Good day, everyone and welcome to the Integra LifeSciences Fourth Quarter Financial Reporting Conference Call. As a reminder, today's call is being recorded. At this time, I'd like to turn the call over to Ms. Angela Steinway, Head of Investor Relations. Please go ahead.

Good morning, and thank you for joining us for the Integra LifeSciences Fourth Quarter and Full Year 2012 Earnings Release Conference Call. Joining me today are Peter Arduini, President and Chief Executive Officer; and Jack Henneman, Chief Financial Officer. Earlier this morning, we issued a press release announcing our financial results for the fourth quarter and full year. Certain statements made during this call are forward-looking, and actual results might differ materially from those projected in any forward-looking statements. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC. The forward-looking statements are made only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements. Certain non-GAAP financial measures are disclosed in this presentation. A reconciliation of these non-GAAP financial measures is available on the Investors section of our website at integralife.com. In an attempt to shorten our prepared remarks, we will reference the financial results in the press release and will not restate the individual numbers. As a result, you may want to keep a copy of the release handy during the call. I will now turn the call over to Pete.

Thank you, Angela. Before we launch into discussing our quarterly results, let me give you a brief update of the recent warning letter. On Tuesday afternoon, we announced that we had received a warning letter relating to our Añasco, Puerto Rico facility. We furnished the warning letter in the Form-8K we filed Tuesday evening. The warning letter cites concerns relating to process validations, corrections and preventive actions in document controls. As we described in the 8K, we stopped distribution of the collagen products manufactured in Añasco in order to confirm that we had successful validation for all such products. We believe we have complete and successful validations for all of our collagen products made in Añasco. And as we speak, a third party expert is revealing every applicable validation and will confirm to us that our assessment is correct. Once we receive that confirmation, we will resume shipping. We believe we're on track to begin shipping early next week, at which point, we'll file an 8K. At this time, we do not expect the warning letter Añasco to result in either materially higher costs or materially lower revenues. And the guidance we're providing today reflects our current expectations. Further, this warning letter and its observations do not impact our progress and plans to remediate our Plainsboro, New Jersey manufacturing facility. Turning to our quarterly financial results. We are pleased with our performance this quarter. Our revenues and earnings were in line with our guidance. For the year, we are at the high end of our guidance range that we provided a year ago and we're looking forward to another productive year. With as many as 25 new products launched, launches planned at 2013, our cost-saving initiatives are well underway, and a successful implementation of our new ERP system at the…

Thank you, Pete. I'll focus the majority of my comments on the items below the sales line and discuss the impact of the Medical Device Excise Tax. They had a period capitalize interest adjustment on the fourth quarter and the treatment of the R&D tax credit. And then we'll elaborate on our 2013 guidance we provided in the press release. During the fourth quarter, GAAP gross margin percentage increased to 2.5% versus the prior year period. Lower expenditures on quality remediation in our regenerative medicine facility in Plainsboro and improved mix drove the improvement in gross margin. We calculate adjusted gross margin by backing out the adjustments to cost of product revenues detailed on Column A of the adjustments table in our press release. In the fourth quarter, our adjusted gross margin of 63.7% was flat versus the comparable measure in the fourth quarter of 2011. Compared to the third quarter of 2012, our adjusted gross margin declined. Manufacturing variances, scrap and excess and obsolete inventory write-offs drove up our production costs, most of which were known and reflected in our guidance in October. Medical Device Excise Tax will negatively impact our 2013 gross margins. We are accounting for this tax as a cost recorded in inventory, which we estimate will reduce our gross profit margin by approximately 1% of sales. At a high level, we expect our optimization programs to bear fruit as the year progresses, partly offsetting the rising impact of the Device Tax on gross margins. For 2013, we expect reported gross margin to stay around 63% throughout the year and adjusted gross margin to be around 64.5% to 65.5% throughout the year. Research and development expenses declined slightly versus the prior year and were 6% of sales. The decrease in spending versus last year reflects savings…

Thank you, Jack. Overall, we were pleased with our performance in the fourth quarter and we're optimistic about 2013. That said, we still have much to do to reach our goals, our vision to become a multibillion-dollar medical technology company. And in 2013, we are focused on delivering on certain projects that will improve our top and bottom line growth. Our strategy to accomplish this includes improving overall execution, optimizing the company and accelerating growth. In recent meetings, we've spoken a lot about the initiatives behind each pillar of our strategy. First, towards execution. We are working on simplification of our systems throughout the company. In particular, the implementation of our ERP system is off to a good start. We went live in a pilot site that addresses about 8% of our revenues a few weeks ago and has progressed pretty much as we anticipated. Certainly, quality and regulatory affairs remain a critical priority for us in 2013. We are developing a single quality system, which will allow us to operate more efficiently and increase our overall quality capabilities. The closure of our warning letters is clearly our top-quality priority. Second, to optimize. We are focusing on our infrastructure and operational excellence. We reduced the number of suppliers that we used significantly during 2012 and look to reduce that number further. Actions taken by our newly formed centralized sourcing team have already generated over $1 million in annualized cost savings. In addition, we're making progress against our plans to optimize our manufacturing and distribution footprint. In the fourth quarter, the number of Integra facilities declined from 30 to 27. We've closed our Akron area facilities and consolidated their operations into other Integra facilities. Both of these actions are aligned with our goals to drive savings and simplify the company. Together,…

[Operator Instructions] We'll take our first question from the line of Matt Miksic of Piper Jaffray.

So I wanted to follow-up with you a little bit on your comments on the shoulder market. You made the Ascension acquisition. There was a shoulder there. You're getting ready to launch a new product. It is a tricky market. There's a fair number of big and established long-term competitors, some of them your neighbors here in New Jersey. Maybe outline what kind of investments you need to make in distribution do you feel? What kind of gaps do you need to fill? You mentioned reverse shoulder. Is there a convertible element to the shoulder that you feel like you need to have? What are the critical elements of that strategy? And then I have a follow-up.

Matt, thanks for the question. And so first of all, I think as we purchased Ascension, we basically came into, I think, a very good core shoulder product as well as a roadmap. And we were working on, as we had purchased Ascension -- actually, the reverse product was in process. We're actually in the filing process as we speak with that. And clearly, I think one of the things that we knew but fully had a -- gained a greater appreciation for really in the last probably 9 months, was having this complete shoulder offering, particularly for the United States market. It was critical to drive share. And the reason being is that is obviously, many of these procedures are opened up with a question mark. What type of shoulder approach will be utilized, hence, having that complete offering is critical. And so, we believe we're going to have that critical offering here coming into the second half of the year. And so that's what we're targeted on. From a distribution standpoint, we've actually made, I would say, some great inroads as far as building the right relationships, bringing on some distributors. But we also have a lot of folks teed up that we believe that we can convert into our stable once we have the full line. And you can imagine from a distribution perspective, if a lot of the procedures are question marks, the diagnostic imaging doesn't give you a definitive is it a reverse, is it a traditional. A lot of distributors aren't going to necessarily switch and come to your line until you have that filled out. So that's -- now that's some of the realities we see in the marketplace. That being said, as well, we also think that we've got a few other things that we're thinking about that, at this point in time, I don't want to openly speak about that we're going to fill out even further in the line. But our real entree into this market will be later this year with a full offering. And I guess your last part of that is that the modularity of the design already was a leadership component. You're starting to see some other people bring it to market. We think we have a quite a modular product that allows revisions and such to take place in a way that are a lot more simplified, and we believe, actually, more overall accurate for the clinician. And so that's been a core part of the design that we acquired from Ascension.

Okay, that's helpful. And then, one, I'm sure we're going to get a fair number of questions here about the San Juan letter. I was wondering, you've made a certain amount of investments across your entire plan infrastructure in the past year since the first letter. Not to say that the first one was a surprise and this one wasn't a surprise, but it seems like you're -- the way at least you're talking about it, you're a little bit more prepared for some of the issues that were raised by the FDA, it seems. Can you talk about -- is that true? Am I reading that right? And maybe what leads to your confidence that you'll be able to sort of get supplies back out in the next several weeks, as you mentioned, whereas say, heading into the first letter, I think there was a period of maybe 2 or 3 months of evaluation and discussions before you sort of had that confidence as to the way things were going to go?

Yes, let me -- I'll frame a couple of comments and I'll ask Jack to jump in. So first of all, as we have been communicating, really over the last 18 months, we've been spending money throughout a lot of our facilities, really to upgrade our overall quality systems. Much of this is focused around just the raising of the bar of the Food and Drug Administration. So that's been a core focus. And it also plays into my comments about driving a single quality system. The more aligned, the more consistent, we believe the more reliably we'll be able to run our overall facility. So that's part of our operational strategy. We've been really investing in the Puerto Rico facility, really over the last 18 months. And so we've made a lot of progress. At the same time, many of the points that were brought up in our 483 observations, we had CAPAs and we had plans already in place. Understandably, that doesn't necessarily mean that they are fully aligned with where the QSR need to be at that point and which the FDA pointed out. But we have items identified. We have taken a look at overall of our safety of our products. We feel very comfortable about where we are with the safety profile of our products, and we are working diligently to get these items closed. I think when you look at the 2 locations, we've got processed items that were closing out that we've already been working on. In Puerto Rico, if you compare that to Plainsboro, we had facility changes. We made structural changes in the facility, which then clearly was the major difference which extended the timeout. Jack, I don't know if you want of your comment a little further?

Yes, I think the -- here's a very high way of -- high-altitude way of looking at it. When we had the inspection in Plainsboro, that was -- frankly, a lot of it was a revelation to us. And we reacted forcefully throughout the company, starting in the fall of 2011 going to our most significant facilities first. Añasco was high in that list. So we began an expensive and lengthy deep dive remediation program starting in the fourth quarter of 2011. And we think we've made tremendous progress against that. So this warning letter, I view as something of a lagging indicator and that makes it quite different. So, that's sort of how we look at this. In fact, the inspection happened in the fall. And by the time we got the warning letter, we actually felt that we had fully validated everything and now we're running it through. We went through it again ourselves essentially over the weekend. And now we've got it in front of a third-party expert to confirm for us that our judgment in that regard is correct. And when that judgment, when that third-party review is finished, assuming it comes out right, we'll release product immediately.

[Operator Instructions] We'll take our next question from the line of Chris Pasquale JPMorgan. Christopher T. Pasquale - JP Morgan Chase & Co, Research Division: I want to start with the Extremities business. This was the first quarter since the Ascension deal that we really have a clean year-over-year comparison. And the 9% growth you posted was at the low end of your long-term target range and a little bit below where we estimate the market's tracking. So you're guiding to an accelerated turn [ph] from that level in 2013. Can you just comment on how you think that business is performing overall? And then how much of that projected improvement is due to the shoulder ramp up versus other factors?

We think the business is performing really well. And has -- just about a week ago, Pete and I were at the national sales meeting for that business. And the sales force is energized. It's a very well-functioning business. We're not troubled at all by little ups and downs in the sales growth, and we have a high level of confidence that's driven by both short-term considerations, new product launches and growth in the sales force itself and longer-term considerations, such as the possibilities for the DFU trial, which is obviously not complete, and the potential upside to that market. So that's how we think of the long-term opportunity there.

I would just add to it, Chris, that to Jack's point, we feel good about it. We've got a fair amount of products coming out as well out of our R&D shop for lower and upper, which are going to add to the overall bag for the sales team. And we believe that we've got some pretty good leads and growth opportunity in our regenerative product in our Skin as well, currently, which will be reflected in our guidance here coming into 2013. But all-in-all, we look at Q4 was a solid quarter based on how we were looking at expectations.

And to close on one question, shoulder's not a huge part of the success in dollars. It's not a huge part of the success to that division this year. The trick is to get to the right product mix that can attract the really strong distributors in the field that we need to attract to make next year a big success in that area. Christopher T. Pasquale - JP Morgan Chase & Co, Research Division: That's helpful. Maybe just one on Neuro then. You're guiding for 2013 growth there at or above your long-term goal. This was a good quarter for that business. What's driving the better outlook there? Is it on the capital side or the procedural? And since that's the piece of your business most exposed to Europe, maybe you could just comment briefly on your latest thoughts in the environment there.

Yes, Chris. I think across the board, we've had a pretty solid performance. I mean, Q4, we said we were a little bit lighter on the capital ablation site. I think as much as anything, it was more timing of deals than any, I think, any market-specific dynamics. But our flow products and our regenerative products, particularly our duraplasty products, are doing well. We are in the process of launching roughly about 6 new products in Neuro that are refreshing, really, across the line from where we take a look at our monitoring, some of our critical care catheters, our stabilization products. We've rolled out some new tips, as well recently, on our CUSA product line. And as I mentioned, we have a new product coming out in DuraGen. So we see the procedural rates staying pretty stable in the 2%, 3% range, not really major changes there. But this has been, at the end of last year, coming into this year, really the refreshing of our product lines. And we see that driving, as Jack communicated earlier, upper single-digit growth for us this year. And your second part on Europe, yes, I think -- look, we think we create some tailwinds for the Neuro business because these launches, as I mentioned, are global and they will have -- be launched, for the most part, in Europe. That being said, we believe that it's still going to be another tough year for the European marketplaces out there, and we've reflected that within our guidance. I would say, broadly for Europe, we're also introducing our Spine products and bringing some new products to market. It's also what's helped us have a little bit stronger growth versus what other people have been reporting, mainly because we've been -- had the luxury of introducing some new products into that market.

We'll take our next question from the line of Raj Denhoy with Jefferies. Raj Denhoy - Jefferies & Company, Inc., Research Division: Quick question. So your guidance for the year, I mean, the 4% to 6% here in '13, you've put out some long-term guidance of 5% to 7% back at your analyst meeting. Given what you're seeing out there now, are you still comfortable that after a year or 2, you'll be able to accelerate up to that level? And what drives you back to the 5% to 7% level?

Well, we are, I mean, I think we're quite confident on what we laid out in the fall and how that projects. I think if you remember, when we spoke about it, we talked about it ramping up over that 5-year window. And probably, the #1 component that gives me that confidence is our increased capabilities to execute against our plans. That's the first part and that's the sales execution and commercial part. And I think Jack's points about our sales meeting, seeing the confidence of our team, the quality of our sales organizations increasing, the quality of the marketing tools and products, that's part of it. The other aspect is in the short term, we're disrupting quite a few things. I mean, we have -- I talked about facility moves, ERP implementation. We know that some level of that effect will have an effect on our ability to grow faster early because we're changing things. So as we get those change items solidified here in the next 18 months, the majority of them, that alone has an effect on accelerating growth, not to mention, obviously, on top of that, deals. Fundamentally, we haven't really done a new deal now since...

September of '11 was the last time so...

Which we plan on obviously bringing in some more acquisitions into the portfolio as well. Raj Denhoy - Jefferies & Company, Inc., Research Division: Okay. Well, if I'm not mistaken, from the guidance you laid out to what your longer-term guidance relative to what you’re talking about for '13, of course, the biggest difference is in international where you're talking about getting to double digits longer term, but you're still sort of mid-single digits now. I know there are some offsets with what's happening in Europe, but again, where is the confidence that, that business is going to be able to accelerate to that level?

Yes, look, again, I mentioned, I used the word, I think, on a previous call, lumpy. Again, our strategy in international is really 2 key components. One is by marketplace, aligning the distribution structure so that we have deeper penetration and really more control over our products. I think China is a great example of that where we've gone from fundamentally 1 or 2 core distributors to a structure where we have 15, and we have deeper reach within -- to the countries, we're registering our products. That allows us to bring faster follow-on products. So that's one set of items. The fact is, as we make some of those changes, we actually have periods, quarters and such where we're going to have some decreases followed by accelerations. And so right now, as we're going through some of those changes, we really had projected that we would have some slower growth in the front end, followed by some stronger acceleration on the back end. The other part of that, Raj, is that we actually have about 25 to 50 products over the next couple of years that were very applicable, strong margins we believe in our target markets that we've never registered. And so some of those, even if we get the registration submitted this summer, are still going to take 18, 20 months to actually have those products selling, but we're driving that now. And we see how that will play out over the next couple of years. But I still feel quite bullish, particularly about the Rest of the World for growth potential for our products. Raj Denhoy - Jefferies & Company, Inc., Research Division: Okay. And then just one quick one on the warning letter. This is the third warning letter, as I'm sure you know, in the last 14 months the company has received if you include the one at -- in England at the Andover facility. 3 warning letters in 14 months is a lot. And I guess, I'm curious what -- if you're doing anything proactive, because the FDA may have some broader questions here about the company's quality systems. And is that a concern for you at this point and how are you addressing that?

Well, obviously, with 3 warning letters, it's a strong concern for us. I mean, that's what we're very much focused on to get those closed out. We actually have reached proactively out to the FDA, and really, in the near future, we're going to be sitting down with them with my new head of quality and manufacturing and laying out our broader plan for how we're really focusing on our one quality system, our plans to get these items addressed. And so yes, as I'll emphasize, reaching out proactively to have the agency understand what we're doing. And to play off of Jack's comments before, we believe like all things, that we've been working on this pretty aggressively over the last 18 months and we've made a lot of good progress. We want to show that to the agency, but ultimately, we have to prove to them that we can get these items closed out. And so we have specific plans at each of the locations to do that. But as importantly, our other sites where we've been focused on, we've really looked at all of our sites. And as I've mentioned in other areas, we've had multiple inspections where we've had 483 observations. So we know how to do it, we know what good is. And at this point in time, we literally have either plans in place in all of our facilities to make sure that we're in great shape. And we want to share that with the agency, and we plan to, as I said, really coming up here in the month of March we're going to be sitting down.

We'll now take a question from the line of Amit Bhalla with Citi.

This is actually Adam in for Amit today. So just to start with on Instruments. So Instruments looked a little bit stronger this quarter after last quarter. I mean, can you talk about what's happening in that market in the U.S. and on the EU side as well?

What was your second question?

Just on the breakdown between what's happening in the U.S. versus the EU.

Okay, U.S. versus EU. All right, I'll take a shot on the Instruments, have Jack comment on U.S. and Europe. So look, for the Instruments, the first thing is, for the full year, the Instruments team had a really great year. I mean, from a standpoint of their revenue, and candidly also the work that Dan and his team have done on profitability of that business, they've done a very nice job throughout the year. And in Q4, we were up, I believe, 7%, particularly strong. But as I noted, last year, in Q4, we had a miss that, fundamentally, the majority of the miss from the company was associated with our alternate site Instruments business. And so we had a weaker comp year-over-year. But from a full-year perspective, the Instruments business with a lot of our specialty items, our lighting products, the LED product, has done extremely well. It's received well into the market and we see that continuing into this year, our retractor business, as well as really some of our specialty products, such as our Ruggles product as well, have done well. And I think our old site business as well has fully recovered. And with some of the new channel structures that we've put in place on how we're selling, we feel quite good about that. That being said, from a standpoint of where the market growth is, we see low-single digit growth is realistically how we projected what 2013 looks like. Jack, on U.S., Europe?

Yes, so I assume you're asking about the whole business rather than just Instruments, just to be clear. Instruments is our most domestic, least international division, so I'm going to talk about the whole business. In rough terms, domestic revenues were 77% of the total, so the Rest of the World was obviously 23%. Of that, and I think most people know this, Europe, on the one hand, and the Rest of the World on the other are pretty evenly split outside the U.S. We actually had -- we're actually down less than 1 point in Europe. But we were up double digits Rest of World on the top line. So that's roughly how we look at it. We expect Europe to continue to be challenging on the one hand. On the other hand, we've been executing well in a tough environment, especially against our previous execution in Europe, which was challenged in many respects. So we're pleased with the progress that we're making in that part of the company and that momentum can help us going forward.

We'll take our next question from the line of David Lewis, MS.

Jack, just want to turn the tables here to EPS for a second. The range you're guiding for in 2013 is a little bit lighter than the range that we've seen in prior years, and certainly in 2013. I wonder if you could help us with -- at the polls, what are the factors that are sort of underpinning in that wide range? I mean, how much of that is just cost-saving initiatives? How much is conservatism? How much is potential mid-tax timing? If you can just help us understand the magnitude of the gap, that'd be great.

I think it's an excellent question and it's essentially those 3 things. So start with we have a lot going on inside the company. To be blunt, you guys haven't even seen the detail behind the plans we have this year to build a strong optimized foundation for the company. So we have a lot going on and very specific things, we'll no doubt call out from the adjusted number. But we're going to have a lot of movement on the expense side for sure. The med tech tax is in COGS and -- will flow through inventory. The timing of that from an accounting perspective is going to vary a lot depending on the mix of products we sell in a quarter. And frankly, from our standpoint, it's a little tough to model precisely. We have a huge number, as you know, you've heard aimlessly from us at this point, we have a huge number of SKUs in the company. So forecasting what actually happens, for example, to the device tax or really any other variant in COGS is a little bit of a law of large numbers estimation game for us rather than a granular position game for us, so we thought we'd leave a little room there. And so, we have actually, frankly, on the one hand, a lot of optimism about the business in the abstract. And on the other hand, a very realistic view of all the stuff we're working on. And that sort of the drives, perhaps, a wider range in our expectations for what happens in the year. And I think it's only frankly prudent for us to do that. Pete, I don't know if you want to elaborate on that.

No. I think you've covered it, Jack. I think this is an important year for us, as we expressed, really, in our strap plan. So we're well on our plans from working what we're thinking about from facility strategies. Our sourcings piece is actually doing quite well, but we're consolidating suppliers. We're actually being able to get some good cost savings and going to have benefits, at the same time shifting some products around. So a lot of moving parts, but we feel quite good about those plans. And hence, driving a little bit more range so that if we have a couple of challenges we work through, we have a little bit of room on the lower end of the range. And if all things align very well, we could be a little bit higher on that scale.

Okay, very clear. That's great detail. And just maybe 2 quick ones. I guess, Pete, just for you, I know people have been dancing around this International dynamic and you've given some great commentary on how you can move the International growth rate over the next couple of years. But just specifically for '13, there is a pretty interesting acceleration from '12 to '13 internationally. Is there a particular product set outside of neuro or particular geography that you're optimistic that's coming online in '13 that really gets you comfortable with that just year-over-year improvement?

Well, I mean, I would specifically call out, I mean, China, we made a lot of the changes last year within the alignment, so we're expecting China to be a market that's going to be accelerating at a more faster, smoother rate in '13 than in '12, as an example. I think Brazil, as an example, there are some reimbursement items that became through on our skin products. And so as we're increasing our capacity and roll out there, I see specific markets. And there are select other markets as well, David, that we've actually had registrations that we had submitted last year that were getting approvals this year that will commence roll out, even in Eastern Europe as well. So that's how I would take a look at it. I think our Extremities business is probably going to be one of the ones from a standpoint which spend a good chunk of time on some those files, as well as Spine. We had select Spine products that realistically for Rest of World, even outside of Europe, we've never really been launched before and so we do a lot of the preregistration work at that end of the year. So that's why I have confidence in those markets, we're going to see some sustained growth. But back to my previous point, it doesn't still change the point that when you go into a market, you're making some major changes in structure for the long-term benefit. It clearly has a negative impact for 1 quarter or 2, as you put those items in place. And so we reflect that in our guidance, and that's kind of how we see the plan.

Okay. That's a very clear piece. And Jack, just one more quick one, sorry. On a net scale, it sounds like that the likelihood that a third-party or the third party and/or [indiscernible] gets delayed is very low, but is there a point here -- is it 1 week, 2 weeks, 1 month where if [indiscernible] were maintained, do you start to run up against capacity issues in [indiscernible]?

So the -- first, let me say, let me get back to the Añasco point just to make sure the table is set. So we've got a -- we've been through the all the validations and question ourselves. And we believe we have accomplished what we need to accomplish. The third party is going through that now and has been for a couple of days. And we have what I would describe as a pretty high level of confidence we're going to hit the date. Obviously in situations like this, it's unwise to make absolute promises, and we're not doing that. Now, to get to the capacity question, 2 things could be said about it. One, there's a bunch of product in the field and there's bunch of products on hospital shelves, and we don't believe that near term we'll have any disruption in sales and so forth. There is a -- if it came to pass that we couldn't ship out of the Añasco for a longer period of time, and I want to emphasize, we think that's remote, we would need to engage in a pretty detailed production planning exercise in Plainsboro. And frankly, the capacity of the existing plant in Plainsboro is insufficient to meet the total demand for our product. So we would be in a very careful planning mode and have to make some real trade-off decisions. We're not at that point. We don't believe we're going to get to that point. But we could meet the demands of select customers and work through our issues, if it came to that. And that's about all that's worth saying at this point because we don't think we're at that stage.

And Dave, just to remind you, as we said in the prepared comments, we're going to -- we'll release an 8-K once we began shipping.

A further point, which may be a little unclear and worth hitting home, we're continue to manufacture at Añasco. This is not a manufacturing hold, it's a shipping hold. So there's not going to be some big burp in the supply chain once we are able to ship, just to add that further detail.

We'll take our next question from the line of Robert Goldman, CL King. Robert M. Goldman - CL King & Associates, Inc., Research Division: A couple of follow-up questions on the warning letter. Just so that we're clear, since you got warning letters oath in Plainsboro and Puerto Rico, are you allowed to do any trials on new products that are based on collagen? Or is the approval of new products suspended until the warning letters are lifted?

Yes, Bob, it typically touches 2 areas, which is the approval of PMA's not necessarily 510(k)s, usually are not approved when you have a warning letter. And also letters of certificates from foreign governments. Which I'm sure you know, governments that rely on the U.S. to kind of provide certification, the FDA doesn't typically issue those. Those are typically are the 2 things. That being said, if you have PMA products in process, you can submit subsections, you can be working on it during all this time. But your ultimate approvals typically aren't approved until the letter is actually lifted.

So just to nail a key point, the DFU trial, which is the high-profile thing we're doing, will proceed on schedule, Point 1. Point 2, the durable products are made in Plainsboro, and it is the case that we'll need to get the Plainsboro warning letter lifted before we can get approval on that product. The lead times though are such that we're pretty confident we'll get there because it's a long time in the future before we'll be up for approval on that product. But that's a key thing to bear in mind. Final point is, the impact on -- around the certificates to foreign government issue is de minimis. It's well under $1 million over the next 1.5 years or so if you play it out, so it's not a big deal. Robert M. Goldman - CL King & Associates, Inc., Research Division: Okay. Then second is that the Puerto Rico warning letter speaks or suggests that you should use independent experts. And the Puerto Rico warning letter references Plainsboro as well. Of course, you are using, from what you're telling us, independent experts and FDA was in your plan in Puerto Rico for a month so I'm sure you made that point to them. Are they uncomfortable with the experts that you're using? Or do they not view them as experts?

Well, Bob, I don't believe it's -- that they're uncomfortable with the experts that we're using. I think it's just the stated language about how they worded things in the warning letter about how we needed to review. We've actually had a dialogue with the San Juan district, and we've expressed to them our approach and who is actually doing the work. And we have fundamentally the support that we're proceeding in the proper direction. So we believe that we're doing the right things on track to that, and I think as it comes to our Plainsboro facility, the individuals that we're using are highly respected by the FDA and candidly by us. They've given us some great advice and help us out. The references that you see in the letter are that these plants, some of the processes are done in New Jersey and shipped to Puerto Rico. And so there are references to incoming goods and products that are brought up. And I'd just be clear for everyone that the letter that from Añasco does not reference the -- excuse me, in Puerto Rico does not reference the Plainsboro from that warning letter item. It's very discreet to that. But these 2 plants work together. I mean, there are the products and raw materials that go back and forth. Robert M. Goldman - CL King & Associates, Inc., Research Division: And then finally, Pete, sort of more of an overview question. You provided some guidance in 2013 at the Analyst Meeting in October. And the guidance that you presented today on the press release really is consistent with that. Yet, you do have 2 warning letters that have come up since October until now. It sounds like you're comfortable enough in what you're doing on remediation that you're not budgeting for any step up in remediation costs over the last few months.

Well, first of all, from your guidance comment, I would agree with that. And again, why is it that? Well, we've been working on these plans for the last 18 months. So what does that mean? That means when we gave our guidance, we had already built in costs to work on remediation because we knew we wanted to actually increase our overall quality capabilities. We knew what it would cost to spend the time on a common quality system. And again, I think it's another point to reinforce, we did our assessments of our facilities and the observations in Plainsboro had clear items that were associated with things that we had to change structurally in the plant. And that's what drove a lot of the cost investment. Our own assessment and also the assessment that came from the agency in Puerto Rico were process changes, the dock controls validation, items that we understood. We opened Capas [ph] on these items, and we properly, I believe, budgeted at this point in time for that scope. That being said, if things were to change, obviously, we'd have to change that. But we believe at this point in time, our plans and what's articulated in the warning letter that's it's within the range of the cost that we've laid out on the call and in the press release.

We have a question now from the line of Spencer Nam, Janney Capital.

Just a couple of quick follow-up questions. I guess, I'll throw one in for -- on the warning letter, and then I just have a quick question on the U.S. Instrument guidance. On the warning letter, so when we think about these things, the -- I'm just curious what -- how you guys are thinking in terms of the timeframe. It's obviously difficult to estimate when these things could be resolved as more issues could come out, and -- but having said that, I'm curious how you guys are thinking whether we could roughly sort of think that all being in-line with your expectations that these issues could resolve within this calendar year for example.

So I'll take a shot at that and then Pete can elaborate. Excellent question. On the one hand, it's early in the calendar year. On the other hand, no company including Integra can set the FDA's schedule for the FDA. So as -- we believe that we will be in a position to absorb a new FDA inspection in any of these plants during the year. But we've been clear with the FDA on our calendars to these plants. We give them regular reports. So they know when we will be done on our work in the plants. The question then would be, how quickly thereafter they would schedule an inspection and come in. And then after that, if the inspection went well, how quickly they would give us the clean bill of health. And we obviously would be very reluctant to speculate about that because it's outside of, frankly, outside of our control.

Yes, I think, Jack, you've covered it. We, again, we understand the issues. It's not as if we are going through to try to understand root cause or issues. The -- all 3 of these locations, we understand what the agency is asking for. We have plans in place and we're closing on them. All of them have obviously different timelines, and all of them have different districts that we'll be interfacing with and we have been with, as Jack commented, on monthly updates. Our plan is to be as transparent and open with them. And to reinforce the discussion commented I made a little bit earlier, literally sitting down with the heads in CDRH to kind of layout our plans and discuss that with them in the near term is a meeting that we requested and were granted.

Any sense right now whether there may be -- when you look at sort of the line items from these 3 spots that -- where you have issues with the FDA. Are you sensing that there could be other areas -- I mean, how sort of -- is this a point-to-point, sort of one-to-one sort of situation where you guys are sort of taking this -- an isolated situation or the isolated property? Or is it more of a -- can you -- how confident are you guys that you're not going to see more of these popping up, say, new cases that is 3- to 6-month time frame?

Well, look, I mean, I'm not going to predict on the call will we not get another warning letter, will we not have another issue. Obviously, as I mentioned, one of our concerns is we don't have any escalations above this, another site or something broader. And so that's why we're meeting, Spencer, with the agency to layout our plans. Now my confidence that we've looked very critically at all of our, not just crucial plants, but all of our plans assessment what needs to be done, have plans at already been working on into the last year, are quite high. So I think we have a good handle and know where the risks are. We've had other inspections that have been closed out that we haven't necessarily made comment on. So we have a pretty good inventory of our overall site. That being said, these are -- warning letters are not to be taken lightly, and we do not, and we take this very seriously and we're moving aggressively. And Jack's previous points, we think we've got plans at each location to meet the agency's expectations.

It's also worth adding for the people on the call, we've made substantial changes in our quality QA leadership team. We have built up a really first-rate group of people in really, to a great degree, in the last 6 months. And that is a frankly, one the reasons why we have a somewhat higher SG&A planned for 2013, which came up in the guidance. So embedded in the guidance is our investment in really a much beefed up quality leadership team. And the effects and the impact of that are being felt all over the company. And the agenda -- for our agenda for the meeting with FDA will be to introduce them directly to that team and show them our level of leadership commitment and financial comment to resolving the issues.

We'll take our next question from David Toung, Argus Research.

I was a little late to the call, but I was wondering if you could go back in and just repeat the details of your international growth. I heard that you -- Europe and the Rest of the World were about evenly split and that Europe was down one percentage point. And then you mentioned 12%, does that relate to the Rest of the World, non-Europe?

I'm sorry, the last -- what was last few words of your question? It broke up, I'm sorry, David.

I'm sorry. You talked about Europe being down 1%, and then I heard 12% for the Rest of the World. Does that relate to non-Europe Rest of the World up 12%?

Yes. So just to refresh, let me -- I gave 2 lines of numbers, okay? The first was the basic split of our revenues, which is pretty much the same as it's been. Domestic revenues account for 77% of the total. The world outside the U.S., 23% of the total, so it adds up to 100%. Of the world outside the U.S., it's roughly half Europe, roughly half everything else. Now, growth rates, all right. The international growth rate is as reflected in the press release. You should track that down. Europe, the Europe component of the international growth rate was actually down less than 1%, okay? It rounds to about 1 point, but it was actually a little less than that, close to flat. The Rest of the World, outside of Europe and the United States was actually up double digits. And it adds up to the growth rate we described. So that's how it plays out and we can handle some of the rest of that in the calls off line if you want, and give you more granularity on that or you can talk to Angela and get more detail.

Okay. So given what you've said about product registration and distributor build-out, you mentioned Brazil, you mentioned China. And so, there's considerable opportunity in the Rest of the World that you could see a considerable opportunities given that all of this was the work in progress and there's still more work in progress. And if you look out to '13 and '14, you have some fairly robust opportunities in the Rest of the World.

Correct. Definitely, and I think the fact is, as I've mentioned a couple of countries, that we believe are going to be making progress in '13. But we're working on many other countries. I mean even Japan as an example, which not everyone obviously thinks as a growth market, we're very under-penetrated, but our products are greatly appreciated. And we're working on plans there to be able to expand our growth deeper. So, from those markets, as well as some of our more mature markets such as Australia, we've made some gains. So yes, I think it's across the board. My questions [ph] there really is as we make channel changes and strategies, it's going to be lumpy. We're going to have some markets that actually we have some flat growth for period of times, and then we'll have some new structures in place accelerating higher double digits. On aggregate though, we get comfortable with our projections that we've laid out here for '13. And candidly, well in line with what we've laid out for our 5-year plan, we laid out back in the fall.

Our next question comes from line of Steven Lichtman, Oppenheimer & Company. Steven M. Lichtman - Oppenheimer & Co. Inc., Research Division: Pete, a lot of the gross margin benefit this year, as you talked about before, comes from sourcing. A longer term facility closure should play a larger part. You mentioned 3 facilities closed last year. Are there any goals we should be focused on in terms of plant closures this year that will benefit costs going forward? In other words, if we think about 2014, what are the items that should benefit gross margin that year incrementally versus 2013?

Yes. I think that's a good question, Steve. As we talked about, obviously, these are sensitive items that we're not going to call out the specifics until we're actually ready. But as you've seen what our plans look like over the next 5 years, it means that we need to have progress each year. And so I would say, expect to hear some updates from us when we're ready to announce that on those specific items around the facilities components, whether it be distribution or other. On the sourcing standpoint, it is clearly a momentum game. Obviously, the savings that you get roll over from an annualized basis. And this is -- we had a good start in Q4. This is an important year for us and then that will parlay into '14 as probably some of the bigger savings around sourcing. And as we get into our next call and we have more information on that, we'll continue to elaborate more. So just as my prepared comments today talked about some of the fourth quarter items, as we get into our first quarter call, we'll talk more about, as we can, how those other items are revolving. So yes, I think, you're right, that is a big component. We feel that we're on track to those plans. The other aspect is mix. I mean, we have a good growth in what's taking place with Extremities and also in our Spine business. And we're also having some favorable product mix within each of our businesses. I think something to highlight, each of the teams has been looking at as they've been illuminating lower margin SKUs and focusing on higher margin. That's also a play we don't talk about as much. But I think our Instruments team is a great example where they've been able to lift their overall home business margin not by cost reduction, but by smart positioning and optimizing their product portfolio. And so that's also built into some of these -- some of the growth we're expecting. Steven M. Lichtman - Oppenheimer & Co. Inc., Research Division: Great. And then, Jack, it doesn't look as though stock buybacks are contemplated at least meaningfully in the guidance for '13. Understanding, looks like a lot of cash is earmarked for CapEx, but is there potential for us to see an increase in share repurchases in '13? Or is the cash being directed elsewhere?

Well, I would say, right now, for 2013, we don't have any plans for stock buybacks. We have done in the past, as you know, and broadly speaking, our business generates a lot of cash, but in 2013, we have significant plans for capital expenditures, as you pointed out. And we do also expect to put some cash into working capital items. When we get to talking about, for example, facility moves and that kind of thing, one of the things that always happens in connection with the those is you build up safety stock in the inventory and that kind of thing, and that will happen as well. So this year, we don't expect to have sort of a lot of extra cash to make a move like that. We have a plan authorized that we can, if our judgment changes, but we're not building it into the plan.

We'll move next to a question from the line of Jayson Bedford, Raymond James. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: In Plainsboro, from a manufacturing standpoint, are you kind at historical or normalized levels? Basically, is there less underutilization than in quarters past?

We're pretty well at normalized levels. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Okay. And can you remind us where you are with the new facility in Plainsboro in terms of bringing that up and running?

Yes, so roughly where we're at is, I mean, we're coming to getting everything fully finished within the facility. And later at the end of this year, we'll actually begin certain product line areas, the migration, so bringing up some pieces of it, but it won't have a substantial impact on volume and manufacturing really until 2014. But the facility is coming along well. We're very happy with what we've got laid out. And keep in mind, the -- many of the procedures and processes that we used to manufacture those products, we utilize in 105. And so we're making sure that we have everything tied down in 105. Those will be the same procedures when we make our collagen products where -- we'll utilized in our new facility, which we call 109, and obviously, sharing that with the FDA when we bring that facility up, but things are on track and we'll actually brining some products up later this year. Jayson T. Bedford - Raymond James & Associates, Inc., Research Division: Okay, And just lastly for Jack, clarification. The 64.5% to 65.5% in adjusted gross margin for '13, that includes the device tax, correct?

Correct. We're not adjusting out the device tax.

At this time, we have one question remaining in the queue. [Operator Instructions] We'll take our next question from the line of Bruce Jackson of Northland Capital Markets.

I just wanted to round out the FDA discussion. They've been making the rounds to the various tissue banking companies, and I wanted to know if they've visited the IsoTis plant. And if they haven't, when was the last time they were in?

Yes, we actually had an inspection. I don't know exactly the date but it was last year, and we came away with that with no observations.

It was a very clean inspection.

And it appears that there are no further questions at this time. I'd like to go ahead and turn the conference back over to management for any closing or final remarks.

Thank you for listening to the call. We'll look forward to speaking with you when we report our first quarter earnings. Thanks.

That does conclude today's conference. Thank you for your participation, please have a good day.