and 2001 Equity Incentive Plans were terminated as of February 19, 2021, and no further awards may be issued under the plans.

SELECTED QUARTERLY INFORMATION - UNAUDITED

(In thousands, except per share data)

Quarter Total revenue, net Gross margin Net income (loss) Per Share - Basic (1) Per Share - Diluted (1)

First 354,324 220,848 9,180 $ 0.11 $ 0.11

Second 258,665 153,187 ( 369 ) ( 0.00 ) ( 0.00 )

Third 370,232 235,421 32,337 0.38 0.38

Fourth 388,647 241,578 92,744 1.10 1.09

1,371,868 851,034 133,892

First 359,690 230,778 32,756 $ 0.38 $ 0.38

Second 383,645 239,974 29,736 0.35 0.34

Third 379,095 236,459 ( 27,610 ) ( 0.32 ) ( 0.32 )

Fourth 395,127 245,665 15,319 0.18 0.18

1,517,557 952,876 50,201

(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 and repurchasing shares of its common stock during the year.

INTEGRA LIFESCIENCES HOLDINGS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

Balance at Beginning of Period Charged to Costs and Expenses Other Deductions Balance at End of Period

(In thousands)

Dollars in thousands

Year ended December 31, 2021

1 unchanged sentence

Deferred tax assets valuation allowance

13,825 1,444 89 ( 100 ) 15,258

Year ended December 31, 2020

5 unchanged sentences

(1) Deductions primarily relates to allowance for doubtful accounts written off during the year, net of recoveries and other adjustments.

(2) The Company transferred sales returns and allowances from accounts receivable, net to accrued expenses and other current liabilities upon adopting Topic 606 on January 1, 2018 using the modified retrospective method.

(2) The above amount primarily relates to amounts acquired through the acquisition of Arkis and a charge recorded in 2019 to valuation allowance related to the non-deductibility of executive compensation.

(3) The above amount primarily relates to amounts acquired through the acquisition of ACell.

(4) Deduction primarily relates to a decrease to the allowance for doubtful accounts as a result of collections in the period and accounts written off during the year, net of recoveries.

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-K

Item 9A. Controls and Procedures