Item 2.05 Costs Associated with Exit or Disposal Activities.

On December 21, 2012, the Company informed affected employees that it was closing its tissue engineering facility in Abano Terme, Italy due to the inability to meet strict regulatory standards established by the European Medicines Agency ("EMA") for ATMP (cell based) products that are effective January 1, 2013. Therefore the Company will discontinue the manufacture and sale of these products after 2012. The plan adopted includes a reduction-in-force of 12 people and provides for severance payments, and the disposal of related supplies, equipment, and other assets. The plan is expected to be implemented within six months, and is intended to improve the efficiency and financial performance of the Company's Italian operations, by reducing costs and focusing on products and technology with strong commercial potential.

In connection with the plan, the Company currently estimates it will take a fourth quarter 2012 pre-tax charge of approximately $2.5 million, including $1.3 million for severance, various expenses, and write-offs of supplies and equipment, and a $1.2 million non-cash charge in connection with discontinuing the Hyalograft C Autograft in-process R&D project. These reductions are expected to result in annualized savings. The Company does not expect this charge to impact its 2012 annual diluted earnings per share guidance provided on November 1, 2012 during the third quarter 2012 earnings conference call.