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Document and Entity Information - USD ($)	12 Months Ended
May 31, 2012	Jul. 31, 2012	Nov. 30, 2011
Document And Entity Information [Abstract]
Entity Registrant Name	ANGIODYNAMICS INC
Entity Central Index Key	0001275187
Document Type	10-K
Document Period End Date	May 31, 2012
Amendment Flag	false
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	FY
Current Fiscal Year End Date	--05-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Public Float			$ 379,562,758
Entity Common Stock, Shares Outstanding		34,829,127

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	May 31, 2012	May 31, 2011	May 31, 2010
Consolidated Statements of Operations [Abstract]
Net sales	$ 221,787	$ 215,750	$ 216,035
Cost of sales	95,829	90,047	89,066
Gross profit	125,958	125,703	126,969
Operating expenses
Research and development	20,511	21,373	19,275
Sales and marketing	64,505	58,123	60,923
General and administrative	18,334	17,828	16,437
Amortization of intangibles	9,406	9,234	9,463
Acquisition and other items, net	16,164	7,182
Total operating expenses	128,920	113,740	106,098
Operating (loss) income	(2,962)	11,963	20,871
Other (expenses) income
Interest income	1,090	737	713
Interest expense	(508)	(499)	(672)
Other expense	(2,902)	(1,503)	(1,293)
Total other (expenses) income, net	(2,320)	(1,265)	(1,252)
(Loss) income before income tax provision	(5,282)	10,698	19,619
Income tax (benefit) provision	(188)	2,581	7,307
Net (loss) income	$ (5,094)	$ 8,117	$ 12,312
(Loss) earnings per share
Basic	$ (0.20)	$ 0.33	$ 0.50
Diluted	$ (0.20)	$ 0.32	$ 0.50
Basic weighted average shares outstanding	25,382	24,870	24,580
Diluted weighted average shares outstanding	25,382	25,133	24,787

Consolidated Balance Sheets - USD ($) $ in Thousands	May 31, 2012	May 31, 2011
CURRENT ASSETS
Cash and cash equivalents	$ 23,508	$ 45,984
Escrow receivable	2,500
Marketable securities, at fair value	14,070	85,558
Total cash, cash equivalents, escrow receivable and marketable securities	40,078	131,542
Accounts receivable, net of allowances of $933 and $485, respectively	48,588	27,141
Inventories	55,823	28,126
Deferred income taxes	4,923	2,821
Prepaid expenses and other	9,826	4,675
Total current assets	159,238	194,305
PROPERTY, PLANT AND EQUIPMENT-AT COST, net	55,915	23,804
OTHER ASSETS	10,707	2,823
INTANGIBLE ASSETS, net	147,266	48,037
GOODWILL	308,912	161,951
DEFERRED INCOME TAXES, long term	39,198	5,835
PREPAID ROYALTIES	533	666
TOTAL ASSETS	721,769	437,421
CURRENT LIABILITIES
Accounts payable	29,200	11,391
Accrued liabilities	18,722	13,841
Current portion of long-term debt	7,500	275
Total current liabilities	55,422	25,507
LONG-TERM DEBT, net of current portion	142,500	6,275
Other long term liabilities	327
Total liabilities	198,249	31,782
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share, 5,000,000 shares authorized; no shares issued and outstanding
Common stock, par value $.01 per share, 45,000,000 shares authorized; issued and outstanding 34,826,531 and 24,985,657 shares, respectively	348	250
Additional paid-in capital	496,375	371,393
Retained earnings	30,175	35,269
Treasury stock, 142,305 shares, at cost	(2,104)
Accumulated other comprehensive loss	(1,274)	(1,273)
Total stockholders' equity	523,520	405,639
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 721,769	$ 437,421

Consolidated Statements of Stockholders' Equity and Comprehensive Income - USD ($) $ in Thousands	Total	Common Stock	Additional paid in capital	Retained earnings	Accumulated other comprehensive loss	Treasury Stock	Comprehensive income/(loss)
Balance at May. 31, 2009	$ 372,194	$ 245	$ 358,014	$ 14,840	$ (905)	$ 0
Balance, Shares at May. 31, 2009		24,428,209				0
Net Income (Loss)	12,312			12,312			$ 12,312
Exercise of stock options	1,724	$ 1	1,723
Exercise of stock options, Shares		172,377
Tax effect of exercise of stock options	(366)		(366)
Issuance of performance shares, net	(55)		(55)
Issuance of performance shares, net, Shares		32,080
Purchase of common stock under Employee Stock Purchase Plan	1,153	$ 1	1,152
Purchase of common stock under Employee Stock Purchase Plan, Shares		114,479
Stock- based compensation	4,876		4,876
Unrealized loss on marketable securities, net of tax of $38, $15 and $82 for the year ended 2012, 2011 and 2010 respectively	(140)				(140)		(140)
Unrealized loss on interest rate swap, net of tax of $(121), $2 and $3 for the year ended 2012, 2011 and 2010 respectively	(5)				(5)		(5)
Foreign currency translation	(344)				(344)		(344)
Comprehensive income (loss)							11,823
Balance at May. 31, 2010	391,349	$ 247	365,344	27,152	(1,394)	$ 0
Balance, Shares at May. 31, 2010		24,747,145				0
Net Income (Loss)	8,117			8,117			8,117
Exercise of stock options	977	$ 1	976
Exercise of stock options, Shares		106,858
Tax effect of exercise of stock options	(639)		(639)
Issuance of performance shares, net	1	$ 1
Issuance of performance shares, net, Shares		46,727
Purchase of common stock under Employee Stock Purchase Plan	1,104	$ 1	1,103
Purchase of common stock under Employee Stock Purchase Plan, Shares		84,927
Stock- based compensation	4,609		4,609
Unrealized loss on marketable securities, net of tax of $38, $15 and $82 for the year ended 2012, 2011 and 2010 respectively	(26)				(26)		(26)
Unrealized loss on interest rate swap, net of tax of $(121), $2 and $3 for the year ended 2012, 2011 and 2010 respectively	3				3		3
Foreign currency translation	144				144		144
Comprehensive income (loss)							8,238
Balance at May. 31, 2011	405,639	$ 250	371,393	35,269	(1,273)	$ 0
Balance, Shares at May. 31, 2011		24,985,657				0
Net Income (Loss)	(5,094)			(5,094)			(5,094)
Exercise of stock options	2,157	$ 2	2,155
Exercise of stock options, Shares		193,684
Tax effect of exercise of stock options	(295)		(295)
Issuance of performance shares, net, Shares		64,221
Purchase of common stock under Employee Stock Purchase Plan	1,202	$ 1	1,201
Purchase of common stock under Employee Stock Purchase Plan, Shares		103,362
Shares issued pursuant to acquisition	117,926	$ 95	117,831
Shares issued pursuant to acquisition, shares		9,479,607
Purchase of common stock for treasury	(2,104)					$ (2,104)
Purchase of common stock for treasury, shares						(142,305)
Stock- based compensation	4,090		4,090
Unrealized loss on marketable securities, net of tax of $38, $15 and $82 for the year ended 2012, 2011 and 2010 respectively	(65)				(65)		(65)
Unrealized loss on interest rate swap, net of tax of $(121), $2 and $3 for the year ended 2012, 2011 and 2010 respectively	204				204		204
Foreign currency translation	(140)				(140)		(140)
Comprehensive income (loss)							$ (5,095)
Balance at May. 31, 2012	$ 523,520	$ 348	$ 496,375	$ 30,175	$ (1,274)	$ (2,104)
Balance, Shares at May. 31, 2012		34,826,531				(142,305)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	May 31, 2012	May 31, 2011	May 31, 2010
Cash flows from operating activities:
Net (loss) income	$ (5,094)	$ 8,117	$ 12,312
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,056	12,579	12,459
Amortization of bond discount	707	52	68
Tax effect on exercise of stock options and issuance of performance shares	(309)	(741)	(529)
Deferred income tax provision	(652)	(840)	5,877
Stock based compensation	4,090	4,609	4,876
Imputed interest			153
Changes in accounts receivable allowances	118	(73)	(44)
Unrealized loss from foreign exchange	(172)	(104)	(301)
Loss on impairment of intangible assets		6,410
Other	1,321	55	57
Changes in operating assets and liabilities, net of effects of acquisitions:
Accounts receivable	(2,496)	2,770	(2,613)
Inventories	(1,091)	1,418	7,429
Prepaid expenses and other	(4,654)	2,050	(1,307)
Accounts payable and accrued liabilities	6,673	(2,432)	1,522
Net cash provided by operating activities	11,497	33,870	39,959
Cash flows from investing activities:
Additions to property, plant and equipment	(2,492)	(2,957)	(5,042)
Acquisition of intangible assets and business, net of cash acquired	(237,867)	(1,086)	(5,411)
Other cash flows from investing activities	(4,000)	(182)
Change in escrow receivable	(2,500)
Purchases of marketable securities	(123,614)	(168,476)	(42,436)
Proceeds from sale or maturity of marketable securities	194,113	124,081	41,112
Net cash used in investing activities	(176,360)	(48,620)	(11,777)
Cash flows from financing activities:
Repayment of long-term debt	(6,550)	(260)	(265)
Proceeds from issuance of long-term debt	150,000
Proceeds from exercise of stock options and ESPP	3,356	2,080	2,875
Deferred financing costs on long-term debt	(2,378)
Purchase of common stock for treasury	(2,104)
Tax effect of the exercise of stock options and issuance of performance shares	14	102	108
Net cash provided by financing activities	142,338	1,922	2,718
Effect of exchange rate changes on cash and cash equivalents	49	49	(46)
(Decrease) increase in cash and cash equivalents	(22,476)	(12,779)	30,854
Cash and cash equivalents
Beginning of year	45,984	58,763	27,909
End of year	23,508	45,984	58,763
Cash paid during the period for:
Interest	438	476	452
Income taxes	2,832	826	$ 4,563
Supplemental disclosure of non-cash operating, investing and financing activities:
Contractual obligations in acquisition of intangibles and business	217	$ 1,909
Equity issued in acquisition of intangible and business	$ 117,926

Basis of Presentation, Business Description and Summary of Significant Accounting Policies

12 Months Ended

May 31, 2012

Basis of Presentation, Business Description and Summary of Significant Accounting Policies [Abstract]

BASIS OF PRESENTATION, BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE A—BASIS OF PRESENTATION, BUSINESS DESCRIPTION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1. Basis of Presentation and Description of Business

The consolidated financial statements include the accounts of AngioDynamics, Inc. and its wholly owned subsidiaries, RITA Medical Systems, LLC, AngioDynamics UK Limited, AngioDynamics Netherlands B. V. since February 2, 2011 and NM Holding Company, Inc. (Navilyst) since May 22, 2012 (collectively, the “Company”). All intercompany balances and transactions have been eliminated. We are primarily engaged in the design, development, manufacture and marketing of medical products used in minimally invasive, image-guided procedures to treat peripheral vascular disease, or PVD, and local oncology therapy options for treating cancer, including radiofrequency ablation, or RFA, systems, NanoKnife Ablation Systems, surgical resection systems and embolization products for treating benign and malignant tumors.

Prior to fiscal 2011, we reported our results of operations as three reportable segments: Peripheral Vascular, Access and Oncology/Surgery. At the beginning of fiscal 2011, we combined our Peripheral Vascular and Access reportable segments into a single reportable segment that was named the Vascular division. The Vascular segment is responsible for products targeting the fluid management, venous intervention, dialysis access, thrombus management and peripheral disease markets and has dedicated research and development and sales and marketing personnel assigned to it. The Oncology /Surgery segment continues to be responsible for RF Ablation, embolization, Habib and NanoKnife product lines and has dedicated research and development and sales and marketing personnel assigned to it.

Our chief operating decision maker evaluates performance based on the reportable segments and utilizes net sales, gross profit and operating income as primary profitability measures. The expenses related to certain shared and corporate activities are allocated to these segments on a percentage of total sales basis or operating expenses basis as deemed appropriate.

We have performed an evaluation of subsequent events through the date the financial statements were issued.

Acquisition of Navilyst

On May, 22, 2012, we completed the acquisition of privately-held Navilyst, a global medical device company with strengths in the vascular access, interventional radiology and interventional cardiology markets. The acquisition and related transaction costs were financed through the issuance of approximately 9.5 million shares of our common stock, $150 million in drawn acquisition debt financing and $97 million of cash. Based on the closing price of our stock of $12.44 on the day prior to the transaction, the purchase price was approximately $362 million.

The fiscal 2012 results include approximately $11.2 million in transaction and related costs for the Navilyst acquisition. These costs are included in “Acquisition and other items, net” in the statement of operations.

With the issuance of common stock related to the acquisition, as of May 31, 2012 we have approximately 34.8 million shares of common stock outstanding. Investment funds affiliated with Avista Capital Partners, former owners of Navilyst, received approximately 9.5 million shares of our common stock and as of May 31, 2012 hold approximately 27% of our outstanding shares. Investment funds affiliated with Avista Capital Partners entered into a stockholders agreement with us as part of the transaction and also received the right to appoint two additional seats on our existing Board of Directors.

To satisfy any working capital adjustment and potential indemnification claims that may arise, $20 million of purchase consideration has been placed in escrow, including approximately $14.9 million in cash and approximately 415 thousand shares of common stock, determined based on the closing price of $12.44 on the day prior to the transaction. The indemnification claims period will terminate on July 15, 2013. At May 31, 2012, we have $2.5 million of receivable related to the working capital adjustment recorded as escrow receivable on the balance sheet. Such receivable is the subject of ongoing negotiation between the parties and there can be no assurance it will be realized.

Investment in Microsulis Medical Ltd

On March 22, 2012, we established a strategic relationship with Microsulis Medical Ltd., a U.K.-based company specializing in the minimally-invasive, microwave ablation technology for the coagulation of soft tissue which has systems in more than 80 hospitals worldwide.

The relationship includes a $5 million investment in Microsulis through the purchase of senior preferred stock, representing a 14.3% ownership position, exclusive distribution rights to market and sell their microwave ablation systems in all markets outside the United States from May 2012 through December 2013, and an exclusive option to purchase at any time until September 22, 2013, substantially all of the global assets of Microsulis Medical, Ltd. This has been accounted for as a cost method investment. The $5 million investment is included in intangible assets and other non -current assets on the balance sheet at May 31, 2012. Fees related to this transaction of approximately $604 thousand are included in “Acquisition and other items, net” in the statement of operations for fiscal 2012.

See Note C for further discussion of acquisitions.

Regulatory Matters

On January 24, 2011 we received a Warning Letter from the U.S. Food and Drug Administration, or FDA, in connection with our marketing of the NanoKnife System. In the Warning Letter the FDA states that certain statements we made, including those on our company website, promote the use of the NanoKnife System beyond its currently cleared indications. Upon receipt of the Warning Letter, we promptly responded to FDA and completed corrective and preventative actions to address the matters raised. We believe the matters raised by the FDA in the Warning Letter are fully resolved.

We received a Warning Letter dated May 27, 2011 from the FDA in connection with its inspection of our Queensbury, NY manufacturing facility. In the Warning Letter, the FDA cited deficiencies in the response letter we provided the FDA pertaining to the inspection that occurred from January 4 through January 13, 2011. The deficiencies related to our internal procedures for medical device reporting, corrections and removals and complaint handling. We have responded to the May 27, 2011 Warning Letter and completed corrective and preventive actions to address the observations.

On February 10, 2012, we received from the FDA a Form 483, List of Investigational Observations, in connection with their inspection of our Queensbury facility from November 14, 2011 through February 10, 2012. The Form 483 contained 12 observations related to, among other things, our CAPA system, MDR reporting, complaint investigation, corrections and removals, acceptance criteria and training. Some of the observations contained in the Form 483 were repeat observations from the May 27, 2011 Warning Letter.

On February 13, 2012, we received from the FDA a Form 483 in connection with their inspection of our Fremont facility from January 12, 2012 through February 13, 2012. The Form 483 contained 6 observations related to, among other things, our CAPA system, design controls, risk management and training.

We have developed a comprehensive Quality Call to Action Program to review and augment our Quality Management Systems at our Queensbury facility, and we have implemented numerous measures outlined in that plan. When we initiated the program in early December 2011, we engaged a team of external regulatory and quality experts and reallocated a significant number of engineering and product development resources to support this corporate initiative. In fiscal 2012, we incurred $2.3 million of expense associated with the Quality Call to Action Program.

We provided responses to the FDA to the Form 483s within 15 business days from the date we received them. We will continue to work closely with the FDA to resolve any outstanding issues. Until the items raised in the Warning Letters and during the recent inspections are corrected, we may be subject to additional regulatory action by the FDA, including the issuance of warning letters, injunction, seizure or recall of products, imposition of fines or penalties or operating restrictions on our facilities and any such actions could significantly disrupt our ongoing business and operations and have a material adverse impact on our financial position and operating results.

In May 2011, we submitted to FDA an application for an Investigational Device Exemption for a clinical trial to study the use of NanoKnife in the treatment of pancreatic cancer. In June 2012, we submitted an amendment to our application to address matters raised by FDA in the course of their review of the application and to propose an expanded and enhanced controlled, randomized trial protocol. In August 2012, we received a disapproval letter from FDA requesting additional information and certain protocol changes. We intend to continue to work with FDA to address the matters raised in the August letter.

CEO and Executive Transitions

On June 13, 2011, we entered into a Separation Agreement with Johannes C. Keltjens, our then President and Chief Executive Officer that provided, among other things, for a lump sum payment in the amount of $930,811 (subject to applicable withholdings and deductions) and continuation of health benefits for a period of up to 24 months. Total expenses of $1.0 million associated with this Separation Agreement were included in “Acquisition and other items, net” in our statement of operations fiscal 2012. Joseph M. DeVivo commenced employment on September 7, 2011 as President and Chief Executive Officer. During the transition period, Scott J. Solano, Senior Vice President and Chief Technology Officer, assumed the duties of Interim Chief Executive Officer. Mr. Solano resigned from AngioDynamics, effective October, 14, 2011. Expenses of $286 thousand for the relocation of our new CEO and $968 thousand of expenses for transitions in the executive management team are included in “Acquisition and other items, net” in our statement of operations for fiscal 2012. Comparably, expenses of $772 thousand of expenses for transitions in the executive management team were included in our statement of operations for fiscal 2011.

Expiration of our Distribution Agreement Amendment for LC Bead

The Supply and Distribution Agreement with Biocompatibles UK Limited, which granted us exclusive distribution rights to LC Beads in the United States, expired on December 31, 2011. LC Bead sales were $21.3 million or 9% of total sales for the fiscal year ended May 31, 2012, $28.3 million or 13 % of total sales for the fiscal year ended May 31, 2011 and $ 22.4 million or 10% of total sales for the fiscal year ended May 31, 2010.

Amendment of AngioDynamics’ 2004 Stock and Incentive Award Plan

On October 5, 2011, we amended the 2004 Stock and Incentive Award Plan to increase the maximum number of shares of our common stock with respect to which stock options may be granted during any calendar year to any one employee from 200,000 shares to 500,000 shares. See Note N to the consolidated financial statements in this Annual Report on Form 10-K for additional information.

Share Repurchase Program

On October 5, 2011, our Board of Directors authorized the repurchase of up to $20 million of our common stock, prior to May 31, 2012. During the fiscal year ended May 31, 2012, we purchased 142,305 shares at a cost of approximately $2.1 million. See Note N to the consolidated financial statements in this Annual Report on Form 10-K for additional information.

Closure of UK facility

During the first fiscal quarter of 2012, we made the decision to close our Cambridge, UK facility and transfer the production of lasers to our Queensbury, NY facility. We have extended the date for closing the UK facility and moving laser manufacturing from December 2011 to December 2012. We estimate the total cost of this project will be approximately $3.4 million. The statement of operations for fiscal 2012 includes charges of $1.8 million for costs incurred associated with this closure which is included in “Acquisition and other items, net”.

2. Fiscal Year

We report on a fiscal year ending May 31.

3. Cash and Cash Equivalents

We consider all unrestricted highly liquid investments purchased with an initial maturity of less than three months to be cash equivalents. We maintain cash and cash equivalent balances with financial institutions in the United States in excess of amounts insured by the Federal Deposit Insurance Corporation.

4. Marketable Securities

Marketable securities, which are principally government agency bonds, auction rate investments and corporate commercial paper, are classified as “available-for-sale securities” in accordance with authoritative guidance issued by FASB and are reported at fair value, with unrealized gains and losses excluded from operations and reported as a component of accumulated other comprehensive income (loss), net of the related tax effects, in stockholders’ equity. Cost is determined using the specific identification method. We hold investments in auction rate securities in order to generate higher than typical money market rate investment returns. Auction rate securities typically are high credit quality, generally achieved with municipal bond insurance. Credit risks are eased by the historical track record of bond insurers, which back a majority of this market. Sell orders for any security traded through an auction process could exceed bids and, in such cases, the auction fails and we may be unable to liquidate our position in the securities in the near term. During fiscal years 2012, 2011 and 2010, we had $1.85 million in investments in two auction rate securities issued by New York state and local government authorities that failed auctions. The authorities are current in their interest payments on the securities.

5. Accounts Receivable

Accounts receivable, principally trade, are generally due within 30 to 90 days and are stated at amounts due from customers, net of an allowance for sales returns and doubtful accounts. We perform ongoing credit evaluations of our customers and adjust credit limits based upon payment history and the customer’s current creditworthiness, as determined by a review of their current credit information. We continuously monitor aging reports, collections and payments from customers, and a provision for estimated credit losses is maintained based upon our historical experience and any specific customer collection issues that have been identified. While such credit losses have historically been within our expectations and the provisions established, we cannot guarantee that the same credit loss rates will be experienced in the future. We write off accounts receivable when they are determined to be uncollectible.

6. Inventories

Inventories are stated at the lower of cost (at standard cost, which approximates the first-in, first-out method) or market. Appropriate consideration is given to deterioration, obsolescence and other factors in evaluating net realizable value.

7. Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. We evaluate these assets for impairment annually or as changes in circumstances or the occurrence of events suggest the remaining value is not recoverable. Expenditures for repairs and maintenance are charged to expense as incurred. Renewals and betterments are capitalized.

8. Goodwill and Intangible Assets

Intangible assets other than goodwill and acquired IPR&D are amortized over their estimated useful lives, which range between one and 11 years, on either a straight-line basis over the expected period of benefit or as revenues are earned from the sales of the related products. We periodically review the estimated useful lives of our intangible assets and review such assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Our determination of impairment is based on estimates of future cash flows. If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.

Acquired IPR&D has an indefinite life and is not amortized until completion and development of the project, at which time the IPR&D becomes an amortizable asset. If the related project is not completed in a timely manner or the project is terminated or abandoned, we may have an impairment related to the IPR&D, calculated as the excess of the asset’s carrying value over its fair value.

Our policy defines IPR&D as the value assigned to those projects for which the related products have not received regulatory approval and have no alternative future use. Determining the portion of the purchase price allocated to IPR&D requires us to make significant estimates. The amount of the purchase price allocated to IPR&D 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 methods. These methodologies include consideration of the risk of the project not achieving commercial feasibility.

At the time of acquisition, we expect that all acquired IPR&D will reach technological feasibility, but there can be no assurance that the commercial viability of these products will actually be achieved. The nature of the efforts to develop the acquired technologies into commercially viable products consists principally of planning, designing, and conducting clinical trials necessary to obtain regulatory approvals. 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, or delays or issues with patent issuance, or validity and litigation. If commercial viability were not achieved, we would likely look to other alternatives to provide these therapies.

Goodwill and other intangible assets that have indefinite useful lives are not amortized, but rather, are tested for impairment annually or more frequently if impairment indicators arise. We have one intangible asset which has been assigned an indefinite life, the NAMIC trademark that was recently acquired as part of our acquisition of Navilyst, and is valued at $28.6 million. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets have been recorded at either incurred or allocated cost. Allocated costs were based on respective fair market values at the date of acquisition.

We test goodwill for impairment during the third quarter of every fiscal year and when an event occurs or circumstances change such that it is reasonably possible that impairment exists. The impairment test requires a comparison of the estimated fair value of the reporting unit to which the goodwill is assigned to the sum of the carrying value of the assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the fair value of the reporting unit, the carrying value of the reporting unit’s goodwill is reduced to its implied fair value through an adjustment to the goodwill balance, resulting in an impairment charge. Our determination of impairment is based on estimates of future cash flows. We test goodwill for impairment during the third quarter of every fiscal year, or more frequently if impairment indicators arise. Events that could, in the future, result in impairment include, but are not limited to, sharply declining sales for a significant product or in a significant geographic region.

9. Revenue Recognition

We recognize revenue in accordance with generally accepted accounting principles as outlined in the SEC’s authoritative guidance on revenue recognition which requires that four basic criteria be met before revenue can be recognized: (i) persuasive evidence that an arrangement exists; (ii) the price is fixed or determinable; (iii) collectability is reasonably assured; and (iv) product delivery has occurred or services have been rendered. Decisions relative to criterion (iii) regarding collectability are based upon our judgments, as discussed under “Accounts Receivable” above, and should conditions change in the future and cause us to determine this criterion is not met, our results of operations may be affected. We recognize revenue, net of sales taxes assessed by any governmental authority, as products are shipped, based on F.O.B. shipping point terms when title and risk of loss passes to customers. We negotiate shipping and credit terms on a customer-by-customer basis and products are shipped at an agreed upon price. All product returns must be pre-approved by us and customers may be subject to a 20% restocking charge. To be accepted, a returned product must be unadulterated, undamaged and have at least 12 months remaining prior to its expiration date.

We chose to early adopt, effective with the third quarter of fiscal 2010, updated authoritative guidance for revenue recognition relating to the accounting treatment for revenue arrangements that involve more than one deliverable or unit of accounting. At the same time, we also adopted the updated guidance relating to certain revenue arrangements that include software elements. Neither of these had a material effect on our consolidated financial statements.

10. Research and Development

Research and development costs, including salaries, consulting fees, building costs, utilities, administrative expenses and an allocation of corporate costs are related to developing new products, enhancing existing products, validating new and enhanced products and managing clinical, regulatory and medical affairs and our intellectual property and are expensed as incurred.

11. Shipping and Handling Costs

Shipping and handling costs, associated with the distribution of finished products to customers, are recorded in costs of goods sold and are recognized when the related finished product is shipped to the customer. Amounts charged to customers for shipping are recorded in net sales.

12. Income Taxes

Deferred income taxes are recognized for temporary differences between financial statement and income tax bases of assets and liabilities and loss carryforwards and tax credit carryforwards for which income tax benefits are expected to be realized in future years. A valuation allowance has been established to reduce deferred tax assets, if it is more likely than not that all, or some portion, of such deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rates is recognized in income in the period which includes the enactment date. The deferred tax asset includes net operating losses acquired as part of the acquisitions of Rita and Navilyst. These losses could be significantly limited under Internal Revenue Code (“IRC”) Section 382. An analysis of RITA’s ownership changes as defined in IRC Section 382 shows that approximately $15.8 million (of which $7.1 million had expired as of May 31, 2012) of federal net operating losses will not be utilized due to limitations. In addition, it is estimated that $11.8 million of Rita state net operating losses will expire prior to utilization. A similar analysis of Navilyst’s ownership changes as defined in IRS Section 382 shows that approximately $19.6 million of federal net operating losses will not be utilized due to limitations. In addition, it is estimated that $35.9 million of Navilyst’s state net operating losses will expire prior to utilization. The gross deferred tax asset related to the net operating losses reflects these limitations.

We intend to reinvest indefinitely any of our unrepatriated foreign earnings as of May 31, 2012. We have not provided for U.S. income taxes on these undistributed earnings of our foreign subsidiaries because we consider such earnings to be reinvested indefinitely outside the United States. If these earnings were distributed, we may be subject to both foreign withholding taxes and U.S. income taxes. Determination of the amount of this unrecognized deferred income tax liability is not practical.

13. Fair Value of Financial Instruments

Our financial instruments include cash and cash equivalents, accounts receivable, marketable securities, accounts payable, short-term and long-term debt. The prior year included two interest rate swap agreements which were terminated in fiscal year 2012. The carrying amount of these instruments approximates fair value due to the immediate or short-term maturities or, with respect to our debt and related interest rate swaps, variable interest rates associated with these instruments. The interest rate swap agreements had been recorded at their fair value based on a valuation received from an independent third party. Marketable securities are carried at their fair value as determined by quoted market prices.

Effective June 1, 2008, we adopted an accounting policy regarding fair value. Under this policy, fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. This policy establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The policy describes three levels of inputs that may be used to measure fair value which are provided in the table below. The adoption of this policy had no impact on our financial statements other than the disclosures presented herein.

Level 1

Quoted prices in active markets for identical assets or liabilities. Level 1 assets include bank time deposits, money market funds, mutual funds and U.S. Treasury securities that are traded in an active exchange market.

Level 2

Observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 2 assets include US government securities and corporate bonds. When quoted market prices are unobservable, we obtain pricing information from an independent pricing vendor. The pricing vendor uses various pricing models for each asset class that are consistent with what other market participants would use. The inputs and assumptions to the model of the pricing vendor are derived from market observable sources including: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, benchmark securities, bids, offers, and other market-related data. Since many fixed income securities do not trade on a daily basis, the methodology of the pricing vendor uses available information as applicable such as benchmark curves, benchmarking of like securities, sector groupings, and matrix pricing. The pricing vendor considers all available market observable inputs in determining the evaluation for a security. Thus, certain securities may not be priced using quoted prices, but rather determined from market observable information. These investments are included in Level 2 and primarily comprise our portfolio of corporate and government fixed income securities. Additionally included in Level 2 are interest rate swap agreements which are valued using a mid-market valuation model.

Level 3

Unobservable inputs that are supported by little or no market activity and are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation. This category currently only includes auction rate securities where independent pricing information was not able to be obtained. Our investments in auction-rate securities were classified as Level 3 as quoted prices were unavailable since these auction rate securities issued by New York state and local government authorities failed auction. Due to limited market information, we utilized a discounted cash flow (“DCF”) model to derive an estimate of fair value for all periods presented. The assumptions used in preparing the DCF model included estimates with respect to the amount and timing of future interest and principal payments, forward projections of the interest rate benchmarks, the probability of full repayment of the principal considering the credit quality and guarantees in place, and the rate of return required by investors to own such securities given the current liquidity risk associated with auction-rate securities.

The following tables provide information by level for assets and liabilities that are measured at fair value on a recurring basis (in thousands):


	Fair Value Measurements using inputs considered as:
	Level 1		Level 2		Level 3		Fair Value at May 31, 2012
Financial Assets
Cash equivalents
Money market funds	$	4,762	$	—	$	—	$	4,762

Total	$	4,762	$	—	$	—	$	4,762
Marketable securities
Corporate bond securities	$	—	$	6,371	$	—		6,371
U.S. government agency obligations		—		5,849		1,850		7,699

Total		—		12,220		1,850		14,070

Total Financial Assets	$	4,762	$	12,220	$	1,850	$	18,832

At May 31, 2012, there were no financial liabilities measured at fair value since the interest rate swap arrangements were paid off during May 2012.


	Fair Value Measurements using inputs considered as:
	Level 1		Level 2		Level 3		Fair Value at May 31, 2011
Financial Assets
Cash equivalents
Money market funds	$	11,719	$	—	$	—	$	11,719
Corporate bond securities		—		20,995		—		20,995

Total	$	11,719	$	20,995	$	—	$	32,714

Marketable securities
Corporate bond securities	$	—	$	46,155	$	—		46,155
U.S. government agency obligations		—		37,553		1,850		39,403

Total		—		83,708		1,850		85,558

Total Financial Assets	$	11,719	$	104,703	$	1,850	$	118,272

Financial Liabilities
Interest rate swap agreements	$	—	$	1,028	$	—	$	1,028

Total Financial Liabilities	$	—	$	1,028	$	—	$	1,028

There were no changes in the level 3 fair value instruments during fiscal 2012 or 2011.

15. Derivative Financial Instruments

We are exposed to market risk due to changes in interest rates. To reduce this risk, we periodically enter into certain derivative financial instruments to hedge the underlying economic exposure. We use derivative instruments as part of our interest rate risk management strategy. The derivative instruments used are floating-to-fixed rate interest rate swaps, which are subject to cash flow hedge accounting treatment. We recognized interest expense of $61,000, $37,000 and $70,000 for the fiscal 2012, 2011 and 2010 periods, respectively, on the cash flow hedge. The cash flow hedge was terminated in May 2012 in conjunction with the early payoff of the related debt.

In accordance with authoritative guidance on Accounting for Derivatives and Hedging Activities, as amended, our 2002 interest rate swap agreement qualified for hedge accounting under GAAP and the 2006 interest rate swap agreement did not. Both were presented in the consolidated financial statements at their fair value. Changes in the fair value of derivative financial instruments were either recognized periodically in income or in stockholders’ equity as a component of accumulated other comprehensive income (loss) depending on whether the derivative financial instrument qualifies for hedge accounting and, if so, whether it qualifies as a fair value or cash flow hedge. Generally, the changes in the fair value of derivatives accounted for as fair value hedges are recorded in income along with the portions of the changes in the fair value of hedged items that relate to the hedged risks. Changes in the fair value of derivatives accounted for as cash flow hedges, to the extent they are effective as hedges, are recorded in accumulated other comprehensive income (loss). Both the 2002 and the 2006 swap agreements were terminated in May 2012 in conjunction with the early payoff of the related debt.

In June 2012, we entered in an interest rate swap agreement, with an initial notional amount of $100 million, to limit the effect of variability due to interest rates on the loan. The Swap Agreement, which qualifies for hedge accounting under authoritative guidance, is a contract to exchange floating interest rate payments for fixed interest rate payments of 3.26% of the outstanding balance of the loan over the life of the agreement without the exchange of the underlying notional amounts.

16. Stock-Based Compensation

We recognize compensation expense for all share-based payment awards made to our employees and directors including employee stock options and employee stock purchases related to our Stock Purchase Plan based on estimated fair values. We recognize compensation expense for our stock awards on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period.

The amount of stock-based compensation recognized is based on the value of the portion of awards that are ultimately expected to vest. Guidance requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The term “forfeitures” is distinct from “cancellations” or “expirations” and represents only the unvested portion of the surrendered option. We currently expect, based on an analysis of our historical forfeitures, that approximately 88% of our options will vest annually, and we have therefore applied a 12% annual forfeiture rate in determining the stock-based compensation charge recorded. We will re-evaluate this estimate periodically and adjust the forfeiture rate on a prospective basis as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that actually vest.

For the fiscal years ended May 31, 2012, May 31, 2011 and May 31, 2010, we used the Black-Scholes option-pricing model (“Black-Scholes”) as our method of valuation and a single option award approach. This fair value is then amortized on a straight-line basis over the requisite service periods of the awards, which is generally the vesting period. The fair value of share based payment awards on the date of the grant as determined by the Black-Scholes model is affected by our stock price as well as other assumptions. These assumptions include, but are not limited to the expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, and a risk-free interest rate. The risk-free interest rate is based on factual data derived from public sources. The expected stock-price volatility and option life assumptions require significant judgment which makes them critical accounting estimates.

We utilize our historical volatility when estimating expected stock price volatility. We use yield rates on U.S. Treasury securities for a period approximating the expected term of the award to estimate the risk-free interest rate. The expected term is based on our actual historical experience. The dividend yield is based on the history and expectation of dividend payments. We have not paid dividends in the past nor do we expect to pay dividends in the foreseeable future. Our historical data includes information from May 27, 2004, the date of our initial public offering.

17. Earnings Per Common Share

Basic earnings per share are based on the weighted average number of common shares outstanding without consideration of potential common stock. Diluted earnings per share further includes the dilutive effect of potential common stock consisting of stock options, warrants, restricted stock units and shares issuable upon conversion of convertible debt into shares of common stock, provided that the inclusion of such securities is not antidilutive.

Excluded from the calculation of diluted earnings per common share are options and restricted stock units issued to employees and non-employees to purchase 2,347,426 shares of common stock at May 31, 2012 as their inclusion would be anti-dilutive compared with options and restricted stock units issued to employees and non-employees to purchase 1,991,023 shares of common stock at May 31, 2011. For the period ending May 31, 2010, options and restricted stock units issued to employees and non-employees to purchase 2,325,215 shares of common stock were excluded from the calculation of diluted earnings per common share as their inclusion would be anti-dilutive.

The following table sets forth the reconciliation of the weighted-average number of common shares:


	2012		2011		2010
Basic		25,382,293		24,870,005		24,580,483
Effect of dilutive securities		—		262,758		206,358

Diluted		25,382,293		25,132,763		24,786,841

18. Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect reported amounts of sales and expenses during the reporting period. Actual results could differ from those estimates.

19. Supplier Concentrations

We were dependent on a third party supplier for our embolization product, LC Bead, which accounted for approximately 9% of our sales in fiscal 2012. The agreement to distribute this product ended December 31, 2011. We are dependent on a third-party manufacturer for a substantial portion of our dialysis catheters. In fiscal 2012, products purchased from this supplier accounted for approximately 10% of total product purchases and sales of these products accounted for approximately 4% of our sales. We are dependent upon the ability of our suppliers to provide products on a timely basis and on favorable pricing terms. The loss of our principal suppliers or a significant reduction in product availability from these suppliers could have a material adverse effect on us. We believe that our relationships with these suppliers are satisfactory.

20. Recently Issued Accounting Pronouncements

In December 2010, the FASB updated the accounting guidance relating to the annual goodwill impairment test. The updated guidance requires companies to perform the second step of the impairment test to measure the amount of impairment loss, if any, when it is more likely than not that a goodwill impairment exists when the carrying amount of a reporting unit is zero or negative. In considering whether it is more likely than not that goodwill impairment exists, an entity shall evaluate whether there are adverse qualitative factors. The updated guidance is effective beginning in our fiscal 2012 year. The adoption of this guidance had no material impact on our consolidated financial statements.

In December 2010, the FASB updated the accounting guidance relating to the disclosure of supplementary pro forma information for business combinations. The updated guidance requires companies to provide additional comparative pro forma financial information along with the nature and amount of any material nonrecurring pro forma adjustments related to the business combination. The updated guidance is effective for business combinations which have an acquisition date in fiscal years beginning on or after December 15, 2010 (our 2012 fiscal year). The adoption of this guidance had no material impact on our consolidated financial statements.

In January 2010, the FASB updated the disclosure requirements for fair value measurements. The updated guidance requires companies to disclose separately the investments that transfer in and out of Levels 1 and 2 and the reasons for those transfers. Additionally, in the reconciliation for fair value measurements using significant unobservable inputs (Level 3), companies should present separately information about purchases, sales, issuances and settlements. The updated guidance was effective for annual and interim reporting periods beginning after December 15, 2009 (our 2011 fiscal first quarter), except for the disclosures about purchases, sales, issuances and settlements in the Level 3 reconciliation, which are effective for fiscal years beginning after December 15, 2010 (our 2012 fiscal year). We have provided the additional disclosures herein.

In May 2011, the FASB updated the accounting guidance related to fair value measurements. The updated guidance results in a consistent definition of fair value and common requirements for measurement of and disclosure about fair value between U.S. GAAP and International Financial Reporting Standards (IFRS). The updated guidance is effective for interim and annual periods beginning after December 15, 2011 (the fourth quarter of our fiscal year 2012). The adoption of this guidance had no material impact on our consolidated financial statements.

In June 2011 and December 2011, the FASB updated the disclosure requirements for comprehensive income. The updated guidance requires companies to disclose the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. The updated guidance does not affect how earnings per share is calculated or presented. The updated guidance is effective for annual periods, and interim periods within those years, beginning after December 15, 2011 (our fiscal year 2013). We are currently evaluating the impact of adoption of this accounting guidance on our consolidated financial statements.

In September 2011, the FASB updated the accounting guidance related to testing goodwill for impairment. This update permits an entity to make a qualitative assessment of whether it is more likely than not that a reporting unit’s fair value is less than its carrying value before applying the two-step goodwill impairment model that is currently in place. If it is determined through the qualitative assessment that a reporting unit’s fair value is more likely than not greater than its carrying value, the quantitative assessment steps would be unnecessary. The qualitative assessment is optional, allowing companies to go directly to the quantitative assessment. This update is effective for annual and interim goodwill impairment tests performed in fiscal years beginning after December 15, 2011 (our fiscal year 2013) however, early adoption is permitted. We are currently evaluating the impact of adoption of this accounting guidance on our consolidated financial statements.

In July 2012, the FASB updated the accounting guidance related to testing indefinite-lived intangible assets for impairment. This update permits an entity to first make a qualitative assessment of whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired. The more-likely-than- not threshold is defined as having a likelihood of more than 50%. This update is effective for annual and interim impairment tests performed in fiscal years beginning after September 15, 2012 (our fiscal year 2014) however early adoption is permitted, provided that the entity has not yet performed its annual impairment test or issued its financial statements. We are currently evaluating the impact of adoption of this accounting guidance on our consolidated financial statements.

- Definition

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

+ References + Details

Acquisitions

12 Months Ended

May 31, 2012

Acquisitions [Abstract]

ACQUISITIONS

NOTE C—ACQUISITIONS

Acquisition of Navilyst

On May, 22, 2012, we completed the acquisition of privately-held Navilyst, a global medical device company with strengths in the vascular access, interventional radiology and interventional cardiology markets. The acquisition and related transaction costs were financed through the issuance of approximately 9.5 million shares of our common stock, $150 million in drawn acquisition debt financing and $97 million of cash. (See Note L for additional information). Based on the closing price of our stock of $12.44 on the day prior to the transaction, the purchase price was approximately $362 million.

The purchase price was approximately $362 million. Goodwill recorded as a result of the acquisition was $147 million. Intangible assets acquired, other than goodwill, totaled approximately $107.1 million of which $49.4 million has been identified as customer relationships (15-year weighted average useful life), $32.5 million of trademarks (of which $28.6 million has been determined to have an indefinite useful life and the remaining $3.9 million has a 7-year weighted average useful life), $15.1 million of in-process, research and development (indefinite useful life), and $10.1 million of technology (6-year weighted average useful life).

The IPR&D assets, which are accounted for as indefinite-lived intangible assets, represent the development of a bio-medical polymer additive for use in PICC and other vascular access product lines and a power injectable port which are valued at $12.1 million and $3.0 million, respectively. The launch of these product offerings in the United States are currently expected to occur in fiscal 2013, subject to regulatory approvals. The fair value of these intangible assets was determined based upon the present value of expected future cash flows adjusted for the probability of technological and commercial risk, utilizing a risk–adjusted discount rate.

The following table summarizes the estimated fair values of the assets acquired and liabilities assumed at the date of the acquisition (in thousands):


	May 22, 2012
Cash and cash equivalents	$	7,683
Accounts receivable		19,069
Inventories		26,851
Prepaid expenses and other current assets		5,503
Property, plant and equipment		34,017
Deferred tax assets		32,827
Goodwill		146,961
Intangibles		107,100
Other long-term assets		498

Total assets acquired		380,509
Liabilities assumed		(18,287	)

Total net assets acquired	$	362,222

The purchase price allocation has been prepared on a preliminary basis and is subject to change as additional information becomes available concerning the fair value and tax basis of the acquired assets and liabilities. Any adjustment to the purchase price allocation will be made as soon as practicable but no later than one year from May 22, 2012, the acquisition date.

The following supplemental unaudited pro forma information presents our financial results as if the acquisition of Navilyst had occurred on June 1, 2010 (in thousands):


	For the Years Ended May 31
	2012		2011
	(unaudited)
Net sales	$	365,357	$	369,381

Net Income	$	3,897	$	(2,786	)

The above unaudited pro forma information was determined based on historical GAAP results of AngioDynamics and Navilyst. The unaudited pro forma consolidated results are not necessarily indicative of what our consolidated results of operations actually would have been if the acquisition was completed on June 1, 2010. The unaudited pro forma consolidated net income primarily reflects adjustments of:

(i)

exclusion of $17.6 million of transaction costs and restructuring charges for both AngioDynamics and Navilyst for the year ended May 31, 2012, which are directly attributable to the transaction and inclusion of these charges for the year ended May 31, 2011;

(ii)

inclusion of $3.8 million of inventory step-up directly related to the transaction for the year ended May 31, 2011;

(iii)

inclusion of $4.7 million of interest expense associated with the $150 million credit facility associated with the transaction for the years ended May 31, 2012 and 2011; and

(iv)

tax effecting the unaudited pro forma consolidated net income and adjustments for the years ended May 31, 2012 and 2011.

Investment in Microsulis Medical Ltd

The relationship includes a $5 million investment in Microsulis through the purchase of senior preferred stock, representing a 14.3% ownership position, exclusive distribution rights to market and sell their microwave ablation systems in all markets outside the United States from May 2012 through December 2013, and an exclusive option to purchase at any time until September 22, 2013, substantially all of the global assets of Microsulis Medical, Ltd. This has been accounted for as a cost method investment. The $5 million investment is included in intangible assets and other non-current assets on the balance sheet at May 31, 2012. Fees related to this transaction of approximately $604 thousand are included in “Acquisition and other items, net” in the statement of operations for fiscal 2012.

- Definition

The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable).

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
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Reference 18: http://www.xbrl.org/2003/role/presentationRef
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Reference 19: http://www.xbrl.org/2003/role/presentationRef
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+ Details

Goodwill and Intangible Assets

12 Months Ended

May 31, 2012

Goodwill and Intangible Assets [Abstract]

GOODWILL AND INTANGIBLE ASSETS

NOTE H—GOODWILL AND INTANGIBLE ASSETS

Intangible assets other than goodwill are amortized over their estimated useful lives, which range between one and 11 years, on either a straight-line basis over the expected period of benefit or as revenues are earned from the sales of the related products. We periodically review the estimated useful lives of our intangible assets and review such assets for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Our determination of impairment is based on estimates of future cash flows. If an intangible asset is considered to be impaired, the amount of the impairment will equal the excess of the carrying value over the fair value of the asset.

Goodwill and intangible assets that have indefinite useful lives are not amortized, but rather, are tested for impairment annually or more frequently if impairment indicators arise. We have one intangible asset which has been assigned an indefinite life, the NAMIC trademark, which was recently acquired as part of our acquisition of Navilyst, and is valued at $28.6 million. Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable intangible assets acquired in each business combination. Goodwill and intangible assets have been recorded at either incurred or allocated cost. Allocated costs were based on respective fair market values at the date of acquisition.

We test goodwill for impairment during the third quarter of every fiscal year, and when an event occurs or circumstances change such that it is reasonably possible that impairment exists. The impairment test requires a comparison of the estimated fair value of the reporting unit to which the goodwill is assigned to the sum of the carrying value of the assets and liabilities of that unit. If the sum of the carrying value of the assets and liabilities of a reporting unit exceeds the fair value of the reporting unit, the carrying value of the reporting unit’s goodwill is reduced to its implied fair value through an adjustment to the goodwill balance, resulting in an impairment charge. Our determination of impairment is based on estimates of future cash flows.

Prior to fiscal 2011, we reported our results of operations as three reportable segments: Peripheral Vascular, Access and Oncology/Surgery. At the beginning of fiscal 2011, we combined our Peripheral Vascular and Access reportable segments into a single reportable segment that was named the Vascular division. The Vascular segment is responsible for products targeting the venous intervention, dialysis access, thrombus management and peripheral disease markets and has dedicated research and development and sales and marketing personnel assigned to it. The Oncology/Surgery segment continues to be responsible for RF Ablation, embolization, Habib and NanoKnife product lines and has dedicated research and development and sales and marketing personnel assigned to it.

To determine fair value, we considered two market-based approaches and an income approach. Under the market-based approaches, we utilized information regarding our own as well as publicly available industry information to determine earnings multiples and sales multiples. Under the income approach, we determined fair value based on estimated future cash flows of each reporting unit, discounted by an estimated weighted-average cost of capital, which reflects the overall level of inherent risk of a reporting unit and the rate of return an outside investor would expect to earn. We determined the discounted cash flow as the best indicator to determine fair value.

Determining the fair value of a reporting unit is judgmental in nature and requires the use of significant estimates and assumptions, including revenue growth rates, operating margins, discount rates and future market conditions, among others. Solely for purposes of establishing inputs for the fair value calculations, we assumed that the current economic conditions would continue. In addition, we applied gross margin assumptions consistent with our historical trends at various revenue levels and used an EBITDA exit multiple of 6.0 and 7.0 to calculate the terminal value of the Vascular and Oncology/Surgery reporting units, respectively, which was also consistent with the prior year. In addition, we used a discount rate of 12% and 21% to calculate the fair value of our Vascular and Oncology/Surgery reporting units, respectively. Discount rates of 18% and 20%, were used in the prior year for the Vascular and Oncology/Surgery reporting units, respectively.

We completed our annual goodwill impairment test by reporting unit as of December 31, 2011. At December 31, 2011, our reporting units were the same as our reportable segments. We determined our reporting units in accordance with FASB accounting guidance. Our assessment of goodwill impairment indicated that the fair value of each of our reporting units exceeded its carrying value and therefore goodwill in each of the reporting units was not impaired. The fair value of Vascular and Oncology/Surgery exceeded its carrying value by 6% and 15%, respectively. The sum of the fair values of the reporting units was reconciled to our current market capitalization (based upon our stock price) plus an estimated control premium of approximately 16% as of December 31, 2011.

In addition, as a result of the decision not to extend the LC Beads distribution contract in April 2011 (which was set to expire on December 31, 2011) and our revised expectations of the segment, we performed an interim goodwill impairment test on the Oncology/Surgery segment as of April 30, 2011. Significant assumptions included an EBITDA exit multiple of 7.0 to calculate the terminal value of the Oncology/Surgery reporting unit, which was consistent with previous valuations. In addition, we used a discount rate 22.5% to calculate the fair value compared to 20% in the December valuation. Our assessment of goodwill impairment indicated that the fair value of the reporting unit exceeded its carrying value by 14% and therefore goodwill was not impaired.

Since early November 2008, our stock market capitalization has at times been lower than our shareholders’ equity or book value. However, our reporting units have continued to generate significant cash flow from their operations, and we expect that they will continue to do so in fiscal 2012 and beyond. Furthermore, given the relatively small difference between our stock price and our book value per share, we believe that a reasonable potential buyer would offer a control premium for our business that would adequately cover the difference between our trading prices and our book value.

Even though we determined that there was no goodwill impairment as of December 31, 2011, the future occurrence of a potential indicator of impairment, such as a significant adverse change in legal factors or business climate, an adverse action or assessment by a regulator, unanticipated competition, a material negative change in relationships with significant customers, strategic decisions made in response to economic or competitive conditions, loss of key personnel or a more-likely-than-not expectation that a reporting unit or a significant portion of a reporting unit will be sold or disposed of, would require an interim assessment for some or all of the reporting units prior to the next required annual assessment as of December 31, 2012.

It is not possible at this time to determine if any such future impairment charge would result or, if it does, whether such charge would be material. Events that could, in the future, result in impairment include, but are not limited to, sharply declining sales for a significant product or in a significant geographic region.

Adjustments to goodwill for the fiscal year ended May 31, 2012 and May 31, 2011 are as follows (in thousands):


	Vascular			Oncology/ Surgery			Total
Balance, May 31, 2010	$	107,982		$	53,992		$	161,974
Adjustments to purchase price allocation		(15	)		(8	)		(23	)

Balance, May 31, 2011	$	107,967		$	53,984		$	161,951
Goodwill recognized from Navilyst business combination		146,961			—			146,961

Balance, May 31, 2012	$	254,928		$	53,984		$	308,912

During the fiscal year ended May 31, 2011, options assumed in connection with the acquisition of RITA Medical Systems, Inc. were exercised causing an adjustment to the purchase price allocation as noted above. The exercises resulted in a tax benefit when the annual tax return was filed.

The balances of intangible assets are as follows:


	May 31, 2012
	Gross carrying value		Accumulated amortization			Net carrying value		Weighted avg useful life
	(in thousands)							(years)
Licenses	$	6,152	$	(3,711	)	$	2,441		9.1
Customer relationships		82,205		(22,123	)		60,082		11.7
Distributor relationships		1,140		(940	)		200		2.6
Trademarks		4,575		(375	)		4,200		7.3
Trademark—NAMIC		28,600		—			28,600		Indefinite
Product technologies		55,540		(18,839	)		36,701		11.3
In process R&D Acquired		15,042		—			15,042		Indefinite

	$	193,254	$	(45,988	)	$	147,266

			May 31, 2011
	Gross carrying value		Accumulated amortization			Net carrying value		Weighted avg useful life
	(in thousands)							(years)
Licenses	$	6,252	$	(3,005	)	$	3,247		9.1
Customer relationships		32,981		(17,502	)		15,479		7.5
Distributor relationships		900		(900	)		—		3.0
Trademarks		675		(275	)		400		9.2
Product technologies		49,453		(20,542	)		28,911		13.3

	$	90,261	$	(42,224	)	$	48,037

Amortization expense was $9,406,000, $9,234,000, and $9,463,000 for fiscal 2012, 2011 and 2010, respectively.

During the fiscal year ended May 31, 2011, we made the decision to not continue development of the Medron Lightport technology resulting in an impairment charge in other non-recurring items of $4.2 million which affected our Vascular intangible balance.

Annual amortization of these intangible assets is expected to approximate the following amounts for each of the next five fiscal years (in thousands):


2013	$	16,819
2014		14,307
2015		12,337
2016		11,151
2017		10,501

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Income Taxes

12 Months Ended

May 31, 2012

Income Taxes [Abstract]

INCOME TAXES

NOTE I—INCOME TAXES

The components of income (loss) before income tax provision for the years ended May 31 are as follows:


	2012			2011		2010
	(in thousands)
(Loss) income before tax provision:
US	$	(5,151	)	$	10,076	$	20,330
Non-US		(131	)		622		(711	)

	$	(5,282	)	$	10,698	$	19,619

Income tax (benefit) provision analyzed by category and by statement of income classification for the years ended May 31 is summarized as follows:


	2012			2011			2010
	(in thousands)
Current
Federal	$	448		$	3,030		$	918
State and local		(19	)		323			456
Non U.S.		18			142			91

		447			3,495			1,465
Deferred		(635	)		(914	)		5,842

	$	(188	)	$	2,581		$	7,307

The significant components of deferred income tax (benefit) expense from operations for the years ended May 31 consist of the following:


	2012			2011			2010
	(in thousands)
Deferred tax benefit	$	(1,722	)	$	(4,092	)	$	(1,602	)
Net operating loss carryforward		1,087			3,178			7,444

	$	(635	)	$	(914	)	$	5,842

Temporary differences that give rise to deferred tax assets and liabilities are summarized as follows:


	May 31, 2012			May 31, 2011
	(in thousands)
Deferred tax assets
Net operating loss carryforward	$	45,707		$	12,294
Stock-based compensation		5,394			4,839
Federal and state R&D tax credit carryforward		629			775
Inventories		95			734
State tax credits		1,929			791
Expenses incurred not currently deductible		1,780			364
Impairment of long-lived assets		—			976
Capital loss carryforwards		371			163
Unrealized loss on interest rate swap		—			121
Deferred revenue		1,256			111
Other		—			260

Gross deferred tax asset		57,161			21,428

Deferred tax liabilities
Excess tax over book depreciation and amortization		11,820			11,638
Impairment of long-lived assets		24			—

		11,844			11,638
Valuation Allowance		(1,196	)		(1,134	)

Net deferred tax asset	$	44,121		$	8,656

At May 31, 2012, we had approximately $159.6 million of remaining Federal net operating loss carryforwards and $201.0 million of state net operating loss carryforwards (“NOL”) which were generated by acquired companies. These net operating losses are subject to Internal Revenue Code (“IRC”) Section 382 limitations which is expected to significantly limit our ability to utilize these net operating losses on an annual basis. As a result of our IRC Section 382 analyses, it is estimated that approximately $28.3 million of remaining Federal net operating losses and $48.4 million of state net operating losses will expire prior to utilization. The gross deferred income tax asset (“DTA”) related to the NOL reflects these limitations.

In order to ensure the realizability of our deferred tax assets, we need to generate $8.3 million of taxable income each year for the next seven years, then $7.7 million of taxable income each year for the following four years and finally, $5.3 million of taxable income each year for the final eight years of the remaining nineteen year carryforward period. If we are unable to meet these minimum taxable income levels, the deferred tax assets may still be utilized in future years if we can make up previous year taxable income short falls prior to the expiration of net operating loss carryforwards. We have determined that we have sufficient existing levels of pre-tax earnings to generate sufficient taxable income to realize the net deferred tax assets recorded on our balance sheets.

In order to support the realizability of our net deferred tax asset, we projected our pre-tax income utilizing a combination of historical and projected results. Utilizing this projected pre-tax income, we have projected taxable income taking into consideration existing levels of permanent differences including stock option exercise deductions and non-deductible expenses and the reversal of significant temporary differences.

Our Federal net operating loss carryforwards as of May 31, 2012 after considering IRC Section 382 limitations are $131.3 million. The expiration of the Federal net operating loss carryforwards are as follows: $20.8 million between 2017 and 2021, $9.9 million between 2022 and 2026 and $100.6 million between 2027 and 2031.

Our state net operating loss carryforwards as of May 31, 2012 after considering remaining IRC Section 382 limitations are $152.6 million which expire in various years from 2013 to 2031.

At May 31, 2012, we had $3.9 million of state credits, of which $1.2 million expire at various dates through 2027 and $2.7 million which have an unlimited carryforward period.

At May 31, 2012, we had a net deferred income tax asset of $44.1 million, after recording a valuation allowance of $1.2 million. The valuation allowance increased by $62,000 in 2012 and decreased by $28,000 in 2011. Both years’ changes relate to the use of fully reserved state tax credits due to a temporary change in state tax law offset by capital losses incurred in each year which were fully reserved. The valuation allowance recorded against the deferred tax assets relates to state tax credits, capital losses and state NOLs that management has estimated will more likely than not expire before they are expected to be utilized.

Our consolidated income tax provision has differed from the amount that would be provided by applying the U.S. Federal statutory income tax rate to our income before income taxes for the following reasons:


	2012			2011			2010
	(in thousands)
Income tax (benefit) provision	$	(188	)	$	2,581		$	7,307
Effect of Graduated tax rates		(53	)		107			196
State income taxes, net of Federal tax benefit		(158	)		99			(157	)
State income tax credits, net of Federal tax benefit		69			300			—
Impact of Non US operations		(46	)		65			(233	)
Tax-exempt interest		4			5			15
Research and development tax credit		115			549			226
Domestic Production Activities deduction		71			471			139
Nondeductible acquisition costs		(1,144	)		—			—
Nondeductible stock-based compensation		(125	)		(119	)		(233	)
Other nondeductible expenses		(336	)		(323	)		(408	)
Overaccrual (underaccrual) of prior year Federal and state taxes		138			49			41
Fully reserved capital losses		(208	)		(19	)		(26	)
Other		12			(21	)		—

Income tax (benefit) provision at statutory tax rate of 35%	$	(1,849	)	$	3,744		$	6,867

During the twelve months ended May 31, 2012, we did not recognize any tax liabilities related to uncertain tax positions. Due to our unrecognized tax benefit being zero upon adoption, with no change since adoption, no “tabular reconciliation” of the total amount of unrecognized tax benefits at the beginning and end of the period is being presented.

We recognize interest and penalties related to unrecognized tax benefits within our global operations as a component of income tax expense. This accounting policy did not change as a result of the guidance issued with respect to uncertain tax positions. There were no accrued interest and penalties recognized in the consolidated balance sheet as of May 31, 2012 and May 31, 2011.

We file income tax returns in the U.S. federal jurisdiction and various state and foreign jurisdictions. In the normal course of business we are subject to examination by taxing authorities throughout the world. The Internal Revenue Service (“IRS”) completed an examination of our federal income tax returns for fiscal years 2006 and 2007 in February 2009 which did not result in a material impact on our results of operations or financial position. During fiscal year 2012, New York State completed an examination of our New York State Franchise Tax returns for fiscal years 2005 to 2008. In relation to this examination, income tax expense in fiscal 2011 includes an out-of-period benefit of $300,000 to correct an error that originated in prior years related to certain state tax credits. We assessed the impact of this adjustment on the 2011year and all prior periods and determined that the cumulative effect of the adjustments was not material to the full year 2011 and did not result in a material misstatement to any previously issued annual or quarterly financial statements. Additionally, as a result of the audit, we were able to claim state tax credits of $210,000 that are recorded in fiscal year 2012.

Fiscal years 2009 through 2012 remain open to examination by the various tax authorities. We analyzed filing positions in all of the Federal and state jurisdictions where we are required to file income taxes, as well as all open tax years in these jurisdictions and believe that our income tax filing positions and deductions will be sustained on audit and we do not anticipate any adjustments will result in a material adverse effect on our financial condition, results of operations or cash flows.

We do not anticipate that the amount of unrecognized tax benefits will significantly change in the next twelve months.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

+ Details

Stockholders' Equity

12 Months Ended

May 31, 2012

Comprehensive Income/Stockholders' Equity [Abstract]

STOCKHOLDERS' EQUITY

NOTE N—STOCKHOLDERS’ EQUITY

1. Capitalization

On February 27, 2004, our Board of Directors and the Former Parent, as sole stockholder, approved our Amended and Restated Certificate of Incorporation (the “Amended Certificate”). Under the Amended Certificate, the authorized capital stock is 50,000,000 shares, consisting of 45,000,000 shares of common stock, par value $.01 per share and 5,000,000 shares of preferred stock, par value $.01 per share. Pursuant to the Amended Certificate, (i) each share of voting common stock, $1 par value and (ii) each share of non-voting common stock, $1 par value was reclassified and exchanged into 9,200 shares of issued, fully paid, non-assessable common stock for a total of 9,200,000 shares to be then outstanding.

The holders of common stock are entitled to one vote for each share held. Subject to preferences applicable to any outstanding shares of preferred stock, the holders of common stock are entitled to receive ratably dividends, if any, as may be declared by the Board of Directors out of funds legally available for dividend payments. If we liquidate, dissolve, or wind up, the holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and liquidation preferences of any outstanding shares of preferred stock. Holders of common stock have no pre-emptive rights or rights to convert their common stock into any other securities. There are no redemption or sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common stock are subject to, and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate in the future.

Our board of directors has the authority to (i) issue the undesignated preferred stock in one or more series, (ii) determine the powers, preferences and rights and the qualifications, limitations or restrictions granted to or imposed upon any wholly un-issued series of undesignated preferred stock and (iii) fix the number of shares constituting any series and the designation of the series, without any further vote or action by our stockholders.

Shares issued in Navilyst Acquisition

On May 22, 2012, a portion of the acquisition and related transaction costs of the Navilyst acquisition were financed through the issuance of approximately 9.5 million shares to investment funds affiliated with Avista Capital Partners, former owners of Navilyst, and as of May 31, 2012 they hold approximately 27% of our outstanding shares.

Share Repurchase Program

2. Stock Options

We have two stock-based compensation plans. These plans provide for the issuance of up to approximately 4.8 million shares of common stock.

1997 Stock Option Plan

In 1997, we adopted a Stock Option Plan (the “1997 Plan”). The 1997 Plan provides for the grant to key employees of both nonqualified stock options and incentive stock options and to members of the Board of Directors and consultants of nonqualified stock options. A total of 1,497,674 shares of our common stock may be issued under the 1997 Plan pursuant to the exercise of options. All stock options must have an exercise price of not less than the fair market value of the shares on the date of grant. Options will be exercisable over a period of time to be designated by the administrators of the 1997 Plan (but not more than 10 years from the date of grant) and will be subject to such other terms and conditions as the administrators may determine. The vesting schedule is subject to the discretion of our Board of Directors. Options are exercisable immediately upon vesting. In addition, all options, whether vested or not, become exercisable in full immediately upon a change of control, as defined under the 1997 Plan. The 1997 Plan terminated in March 2007 and as such, no further options will be granted under this plan.

2004 Stock and Incentive Award Plan

The 2004 Stock and Incentive Award Plan (the “2004 Plan”) provides for the grant of incentive options to our employees and for the grant of non-statutory stock options, restricted stock, stock appreciation rights, performance units, performance shares and other incentive awards to our employees, directors and other service providers. A total of 4,750,000 shares of our common stock have been reserved for issuance under the 2004 Plan, of which up to 800,000 shares may be issued upon the exercise of incentive stock options. The compensation committee of the Board of Directors administers the 2004 Plan. The committee determines vesting terms and the exercise price of options granted under the 2004 Plan, but for all incentive stock options the exercise price must at least be equal to the fair market value of our common stock on the date of grant. The term of an incentive stock option may not exceed ten years.

Stock Option Activity:

The following schedule summarizes our stock option activity as of and for the years ended May 31, 2012, May 31, 2011 and May 31, 2010:


	2012									2011					2010
	Shares			Weighted- average exercise price		Weighted average remaining contractual life		Aggregate intrinsic value (in thousands)		Shares			Weighted- average exercise price		Shares			Weighted- average exercise price
Outstanding at beginning of year		2,680,390		$	15.96						2,624,114		$	16.22		2,809,178		$	16.50
Granted		1,434,000		$	13.70						503,000		$	15.37		272,900		$	13.89
Exercised		(193,684	)	$	14.22						(106,858	)	$	15.89		(172,377	)	$	11.41
Forfeited		(917,126	)	$	14.22						(335,300	)	$	17.94		(284,894	)	$	19.73
Expired		(18,388	)	$	24.44						(4,566	)	$	48.51		(693	)	$	30.76

Outstanding at end of year		2,985,192		$	15.69		4.16	$	23,285		2,680,390		$	15.96		2,624,114		$	16.22

Options exercisable at year-end		1,678,559		$	17.01		4.55	$	15,533		1,637,945		$	16.76		1,497,005		$	17.24

Options expected to vest in future periods		1,075,473		$	14.19		5.75	$	6,476		830,552		$	15.25		1,046,046		$	15.32

Weighted average fair value of options granted during the fiscal years ended May 31, is as follows:


	2012		2011		2010
Weighted-average fair value of options granted during the year	$	5.62	$	6.83	$	6.77

On May 31, 2011, there remained 1,120,734 shares available for granting of options under the 2004 Plan. Options are exercisable into common stock.

All of our options were granted at exercise prices equal to the quoted market price of our common stock at the date of the grants. Options under these grants vest 25% per year over four years for employees and 100% after one year for consultants. Initial grants to directors vest 25% per year over four years and subsequent grants to directors vest 33 1/3 % per year over three years. Options granted prior to May 1, 2007 expire on the tenth anniversary of the grant date. Options granted on or after May 1, 2007, expire on the seventh anniversary of the grant date. The total intrinsic value of options exercised was $2,201,516, $1,301,994 and $862,117 for the years ended May 31, 2012, May 31, 2011 and May 31, 2010, respectively. We generally issue authorized but unissued shares upon stock option exercises and the settlement of performance share awards and restricted stock units.

The fair value of the options granted under the 1997 and 2004 Plans was estimated at the date of grant using the Black-Scholes option-pricing model assuming no expected dividends and the following weighted-average assumptions:


	2012			2011			2010
Expected stock price volatility		49.06	%		52.39	%		57.39	%
Risk-free interest rate		0.70	%		1.33	%		2.08	%
Expected life of options		4.59 years			4.63 years			4.64 years

The following information applies to options outstanding at May 31, 2012:


Range of exercise prices	Number outstanding		Weighted- average remaining life in years		Weighted - average exercise price		Number Exercisable		Weighted- average exercise price
$ 5.98 - $11.00		87,607		1.80	$	10.03		87,607	$	10.03
$12.06 - $12.72		233,201		5.98		12.43		47,326		12.60
$13.18 - $13.85		519,279		4.94		13.34		178,229		13.28
$13.92 - $14.31		480,000		6.12		13.99		22,084		14.31
$14.92 - $15.50		406,677		3.95		15.32		241,352		15.25
$15.57 - $16.55		415,904		4.00		16.15		259,437		16.29
$17.18 - $19.88		506,931		2.32		18.19		506,931		18.19
$20.03 - $34.32		335,593		2.69		23.45		335,593		23.45

		2,985,192		4.16	$	15.69		1,678,559	$	17.01

3. Performance Share and Restricted Stock Unit Awards

We grant restricted stock units and performance share awards to certain employees under the 2004 Plan. The performance criteria is established by the compensation committee for vesting of the performance share awards and may include factors such as the achievement of certain sales, operating income and earnings per share (“EPS”) goals. Performance share awards are subject to additional conditions, including the recipient’s continued employment with us. The restricted stock unit awards vest in equal annual installments over the term of the grants. Unvested restricted stock unit awards will be forfeited if the recipient ceases to be employed by us, competes with our business or otherwise engages in activities detrimental to our business before such date. The performance share awards and restricted stock units settle in shares of our common stock on a one-for-one basis.

We value performance share and restricted stock unit awards based on the closing trading value of our shares on the date of grant. We recognize the compensation cost related to our non-vested stock awards ratably over the requisite service period, or over the performance period when performance award metrics are expected to be achieved, which is consistent with the treatment prior to the adoption of authoritative guidance on share based payment awards.


	Non-Vested Stock Award Units			Weighted Average Grant-Date Fair Value
Balance as of May 31, 2011		324,263		$	14.19
Granted		245,119			13.65
Cancelled		(146,783	)		13.77
Vested		(68,704	)		14.55

Balance as of May 31, 2012		353,895			14.12

The total fair value of restricted stock awards vesting was $928,100, $1,071,000 and $733,000, for the years ended May 31, 2012, May 31, 2011 and May 31, 2010, respectively.

4. Unrecognized Compensation Cost:

Under the provisions of authoritative guidance on share based payment awards, we expect to recognize the following future expense for awards outstanding as of May 31, 2012:


	Unrecognized Compensation Cost		Weighted Average Remaining Vesting Period (in years)
Stock Options	$	5,924,724		2.69
Non-vested stock awards		3,730,256		2.64

	$	9,654,980		2.68

Unrecognized compensation cost for stock options is presented net of 12% assumed annual forfeitures.

5. Employee Stock Purchase Plan

The Employee Stock Purchase Plan (the “Stock Purchase Plan”) provides a means by which our employees (the “participants”) are given an opportunity to purchase our common stock through payroll deductions. The maximum number of shares to be offered under the Stock Purchase Plan is 700,000 shares of our common stock, subject to any increase authorized by the Board of Directors. Shares are offered through two purchase periods, each with duration of approximately 6 months, commencing on the first business day of the first and third fiscal quarters. An employee is eligible to participate in an offering period if, on the first day of an offering period, he or she has been employed in a full-time capacity for at least six months, with a customary working schedule of 20 or more hours per week and more than five months in a calendar year. Employees who own stock possessing 5% or more of the total combined voting power or value of all classes of our stock are not eligible to participate in the Stock Purchase Plan. The purchase price of the shares of common stock acquired on each purchase date will be the lower of (i) 85% of the fair market value of a share of common stock on the first day of the offering period or (ii) 85% of the fair market value of a share of common stock on the last day of the purchase period, subject to adjustments made by the Board of Directors. The Stock Purchase Plan is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code.

We use the Black-Scholes option-pricing model to calculate the purchase date fair value of the shares issued under the Stock Purchase Plan and recognize expense related to shares purchased ratably over the offering period.

For the years ended May 31, 2012, May 31, 2011 and May 31, 2010, 103,362, 84,927 and 114,479 shares, respectively, were issued at an average price of $11.62, $13.01 and $10.09, respectively, under the Stock Purchase Plan. As of May 31, 2012, 181,716 shares remained available for future purchases under the Stock Purchase Plan.

For fiscal 2012, stock based compensation was $4.1 million pre-tax ($2.7 million after tax). For fiscal 2011, stock based compensation was $4.6 million pre-tax ($2.9 million after tax). For fiscal 2010, stock based compensation was $4.9 million pre-tax ($3.1 million after tax).

The following table summarizes stock-based compensation in accordance with authoritative guidance on share based payment awards for the years ended May 31, 2012, May 31, 2011 and May 31, 2010, which was allocated as follows:


	May 31, 2012		May 31, 2011		May 31, 2010
	(In thousands)
Cost of sales	$	268	$	227	$	465

Research and development		738		702		809
Sales and marketing		1,340		1,439		1,826
General and administrative		1,744		2,241		1,776

Stock based compensation expense included in operating expenses		3,822		4,382		4,411

Total stock based compensation		4,090		4,609		4,876
Tax benefit		1,386		1,677		1,789

Stock based compensation expense, net of tax	$	2,704	$	2,932	$	3,087

- Definition

The entire disclosure for shareholders' equity, comprised of portions attributable to the parent entity and noncontrolling interest, if any, including other comprehensive income (as applicable). Including, but not limited to: (1) balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings; (2) accumulated balance for each classification of other comprehensive income and total amount of comprehensive income; (3) amount and nature of changes in separate accounts, including the number of shares authorized and outstanding, number of shares issued upon exercise and conversion, and for other comprehensive income, the adjustments for reclassifications to net income; (4) rights and privileges of each class of stock authorized; (5) basis of treasury stock, if other than cost, and amounts paid and accounting treatment for treasury stock purchased significantly in excess of market; (6) dividends paid or payable per share and in the aggregate for each class of stock for each period presented; (7) dividend restrictions and accumulated preferred dividends in arrears (in aggregate and per share amount); (8) retained earnings appropriations or restrictions, such as dividend restrictions; (9) impact of change in accounting principle, initial adoption of new accounting principle and correction of an error in previously issued financial statements; (10) shares held in trust for Employee Stock Ownership Plan (ESOP); (11) deferred compensation related to issuance of capital stock; (12) note received for issuance of stock; (13) unamortized discount on shares; (14) description, terms, and number of warrants or rights outstanding; (15) shares under subscription and subscription receivables, effective date of new retained earnings after quasi-reorganization and deficit eliminated by quasi-reorganization and, for a period of at least ten years after the effective date, the point in time from which the new retained dates; and (16) retroactive effective of subsequent change in capital structure.

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+ Details

Commitments and Contingencies

12 Months Ended

May 31, 2012

Commitments and Contingencies [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE O—COMMITMENTS AND CONTINGENCIES

Leases

We are committed under non-cancelable operating leases for facilities and equipment. During fiscal 2012, 2011 and 2010, aggregate rental costs under all operating leases were approximately $3,114,000, $3,074,000, and $2,583,000, respectively. Future annual payments under non-cancelable operating leases in the aggregate, of which one includes an escalation clause, with initial remaining terms of more than one year at May 31, 2012, are summarized as follows (in thousands):


2013	$	2,405
2014		2,048
2015		1,909
2016		1,373
2017 +		3,576

	$	11,311

Litigation Matters

AngioDynamics v. biolitec

On January 2, 2008, we commenced an action in the United States District Court for the Northern District of New York entitled AngioDynamics, Inc. v. biolitec, Inc. In this action, we are seeking judgment against biolitec for defense and indemnification in two lawsuits which we previously settled. Our claims arise out of a Supply and Distribution Agreement (“SDA”) entered into with biolitec on April 1, 2002. Biolitec has filed counter-claims against us in this action, seeking reimbursement of approximately $1.6 million in alleged past defense costs paid by biolitec in one of the settled cases. On September 27, 2011, the U.S. District Court for the Northern District of New York granted key portions of our motion for summary judgment in our legal case against biolitec. The Court’s order was filed under seal. As of this date, the order has not yet been entered as a judgment and therefore does not contain specified amounts with respect to damages, and there can be no assurance that we will recover the full amount, or any amount, of the damages we have sought against biolitec. The Court also dismissed biolitec’s counterclaims against us. The court denied one portion of our summary judgment motion, which sought to recover additional costs from biolitec, leaving this for adjudication at trial.

In October 2009, we commenced an action in the United States District Court for the District of Massachusetts entitled AngioDynamics, Inc. v. biolitec AG and Wolfgang Neuberger. The Complaint in this action was amended in March 2010. This action seeks to recover against biolitec, Inc.’s parent entities and CEO for tortiously interfering with biolitec, Inc.’s contractual obligation to defend and indemnify us, and also seeks to pierce the corporate veil of biolitec, Inc. and to invalidate certain alleged fraudulent transfers in order to hold biolitec, Inc.’s parent entities jointly and severally liable for the alleged breach of the SDA. This case is currently in the discovery phase.

We will continue to vigorously enforce our rights under the supply agreement with biolitec. However, in the event it is ultimately determined that the claims asserted in the Diomed action and the VNUS action are not within biolitec’s indemnification obligations under the biolitec supply agreement, we may be required to reimburse biolitec for the costs and expenses of defending the Diomed action.

Navilyst Medical, Inc. v. Merit Medical Systems, Inc.

On November 18, 2011, Navilyst Medical, Inc. filed suit for patent infringement against Merit Medical Systems, Inc. in the United States District Court, District of Massachusetts alleging that Merit infringes certain patents held by Navilyst. On March 1, 2012, Navilyst filed an amended complaint alleging that Merit also infringes another patent. The patents in suit generally relate to Navilyst’s fluid management systems. Merit denies Navilyst’s claims of infringement, and asserts various affirmative defenses. Merit has also asserted a counterclaim for declaratory judgment of non-infringement and invalidity. Navilyst seeks a permanent injunction, monetary damages and its costs. The parties are presently in the midst of discovery. No trial date has yet been set.

C.R. Bard, Inc. v. AngioDynamics, Inc.

On January 11, 2012, C.R. Bard, Inc. filed a suit in the United States District Court of Utah claiming certain of our implantable port products infringe on patents held by them. Bard is seeking unspecified damages and other relief. The plaintiff is also seeking to consolidate this action with separate actions it filed on the same day against Medical Components, Inc. and Smiths Medical ASD, Inc. relating to implantable port products. We believe these claims are without merit and intend to defend them vigorously. We have not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

Cirrex Systems LLC v. AngioDynamics, Inc.

On May 21, 2012, Cirrex Systems LLC filed a suit in the United States District Court of Georgia claiming that certain of our endovenous ablation products infringe on patents held by them. Cirrex is seeking unspecified damages and other relief. We believe these claims are without merit and intend to defend them vigorously. We have not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

Joseph Pierre v. AngioDynamics, Inc.

In July 2011, a former employee dual-filed a complaint with the New York State Division of Human Rights and the Equal Employment Opportunity Commission, entitled Joseph Pierre v. AngioDynamics, Inc. In this action, the former employee is alleging discrimination due to his status as an African-American, in light of him being reassigned to another project. At the conclusion of its investigation, the Division issued a finding of “no probable cause” on January 6, 2012 and dismissed the complaint. The complainant did not appeal the decision to preserve his New York Human Rights Law claims. On February 22, 2012, the Equal Employment Opportunity Commission issued its determination adopting the decision of the Division and dismissing the charge. The complainant filed a federal claim following the EEOC’s decision in the United States District Court for the Northern District of New York on May 21, 2012. This complaint makes the same allegations of discrimination, and alleges causes of action under Title VII of the Civil Rights Act and 42 U.S.C. 1981. We believe these claims are without merit and intend to defend them vigorously. We have not recorded an expense related to the outcome of this litigation because it is not yet possible to determine if a potential loss is probable nor reasonably estimable.

Cardinal Health v. Navilyst Medical, Inc.

On December 21, 2011, Cardinal Health Canada 204, Inc. (Cardinal Health) filed a demand for arbitration pursuant to the terms of the International Distributorship Agreement entered into as of November 1, 2008 between Navilyst and Cardinal Health. Cardinal Health claims that it is entitled to damages based on Navilyst’s decision to terminate the International Distributorship Agreement. The parties have entered into a written stipulation to stay the proceedings in this matter pending the outcome of a related litigation brought by Cardinal health against three our current employees (all of whom are former employees of Cardinal Health) in the Ontario Superior Court of Justice (Cardinal Health Canada, Inc. vs. Alexander, Sohi & Campbell, Superior Court of Justice, Ontario, Canada, No. CV-11-440418 (the Ontario Litigation). If this matter proceeds following the stay, we intend to deny the allegations contained in the demand for arbitration and to advance counterclaims against Cardinal Health. Navilyst entered into a joint defense agreement with the defendants in the Ontario Litigation, pursuant to which Navilyst agreed, subject to certain conditions, to indemnify the defendants for all legal fees relating to the Ontario Litigation as well as any damages or cost awards arising out of the Ontario Litigation. While we intend to vigorously defend against these actions, each of these cases is in the preliminary states and, as result, the ultimate outcome of these cases and their potential financial impact are not determinable at this time.

We are party to other legal actions that arise in the ordinary course of business. We believe that any liability resulting from any currently pending litigation will not, individually or in the aggregate, have a material adverse effect on our business or financial condition, results of operations or cash flow.

Future Purchase Obligations

On October 17, 2005, we entered into a Supply and Distribution Rights Agreement (the “Agreement”) with Bioniche Pharma Group Limited (“Bioniche”). We were appointed the exclusive distributor in the Field, as defined in the Agreement, in the United States of Bioniche’s sodium tetradecyl sulfate product in concentrations of 1% and 3%, brand name “Sotradecol” (“Product”). Sotradecol is indicated in the treatment of small uncomplicated varicose veins of the lower extremities that show simple dilation with competent valves. The Agreement was amended and restated during fiscal 2010 and expires on June 30, 2012 with automatic renewals for up to three years. Future obligations under the agreement are as follows:

•

We agreed to purchase a minimum of 160,000 units of Product per year (or a quantity to be negotiated each year). We met our purchase commitment for the year ended June 30, 2012. Failure to make certain minimum annual purchases in any two consecutive contract years, unless cured as provided in the Agreement, may result in a loss of exclusive rights under the Agreement.

We have also entered into other commitments for future minimum inventory purchases related to several core products. Total future purchase obligations for fiscal years ending May 31 are as follows: $6.0 million in 2013, $5.7 million in 2014, $1.9 million in 2015 and $0.9 million in 2016.

- Definition

The entire disclosure for commitments and contingencies.

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+ Details

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	May 31, 2012	May 31, 2011
Consolidated Balance Sheets [Abstract]
Accounts receivable, allowances	$ 933	$ 485
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	45,000,000	45,000,000
Common stock, shares issued	34,826,531	24,985,657
Common stock, shares outstanding	34,826,531	24,985,657
Treasury stock, shares	142,305	142,305