|
þ
|
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
13-4088127
|
(State or other jurisdiction
of incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
1023 Cherry Road, Memphis, Tennessee
(Address of principal executive offices)
|
|
38117
(Zip code)
|
Title of each class
|
|
Name of each exchange on which registered
|
Common Stock, par value $0.01 per share
|
|
NASDAQ Global Select Market
|
Contingent Value Rights
|
|
NASDAQ Stock Market LLC
|
Large accelerated filer
þ
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
|
|
Smaller reporting company
o
|
|
|
|
|
(Do not check if a smaller reporting company)
|
|
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EX-10.8
|
|
EX 10.94
|
|
EX-12
|
|
EX-21
|
|
EX-23
|
|
EX-31.1
|
|
EX-31.2
|
|
EX-32
|
|
EX-101 INSTANCE DOCUMENT
|
|
EX-101 SCHEMA DOCUMENT
|
|
EX-101 CALCULATION LINKBASE DOCUMENT
|
|
EX-101 LABELS LINKBASE DOCUMENT
|
|
EX-101 PRESENTATION LINKBASE DOCUMENT
|
|
EX-101 DEFINITION LINKBASE DOCUMENT
|
•
|
future actions of the SEC, the United States Attorney's office, the FDA, the Department of Health and Human Services or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the Foreign Corrupt Practices Act and similar laws, that could delay, limit or suspend our development, manufacturing, commercialization and sale of products, or result in seizures, injunctions, monetary sanctions or criminal or civil liabilities;
|
•
|
continued liability for product liability claims on OrthoRecon products sold prior to divestiture of our OrthoRecon business or for post-market regulatory obligations on such products;
|
•
|
disruptions resulting from loss of personnel, systems and infrastructure changes and transition services arrangements in connection with our OrthoRecon divestiture;
|
•
|
failure to realize the anticipated benefits from our acquisitions or from divestiture of our OrthoRecon business;
|
•
|
adverse outcomes in existing product liability litigation;
|
•
|
new product liability claims;
|
•
|
inadequate insurance coverage;
|
•
|
copycat claims against our modular hip systems resulting from a competitor's recall of its modular hip product;
|
•
|
failure or delay in obtaining FDA approval of Augment
®
Bone Graft for commercial sale in the United States;
|
•
|
challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others;
|
•
|
loss of a key suppliers;
|
•
|
failures of, interruptions to, or unauthorized tampering with our information technology systems;
|
•
|
failure or delay in obtaining FDA or other regulatory approvals for our products;
|
•
|
any actual or alleged breach of the Corporate Integrity Agreement to which we are subject through September 2015, which could expose us to significant liability, including exclusion from Medicare, Medicaid and other federal healthcare programs, potential criminal prosecution, and civil and criminal fines or penalties;
|
•
|
the potentially negative effect of our ongoing compliance enhancements on our relationships with customers and on our ability to deliver timely and effective medical education, clinical studies, and new products;
|
•
|
the possibility of private securities litigation or shareholder derivative suits;
|
•
|
insufficient demand for and market acceptance of our new and existing products;
|
•
|
recently enacted healthcare laws and changes in product reimbursements which could generate downward pressure on our product pricing;
|
•
|
potentially burdensome tax measures;
|
•
|
lack of suitable business development opportunities;
|
•
|
inability to capitalize on business development opportunities;
|
•
|
product quality or patient safety issues;
|
•
|
geographic and product mix impact on our sales;
|
•
|
inability to retain key sales representatives, independent distributors and other personnel or to attract new talent;
|
•
|
inventory reductions or fluctuations in buying patterns by wholesalers or distributors; and
|
•
|
the negative impact of the commercial and credit environment on us, our customers and our suppliers.
|
•
|
Develop new products and innovative technologies;
|
•
|
Obtain and maintain regulatory clearance and reimbursement for our products;
|
•
|
Manufacture and sell our products cost-effectively;
|
•
|
Meet all relevant quality standards for our products and their markets;
|
•
|
Respond to competitive pressures specific to each of our geographic markets, including our ability to enforce non-compete agreements;
|
•
|
Protect the proprietary technology of our products and manufacturing processes;
|
•
|
Market and promote our products;
|
•
|
Continue to maintain a high level of medical education for our surgeons on our products;
|
•
|
Attract and retain skilled employees and focused sales representatives; and
|
•
|
Support our technology and with clinically relevant studies.
|
•
|
imposing fines and penalties on us;
|
•
|
preventing us from manufacturing or selling our products;
|
•
|
bringing civil or criminal charges against us;
|
•
|
delaying the introduction of our new products into the market;
|
•
|
recalling or seizing our products; or
|
•
|
withdrawing or denying approvals or clearances for our products.
|
•
|
the imposition of additional foreign governmental controls or regulations on orthopaedic implants and biologic products;
|
•
|
new export license requirements, particularly related to our biologic products;
|
•
|
economic instability, including currency risk between the U.S. dollar and foreign currencies, in our target markets;
|
•
|
a shortage of high-quality international salespeople and distributors;
|
•
|
loss of any key personnel who possess proprietary knowledge or are otherwise important to our success in international markets;
|
•
|
changes in third-party reimbursement policy that may require some of the patients who receive our implant products to directly absorb medical costs or that may necessitate our reducing selling prices for our products;
|
•
|
changes in tariffs and other trade restrictions, particularly related to the exportation of our biologic products;
|
•
|
work stoppages or strikes in the healthcare industry, such as those that have affected our operations in France, Canada, Korea and Finland in the past;
|
•
|
a shortage of nurses in some of our target markets; and
|
•
|
exposure to different legal and political standards due to our conducting business in approximately 60 countries.
|
•
|
make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry and competitive conditions and adverse changes in government regulation;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and our industry;
|
•
|
place us at a competitive disadvantage compared to our competitors who have less debt; and
|
•
|
limit our ability to borrow additional amounts for working capital, capital expenditures, research and development efforts, acquisitions, debt service requirements, execution of our business strategy or other purposes.
|
•
|
lack of clinical acceptance of allograft products and related technologies;
|
•
|
the introduction of competitive tissue repair treatment options that render allograft products and technologies too expensive and obsolete;
|
•
|
lack of available third-party reimbursement;
|
•
|
the inability to train surgeons in the use of allograft products and technologies;
|
•
|
the risk of disease transmission; and
|
•
|
ethical concerns about the commercial aspects of harvesting cadaveric tissue.
|
•
|
demand for products, which historically has been lowest in the third quarter;
|
•
|
our ability to meet the demand for our products;
|
•
|
increased competition;
|
•
|
the number, timing and significance of new products and product introductions and enhancements by us and our competitors;
|
•
|
our ability to develop, introduce and market new and enhanced versions of our products on a timely basis;
|
•
|
changes in pricing policies by us and our competitors;
|
•
|
changes in the treatment practices of orthopaedic surgeons;
|
•
|
changes in distributor relationships and sales force size and composition;
|
•
|
the timing of material expense- or income-generating events and the related recognition of their associated financial impact;
|
•
|
prevailing interest rates on our excess cash investments;
|
•
|
fluctuations in foreign currency rates;
|
•
|
the timing of significant orders and shipments;
|
•
|
ability to obtain reimbursement for our products;
|
•
|
availability of raw materials;
|
•
|
work stoppages or strikes in the healthcare industry;
|
•
|
changes in FDA and foreign governmental regulatory policies, requirements and enforcement practices;
|
•
|
changes in accounting policies, estimates and treatments;
|
•
|
restructuring charges, costs associated with our U.S. governmental inquiries and other charges;
|
•
|
variations in cost of sales due to the amount and timing of excess and obsolete inventory charges, commodity prices and manufacturing variances;
|
•
|
income tax fluctuations; and
|
•
|
general economic factors.
|
|
High
|
|
Low
|
||||
Fiscal Year 2012
|
|
|
|
||||
First Quarter
|
$
|
19.87
|
|
|
$
|
15.70
|
|
Second Quarter
|
$
|
21.50
|
|
|
$
|
17.88
|
|
Third Quarter
|
$
|
22.59
|
|
|
$
|
18.11
|
|
Fourth Quarter
|
$
|
22.42
|
|
|
$
|
18.89
|
|
Fiscal Year 2013
|
|
|
|
||||
First Quarter
|
$
|
24.58
|
|
|
$
|
20.69
|
|
Second Quarter
|
$
|
27.47
|
|
|
$
|
22.34
|
|
Third Quarter
|
$
|
28.41
|
|
|
$
|
23.70
|
|
Fourth Quarter
|
$
|
30.87
|
|
|
$
|
26.06
|
|
Plan Category
|
|
Number of securities to be issued upon exercise of outstanding options
(in thousands) |
|
Weighted-average exercise price of
outstanding options
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans
(in thousands)
|
||||
Equity compensation plans approved by security holders
|
|
4,516
|
|
|
$
|
22.61
|
|
|
3,791
|
|
Equity compensation plans not approved by security holders
1
|
|
940
|
|
|
17.21
|
|
|
—
|
|
|
Total
|
|
5,456
|
|
|
$
|
21.68
|
|
|
3,791
|
|
1
|
This amount represents options to purchase 940,000 shares of our common stock granted to Robert Palmisano, Julie Tracy and James Lightman during 2011 and Daniel Garen and Pascal E. R. Girin during 2012 to induce these executives to commence employment with us. Mr. Palmisano's options will vest and become exercisable in three equal annual installments beginning on the first anniversary of the date of grant, September 17, 2011. Ms. Tracy's, Mr. Lightman's, Mr. Garen's and Mr. Girin's options will vest and become exercisable in four equal annual installments beginning on the first anniversary of the date of grant, October 17, 2011, December 29, 2011, January 30, 2012, and November 26, 2012, respectively.
|
Cumulative Total Stockholder Returns
Based on Reinvestment of $100.00 Beginning on December 31, 2008
|
|||||||||||||||||||||||
|
12/31/2008
|
|
|
12/31/2009
|
|
|
12/31/2010
|
|
|
12/31/2011
|
|
|
12/31/2012
|
|
|
12/31/2013
|
|
||||||
Wright Medical Group, Inc.
|
$
|
100.00
|
|
|
$
|
92.71
|
|
|
$
|
76.02
|
|
|
$
|
80.76
|
|
|
$
|
102.74
|
|
|
$
|
150.32
|
|
Nasdaq U.S. Companies Index
|
100.00
|
|
|
143.74
|
|
|
170.17
|
|
|
171.08
|
|
|
202.39
|
|
|
281.91
|
|
||||||
Nasdaq Medical Equipment Companies Index
|
100.00
|
|
|
145.84
|
|
|
155.52
|
|
|
178.67
|
|
|
198.90
|
|
|
233.09
|
|
||||||
SIC Code 384 - Surgical, Medical, and Dental Instruments and Supplies
|
100.00
|
|
|
131.06
|
|
|
134.53
|
|
|
131.90
|
|
|
154.63
|
|
|
207.13
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Statement of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
242,330
|
|
|
$
|
214,105
|
|
|
$
|
210,753
|
|
|
$
|
208,489
|
|
|
$
|
191,729
|
|
Cost of sales
(1)
|
59,721
|
|
|
48,239
|
|
|
56,762
|
|
|
55,928
|
|
|
50,809
|
|
|||||
Cost of sales — restructuring
(2)
|
—
|
|
|
—
|
|
|
667
|
|
|
—
|
|
|
—
|
|
|||||
Gross profit
|
182,609
|
|
|
165,866
|
|
|
153,324
|
|
|
152,561
|
|
|
140,920
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative
(1) (6)
|
230,785
|
|
|
150,296
|
|
|
131,611
|
|
|
124,704
|
|
|
108,439
|
|
|||||
Research and development
(1)
|
20,305
|
|
|
13,905
|
|
|
15,422
|
|
|
17,008
|
|
|
12,436
|
|
|||||
Amortization of intangible assets
|
7,476
|
|
|
4,417
|
|
|
2,412
|
|
|
2,397
|
|
|
2,242
|
|
|||||
BioMimetic impairment charges
|
206,249
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on sale of intellectual property
(3)
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Restructuring charges
(2)
|
—
|
|
|
431
|
|
|
4,613
|
|
|
60
|
|
|
208
|
|
|||||
Total operating expenses
|
464,815
|
|
|
154,049
|
|
|
154,058
|
|
|
144,169
|
|
|
123,325
|
|
|||||
Operating (loss) income
(5)
|
(282,206
|
)
|
|
11,817
|
|
|
(734
|
)
|
|
8,392
|
|
|
17,595
|
|
|||||
Interest expense, net
|
16,040
|
|
|
10,113
|
|
|
6,381
|
|
|
6,090
|
|
|
5,392
|
|
|||||
Other (income) expense, net
(6)
|
(67,843
|
)
|
|
5,089
|
|
|
4,241
|
|
|
119
|
|
|
226
|
|
|||||
(Loss) Income before income taxes
|
(230,403
|
)
|
|
(3,385
|
)
|
|
(11,356
|
)
|
|
2,183
|
|
|
11,977
|
|
|||||
Provision (benefits) for income taxes
(7)
|
49,765
|
|
|
2
|
|
|
(3,961
|
)
|
|
624
|
|
|
4,607
|
|
|||||
Net (loss) income from continuing operations
|
$
|
(280,168
|
)
|
|
$
|
(3,387
|
)
|
|
$
|
(7,395
|
)
|
|
$
|
1,559
|
|
|
$
|
7,370
|
|
Income from discontinued operations, net of tax
|
$
|
6,223
|
|
|
$
|
8,671
|
|
|
$
|
2,252
|
|
|
$
|
16,282
|
|
|
$
|
4,761
|
|
Net (loss) income
|
$
|
(273,945
|
)
|
|
$
|
5,284
|
|
|
$
|
(5,143
|
)
|
|
$
|
17,841
|
|
|
$
|
12,131
|
|
Net income (loss) from continuing operations per share:
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
$
|
(6.19
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
|
$
|
0.20
|
|
Diluted
|
$
|
(6.19
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.19
|
)
|
|
$
|
0.04
|
|
|
$
|
0.20
|
|
Weighted-average number of common shares outstanding — basic
|
45,265
|
|
|
38,769
|
|
|
38,279
|
|
|
37,802
|
|
|
37,366
|
|
|||||
Weighted-average number of common shares outstanding — diluted
|
45,265
|
|
|
39,086
|
|
|
38,279
|
|
|
37,961
|
|
|
37,443
|
|
|
As of December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
168,534
|
|
|
$
|
320,360
|
|
|
$
|
153,642
|
|
|
$
|
153,261
|
|
|
$
|
84,409
|
|
Marketable securities
|
14,548
|
|
|
12,646
|
|
|
18,099
|
|
|
36,345
|
|
|
86,819
|
|
|||||
Working capital
|
385,890
|
|
|
575,713
|
|
|
424,543
|
|
|
426,286
|
|
|
421,647
|
|
|||||
Total assets
|
1,007,451
|
|
|
953,453
|
|
|
754,580
|
|
|
755,239
|
|
|
714,284
|
|
|||||
Long-term liabilities
|
428,312
|
|
|
353,580
|
|
|
210,126
|
|
|
212,963
|
|
|
204,919
|
|
|||||
Stockholders’ equity
|
459,714
|
|
|
523,441
|
|
|
468,464
|
|
|
470,972
|
|
|
440,408
|
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow provided by (used in) operating activities
|
$
|
(36,601
|
)
|
|
$
|
68,822
|
|
|
$
|
61,441
|
|
|
$
|
73,194
|
|
|
$
|
71,751
|
|
Cash flow used in investing activities
|
(121,317
|
)
|
|
(1,048
|
)
|
|
(30,560
|
)
|
|
(4,173
|
)
|
|
(74,956
|
)
|
|||||
Cash flow provided by (used in) financing activities
|
6,257
|
|
|
98,721
|
|
|
(30,050
|
)
|
|
(198
|
)
|
|
532
|
|
|||||
Depreciation
|
26,296
|
|
|
38,275
|
|
|
40,227
|
|
|
35,559
|
|
|
32,717
|
|
|||||
Stock-based compensation expense
|
15,368
|
|
|
10,974
|
|
|
9,108
|
|
|
13,177
|
|
|
13,191
|
|
|||||
Capital expenditures
(4)
|
37,530
|
|
|
19,323
|
|
|
46,957
|
|
|
49,038
|
|
|
37,190
|
|
(1)
|
These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2013
|
|
2012
|
|
2011
|
|
2010
|
|
2009
|
||||||||||
Cost of sales
|
$
|
503
|
|
|
$
|
704
|
|
|
$
|
735
|
|
|
$
|
705
|
|
|
$
|
820
|
|
Selling, general and administrative
|
10,675
|
|
|
6,767
|
|
|
4,875
|
|
|
7,808
|
|
|
8,300
|
|
|||||
Research and development
|
780
|
|
|
368
|
|
|
320
|
|
|
1,631
|
|
|
1,606
|
|
|||||
Discontinued operations
|
3,410
|
|
|
3,135
|
|
|
3,178
|
|
|
3,034
|
|
|
2,464
|
|
(2)
|
During the years ended December 31, 2012 and 2011, we recorded pre-tax charges associated with the cost improvement restructuring efforts totaling $0.4 million and $5.3 million. During the years ended December 31, 2010 and 2009, we recorded pre-tax charges associated with the restructuring of our facilities in Toulon and Creteil, France, totaling $0.1 million and $0.2 million, respectively.
|
(3)
|
During the year ended December 31, 2012, we recorded income of $15 million related to a sale and license back transaction for intellectual property.
|
(4)
|
During the years ended December 31, 2010 and 2009, our capital expenditures included approximately $6.0 million and $5.9 million, respectively, related to the expansion of our Arlington, Tennessee facilities.
|
(5)
|
During the year ended December 31,
2013
, we recognized $3.7 million in costs associated with distributor conversions and non-competes. In addition, we recognized $12.9 million in costs for due diligence and transaction costs related to the BioMimetic & Biotech acquisitions. We recognized $21.6 million for transaction costs for the OrthoRecon divestiture. Additionally, we recorded charges of $206.2 million for BioMimetic impairment charges.
|
(6)
|
During the year ended December 31, 2013, we recognized a gain of approximately $7.8 million for the gain on the previously held investment in BioMimetic. During the year ended December 31, 2012, we recognized approximately $2.7 million for the write-off of unamortized deferred financing fees associated with the termination of our Senior Credit facility and the redemption of approximately $25 million of our 2014 Convertible Notes. Additionally, we recognized approximately $1.1 million of charges for the mark to market adjustment of our derivative instruments. During the year ended December 31, 2011, we recognized approximately $4.1 million for the write off of pro-rata unamortized deferred financing fees and transaction costs associated with the tender offer for our convertible notes completed during the first quarter of 2011.
|
(7)
|
During the year ended December 31, 2013, we recognized a $119.6 million tax valuation allowance recorded against deferred tax assets in our U.S. jurisdiction due to recent operating losses.
|
•
|
$208.5 million ($172.3 million net of taxes) of impairment (see Note 12 to our consolidated financial statements for discussion of these charges) and other charges related to assets acquired from BioMimetic, including $2.3 million of charges recorded within Cost of Sales to write down inventory to its net realizable value, partially offset by an unrealized gain of $61.1 million ($61.1 million net of taxes) associated with the mark-to-market adjustment on the contingent value rights payable as contingent consideration for the BioMimetic acquisition;
|
•
|
$21.6 million ($13.2 million net of taxes) of transition costs associated with the sale of our OrthoRecon business;
|
•
|
$15.0 million ($9.6 million net of taxes) gain on the sale of certain internally-developed intellectual property recognized during 2012;
|
•
|
$11.1 million ($8.4 million net of taxes) increase in due diligence, transition and transaction costs associated with our acquisitions of BioMimetic and Biotech;
|
•
|
$5.9 million ($3.5 million net of taxes) increase in non-cash interest expense associated with our 2017 Convertible Notes;
|
•
|
$119.6 million
tax valuation allowance recorded against deferred tax assets in our U.S. jurisdiction due to recent operating losses; and
|
•
|
decreased profitability, primarily driven by investments in our U.S. field operations (including investments in our direct sales force) and operating losses associated with the acquired BioMimetic business.
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
||||||||
|
Amount
|
% of Sales
|
|
Amount
|
% of Sales
|
||||||
Net sales
|
$
|
242,330
|
|
100.0
|
%
|
|
$
|
214,105
|
|
100.0
|
%
|
Cost of sales
1
|
59,721
|
|
24.6
|
%
|
|
48,239
|
|
22.5
|
%
|
||
Gross profit
|
182,609
|
|
75.4
|
%
|
|
165,866
|
|
77.5
|
%
|
||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
1
|
230,785
|
|
95.2
|
%
|
|
150,296
|
|
70.2
|
%
|
||
Research and development
1
|
20,305
|
|
8.4
|
%
|
|
13,905
|
|
6.5
|
%
|
||
Amortization of intangible assets
|
7,476
|
|
3.1
|
%
|
|
4,417
|
|
2.1
|
%
|
||
BioMimetic impairment charges
|
206,249
|
|
85.1
|
%
|
|
—
|
|
—
|
%
|
||
Gain on sale of intellectual property
|
—
|
|
—
|
%
|
|
(15,000
|
)
|
(7.0
|
)%
|
||
Restructuring charges
|
—
|
|
—
|
%
|
|
431
|
|
0.2
|
%
|
||
Total operating expenses
|
464,815
|
|
191.8
|
%
|
|
154,049
|
|
72.0
|
%
|
||
Operating (loss) income
|
(282,206
|
)
|
(116.5
|
)%
|
|
11,817
|
|
5.5
|
%
|
||
Interest expense, net
|
16,040
|
|
6.6
|
%
|
|
10,113
|
|
4.7
|
%
|
||
Other (income) expense, net
|
(67,843
|
)
|
(28.0
|
)%
|
|
5,089
|
|
2.4
|
%
|
||
Loss from continuing operations before income taxes
|
(230,403
|
)
|
(95.1
|
)%
|
|
(3,385
|
)
|
(1.6
|
)%
|
||
Provision (benefit) for income taxes
|
49,765
|
|
20.5
|
%
|
|
2
|
|
0.0
|
%
|
||
Net loss from continuing operations
|
$
|
(280,168
|
)
|
(115.6
|
)%
|
|
$
|
(3,387
|
)
|
(1.6
|
)%
|
Income from discontinued operations, net of tax
1
|
6,223
|
|
|
|
8,671
|
|
|
||||
Net (loss) income
|
$
|
(273,945
|
)
|
|
|
$
|
5,284
|
|
|
1
|
These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
% of Sales
|
|
2012
|
% of Sales
|
||||||
Cost of sales
|
$
|
503
|
|
0.2
|
%
|
|
$
|
704
|
|
0.3
|
%
|
Selling, general and administrative
|
10,675
|
|
4.4
|
%
|
|
6,767
|
|
3.2
|
%
|
||
Research and development
|
780
|
|
0.3
|
%
|
|
368
|
|
0.2
|
%
|
||
Income from discontinued operations, net of tax
|
3,410
|
|
n/a
|
|
|
3,135
|
|
n/a
|
|
•
|
non-cash expense related to the amortization of the discount on our 2017 Convertible Senior Notes of $8.7 million and $2.8 million in 2013 and 2012, respectively;
|
•
|
non-cash expense related to the amortization of deferred financing costs of $1.6 million and $0.5 million in 2013 and 2012, respectively; and
|
•
|
cash interest expense related to our 2017 Convertible Senior Notes of $6.0 million and $2.0 million in 2013 and 2012, respectively.
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
||||||||
|
Amount
|
% of Sales
|
|
Amount
|
% of Sales
|
||||||
Net sales
|
$
|
214,105
|
|
100.0
|
%
|
|
$
|
210,753
|
|
100.0
|
%
|
Cost of sales
1
|
48,239
|
|
22.5
|
%
|
|
$
|
56,762
|
|
26.9
|
%
|
|
Cost of sales - restructuring
|
—
|
|
—
|
%
|
|
$
|
667
|
|
0.3
|
%
|
|
Gross profit
|
165,866
|
|
77.5
|
%
|
|
153,324
|
|
72.8
|
%
|
||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
1
|
150,296
|
|
70.2
|
%
|
|
131,611
|
|
62.4
|
%
|
||
Research and development
1
|
13,905
|
|
6.5
|
%
|
|
15,422
|
|
7.3
|
%
|
||
Amortization of intangible assets
|
4,417
|
|
2.1
|
%
|
|
2,412
|
|
1.1
|
%
|
||
Gain on sale of intellectual property
|
(15,000
|
)
|
(7.0
|
)%
|
|
—
|
|
—
|
%
|
||
Restructuring charges
|
431
|
|
0.2
|
%
|
|
4,613
|
|
2.2
|
%
|
||
Total operating expenses
|
154,049
|
|
72.0
|
%
|
|
154,058
|
|
73.1
|
%
|
||
Operating income
|
11,817
|
|
5.5
|
%
|
|
(734
|
)
|
(0.3
|
)%
|
||
Interest expense, net
|
10,113
|
|
4.7
|
%
|
|
6,381
|
|
3.0
|
%
|
||
Other expense, net
|
5,089
|
|
2.4
|
%
|
|
4,241
|
|
2.0
|
%
|
||
(Loss) income from continuing operations before income taxes
|
(3,385
|
)
|
(1.6
|
)%
|
|
(11,356
|
)
|
(5.4
|
)%
|
||
(Benefit) provision for income taxes
|
2
|
|
0.0
|
%
|
|
(3,961
|
)
|
(1.9
|
)%
|
||
Net income from continuing operations
|
$
|
(3,387
|
)
|
(1.6
|
)%
|
|
$
|
(7,395
|
)
|
(3.5
|
)%
|
Income from discontinued operations, net of tax
1
|
8,671
|
|
|
|
2,252
|
|
|
||||
Net income (loss)
|
$
|
5,284
|
|
|
|
$
|
(5,143
|
)
|
|
1
|
These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:
|
|
Year Ended December 31,
|
||||||||||
|
2012
|
% of Sales
|
|
2011
|
% of Sales
|
||||||
Cost of sales
|
$
|
704
|
|
0.3
|
%
|
|
$
|
735
|
|
0.3
|
%
|
Selling, general and administrative
|
6,767
|
|
3.2
|
%
|
|
4,875
|
|
2.3
|
%
|
||
Research and development
|
368
|
|
0.2
|
%
|
|
320
|
|
0.2
|
%
|
||
Loss from discontinued operations, net of tax
|
3,135
|
|
n/a
|
|
|
3,178
|
|
n/a
|
|
|
As of December 31,
|
||||||
|
2013
|
|
2012
|
||||
Cash and cash equivalents
|
$
|
168,534
|
|
|
$
|
320,360
|
|
Short-term marketable securities
|
6,898
|
|
|
12,646
|
|
||
Long-term marketable securities
|
7,650
|
|
|
—
|
|
||
Working capital
|
385,890
|
|
|
575,713
|
|
|
Payments Due by Periods
|
||||||||||||||||||
|
Total
|
|
2014
|
|
2015-2016
|
|
2017-2018
|
|
After 2018
|
||||||||||
Amounts reflected in consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital lease obligations
(1)
|
$
|
10,292
|
|
|
$
|
419
|
|
|
$
|
1,863
|
|
|
$
|
1,998
|
|
|
$
|
6,012
|
|
2017 Convertible Senior Notes
(2)
|
300,000
|
|
|
—
|
|
|
—
|
|
|
300,000
|
|
|
—
|
|
|||||
2014 Convertible Senior Notes
(3)
|
3,768
|
|
|
3,768
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts not reflected in consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating leases
|
16,171
|
|
|
6,087
|
|
|
6,867
|
|
|
2,449
|
|
|
768
|
|
|||||
Minimum supply obligations
|
2,073
|
|
|
—
|
|
|
2,073
|
|
|
—
|
|
|
—
|
|
|||||
Interest on 2017 Convertible Senior Notes
(4)
|
22,000
|
|
|
6,000
|
|
|
12,000
|
|
|
4,000
|
|
|
—
|
|
|||||
Interest on 2014 Convertible Senior Notes
(5)
|
91
|
|
|
91
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total contractual cash obligations
|
$
|
354,395
|
|
|
$
|
16,365
|
|
|
$
|
22,803
|
|
|
$
|
308,447
|
|
|
$
|
6,780
|
|
(1)
|
Payments include amounts representing interest.
|
(2)
|
Represents long-term debt payment provided to holders of the 2017 Convertible Senior Notes do not exercise the option to convert each $1,000 note into 39.3140 shares of our common stock. Our 2017 Convertible Senior Notes are discussed further in Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”
|
(3)
|
Represents long-term debt payment provided holders of the 2014 Convertible Senior Notes do not exercise the option to convert each $1,000 note into 30.6279 shares of our common stock. Our 2014 Convertible Senior Notes are discussed further in Note 9 to our consolidated financial statements contained in “Financial Statements and Supplementary Data.”
|
(4)
|
Represents interest on the 2017 Convertible Senior Notes payable semiannually with an annual interest rate of 2.000%.
|
(5)
|
Represents interest on the 2014 Convertible Senior Notes payable semiannually with an annual interest rate of 2.625%.
|
•
|
Augment
®
Bone Graft (Augment) is based on our platform regenerative technology, which combines an engineered version of recombinant human platelet-derived growth factor BB (rhPDGF-BB), one of the principal wound healing and tissue repair stimulators in the body, with tissue specific matrices, when appropriate. This product is intended to offer physicians advanced biological solutions to actively stimulate the body’s natural tissue regenerative process. Augment is targeted to be used in the open (surgical) treatment of fusions. Additionally, Augment may be useful in the future to be used in open fractures. We have evaluated Augment in several open clinical applications, including foot and ankle fusions and distal radius fractures. We believe we have demonstrated that our technology is safe and effective in stimulating bone regeneration with the Canadian regulatory approval of Augment in 2009 and the Australian and New Zealand regulatory clearance of Augment in 2011. A PMA application for the use of Augment in the U.S. as an alternative to autograft in hindfoot and ankle fusion procedures was submitted to the FDA prior to this acquisition. We’ve incurred expenses of approximately $5.8 million for Augment since the date of acquisition. Future costs related to Augment depends on the ultimate decision by the FDA on the PMA.
|
•
|
Augment
®
Injectable Bone Graft (Augment Injectable) combines rhPDGF-BB with an injectable bone matrix, and is targeted to be used in either open (surgical) treatment of fusions and fractures or closed (non-surgical) or minimally invasive treatment of fractures. Augment Injectable can be injected into a fusion or fracture site during an open surgical procedure, or it can be injected through the skin into a fracture site, in either case locally delivering rhPDGF-BB to promote fusion or fracture repair. Our initial clinical development program for Augment Injectable has focused on securing regulatory approval for open indications in the United States and in several markets outside the U.S. Recently, we have focused our efforts on securing FDA approval of Augment. The amount of time and cost to complete the Augment Injectable project depends upon the nature of the approval we ultimately receive for Augment, but we currently estimate
|
Stock Price
|
|
Shares (in thousands)
|
$32.92
|
(10% greater than strike price)
|
1,072
|
$35.91
|
(20% greater than strike price)
|
1,966
|
$38.90
|
(30% greater than strike price)
|
2,722
|
$41.90
|
(40% greater than strike price)
|
3,370
|
$44.89
|
(50% greater than strike price)
|
3,931
|
Wright Medical Group, Inc.
Consolidated Financial Statements
for the Years Ended December 31, 2012, 2011 and 2010
Index to Financial Statements
|
|
|
Page
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
Wright Medical Group, Inc.
Consolidated Balance Sheets
(In thousands, except share data)
|
|||||||
|
December 31, 2013
|
|
December 31, 2012
|
||||
Assets:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
168,534
|
|
|
$
|
320,360
|
|
Marketable securities
|
6,898
|
|
|
12,646
|
|
||
Accounts receivable, net
|
45,817
|
|
|
31,202
|
|
||
Inventories
|
72,443
|
|
|
57,458
|
|
||
Prepaid expenses
|
6,508
|
|
|
4,814
|
|
||
Deferred income taxes
|
10,749
|
|
|
30,145
|
|
||
Current assets held for sale
|
142,015
|
|
|
166,484
|
|
||
Other current assets
|
52,351
|
|
|
29,036
|
|
||
Total current assets
|
505,315
|
|
|
652,145
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
70,515
|
|
|
41,482
|
|
||
Goodwill
|
118,263
|
|
|
32,414
|
|
||
Intangible assets, net
|
39,420
|
|
|
18,684
|
|
||
Marketable securities
|
7,650
|
|
|
—
|
|
||
Deferred income taxes
|
1,632
|
|
|
1,251
|
|
||
Other assets held for sale
|
132,443
|
|
|
129,730
|
|
||
Other assets
|
132,213
|
|
|
77,747
|
|
||
Total assets
|
$
|
1,007,451
|
|
|
$
|
953,453
|
|
Liabilities and Stockholders’ Equity:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
3,913
|
|
|
$
|
4,676
|
|
Accrued expenses and other current liabilities
|
80,117
|
|
|
38,763
|
|
||
Current portion of long-term obligations
|
4,174
|
|
|
—
|
|
||
Current liabilities held for sale
|
31,221
|
|
|
32,993
|
|
||
Total current liabilities
|
119,425
|
|
|
76,432
|
|
||
|
|
|
|
||||
Long-term debt and capital lease obligations
|
271,227
|
|
|
258,485
|
|
||
Deferred income taxes
|
20,620
|
|
|
8,152
|
|
||
Other liabilities held for sale
|
1,399
|
|
|
2,031
|
|
||
Other liabilities
|
135,066
|
|
|
84,912
|
|
||
Total liabilities
|
547,737
|
|
|
430,012
|
|
||
Commitments and contingencies (Note 19)
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Common stock, $.01 par value, authorized: 100,000,000 shares; issued and outstanding: 47,993,765 shares at December 31, 2013 and 39,703,358 shares at December 31, 2012
|
473
|
|
|
389
|
|
||
Additional paid-in capital
|
656,770
|
|
|
442,055
|
|
||
Accumulated other comprehensive income
|
17,953
|
|
|
22,534
|
|
||
Retained earnings
|
(215,482
|
)
|
|
58,463
|
|
||
Total stockholders’ equity
|
459,714
|
|
|
523,441
|
|
||
Total liabilities and stockholders’ equity
|
$
|
1,007,451
|
|
|
$
|
953,453
|
|
Wright Medical Group, Inc.
Consolidated Statements of Operations
(In thousands, except per share data)
|
|||||||||||
|
Year ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales
|
$
|
242,330
|
|
|
$
|
214,105
|
|
|
$
|
210,753
|
|
Cost of sales
1
|
59,721
|
|
|
48,239
|
|
|
56,762
|
|
|||
Cost of sales - restructuring
|
—
|
|
|
—
|
|
|
667
|
|
|||
Gross profit
|
182,609
|
|
|
165,866
|
|
|
153,324
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
1
|
230,785
|
|
|
150,296
|
|
|
131,611
|
|
|||
Research and development
1
|
20,305
|
|
|
13,905
|
|
|
15,422
|
|
|||
Amortization of intangible assets
|
7,476
|
|
|
4,417
|
|
|
2,412
|
|
|||
BioMimetic impairment charges (Note 3)
|
206,249
|
|
|
—
|
|
|
—
|
|
|||
Gain on sale of intellectual property
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
|||
Restructuring charges
|
—
|
|
|
431
|
|
|
4,613
|
|
|||
Total operating expenses
|
464,815
|
|
|
154,049
|
|
|
154,058
|
|
|||
|
|
|
|
|
|
||||||
Operating (loss) income
|
(282,206
|
)
|
|
11,817
|
|
|
(734
|
)
|
|||
Interest expense, net
|
16,040
|
|
|
10,113
|
|
|
6,381
|
|
|||
Other (income) expense, net
|
(67,843
|
)
|
|
5,089
|
|
|
4,241
|
|
|||
(Loss) income from continuing operations before income taxes
|
(230,403
|
)
|
|
(3,385
|
)
|
|
(11,356
|
)
|
|||
Provision (benefit) for income taxes
|
49,765
|
|
|
2
|
|
|
(3,961
|
)
|
|||
Net (loss) income from continuing operations
|
$
|
(280,168
|
)
|
|
$
|
(3,387
|
)
|
|
$
|
(7,395
|
)
|
Income from discontinued operations, net of tax
1
|
$
|
6,223
|
|
|
$
|
8,671
|
|
|
$
|
2,252
|
|
Net (loss) income
|
$
|
(273,945
|
)
|
|
$
|
5,284
|
|
|
$
|
(5,143
|
)
|
|
|
|
|
|
|
||||||
Net (loss) income from continuing operations per share (Note 15):
|
|
|
|
|
|
||||||
Basic
|
$
|
(6.19
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.19
|
)
|
Diluted
|
$
|
(6.19
|
)
|
|
$
|
(0.09
|
)
|
|
$
|
(0.19
|
)
|
|
|
|
|
|
|
||||||
Net (loss) income per share (Note 15):
|
|
|
|
|
|
|
|
|
|||
Basic
|
$
|
(6.05
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.13
|
)
|
Diluted
|
$
|
(6.05
|
)
|
|
$
|
0.14
|
|
|
$
|
(0.13
|
)
|
|
|
|
|
|
|
||||||
Weighted-average number of shares outstanding-basic
|
45,265
|
|
|
38,769
|
|
|
38,279
|
|
|||
Weighted-average number of shares outstanding-diluted
|
45,265
|
|
|
39,086
|
|
|
38,279
|
|
1
|
These line items include the following amounts of non-cash, stock-based compensation expense for the periods indicated:
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Cost of sales
|
$
|
503
|
|
|
$
|
704
|
|
|
$
|
735
|
|
Selling, general and administrative
|
10,675
|
|
|
6,767
|
|
|
4,875
|
|
|||
Research and development
|
780
|
|
|
368
|
|
|
320
|
|
|||
Discontinued operations
|
3,410
|
|
|
3,135
|
|
|
3,178
|
|
|
|
Year ended December 31,
|
||||||||||
|
|
2013
|
|
2012
|
|
2011
|
||||||
|
|
|
|
|
|
|
||||||
Net (loss) income
|
|
$
|
(273,945
|
)
|
|
$
|
5,284
|
|
|
$
|
(5,143
|
)
|
|
|
|
|
|
|
|
||||||
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
|
||||||
Changes in foreign currency translation
|
|
(1,381
|
)
|
|
(1,301
|
)
|
|
(2,102
|
)
|
|||
Unrealized loss on derivative instruments, net of taxes $42 and $600, respectively
|
|
—
|
|
|
(65
|
)
|
|
(1,014
|
)
|
|||
Termination of interest rate swap, net of taxes of $690
|
|
—
|
|
|
1,079
|
|
|
—
|
|
|||
Reclassification of gain on equity securities, net of taxes $3,041
|
|
(4,757
|
)
|
|
—
|
|
|
—
|
|
|||
Unrealized gain (loss) on marketable securities, net of taxes $987, $2,054, and $21, respectively
|
|
1,543
|
|
|
3,210
|
|
|
(33
|
)
|
|||
Minimum pension liability adjustment
|
|
14
|
|
|
550
|
|
|
37
|
|
|||
Other comprehensive (loss) income
|
|
(4,581
|
)
|
|
3,473
|
|
|
(3,112
|
)
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive (loss) income
|
|
$
|
(278,526
|
)
|
|
$
|
8,757
|
|
|
$
|
(8,255
|
)
|
Wright Medical Group, Inc.
Consolidated Statements of Cash Flows
(In thousands)
|
|||||||||||
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net (loss) income
|
$
|
(273,945
|
)
|
|
$
|
5,284
|
|
|
$
|
(5,143
|
)
|
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
26,296
|
|
|
38,275
|
|
|
40,227
|
|
|||
Stock-based compensation expense
|
15,368
|
|
|
10,974
|
|
|
9,108
|
|
|||
Amortization of intangible assets
|
8,345
|
|
|
5,772
|
|
|
2,870
|
|
|||
Amortization of deferred financing costs and debt discount
|
10,288
|
|
|
3,853
|
|
|
982
|
|
|||
Deferred income taxes (Note 14)
|
51,958
|
|
|
3,786
|
|
|
(6,969
|
)
|
|||
Write off of deferred financing costs
|
—
|
|
|
2,721
|
|
|
2,926
|
|
|||
Excess tax benefit from stock-based compensation arrangements
|
(804
|
)
|
|
(507
|
)
|
|
(23
|
)
|
|||
Non-cash restructuring charges
|
—
|
|
|
657
|
|
|
4,924
|
|
|||
Non-cash adjustment to derivative fair value
|
1,000
|
|
|
1,142
|
|
|
—
|
|
|||
Gain on sale of intellectual property
|
—
|
|
|
(15,000
|
)
|
|
—
|
|
|||
Non-cash realized gain on BioMimetic stock (Note 3)
|
(7,798
|
)
|
|
—
|
|
|
—
|
|
|||
BioMimetic goodwill and intangible impairment charge
|
203,081
|
|
|
—
|
|
|
—
|
|
|||
Other
|
(2,788
|
)
|
|
2,232
|
|
|
649
|
|
|||
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
||||||
Accounts receivable
|
(3,477
|
)
|
|
(717
|
)
|
|
9,056
|
|
|||
Inventories
|
7,374
|
|
|
20,622
|
|
|
(1,723
|
)
|
|||
Prepaid expenses and other current assets
|
(21,945
|
)
|
|
(15,498
|
)
|
|
(10,556
|
)
|
|||
Accounts payable
|
(1,334
|
)
|
|
(1,315
|
)
|
|
(6,398
|
)
|
|||
Mark-to-market adjustment for CVRs (Note 2)
|
(61,151
|
)
|
|
—
|
|
|
—
|
|
|||
Accrued expenses and other liabilities
|
12,931
|
|
|
6,541
|
|
|
21,511
|
|
|||
Net cash (used in) provided by operating activities
|
(36,601
|
)
|
|
68,822
|
|
|
61,441
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(37,530
|
)
|
|
(19,323
|
)
|
|
(46,957
|
)
|
|||
Acquisition of businesses
|
(95,409
|
)
|
|
—
|
|
|
(5,639
|
)
|
|||
Purchase of intangible assets
|
(4,291
|
)
|
|
(4,112
|
)
|
|
(1,624
|
)
|
|||
Maturities of held-to-maturity marketable securities
|
—
|
|
|
—
|
|
|
4,748
|
|
|||
Sales and maturities of available-for-sale marketable securities
|
27,332
|
|
|
13,565
|
|
|
38,509
|
|
|||
Investment in available-for-sale marketable securities
|
(20,719
|
)
|
|
(2,878
|
)
|
|
(25,097
|
)
|
|||
Proceeds from sale of assets
|
9,300
|
|
|
11,700
|
|
|
5,500
|
|
|||
Net cash used in investing activities
|
(121,317
|
)
|
|
(1,048
|
)
|
|
(30,560
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Issuance of common stock
|
6,328
|
|
|
1,944
|
|
|
540
|
|
|||
Payments of long term borrowings
|
—
|
|
|
(144,375
|
)
|
|
(5,596
|
)
|
|||
Proceeds from sale of warrants
|
—
|
|
|
34,595
|
|
|
—
|
|
|||
Payment for bond hedge options
|
—
|
|
|
(56,195
|
)
|
|
—
|
|
|||
Redemption of 2014 convertible senior notes
|
—
|
|
|
(25,343
|
)
|
|
(170,889
|
)
|
|||
Proceeds from long term borrowings
|
—
|
|
|
—
|
|
|
150,000
|
|
|||
Payments of deferred financing costs and equity issuance costs
|
(16
|
)
|
|
(9,637
|
)
|
|
(2,892
|
)
|
|||
Proceeds from 2017 convertible senior notes
|
—
|
|
|
300,000
|
|
|
—
|
|
|||
Payment for loss on interest rate swap termination
|
—
|
|
|
(1,769
|
)
|
|
—
|
|
|||
Payments of capital leases
|
(859
|
)
|
|
(1,006
|
)
|
|
(1,236
|
)
|
|||
Excess tax benefit from stock-based compensation arrangements
|
804
|
|
|
507
|
|
|
23
|
|
|||
Net cash provided by (used in) financing activities
|
6,257
|
|
|
98,721
|
|
|
(30,050
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rates on cash and cash equivalents
|
36
|
|
|
223
|
|
|
(450
|
)
|
|||
|
|
|
|
|
|
||||||
Net (decrease) increase in cash and cash equivalents
|
(151,625
|
)
|
|
166,718
|
|
|
381
|
|
|||
|
|
|
|
|
|
||||||
Cash and cash equivalents, beginning of year
|
320,360
|
|
|
153,642
|
|
|
153,261
|
|
|||
|
|
|
|
|
|
Wright Medical Group, Inc.
Consolidated Statements of Cash Flows (Continued)
(In thousands)
|
|||||||||||
Cash and cash equivalents, end of year
|
$
|
168,735
|
|
|
$
|
320,360
|
|
|
$
|
153,642
|
|
Wright Medical Group, Inc.
Consolidated Statements of Changes in Stockholders’ Equity
For the Years Ended December 31, 2011, 2012 and 2013
(In thousands, except share data)
|
||||||||||||||||||||||
|
Common Stock, Voting
|
|
Additional Paid-in Capital
|
|
Retained Earnings
|
|
Accumulated Other Comprehensive Income
|
|
Total Stockholders' Equity
|
|||||||||||||
|
Number of
Shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 31, 2010
|
39,171,501
|
|
|
$
|
379
|
|
|
$
|
390,098
|
|
|
$
|
58,322
|
|
|
$
|
22,173
|
|
|
$
|
470,972
|
|
2011 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,143
|
)
|
|
—
|
|
|
(5,143
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,102
|
)
|
|
(2,102
|
)
|
|||||
Unrealized loss on derivative instruments, net of taxes $600
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,014
|
)
|
|
(1,014
|
)
|
|||||
Unrealized gain (loss) on marketable securities, net of taxes $21
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|
(33
|
)
|
|||||
Minimum pension liability adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37
|
|
|
37
|
|
|||||
Issuances of common stock
|
45,518
|
|
|
1
|
|
|
539
|
|
|
—
|
|
|
—
|
|
|
540
|
|
|||||
Grant of non-vested shares of common stock
|
403,084
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Forfeitures of non-vested shares of common stock
|
(354,774
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of stock-settled phantom stock and restricted stock units
|
40,789
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax deficits realized from stock based compensation arrangements, net
|
—
|
|
|
—
|
|
|
(3,869
|
)
|
|
—
|
|
|
—
|
|
|
(3,869
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
$
|
—
|
|
|
$
|
9,076
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,076
|
|
Balance at December 31, 2011
|
39,306,118
|
|
|
$
|
384
|
|
|
$
|
395,840
|
|
|
$
|
53,179
|
|
|
$
|
19,061
|
|
|
$
|
468,464
|
|
2012 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
5,284
|
|
|
—
|
|
|
5,284
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,301
|
)
|
|
(1,301
|
)
|
|||||
Unrealized loss on derivative instruments, net of $42 taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
(65
|
)
|
|||||
Loss on early termination of interest rate swap, net of taxes of $690
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,079
|
|
|
1,079
|
|
|||||
Unrealized gain (loss) on marketable securities, net of taxes $2,054
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,210
|
|
|
3,210
|
|
|||||
Minimum pension liability adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
550
|
|
|
550
|
|
|||||
Issuances of common stock
|
113,470
|
|
|
1
|
|
|
1,948
|
|
|
—
|
|
|
—
|
|
|
1,949
|
|
|||||
Grant of non-vested shares of common stock
|
269,535
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Forfeitures of non-vested shares of common stock
|
(32,797
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of stock-settled phantom stock and restricted stock units
|
47,032
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax deficits realized from stock based compensation arrangements, net
|
—
|
|
|
—
|
|
|
(116
|
)
|
|
—
|
|
|
—
|
|
|
(116
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
10,932
|
|
|
—
|
|
|
—
|
|
|
10,932
|
|
|||||
Equity issuance costs associated with BioMimetic acquisition
|
—
|
|
|
—
|
|
|
(290
|
)
|
|
—
|
|
|
—
|
|
|
(290
|
)
|
|||||
Issuance of stock warrants, net of equity issuance costs
|
—
|
|
|
—
|
|
|
33,745
|
|
|
—
|
|
|
—
|
|
|
33,745
|
|
|||||
Balance at December 31, 2012
|
39,703,358
|
|
|
$
|
389
|
|
|
$
|
442,055
|
|
|
$
|
58,463
|
|
|
$
|
22,534
|
|
|
$
|
523,441
|
|
Wright Medical Group, Inc.
Consolidated Statements of Changes in Stockholders’ Equity (Continued)
For the Years Ended December 31, 2011, 2012 and 2013
(In thousands, except share data)
|
||||||||||||||||||||||
2013 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(273,945
|
)
|
|
—
|
|
|
(273,945
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,381
|
)
|
|
(1,381
|
)
|
|||||
Reclassification of gain on equity securities, net of taxes $3,041
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,757
|
)
|
|
(4,757
|
)
|
|||||
Unrealized gain (loss) on marketable securities, net of taxes $987
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,543
|
|
|
1,543
|
|
|||||
Minimum pension liability adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|||||
Issuances of common stock
|
307,572
|
|
|
3
|
|
|
6,325
|
|
|
—
|
|
|
—
|
|
|
6,328
|
|
|||||
Common stock issued in connection with BioMimetic acquisition
|
6,956,880
|
|
|
70
|
|
|
168,691
|
|
|
—
|
|
|
—
|
|
|
168,761
|
|
|||||
Common stock issued in connection with Biotech acquisition
|
742,115
|
|
|
7
|
|
|
20,957
|
|
|
—
|
|
|
—
|
|
|
20,964
|
|
|||||
Grant of non-vested shares of common stock
|
281,496
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Forfeitures of non-vested shares of common stock
|
(39,482
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Vesting of stock-settled phantom stock and restricted stock units
|
41,826
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax deficits realized from stock based compensation arrangements, net
|
—
|
|
|
—
|
|
|
(1,045
|
)
|
|
—
|
|
|
—
|
|
|
(1,045
|
)
|
|||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
19,687
|
|
|
—
|
|
|
—
|
|
|
19,687
|
|
|||||
Equity issuance costs associated with BioMimetic acquisition
|
—
|
|
|
—
|
|
|
104
|
|
|
—
|
|
|
—
|
|
|
104
|
|
|||||
Balance at December 31, 2013
|
47,993,765
|
|
|
$
|
473
|
|
|
$
|
656,770
|
|
|
$
|
(215,482
|
)
|
|
$
|
17,953
|
|
|
$
|
459,714
|
|
Land improvements
|
|
15
|
to
|
25
|
years
|
Buildings
|
|
10
|
to
|
25
|
years
|
Machinery and equipment
|
|
3
|
to
|
14
|
years
|
Furniture, fixtures and office equipment
|
|
1
|
to
|
14
|
years
|
Surgical instruments
|
|
|
|
6
|
years
|
Level 1:
|
Financial instruments with unadjusted, quoted prices listed on active market exchanges.
|
Level 2:
|
Financial instruments determined using prices for recently traded financial instruments with similar underlying terms as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
|
Level 3:
|
Financial instruments that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the financial instrument. The prices are determined using significant unobservable inputs or valuation techniques.
|
|
2017 Notes Conversion Derivative
|
2017 Notes Hedge
|
Stock Price Volatility (1)
|
32%
|
32%
|
Credit Spread for Wright (2)
|
2.2%
|
N/A
|
Credit Spread for Bank of America, N.A. (3)
|
N/A
|
0.6%
|
Credit Spread for Deutsche Bank AG (3)
|
N/A
|
0.6%
|
Credit Spread for Wells Fargo Securities, LLC (3)
|
N/A
|
0.3%
|
(1)
|
Volatility selected based on historical and implied volatility of common shares of Wright Medical Group, Inc.
|
(2)
|
Credit spread was estimated based on BVAL price from Bloomberg as of valuation date.
|
(3)
|
Credit spread of each bank is estimated using CDS curves. Source: Bloomberg.
|
|
Total
|
Quoted Prices
in Active
Markets
(Level 1)
|
Prices with
Other
Observable
Inputs
(Level 2)
|
Prices with
Unobservable
Inputs
(Level 3)
|
||||||||
At December 31, 2013
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
168,534
|
|
$
|
168,534
|
|
$
|
—
|
|
$
|
—
|
|
Available-for-sale marketable securities
|
|
|
|
|
||||||||
U.S. agency debt securities
|
4,998
|
|
—
|
|
4,998
|
|
—
|
|
||||
Certificate of deposit
|
245
|
|
—
|
|
245
|
|
—
|
|
||||
Corporate debt securities
|
5,188
|
|
—
|
|
5,188
|
|
—
|
|
||||
U.S. government debt securities
|
4,117
|
|
4,117
|
|
—
|
|
—
|
|
||||
Total available-for-sale marketable securities
|
14,548
|
|
4,117
|
|
10,431
|
|
—
|
|
||||
|
|
|
|
|
||||||||
2017 Notes Hedges
|
118,000
|
|
—
|
|
—
|
|
118,000
|
|
||||
|
|
|
|
|
||||||||
Total
|
$
|
301,082
|
|
$
|
172,651
|
|
$
|
10,431
|
|
$
|
118,000
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2017 Notes Conversion Derivative
|
$
|
112,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
112,000
|
|
Contingent consideration
|
6,237
|
|
—
|
|
—
|
|
6,237
|
|
||||
Contingent consideration (CVRs)
|
8,969
|
|
$
|
8,969
|
|
$
|
—
|
|
—
|
|
||
Total
|
$
|
127,206
|
|
$
|
8,969
|
|
$
|
—
|
|
$
|
118,237
|
|
|
Total
|
Quoted Prices
in Active
Markets
(Level 1)
|
Prices with
Other
Observable
Inputs
(Level 2)
|
Prices with
Unobservable
Inputs
(Level 3)
|
||||||||
At December 31, 2012
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
320,360
|
|
$
|
320,360
|
|
$
|
—
|
|
$
|
—
|
|
Available-for-sale marketable securities
|
|
|
|
|
||||||||
U.S. agency debt securities
|
2,500
|
|
—
|
|
2,500
|
|
—
|
|
||||
Corporate debt securities
|
2,001
|
|
—
|
|
2,001
|
|
—
|
|
||||
Total debt securities
|
4,501
|
|
—
|
|
4,501
|
|
—
|
|
||||
Corporate equity securities
|
8,145
|
|
8,145
|
|
$
|
—
|
|
—
|
|
|||
Total available-for-sale marketable securities
|
12,646
|
|
8,145
|
|
4,501
|
|
—
|
|
||||
|
|
|
|
|
||||||||
2017 Notes Hedges
|
62,000
|
|
$
|
—
|
|
$
|
—
|
|
62,000
|
|
||
Total
|
$
|
395,006
|
|
$
|
328,505
|
|
$
|
4,501
|
|
$
|
62,000
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2017 Notes Conversion Derivative
|
$
|
55,000
|
|
$
|
—
|
|
$
|
—
|
|
$
|
55,000
|
|
Contingent consideration
|
983
|
|
—
|
|
—
|
|
983
|
|
||||
Total
|
$
|
55,983
|
|
$
|
—
|
|
$
|
—
|
|
$
|
55,983
|
|
|
|
Balance at December 31, 2012
|
Transfers into Level 3
|
Gain/(Loss) included in Earnings
|
Settlements
|
Currency
|
Balance at December 31, 2013
|
||||||
|
|
|
|
|
|
|
|
||||||
2017 Notes Hedges
|
|
62,000
|
|
—
|
|
56,000
|
|
—
|
|
—
|
|
118,000
|
|
|
|
|
|
|
|
|
|
||||||
2017 Notes Conversion Derivative
|
|
(55,000
|
)
|
—
|
|
(57,000
|
)
|
—
|
|
—
|
|
(112,000
|
)
|
|
|
|
|
|
|
|
|
||||||
Contingent Consideration
|
|
(983
|
)
|
(6,396
|
)
|
(157
|
)
|
1,491
|
|
(191
|
)
|
(6,236
|
)
|
Cash and cash equivalents
|
$
|
252
|
|
Accounts receivable
|
5,400
|
|
|
Inventory
|
5,814
|
|
|
Prepaid and other current assets
|
303
|
|
|
Property, plant and equipment
|
2,573
|
|
|
Intangible assets
|
15,500
|
|
|
Accounts payable and accrued liabilities
|
(2,091
|
)
|
|
Deferred tax liability - current
|
(52
|
)
|
|
Deferred tax liability - noncurrent
|
(3,939
|
)
|
|
Net assets acquired
|
23,760
|
|
|
|
|
||
Goodwill
|
56,455
|
|
|
Total purchase consideration
|
$
|
80,215
|
|
Fair value of Wright shares issued at an exchange ratio of 0.2482 shares of Wright for one share of BioMimetic
(1)
|
$
|
165,893
|
|
Cash transferred
(2)
|
41,336
|
|
|
Contingent Value Rights
(3)
|
70,120
|
|
|
Value of previously vested BioMimetic stock options converted into Wright stock options (at specified exchange ratio)
(4)
|
2,868
|
|
|
Withholding tax component related to BioMimetic exercised stock options (merger consideration tendered to cover remaining unpaid value of employees' portion)
(5)
|
2,419
|
|
|
Fair value of Wright's investment in BioMimetic held before the merger
(6)
|
10,676
|
|
|
Total value of consideration transferred
|
$
|
293,312
|
|
(1)
|
The fair value of our shares of
$165,893
was calculated by multiplying the (a) BioMimetic shares outstanding as of February 28, 2013,
28.3 million
shares, less our prior investment in BioMimetic of
1.13 million
shares, and (b) the BioMimetic shares issued for exercises of BioMimetic stock options immediately prior to the merger,
1.1 million
shares, by (c) the exchange ratio of 0.2482 and (d)
$23.83
, the closing trading price of our common stock on March 1, 2013. The fair value of the Wright shares was offset by the value of the stock component of merger consideration that would have been received by option holders of
0.2 million
BioMimetic stock options. These BioMimetic stock options were exercised immediately prior to the merger, but were tendered, along with the associated CVRs, to BioMimetic to cover
$1.4 million
of the total employee portion of the statutory withholding tax.
|
(2)
|
The cash transferred of
$41,336
was calculated by multiplying the (a) BioMimetic shares outstanding as of February 28, 2013, 28.3 million shares, less our prior investment in BioMimetic of 1.13 million shares and (b) the BioMimetic shares issued for exercises of BioMimetic stock options immediately prior to the merger, 1.1 million shares, by (c) $1.50 per share to be received by BioMimetic stockholders. The cash component of merger consideration was offset by the value of the cash component of merger consideration that would have been received by option holders to cover
$1.0 million
of the total employee portion of the statutory withholding tax.
|
(3)
|
Each CVR entitles its holder to receive an additional
$3.50
per share upon approval by the FDA of Augment
®
Bone Graft; an additional
$1.50
per share the first time aggregate sales of specified products exceed
$40 million
during a consecutive 12-month period and an additional
$1.50
per share the first time aggregate sales of specified products exceed
$70 million
during a consecutive 12-month period. The CVRs are publicly traded and will terminate on the earlier of the six-year anniversary of the completion of the merger or the payment date for the second product sales milestone.
|
(4)
|
In accordance with FASB ASC Section 805,
Business Combinations
, the consideration transferred by us for BioMimetic includes
$2.9 million
for the fair value of certain BioMimetic stock options attributable to precombination service.
|
(5)
|
The withholding tax component of
$2.4 million
represents the merger consideration tendered to BioMimetic in connection with the exercise of 0.2 million BioMimetic stock options, immediately prior to the merger, to cover the employee portion of the statutory withholding tax, consisting of the sum of (1) the value of the stock component of merger consideration, along with the associated CVRs, to cover $1.4 million of the statutory withholding tax and (2) the cash component of merger consideration that would have been received by option holders to cover $1.0 million of the withholding tax.
|
(6)
|
As of February 28, 2013, we held 1.13 million shares of BioMimetic as an available-for-sale (AFS) marketable security carried at an aggregate fair value of
$10.7 million
based on the closing market price of BioMimetic common stock of $9.49. The cumulative unrealized gain on this investment based on the fair value determined at closing was recognized as a gain of
$7.8 million
. This gain was recorded in “Other (income) expense, net” in the consolidated statement of operations for the twelve months ended December 31, 2013.
|
Cash and cash equivalents
|
|
$
|
10,577
|
|
Marketable securities
|
|
16,882
|
|
|
Accounts receivables
|
|
1,595
|
|
|
Inventories
|
|
4,418
|
|
|
Prepaid and other current assets
|
|
4,234
|
|
|
Property, plant and equipment
|
|
2,976
|
|
|
Intangible assets
|
|
95,100
|
|
|
Deferred tax asset - noncurrent
|
|
24,495
|
|
|
Other long-term assets
|
|
1,133
|
|
|
Accounts payable and accrued liabilities
|
|
(6,003
|
)
|
|
Capital leases
|
|
(118
|
)
|
|
Deferred tax liability - current
|
|
(219
|
)
|
|
Other liabilities
|
|
(2
|
)
|
|
Net assets acquired
|
|
155,068
|
|
|
|
|
|
||
Goodwill
|
|
138,244
|
|
|
Total purchase consideration
|
|
$
|
293,312
|
|
|
Pro Forma Year Ended December 31, 2013
|
|
Pro Forma Year Ended December 31, 2012
|
||||
Revenue from continuing operations
|
$
|
242,945
|
|
|
$
|
216,577
|
|
Net loss from continuing operations
|
(284,480
|
)
|
|
(38,926
|
)
|
||
Net loss from continuing operations per share, basic
|
(6.13
|
)
|
|
(0.85
|
)
|
||
Net loss from continuing operations per share, diluted
|
(6.13
|
)
|
|
(0.85
|
)
|
Cash
|
|
$
|
458
|
|
Accounts receivable
|
|
1,052
|
|
|
Inventory
|
|
1,640
|
|
|
Property, plant and equipment
|
|
330
|
|
|
Intangible assets
|
|
4,748
|
|
|
Accounts payable
|
|
(1,550
|
)
|
|
Deferred tax liability - current
|
|
(43
|
)
|
|
Deferred tax liability - noncurrent
|
|
(1,139
|
)
|
|
Total net assets acquired
|
|
5,496
|
|
|
|
|
|
||
Goodwill
|
|
4,341
|
|
|
Total purchase consideration
|
|
$
|
9,837
|
|
|
Twelve Months Ended
|
||||||||||
|
December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Revenue
|
$
|
231,865
|
|
|
$
|
269,671
|
|
|
$
|
302,193
|
|
Income before tax
|
9,489
|
|
|
11,946
|
|
|
4,700
|
|
|||
Income tax provision
|
3,266
|
|
|
3,275
|
|
|
2,448
|
|
|||
Income from discontinued operations, net of tax
|
6,223
|
|
|
8,671
|
|
|
2,252
|
|
|
|
December 31,
2013 |
|
December 31,
2012 |
||||
Assets
|
|
|
|
|
||||
Cash
|
|
$
|
201
|
|
|
$
|
—
|
|
Accounts receivable
|
|
59,172
|
|
|
67,434
|
|
||
Inventories, net
|
|
74,807
|
|
|
86,792
|
|
||
Property, plant & equipment, net
|
|
92,436
|
|
|
96,759
|
|
||
Goodwill
|
|
25,802
|
|
|
25,652
|
|
||
Intangible assets, net
|
|
1,738
|
|
|
2,610
|
|
||
Deferred income taxes
|
|
1,197
|
|
|
2,200
|
|
||
Other current and long-term assets
|
|
19,105
|
|
|
14,767
|
|
||
Assets held for sale
|
|
$
|
274,458
|
|
|
$
|
296,214
|
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
||||
Accounts payable
|
|
$
|
9,553
|
|
|
$
|
5,666
|
|
Other current liabilities
|
|
21,668
|
|
|
27,327
|
|
||
Other long-term liabilities
|
|
1,399
|
|
|
2,031
|
|
||
Liabilities held for sale
|
|
$
|
32,620
|
|
|
$
|
35,024
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
(Losses)
|
|
Estimated
Fair Value
|
||||||||
At December 31, 2013
|
|
|
|
|
|
|
|
||||||||
Available-for-sale marketable securities
|
|
|
|
|
|
|
|
||||||||
U.S. agency debt securities
|
$
|
5,002
|
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
$
|
4,998
|
|
Certificate of deposit
|
245
|
|
|
—
|
|
|
—
|
|
|
245
|
|
||||
Corporate debt securities
|
5,186
|
|
|
2
|
|
|
—
|
|
|
5,188
|
|
||||
U.S. government debt securities
|
4,116
|
|
|
1
|
|
|
—
|
|
|
4,117
|
|
||||
Total available-for-sale marketable securities
|
$
|
14,549
|
|
|
$
|
3
|
|
|
$
|
(4
|
)
|
|
$
|
14,548
|
|
|
Amortized
Cost
|
|
Gross
Unrealized
Gains
|
|
Gross
Unrealized
(Losses)
|
|
Estimated
Fair Value
|
||||||||
At December 31, 2012
|
|
|
|
|
|
|
|
||||||||
Available-for-sale marketable securities
|
|
|
|
|
|
|
|
||||||||
U.S. agency debt securities
|
2,500
|
|
|
—
|
|
|
—
|
|
|
2,500
|
|
||||
Corporate debt securities
|
2,000
|
|
|
1
|
|
|
—
|
|
|
2,001
|
|
||||
Total debt securities
|
$
|
4,500
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
4,501
|
|
|
|
|
|
|
|
|
|
||||||||
Corporate equity securities
|
2,878
|
|
|
$
|
5,267
|
|
|
—
|
|
|
8,145
|
|
|||
|
|
|
|
|
|
|
|
||||||||
Total available-for-sale marketable securities
|
$
|
7,378
|
|
|
$
|
5,268
|
|
|
$
|
—
|
|
|
$
|
12,646
|
|
|
Available-for-Sale
|
|||||
|
Cost Basis
|
Fair Value
|
||||
Due in one year or less
|
$
|
6,896
|
|
$
|
6,898
|
|
Due after one year through two years
|
6,153
|
|
6,151
|
|
||
Due after two years through five years
|
1,500
|
|
1,499
|
|
||
|
14,549
|
|
14,548
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Land and land improvements
|
$
|
31
|
|
|
$
|
61
|
|
Buildings
|
13,026
|
|
|
2,227
|
|
||
Machinery and equipment
|
14,274
|
|
|
8,029
|
|
||
Furniture, fixtures and office equipment
|
47,364
|
|
|
19,006
|
|
||
Construction in progress
|
13,997
|
|
|
2,737
|
|
||
Surgical instruments
|
52,893
|
|
|
50,860
|
|
||
|
141,585
|
|
|
82,920
|
|
||
Less: Accumulated depreciation
|
(71,070
|
)
|
|
(41,438
|
)
|
||
|
$
|
70,515
|
|
|
$
|
41,482
|
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Buildings
|
$
|
8,192
|
|
|
$
|
—
|
|
Furniture, fixtures and office equipment
|
59
|
|
|
—
|
|
||
|
8,251
|
|
|
—
|
|
||
Less: Accumulated depreciation
|
(48
|
)
|
|
—
|
|
||
|
$
|
8,203
|
|
|
$
|
—
|
|
|
December 31
|
||||||
|
2013
|
|
2012
|
||||
Employee bonus
|
$
|
10,250
|
|
|
$
|
8,967
|
|
Other employee benefits
|
13,740
|
|
|
3,919
|
|
||
Royalties
|
2,669
|
|
|
2,829
|
|
||
Taxes other than income
|
4,722
|
|
|
2,170
|
|
||
Commissions
|
4,336
|
|
|
1,567
|
|
||
Professional and legal fees
|
7,054
|
|
|
4,981
|
|
||
Contingent consideration
|
12,324
|
|
|
444
|
|
||
Product liability
|
7,710
|
|
|
5,275
|
|
||
Distributor payments
|
1,253
|
|
|
2,701
|
|
||
Other
|
16,059
|
|
|
5,910
|
|
||
|
$
|
80,117
|
|
|
$
|
38,763
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||
Capital lease obligations
|
$
|
8,238
|
|
|
$
|
—
|
|
2017 Notes
|
263,395
|
|
|
254,717
|
|
||
2014 Notes
|
3,768
|
|
|
3,768
|
|
||
|
275,401
|
|
|
258,485
|
|
||
Less: current portion
|
(4,174
|
)
|
|
—
|
|
||
|
$
|
271,227
|
|
|
$
|
258,485
|
|
|
December 31, 2013
|
December 31, 2012
|
||||
Principal amount of 2017 Notes
|
$
|
300,000
|
|
$
|
300,000
|
|
Unamortized debt discount
|
(36,605
|
)
|
(45,283
|
)
|
||
Net carrying amount of 2017 Notes
|
$
|
263,395
|
|
$
|
254,717
|
|
2014
|
$
|
3,768
|
|
2015
|
—
|
|
|
2016
|
—
|
|
|
2017
|
300,000
|
|
|
2018
|
—
|
|
|
|
$
|
303,768
|
|
2014
|
$
|
419
|
|
2015
|
915
|
|
|
2016
|
948
|
|
|
2017
|
982
|
|
|
2018
|
1,016
|
|
|
Thereafter
|
6,012
|
|
|
Total minimum payments
|
10,292
|
|
|
Less amount representing interest
|
(2,054
|
)
|
|
Present value of minimum lease payments
|
8,238
|
|
|
Current portion
|
(406
|
)
|
|
Long-term portion
|
$
|
7,832
|
|
|
December 31
|
||||||
|
2013
|
|
2012
|
||||
Unrecognized tax benefits (See Note 14)
|
$
|
4,702
|
|
|
$
|
5,074
|
|
Product liability (See Note 19)
|
9,784
|
|
|
18,639
|
|
||
2017 Notes Conversion Derivative (See Note 11)
|
112,000
|
|
|
55,000
|
|
||
Deferred license revenue (See Note 2)
|
4,210
|
|
|
4,731
|
|
||
Contingent consideration
|
2,882
|
|
|
540
|
|
||
Other
|
1,488
|
|
|
928
|
|
||
|
$
|
135,066
|
|
|
$
|
84,912
|
|
|
Location on consolidated balance sheet
|
December 31, 2013
|
December 31, 2012
|
||||
2017 Notes Hedges
|
Other assets
|
$
|
118,000
|
|
$
|
62,000
|
|
2017 Notes Conversion Derivative
|
Other liabilities
|
$
|
112,000
|
|
$
|
55,000
|
|
|
Twelve Months Ended
|
Twelve Months Ended
|
||||
|
December 31,
|
December 31,
|
||||
|
2013
|
2012
|
||||
2017 Notes Hedges
|
$
|
56,000
|
|
$
|
5,805
|
|
2017 Notes Conversion Derivative
|
(57,000
|
)
|
(6,947
|
)
|
||
Net loss on changes in fair value
|
$
|
(1,000
|
)
|
$
|
(1,142
|
)
|
Goodwill at December 31, 2012
|
$
|
32,414
|
|
Goodwill associated with acquisitions (see Note 3)
|
199,040
|
|
|
Goodwill impairment
|
(114,997
|
)
|
|
Foreign currency translation
|
1,806
|
|
|
Goodwill at December 31, 2013
|
$
|
118,263
|
|
|
December 31, 2013
|
|
December 31, 2012
|
||||||||||||
|
Cost
|
|
Accumulated
Amortization
|
|
Cost
|
|
Accumulated
Amortization
|
||||||||
Indefinite life intangibles:
|
|
|
|
|
|
|
|
||||||||
IPRD technology
|
$
|
4,266
|
|
|
|
|
$
|
278
|
|
|
|
||||
Trademarks
|
4,121
|
|
|
|
|
1,658
|
|
|
|
||||||
Total indefinite life intangibles
|
8,387
|
|
|
|
|
1,936
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Finite life intangibles:
|
|
|
|
|
|
|
|
||||||||
Distribution channels
|
250
|
|
|
$
|
233
|
|
|
1,250
|
|
|
$
|
436
|
|
||
Completed technology
|
16,714
|
|
|
5,702
|
|
|
9,781
|
|
|
4,243
|
|
||||
Licenses
|
3,633
|
|
|
1,303
|
|
|
3,668
|
|
|
1,056
|
|
||||
Customer relationships
|
15,578
|
|
|
2,371
|
|
|
3,788
|
|
|
1,799
|
|
||||
Trademarks
|
2,364
|
|
|
1,098
|
|
|
1,316
|
|
|
922
|
|
||||
Non-compete agreements
|
5,660
|
|
|
3,155
|
|
|
7,314
|
|
|
2,729
|
|
||||
Other
|
771
|
|
|
75
|
|
|
2,171
|
|
|
1,355
|
|
||||
Total finite life intangibles
|
44,970
|
|
|
$
|
13,937
|
|
|
29,288
|
|
|
$
|
12,540
|
|
||
|
|
|
|
|
|
|
|
||||||||
Total intangibles
|
53,357
|
|
|
|
|
31,224
|
|
|
|
||||||
Less: Accumulated amortization
|
(13,937
|
)
|
|
|
|
(12,540
|
)
|
|
|
||||||
Intangible assets, net
|
$
|
39,420
|
|
|
|
|
$
|
18,684
|
|
|
|
|
Currency Translation Adjustment
|
|
Unrealized
Gain (loss) on
Marketable Securities
|
|
Minimum
Pension
Liability
Adjustment
|
|
Total
|
||||||||
Balance December 31, 2012
|
$
|
18,991
|
|
|
$
|
3,213
|
|
|
$
|
330
|
|
|
$
|
22,534
|
|
Other comprehensive (loss) income, net of tax before reclassification
|
(1,381
|
)
|
|
1,543
|
|
|
14
|
|
|
176
|
|
||||
Reclassification to Other (Income) Expense, net: Gain on equity securities, net of tax
|
—
|
|
|
(4,757
|
)
|
|
—
|
|
|
(4,757
|
)
|
||||
Balance December 31, 2013
|
$
|
17,610
|
|
|
$
|
(1
|
)
|
|
$
|
344
|
|
|
$
|
17,953
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
U.S.
|
$
|
(230,975
|
)
|
|
$
|
(4,043
|
)
|
|
$
|
(12,498
|
)
|
Foreign
|
572
|
|
|
658
|
|
|
1,142
|
|
|||
Income (loss) before income taxes
|
$
|
(230,403
|
)
|
|
$
|
(3,385
|
)
|
|
$
|
(11,356
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Current (benefit) provision:
|
|
|
|
|
|
||||||
U.S.:
|
|
|
|
|
|
||||||
Federal
|
$
|
296
|
|
|
$
|
(5,480
|
)
|
|
$
|
(279
|
)
|
State
|
85
|
|
|
(34
|
)
|
|
(81
|
)
|
|||
Foreign
|
180
|
|
|
337
|
|
|
398
|
|
|||
Total current (benefit) provision
|
561
|
|
|
(5,177
|
)
|
|
38
|
|
|||
Deferred provision (benefit):
|
|
|
|
|
|
||||||
U.S.:
|
|
|
|
|
|
||||||
Federal
|
48,257
|
|
|
5,179
|
|
|
(3,533
|
)
|
|||
State
|
884
|
|
|
(98
|
)
|
|
(472
|
)
|
|||
Foreign
|
63
|
|
|
98
|
|
|
6
|
|
|||
Total deferred provision (benefit)
|
49,204
|
|
|
5,179
|
|
|
(3,999
|
)
|
|||
Total provision (benefit) for income taxes
|
$
|
49,765
|
|
|
$
|
2
|
|
|
$
|
(3,961
|
)
|
|
Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Income tax provision at statutory rate
|
35.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes
|
3.2
|
%
|
|
3.8
|
%
|
|
4.8
|
%
|
Change in valuation allowance
|
(51.9
|
)%
|
|
(19.7
|
)%
|
|
(0.8
|
)%
|
Foreign income tax rate differences
|
—
|
%
|
|
12.9
|
%
|
|
3.5
|
%
|
Other non-deductible expenses
|
(0.1
|
)%
|
|
(6.1
|
)%
|
|
(2.2
|
)%
|
Transaction costs
|
(0.8
|
)%
|
|
(21.2
|
)%
|
|
—
|
%
|
CVR Fair Market Value Adjustment
|
9.3
|
%
|
|
—
|
%
|
|
—
|
%
|
Goodwill Impairment
|
(17.5
|
)%
|
|
—
|
%
|
|
—
|
%
|
Other, net
|
1.2
|
%
|
|
(4.8
|
)%
|
|
(5.4
|
)%
|
Total
|
(21.6
|
)%
|
|
(0.1
|
)%
|
|
34.9
|
%
|
|
December 31,
|
||||||
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
100,361
|
|
|
$
|
17,009
|
|
General business credit carryforward
|
3,181
|
|
|
734
|
|
||
Reserves and allowances
|
40,789
|
|
|
37,160
|
|
||
Stock-based compensation expense
|
7,852
|
|
|
7,256
|
|
||
Convertible debt notes and conversion option
|
46,100
|
|
|
22,173
|
|
||
Other
|
6,070
|
|
|
7,195
|
|
||
Valuation allowance
|
(134,263
|
)
|
|
(14,248
|
)
|
||
|
|
|
|
||||
Total deferred tax assets
|
70,090
|
|
|
77,279
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
13,863
|
|
|
21,116
|
|
||
Intangible assets
|
9,071
|
|
|
2,828
|
|
||
Convertible note bond hedge
|
46,020
|
|
|
21,916
|
|
||
Other
|
10,136
|
|
|
8,219
|
|
||
|
|
|
|
||||
Total deferred tax liabilities
|
79,090
|
|
|
54,079
|
|
||
|
|
|
|
||||
Net deferred tax assets (liabilities)
|
$
|
(9,000
|
)
|
|
$
|
23,200
|
|
Balance at January 1, 2013
|
$
|
5,074
|
|
Additions for tax positions related to current year
|
214
|
|
|
Additions for tax positions of prior years
|
180
|
|
|
Reductions for tax positions of prior years
|
(848
|
)
|
|
Settlements
|
—
|
|
|
Foreign currency translation
|
82
|
|
|
Balance at December 31, 2013
|
$
|
4,702
|
|
|
Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Weighted-average number of common shares outstanding — basic
|
45,265
|
|
|
38,769
|
|
|
38,279
|
|
Common stock equivalents
|
—
|
|
|
317
|
|
|
—
|
|
Weighted-average number of common shares outstanding — diluted
|
45,265
|
|
|
39,086
|
|
|
38,279
|
|
|
Year Ended December 31,
|
|||||||
|
2013
|
|
2012
|
|
2011
|
|||
Stock options
|
2,763
|
|
|
2,854
|
|
|
3,400
|
|
Non-vested shares, restricted stock units, and stock-settled phantom stock units
|
197
|
|
|
290
|
|
|
430
|
|
Convertible debt
|
115
|
|
|
633
|
|
|
1,909
|
|
Warrants
|
11,794
|
|
|
11,794
|
|
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Total cost of share-based payment plans
|
$
|
11,912
|
|
|
$
|
7,811
|
|
|
$
|
5,908
|
|
Amounts capitalized as inventory
|
(467
|
)
|
|
(689
|
)
|
|
(725
|
)
|
|||
Amortization of capitalized amounts
|
513
|
|
|
717
|
|
|
747
|
|
|||
Charged against income before income taxes
|
11,958
|
|
|
7,839
|
|
|
5,930
|
|
|||
Amount of related income tax benefit recognized in income
|
(3,945
|
)
|
|
(2,940
|
)
|
|
(2,094
|
)
|
|||
Impact to net loss from continuing operations
|
$
|
8,013
|
|
|
$
|
4,899
|
|
|
$
|
3,836
|
|
Impact to net income from discontinued operations
|
2,320
|
|
|
2,308
|
|
|
2,326
|
|
|||
Impact to net (loss) income
|
$
|
10,333
|
|
|
$
|
7,207
|
|
|
$
|
6,162
|
|
Impact to basic earnings per share, continuing operations
|
$
|
0.18
|
|
|
$
|
0.13
|
|
|
$
|
0.10
|
|
Impact to basic earnings per share
|
$
|
0.23
|
|
|
$
|
0.19
|
|
|
$
|
0.16
|
|
Impact to diluted earnings per share, continuing operations
|
$
|
0.18
|
|
|
$
|
0.13
|
|
|
$
|
0.10
|
|
Impact to diluted earnings per share
|
$
|
0.23
|
|
|
$
|
0.18
|
|
|
$
|
0.16
|
|
|
Year Ended December 31,
|
||||
|
2013
|
|
2012
|
|
2011
|
Risk-free interest rate
|
0.1% - 1.4%
|
|
0.5% - 1.0%
|
|
1.0% - 2.0%
|
Expected option life
|
6 years
|
|
6 years
|
|
6 years
|
Expected price volatility
|
36%
|
|
40%
|
|
39%
|
|
Shares
(000’s)
|
|
Weighted-Average Exercise
Price
|
|
Weighted-Average Remaining
Contractual Life
|
|
Aggregate Intrinsic Value*
($000’s)
|
|||||
Outstanding at December 31, 2012
|
2,120
|
|
|
$
|
22.71
|
|
|
|
|
|
||
Granted
|
1,033
|
|
|
24.38
|
|
|
|
|
|
|||
BioMimetic options assumed
|
752
|
|
|
19.25
|
|
|
|
|
|
|||
Exercised
|
(211)
|
|
|
20.17
|
|
|
|
|
|
|||
Forfeited or expired
|
(325)
|
|
|
25.30
|
|
|
|
|
|
|||
Outstanding at December 31, 2013
|
3,369
|
|
|
$
|
22.36
|
|
|
6.4
|
|
$
|
28,171
|
|
Exercisable at December 31, 2013
|
1,772
|
|
|
$
|
21.89
|
|
|
4.2
|
|
$
|
15,657
|
|
*
|
The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of
December 31, 2013
, and the exercise price of the shares. The market value as of
December 31, 2013
is
$30.71
per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Number Outstanding
|
|
Weighted-Average
Remaining Contractual Life |
|
Weighted-Average Exercise Price
|
|
Number Exercisable
|
|
Weighted-Average Exercise Price
|
||||||
$2.00 — $16.00
|
|
371
|
|
|
5.8
|
|
$
|
12.35
|
|
|
276
|
|
|
$
|
11.53
|
|
$16.01 — $24.00
|
|
1,478
|
|
|
6.5
|
|
21.06
|
|
|
802
|
|
|
20.64
|
|
||
$24.01 — $35.87
|
|
1,520
|
|
|
6.4
|
|
26.07
|
|
|
694
|
|
|
27.47
|
|
||
|
|
3,369
|
|
|
6.4
|
|
$
|
22.36
|
|
|
1,772
|
|
|
$
|
21.89
|
|
|
Shares
(000’s)
|
|
Weighted-Average Exercise
Price
|
|
Weighted-Average Remaining
Contractual Life
|
|
Aggregate Intrinsic Value*
($000’s)
|
|||||
Outstanding at December 31, 2012
|
940
|
|
|
$
|
17.21
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
—
|
|
|
—
|
|
|
|
|
|
|||
Forfeited or expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at December 31, 2013
|
940
|
|
|
$
|
17.21
|
|
|
8.0
|
|
$
|
12,683
|
|
Exercisable at December 31, 2013
|
513
|
|
|
$
|
16.61
|
|
|
7.8
|
|
$
|
7,230
|
|
*
|
The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of
December 31, 2013
, and the exercise price of the shares. The market value as of
December 31, 2013
is
$30.71
per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.
|
|
|
Options Outstanding
|
|
Options Exercisable
|
||||||||||||
Range of Exercise Prices
|
|
Number Outstanding
|
|
Weighted-Average
Remaining Contractual Life |
|
Weighted-Average Exercise Price
|
|
Number Exercisable
|
|
Weighted-Average Exercise Price
|
||||||
$2.00 — $16.00
|
|
371
|
|
|
5.8
|
|
$
|
12.35
|
|
|
276
|
|
|
$
|
11.53
|
|
$16.01 — $24.00
|
|
2,418
|
|
|
7.0
|
|
19.56
|
|
|
1,315
|
|
|
19.07
|
|
||
$24.01 — $35.87
|
|
1,520
|
|
|
6.4
|
|
26.07
|
|
|
694
|
|
|
27.47
|
|
||
|
|
4,309
|
|
|
6.7
|
|
$
|
21.24
|
|
|
2,285
|
|
|
$
|
20.71
|
|
|
Shares
(000’s)
|
|
Weighted-Average
Grant-Date
Fair Value
|
|
Aggregate
Intrinsic Value*
($000’s)
|
|||||
Non-vested at December 31, 2012
|
486
|
|
|
$
|
18.44
|
|
|
|
||
Granted
|
223
|
|
|
24.66
|
|
|
|
|||
Vested
|
(212
|
)
|
|
18.10
|
|
|
|
|||
Forfeited
|
(41
|
)
|
|
17.98
|
|
|
|
|||
Non-vested at December 31, 2013
|
456
|
|
|
$
|
21.69
|
|
|
$
|
14,004
|
|
*
|
The aggregate intrinsic value is calculated as the market value of our common stock as of
December 31, 2013
. The market value as of
December 31, 2013
is
$30.71
per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on
December 31, 2013
.
|
|
|
Options Outstanding
|
|||||||||||
Range of Exercise Prices
|
|
Number Outstanding
|
|
Weighted-Average
Remaining Contractual Life |
|
Weighted-Average Exercise Price
|
|
Aggregate Intrinsic Value*
($000’s)
|
|||||
$15.47 — $20.00
|
|
177
|
|
|
0.75
|
|
$
|
16.46
|
|
|
|
||
$20.01 — $30.00
|
|
857
|
|
|
0.75
|
|
23.77
|
|
|
|
|||
$30.01 — $35.87
|
|
112
|
|
|
0.24
|
|
31.12
|
|
|
|
|||
|
|
1,146
|
|
|
0.70
|
|
$
|
23.20
|
|
|
$
|
8,526
|
|
*
|
The aggregate intrinsic value is calculated as the difference between the market value of our common stock as of
December 31, 2013
, and the exercise price of the shares. The market value as of
December 31, 2013
is
$30.71
per share, which is the closing sale price of our common stock reported for transactions effected on the Nasdaq Global Select Market on December 31, 2013.
|
|
Year Ended December 31,
|
||||
|
2013
|
|
2012
|
|
2011
|
Risk-free interest rate
|
0.1% - 0.4%
|
|
0.1% - 0.2%
|
|
0.3% - 0.4%
|
Expected option life
|
6 months
|
|
6 months
|
|
6 months
|
Expected price volatility
|
36%
|
|
40%
|
|
39%
|
2014
|
$
|
6,087
|
|
2015
|
4,364
|
|
|
2016
|
2,503
|
|
|
2017
|
1,267
|
|
|
2018
|
1,182
|
|
|
Thereafter
|
768
|
|
|
|
$
|
16,171
|
|
|
Total
|
2014
|
2015
|
2016
|
2017
|
2018
|
Thereafter
|
||||||
Minimum supply obligations
|
$2,073
|
—
|
|
2,073
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales by product line:
|
|
|
|
|
|
||||||
Foot and Ankle
|
$
|
150,662
|
|
|
$
|
122,897
|
|
|
$
|
107,734
|
|
Upper Extremity
|
24,663
|
|
|
24,977
|
|
|
27,742
|
|
|||
Biologics
|
59,792
|
|
|
60,495
|
|
|
69,409
|
|
|||
Other
|
7,213
|
|
|
5,736
|
|
|
5,868
|
|
|||
Total
|
$
|
242,330
|
|
|
$
|
214,105
|
|
|
$
|
210,753
|
|
|
Year Ended December 31,
|
||||||||||
|
2013
|
|
2012
|
|
2011
|
||||||
Net sales by geographic region:
|
|
|
|
|
|
||||||
United States
|
$
|
177,648
|
|
|
$
|
166,111
|
|
|
$
|
166,456
|
|
Europe
|
31,210
|
|
|
22,044
|
|
|
21,405
|
|
|||
Other
|
33,472
|
|
|
25,950
|
|
|
22,892
|
|
|||
Total
|
$
|
242,330
|
|
|
$
|
214,105
|
|
|
$
|
210,753
|
|
|
2013
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Net sales
|
$
|
56,293
|
|
|
$
|
60,572
|
|
|
$
|
57,641
|
|
|
$
|
67,824
|
|
Cost of sales
|
13,697
|
|
|
14,564
|
|
|
14,037
|
|
|
17,423
|
|
||||
Gross profit
|
42,596
|
|
|
46,008
|
|
|
43,604
|
|
|
50,401
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
50,709
|
|
|
50,543
|
|
|
63,054
|
|
|
66,479
|
|
||||
Research and development
|
3,507
|
|
|
5,868
|
|
|
5,518
|
|
|
5,412
|
|
||||
Amortization of intangible assets
|
1,606
|
|
|
2,778
|
|
|
1,342
|
|
|
1,750
|
|
||||
BioMimetic impairment charges
|
—
|
|
|
—
|
|
|
206,249
|
|
|
—
|
|
||||
Total operating expenses
|
55,822
|
|
|
59,189
|
|
|
276,163
|
|
|
73,641
|
|
||||
Operating loss
|
$
|
(13,226
|
)
|
|
$
|
(13,181
|
)
|
|
$
|
(232,559
|
)
|
|
$
|
(23,240
|
)
|
Net loss from continuing operations, net of tax
|
$
|
(4,918
|
)
|
|
$
|
(15,539
|
)
|
|
$
|
(124,500
|
)
|
|
$
|
(135,211
|
)
|
Income (loss) from discontinued operations, net of tax
|
$
|
13,353
|
|
|
$
|
(1,792
|
)
|
|
$
|
(5,520
|
)
|
|
$
|
182
|
|
Net income (loss)
|
$
|
8,435
|
|
|
$
|
(17,331
|
)
|
|
$
|
(130,020
|
)
|
|
$
|
(135,029
|
)
|
Net loss, continuing operations per share, basic
|
(0.13
|
)
|
|
(0.34
|
)
|
|
(2.68
|
)
|
|
(2.88
|
)
|
||||
Net loss, continuing operations per share, diluted
|
(0.13
|
)
|
|
(0.34
|
)
|
|
(2.68
|
)
|
|
(2.88
|
)
|
||||
Net income (loss) per share, basic
|
$
|
0.20
|
|
|
$
|
(0.37
|
)
|
|
$
|
(2.80
|
)
|
|
$
|
(2.88
|
)
|
Net income (loss) per share, diluted
|
$
|
0.20
|
|
|
$
|
(0.37
|
)
|
|
$
|
(2.80
|
)
|
|
$
|
(2.88
|
)
|
•
|
costs associated with distributor conversions and non-competes, for which we recognized
$1.2 million
,
$1.1 million
,
$0.7 million
and
$0.8 million
during the first, second, third and fourth quarters of
2013
, respectively;
|
•
|
costs associated with due diligence and transaction expenses for our acquisitions of WG Healthcare, BioMimetic and Biotech totaling
$7.5 million
,
$1.4 million
,
$1.7 million
and
$2.3 million
during the first, second, third and fourth quarters of 2013, respectively;
|
•
|
transition costs associated with the divestiture of the OrthoRecon business totaling
$2.6 million
,
$11.2 million
and
$7.7 million
during the second, third and fourth quarters of 2013, respectively;
|
•
|
charges associated with the write-down of BioMimetic inventory to net realizable value totaling
$1.0 million
and
$1.3 million
during the third and fourth quarters of 2013, respectively; and
|
•
|
charges associated with the impairment of intangible assets and goodwill acquired from our BioMimetic acquisition (see Note 12), as well as the recognition of a
$3.2 million
charge for noncancelable inventory commitments for the raw materials used in the manufacture of Augment
®
Bone Graft, which we have estimated will expire unused, totaling
$206.2 million
which was recognized in the third quarter of 2013.
|
•
|
the after-tax effect of the above amounts;
|
•
|
the after tax effects of mark-to-market adjustments on derivative assets and liabilities netting to a
$2.0 million
loss, a
$1.0 million
gain, a
$2.0 million
loss and a
$2.0 million
gain recognized in the first, second, third and fourth quarters of 2013, respectively;
|
•
|
the after tax effects of CVR mark-to-market adjustments of
$5.8 million
unrealized loss,
$66.1 million
unrealized gain, and
$0.8 million
unrealized gain recognized in the second, third and fourth quarters of 2013, respectively;
|
•
|
the after tax effect of a
$7.8 million
gain on our previously held investment in BioMimetic recognized in the first quarter of 2013; and
|
•
|
a charge to record a valuation allowance against our U.S. deferred tax assets of
$119.6 million
recognized in the fourth quarter of 2013.
|
•
|
the after tax impacts of
$1.1 million
,
$0.7 million
,
$0.5 million
and
$0.6 million
of U.S governmental inquiries and DPA costs during the first, second, third and fourth quarters of 2013, respectively;
|
•
|
the after tax impacts of costs associated with amortization of distributor conversions and non-competes, for which we recognized
$0.5 million
,
$0.4 million
,
$0.3 million
and
$0.3 million
during the first, second, third and fourth quarters of
2013
, respectively;
|
•
|
the after tax impacts of costs associated with the sale of our OrthoRecon business of
$2.8 million
,
$5.2 million
and
$2.9 million
recognized during the second, third and fourth quarters of 2013, respectively; and
|
•
|
the after tax impact of a gain of
$19.4 million
for estimated product liability insurance recoveries during the first quarter of 2013.
|
|
2012
|
||||||||||||||
|
First
Quarter
|
|
Second
Quarter
|
|
Third
Quarter
|
|
Fourth
Quarter
|
||||||||
Net sales
|
$
|
52,873
|
|
|
$
|
51,964
|
|
|
$
|
50,888
|
|
|
$
|
58,380
|
|
Cost of sales
|
11,434
|
|
|
11,779
|
|
|
11,704
|
|
|
13,322
|
|
||||
Gross profit
|
41,439
|
|
|
40,185
|
|
|
39,184
|
|
|
45,058
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
34,524
|
|
|
35,885
|
|
|
36,730
|
|
|
43,157
|
|
||||
Research and development
|
3,361
|
|
|
3,490
|
|
|
3,428
|
|
|
3,626
|
|
||||
Amortization of intangible assets
|
655
|
|
|
982
|
|
|
1,289
|
|
|
1,491
|
|
||||
Gain on sale of intellectual property
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,000
|
)
|
||||
Restructuring charges
|
177
|
|
|
254
|
|
|
—
|
|
|
—
|
|
||||
Total operating expenses
|
38,717
|
|
|
40,611
|
|
|
41,447
|
|
|
33,274
|
|
||||
Operating income (loss)
|
$
|
2,722
|
|
|
$
|
(426
|
)
|
|
$
|
(2,263
|
)
|
|
$
|
11,784
|
|
Net income (loss), continuing operations, net of tax
|
$
|
424
|
|
|
$
|
(1,367
|
)
|
|
$
|
(4,088
|
)
|
|
$
|
1,644
|
|
Net income (loss), discontinued operations, net of tax
|
$
|
4,137
|
|
|
$
|
2,077
|
|
|
$
|
(1,251
|
)
|
|
$
|
3,708
|
|
Net income (loss)
|
$
|
4,561
|
|
|
$
|
710
|
|
|
$
|
(5,339
|
)
|
|
$
|
5,352
|
|
Net income (loss), continuing operations per share, basic
|
$
|
0.02
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.04
|
|
Net income (loss), continuing operations per share, diluted
|
$
|
0.02
|
|
|
$
|
(0.04
|
)
|
|
$
|
(0.11
|
)
|
|
$
|
0.04
|
|
Net income (loss) per share, basic
|
$
|
0.12
|
|
|
$
|
0.02
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.14
|
|
Net income (loss) per share, diluted
|
$
|
0.12
|
|
|
$
|
0.02
|
|
|
$
|
(0.14
|
)
|
|
$
|
0.14
|
|
•
|
Solana Surgical, LLC, a privately held extremity company based in Memphis, TN on January 30, 2014 for
$47.6 million
in cash, subject to certain adjustments set forth in the definitive agreement, and approximately
$42.4 million
of Wright common stock.
|
•
|
OrthoPro, L.L.C., a privately held extremity company based in Salt Lake City, Utah on February 5, 2014, for
$32.5 million
in cash, subject to certain adjustments set forth in the definitive agreement, and up to an additional
$3.5 million
in cash contingent upon certain revenue-based milestones.
|
Exhibit No.
|
|
Description
|
3.1
|
|
Fourth Amended and Restated Certificate of Incorporation of Wright Medical Group, Inc.,
(1)
as amended by Certificate of Amendment of Fourth Amended and Restated Certificate of Incorporation of Wright Medical Group, Inc.
(2)
and Certificate of Amendment for Fourth Amended and Restated Certificate of Incorporation of Wright Medical Group, Inc.
(3)
|
|
|
|
3.2
|
|
Third Amended and Restated By-laws of Wright Medical Group, Inc.
(4)
|
|
|
|
4.1
|
|
Form of Common Stock certificate.
(1)
|
|
|
|
4.2
|
|
Indenture, dated as of November 26, 2007, between Wright Medical Group, Inc. and The Bank of New York as trustee (including form of 2.625% Convertible Senior Notes due 2014).
(5)
|
|
|
|
4.3
|
|
Underwriting Agreement, dated as of November 19, 2007, among Wright Medical Group, Inc. and J.P. Morgan Securities Inc., Piper Jaffray & Co. and Wachovia Capital Markets, LLC.
(5)
|
|
|
|
4.4
|
|
Indenture, dated as of August 31, 2012, between Wright Medical Group, Inc. and The Bank of New York, as trustee (including form of 2.000% Cash Convertible Senior Notes due 2017).
(23)
|
|
|
|
4.5
|
|
Purchase Agreement, dated as of August 22, 2012, among Wright Medical Group, Inc. and J.P. Morgan Securities LLC, as Representative of the Initial Purchasers.
(22)
|
|
|
|
10.1
|
|
Credit Agreement dated as of February 10, 2011, among Wright Medical Group, Inc., as the Borrower; the U.S. subsidiaries of the Borrower, as the Guarantors; the Lenders named therein; Bank of America, N.A., as Administrative Agent, Swing Line Lender and L/C Issuer; SunTrust Bank and Wells Fargo Bank, N.A., as Co-Syndication Agents; and US Bank National Association, as Documentation Agent.
(17)
|
|
|
|
10.2*
|
|
Fifth Amended and Restated 1999 Equity Incentive Plan (the 1999 Plan),
(7)
as amended by First Amendment to the 1999 Plan.
(8)
|
|
|
|
10.3*
|
|
Second Amended and Restated 2009 Equity Incentive Plan (2009 Plan)
(9)
|
|
|
|
10.4*
|
|
Form of Executive Stock Option Agreement pursuant to the 2009 Plan.
(26)
|
|
|
|
10.5*
|
|
Form of Non-US Employee Stock Option Agreement pursuant to the 2009 Plan.
(26)
|
|
|
|
10.6*
|
|
Form of Non-Employee Director Stock Option Agreement (one year vesting) pursuant to the 2009 Plan.
(26)
|
|
|
|
10.7*
|
|
Form of Non-Employee Director Stock Option Agreement (four year vesting) pursuant to the 2009 Plan.
(26)
|
|
|
|
10.8*
|
|
Form of Executive Restricted Stock Grant Agreement pursuant to the 2009 Plan.
|
|
|
|
10.9*
|
|
Form of Non-Employee Director Restricted Stock Grant Agreement (one year vesting) pursuant to the 2009 Plan.
(26)
|
|
|
|
10.10*
|
|
Form of Non-Employee Director Restricted Stock Grant Agreement (four year vesting) pursuant to the 2009 Plan.
(26)
|
|
|
|
10.11*
|
|
Form of Non-US Employee Restricted Stock Unit Grant Agreement pursuant to the 2009 Plan.
(26)
|
|
|
|
10.12*
|
|
Form of Executive Stock Option Agreement pursuant to the 1999 Plan.
(10)
|
|
|
|
10.13*
|
|
Form of Non-US Employee Stock Option Agreement pursuant to the 1999 Plan.
(10)
|
|
|
|
10.14*
|
|
Form of Non-Employee Director Stock Option Agreement (one year vesting) pursuant to the 1999 Plan.
(10)
|
|
|
|
10.15*
|
|
Form of Non-Employee Director Stock Option Agreement (four year vesting) pursuant to the 1999 Plan.
(10)
|
|
|
|
10.16*
|
|
Form of Executive Restricted Stock Grant Agreement pursuant to the 1999 Plan.
(10)
|
|
|
|
10.17*
|
|
Form of Non-US Employee Phantom Stock Unit Grant Agreement pursuant to the 1999 Plan.
(10)
|
|
|
|
10.18*
|
|
Form of Non-Employee Director Restricted Stock Grant Agreement (four year vesting) pursuant to the 1999 Plan.
(11)
|
|
|
|
10.19*
|
|
Wright Medical Group, Inc. Executive Performance Incentive Plan.
(12)
|
|
|
|
10.20*
|
|
Wright Medical Group, Inc. 2010 Executive Performance Incentive Plan.
(13)
|
|
|
|
10.21*
|
|
Form of Indemnification Agreement between Wright Medical Group, Inc. and its directors and executive officers.
(14)
|
|
|
|
10.22*
|
|
Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Lance A. Berry.
(15)
|
|
|
|
10.23*
|
|
Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and William L. Griffin, Jr.
(15)
|
|
|
|
10.24*
|
|
Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Eric A. Stookey.
(15)
|
|
|
|
10.25*
|
|
Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Daniel J. Garen.
(26)
|
|
|
|
10.26*
|
|
Employment Agreement dated as of September 17, 2011 between Wright Medical Technology, Inc. and Robert J. Palmisano.
(20)
|
|
|
|
10.27*
|
|
Separation Pay Agreement dated as of November 6, 2012 between Wright Medical Technology, Inc. and Timothy E. Davis, Jr.
(15)
|
|
|
|
10.28*
|
|
Separation Pay Agreement dated as of November 29, 2012 between Wright Medical Technology, Inc. and Pascal E.R. Girin.
(26)
|
|
|
|
10.29*
|
|
Inducement Stock Option Grant Agreement dated as of September 17, 2011 between Wright Medical Technology, Inc. and Robert J. Palmisano.
(20)
|
|
|
|
10.30*
|
|
Inducement Stock Option Grant Agreement between the Registrant and Julie D. Tracy dated October 17, 2011.
(21)
|
|
|
|
10.31*
|
|
Inducement Stock Option Grant Agreement between Registrant and James A. Lightman dated December 29, 2011
(21)
|
|
|
|
10.32*
|
|
Inducement Stock Option Grant Agreement between Registrant and Daniel Garen dated January 30, 2012.
(21)
|
|
|
|
10.33*
|
|
Inducement Stock Option Grant Agreement between Registrant and Pascal E.R. Girin dated November 26, 2012.
(26)
|
|
|
|
10.34
|
|
Settlement Agreement dated September 29, 2010, among the United States of America, acting through the United States Department of Justice and on behalf of the Office of Inspector General of the Department of Health and Human Services, and Wright Medical Technology, Inc.
(16)
|
|
|
|
10.35
|
|
Corporate Integrity Agreement dated September 29, 2010, between Wright Medical Technology, Inc. and the Office of Inspector General of the Department of Health and Human Services.
(16)
|
|
|
|
10.36
|
|
Deferred Prosecution Agreement dated September 29, 2010, between Wright Medical Technology, Inc. and the United States Attorney's Office for the District of New Jersey.
(16)
|
|
|
|
10.37
|
|
Amendment to the Corporate Integrity Agreement dated September 14, 2011, between Wright Medical Technology, Inc. and the Office of Inspector General of the Department of Health and Human Services.
(19)
|
|
|
|
10.38
|
|
Addendum and Amendment to the Deferred Prosecution Agreement dated September 15, 2011, between Wright Medical Technology, Inc. and the United States Attorney's Office for the District of New Jersey.
(19)
|
|
|
|
10.39†
|
|
Amended and Restated Supply and Development Agreement dated January 28, 2011 between Wright Medical Technology, Inc. and LifeCell Corporation.
(18)
|
|
|
|
10.40†
|
|
Trademark License Agreement dated January 28, 2011 between Wright Medical Technology, Inc. and KCI Medical Records.
(18)
|
|
|
|
10.41
|
|
Base Call Option Transaction Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Bank of America, N.A.
(22)
|
|
|
|
10.42
|
|
Base Call Option Transaction Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc.
(22)
|
|
|
|
10.43
|
|
Base Call Option Transaction Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc., and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC
(22)
|
|
|
|
10.44
|
|
Base Warrants Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Bank of America, N.A.
(22)
|
|
|
|
10.45
|
|
Base Warrants Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc.
(22)
|
|
|
|
10.46
|
|
Base Warrants Confirmation, dated as of August 23, 2012, between Wright Medical Group, Inc. and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC
(22)
|
|
|
|
10.47
|
|
Additional Call Option Transaction Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Bank of America, N.A.
(23)
|
|
|
|
10.48
|
|
Additional Call Option Transaction Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc.
(23)
|
|
|
|
10.49
|
|
Additional Call Option Transaction Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC
(23)
|
|
|
|
10.50
|
|
Additional Warrants Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Bank of America, N.A.
(23)
|
|
|
|
10.51
|
|
Additional Warrants Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Deutsche Bank AG, London Branch, through its agent Deutsche Bank Securities Inc.
(23)
|
|
|
|
10.52
|
|
Additional Warrants Confirmation, dated as of August 28, 2012, between Wright Medical Group, Inc. and Wells Fargo Bank, National Association through its agent Wells Fargo Securities, LLC
(23)
|
|
|
|
10.53†
|
|
Agreement and Plan of Merger by and among BioMimetic Therapeutics, Inc., Wright Medical Group, Inc., Achilles Merger Subsidiary, Inc. and Achilles Acquisition Subsidiary, LLC, dated as of November 19, 2012
(24)
|
|
|
|
10.54†
|
|
Contingent Value Rights Agreement by and between Wright Medical Group, Inc. and American Stock Transfer & Trust Company, LLC, dated as of March 1, 2013
(25)
|
|
|
|
10.55†
|
|
Supply Agreement, dated as of November 2, 2012, by and between Wright Medical Technologies, Inc. and Orchid MPS Holdings, LLC.
(23)
|
|
|
|
10.56
|
|
Asset Purchase Agreement by and among MicroPort Medical B.V., MicroPort Scientific Corporation and Wright Medical Group, Inc., dated as of June 18, 2013
(27)
|
|
|
|
10.57†
|
|
License Agreement between BioMimetic Therapeutics, Inc. and President and Fellows of Harvard College, dated as of April 10, 2001.
(28)
|
|
|
|
10.58†
|
|
Exclusive Patent License Agreement between BioMimetic Therapeutics, Inc. and ZymoGenetics, Inc., dated as of March 28, 2001.
(28)
|
|
|
|
10.59†
|
|
Second Exclusive Patent License Agreement between BioMimetic Therapeutics, Inc. and ZymoGenetics, Inc., dated as of January 21, 2003.
(28)
|
|
|
|
10.60†
|
|
Letter Agreement between BioMimetic Therapeutics, Inc. and ZymoGenetics, Inc., dated October 17, 2005.
(28)
|
|
|
|
10.61†
|
|
Supply Agreement between BioMimetic Therapeutics, Inc. and Orthovita, Inc. dated as of August 2, 2002.
(28)
|
|
|
|
10.62†
|
|
Development, Manufacturing and Supply Agreement between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation, dated as of June 28, 2005.
(28)
|
|
|
|
10.63†
|
|
Patent Purchase Agreement by and among BioMimetic Therapeutics, Inc. and Institute of Molecular Biology, Inc. dated November 4, 2005.
(28)
|
|
|
|
10.64
|
|
Amendment No. 1 to Exclusive Sublicense Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated as of December 21, 2005.
(28)
|
|
|
|
10.65
|
|
Amendment No. 1 to Manufacturing and Supply Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated as of December 21, 2005.
(28)
|
|
|
|
10.66†
|
|
Letter Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated as of December 21, 2005.
(28)
|
|
|
|
10.67
|
|
Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC effective January 1, 2007.
(29)
|
|
|
|
10.68
|
|
Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated August 17, 2007.
(30)
|
|
|
|
10.69†
|
|
Asset Purchase Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated December 14, 2007.
(31)
|
|
|
|
10.70†
|
|
Amended and Restated Exclusive Sublicense Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008.
(31)
|
|
|
|
10.71†
|
|
Exclusive License Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008.
(31)
|
|
|
|
10.72†
|
|
Supply Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008.
(31)
|
|
|
|
10.73
|
|
Agreement Terminating Research, Development and Marketing Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008.
(31)
|
|
|
|
10.74
|
|
Agreement Terminating Manufacturing and Supply Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008.
(31)
|
|
|
|
10.75
|
|
Amendment and Waiver Agreement with respect to Asset Purchase Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated January 4, 2008.
(31)
|
|
|
|
10.76
|
|
Amendment to Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated January 22, 2008.
(32)
|
|
|
|
10.77†
|
|
Distribution Agreement between BioMimetic Therapeutics, Inc. and Joint Solutions Alliance Corporation dated April 18, 2008.
(33)
|
|
|
|
10.78
|
|
Second Amendment to Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated January 9, 2009.
(34)
|
|
|
|
10.79†
|
|
Release and Settlement Agreement, effective as of December 21, 2009, between BioMimetic Therapeutics, Inc. and Deutsche Bank Securities, Inc.
(35)
|
|
|
|
10.80†
|
|
Amended and Restated Manufacturing and Supply Agreement, effective as of December 1, 2009, between BioMimetic Therapeutics, Inc. and Novartis Vaccines and Diagnostics, Inc.
(35)
|
|
|
|
10.81†
|
|
First Amendment to Development, Manufacturing and Supply Agreement, effective August 15, 2006, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation.
(36)
|
|
|
|
10.82†
|
|
Second Amendment to Development, Manufacturing and Supply Agreement, effective November 1, 2006, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation.
(36)
|
|
|
|
10.83†
|
|
Third Amendment to Development, Manufacturing and Supply Agreement, effective April 2, 2008, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation.
(36)
|
|
|
|
10.84†
|
|
Fourth Amendment to Development, Manufacturing and Supply Agreement, effective September 30, 2010, between BioMimetic Therapeutics, Inc. and Kensey Nash Corporation.
(37)
|
|
|
|
10.85
|
|
Amendment No. 1 to Amended and Restated Exclusive Sublicense Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated November 1, 2010.
(38)
|
|
|
|
10.86
|
|
Amendment No. 1 to Asset Purchase Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated November 1, 2010.
(38)
|
|
|
|
10.87
|
|
Amendment No. 1 to Agreement Terminating Research, Development and Marketing Agreement between BioMimetic Therapeutics, Inc. and Luitpold Pharmaceuticals, Inc. dated November 1, 2010.
(38)
|
|
|
|
10.88
|
|
Logistical Support Agreement between BioMimetic Therapeutics, Inc. and Joint Solutions Alliance Corporation dated November 3, 2010.
(37)
|
|
|
|
10.89†
|
|
Supply Agreement between BioMimetic Therapeutics, Inc. and Integra LifeSciences Corporation dated July 15, 2010.
(37)
|
|
|
|
10.90
|
|
Third Amendment to Lease Agreement between BioMimetic Therapeutics, Inc. and Noblegene Development, LLC dated April 8, 2011.
(39)
|
|
|
|
10.91
|
|
Amendment to Patent License Agreements between BioMimetic Therapeutics, Inc. and Bristol-Myers Squibb Company dated June 30, 2011.
(40)
|
|
|
|
10.92†
|
|
Amendment to Amended and Restated Manufacturing and Supply Agreement, effective as of January 1, 2012, between BioMimetic Therapeutics, Inc. and Novartis Vaccines and Diagnostics, Inc.
(41)
|
|
|
|
10.93
|
|
Sales and Purchase Agreement between Upperside SA, Naxicap Rendement 2018, and Banque Populaire Developpement as Sellers and Wright Medical Group, Inc. as Purchaser, dated as of October 16, 2013.
(42)
|
10.94
|
|
Agreement of Lease, dated December 28, 2013, by and between Wright Medical Technology, Inc. and RBM Cherry Road Partners
|
|
|
|
10.95
|
|
Agreement and Plan of Merger, dated as of January 30, 2014, by and among Wright Medical Group, Inc., WMMS, LLC, OrthoPro, LLC and OP CHA, Inc., as Company Holders’ Agent
(43)
|
|
|
|
10.96
|
|
Agreement and Plan of Merger, dated as of January 30, 2014, by and among Wright Medical Group, Inc., Winter Solstice LLC, Solana Surgical, LLC, and Alan Taylor, as Members’ Representative
(43)
|
|
|
|
11
|
|
Computation of earnings per share (included in
Note 15
of the Notes to Consolidated Financial Statements in Financial Statements and Supplementary Data).
(26)
|
|
|
|
31.1
|
|
Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934.
|
|
|
|
31.2
|
|
Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) Under the Securities Exchange Act of 1934.
|
|
|
|
32
|
|
Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Rule 13a-14(b) Under the Securities Exchange Act of 1934 and Section 1350 of Chapter 63 of Title 18 of the United States Code.
|
|
|
|
101
|
|
The following materials from Wright Medical Group, Inc. Annual Report on Form 10-K for the year ended December 31, 2013 formatted in XBRL (Extensible Business Reporting Language): (1) the Consolidated Balance Sheets; (2) Parenthetical Data to the Consolidated Balance Sheets; (3) the Consolidated Statements of Operations; (4) Parenthetical Data to the Consolidated Statements of Operations; (5) the Consolidated Statements of Comprehensive Income; (6) Parenthetical Data to the Consolidated Statements of Comprehensive Income; (7) the Consolidated Statements of Cash Flows; (8) the Consolidated Statements of Changes in Stockholders’ Equity; and (9) Notes to Consolidated Financial Statements.
|
(1)
|
Incorporated by reference to our Registration Statement on Form S-1 (Registration No. 333-59732), as amended.
|
(2)
|
Incorporated by reference to our Registration Statement on Form S-8 (Registration No. 333-115541) filed on May 14, 2004.
|
(3)
|
Incorporated by reference to our current report on Form 8-K filed on May 17, 2013 (Commission file number 001-35823).
|
(4)
|
Incorporated by reference to our current report on Form 8-K filed on February 20, 2014 (Commission file number 000-32883).
|
(5)
|
Incorporated by reference to our current report on Form 8-K filed on November 26, 2007 (Commission file number 000-32883).
|
(6)
|
Incorporated by reference to our current report on Form 8-K filed July 8, 2011 (Commission file number 000-32883).
|
(7)
|
Incorporated by reference to our definitive Proxy Statement filed on April 14, 2008 (Commission file number 000-32883).
|
(8)
|
Incorporated by reference to our quarterly report on Form 10-Q for the quarter ended September 30, 2008 (Commission file number 000-32883).
|
(9)
|
Incorporated by reference to our definitive Proxy Statement filed on April 4, 2013 (Commission file number 000-335823).
|
(10)
|
Incorporated by reference to our quarterly report on Form 10-Q for the quarter ended June 30, 2009 (Commission file number 000-32883).
|
(11)
|
Incorporated by reference to our Registration Statement on Form S-8 (Registration No. 333-151756) filed on June 18, 2008.
|
(12)
|
Incorporated by reference to our current report on Form 8-K filed on February 10, 2005 (Commission file number 000-32883).
|
(13)
|
Incorporated by reference to our current report on Form 8-K filed on March 25, 2010 (Commission file number 000-32883).
|
(14)
|
Incorporated by reference to our current report on Form 8-K filed on April 7, 2009 (Commission file number 000-32883).
|
(15)
|
Incorporated by reference to our current report on Form 8-K filed on November 6, 2012 (Commission file number 000-32883).
|
(16)
|
Incorporated by reference to our current report on Form 8-K filed on September 30, 2010 (Commission file number 000-32883).
|
(17)
|
Incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2010 (Commission file number 000-32883).
|
(18)
|
Incorporated by reference to our current report on Form 8-K/A filed on May 18, 2011 (Commission file number 000-32883).
|
(19)
|
Incorporated by reference to our current report on Form 8-K filed September 15, 2011 (Commission file number 000-32883).
|
(20)
|
Incorporated by reference to our current report on Form 8-K filed on September 22, 2011 (Commission file number 000-32883).
|
(21)
|
Incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2011 (Commission file number 000-32883).
|
(22)
|
Incorporated by reference to our current report on Form 8-K filed on August 28, 2012 (Commission file number 000-32883).
|
(23)
|
Incorporated by reference to our current report on Form 8-K filed on September 4, 2012 (Commission file number 000-32883).
|
(24)
|
Incorporated by reference to our current report on Form 8-K filed on November 19, 2012 (Commission file number 000-32883).
|
(25)
|
Incorporated by reference to our current report on Form 8-K filed on March 1, 2013 (Commission file number 000-32883).
|
(26)
|
Incorporated by reference to our annual report on Form 10-K for the fiscal year ended December 31, 2012 (Commission file number 000-32883).
|
(27)
|
Incorporated by reference to our current report on Form 8-K filed on June 21, 2013 (Commission file number 001-35823).
|
(28)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s Registration Statement on Form S-1 (Registration No. 333-131718), as amended.
|
(29)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on May 7, 2007 (Commission file number 000-51934).
|
(30)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on August 21, 2007 (Commission file number 000-51934).
|
(31)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2007 (Commission file number 000-51934).
|
(32)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K file on January 25, 2008 (Commission file number 000-51934).
|
(33)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s quarterly report on Form 10-Q for the quarter ended June 30, 2008 (Commission file number 000-51934).
|
(34)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2008 (Commission file number 000-51934).
|
(35)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2009 (Commission file number 000-51934).
|
(36)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K/A for the fiscal year ended December 31, 2009 (Commission file number 000-51934).
|
(37)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s annual report on Form 10-K for the fiscal year ended December 31, 2010 (Commission file number 000-51934).
|
(38)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on November 19, 2010 (Commission file number 000-51934).
|
(39)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on April 14, 2011 (Commission file number 000-51934).
|
(40)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on July 1, 2011 (Commission file number 000-51934).
|
(41)
|
Incorporated by reference to BioMimetic Therapeutics, Inc.'s current report on Form 8-K filed on February 27, 2012 (Commission file number 000-51934).
|
(42)
|
Incorporated by reference to our current report on Form 8-K filed October 18, 2013 (Commission file number 001-35823).
|
(43)
|
Incorporated by reference to our current report on Form 8-K filed January 31, 2014 (Commission file number 001-35823).
|
*
|
Denotes management contract or compensatory plan or arrangement.
|
†
|
Confidential treatment granted under 17 CFR 24b-2. The confidential portions of this exhibit have been omitted and are marked accordingly. The confidential portions have been filed separately with the Securities and Exchange Commission pursuant to the Confidential Treatment Request.
|
Wright Medical Group, Inc.
|
|
By:
|
/s/ Robert J. Palmisano
|
|
Robert J. Palmisano
|
|
President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Robert J. Palmisano
Robert J. Palmisano
|
|
President, Chief Executive Officer and Director
(Principal Executive Officer)
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Lance A. Berry
Lance A. Berry
|
|
Chief Financial Officer
(Principal Financial Officer )
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Julie B. Andrews
Julie B. Andrews
|
|
Chief Accounting Officer
(Principal Accounting Officer )
|
|
February 26, 2014
|
|
|
|
|
|
/s/ David D. Stevens
David D. Stevens
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Gary D. Blackford
Gary D. Blackford
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Martin J. Emerson
Martin J. Emerson
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Lawrence W. Hamilton
Lawrence W. Hamilton
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Ronald K. Labrum
Ronald K. Labrum
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ John L. Miclot
John L. Miclot
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Amy S. Paul
Amy S. Paul
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Robert J. Quillinan
Robert J. Quillinan
|
|
Director
|
|
February 26, 2014
|
|
|
|
|
|
/s/ Douglas G. Watson
Douglas G. Watson
|
|
Director
|
|
February 26, 2014
|
Wright Medical Group, Inc.
Schedule II-Valuation and Qualifying Accounts
(In thousands)
|
|||||||||||||||
|
Balance at
Beginning of Period
|
|
Charged to Cost and
Expenses
|
|
Deductions
and Other
|
|
Balance at End of
Period
|
||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
||||||||
For the period ended:
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
$
|
291
|
|
|
$
|
(66
|
)
|
|
$
|
47
|
|
|
$
|
272
|
|
December 31, 2012
|
$
|
293
|
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
291
|
|
December 31, 2011
|
$
|
353
|
|
|
$
|
(60
|
)
|
|
$
|
—
|
|
|
$
|
293
|
|
Sales returns and allowance:
|
|
|
|
|
|
|
|
||||||||
For the period ended:
|
|
|
|
|
|
|
|
||||||||
December 31, 2013
|
$
|
298
|
|
|
$
|
(16
|
)
|
|
$
|
—
|
|
|
$
|
282
|
|
December 31, 2012
|
$
|
313
|
|
|
$
|
(15
|
)
|
|
$
|
—
|
|
|
$
|
298
|
|
December 31, 2011
|
$
|
321
|
|
|
$
|
(8
|
)
|
|
$
|
—
|
|
|
$
|
313
|
|
Award Granted to (“Grantee”):
|
|
Grant Date:
|
|
Number of Shares (“Shares”):
|
|
1.
|
Grant of Stock
. Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to Grantee the Shares.
|
2.
|
Vesting Schedule
. The interest of Grantee in the Shares shall vest as to one-fourth (¼) of the Shares on the first anniversary of the Grant Date, and as to an additional one-fourth (¼) on each succeeding anniversary date, so as to be 100% vested on the fourth anniversary thereof, conditioned upon Grantee maintaining status as an Eligible Person (as defined in the Plan) as of each vesting date. Notwithstanding the foregoing, the interest of Grantee in the Shares shall vest as to:
|
2.1.
|
A percentage of the unvested Shares upon a Life Event occurring. For purposes of this Agreement, a “Life Event” shall mean the Grantee’s death, Disability (as defined in the Plan), or Qualified Retirement. For purposes of this Agreement, a “Qualified Retirement” shall occur upon the Grantee’s voluntary resignation from the Company or any Related Entity (as defined in the Plan), provided that on the date of the Grantee’s voluntary resignation, Grantee is sixty-five (65) years or older and the Grantee has been
|
2.2.
|
100% of the then unvested Shares upon a Change of Control. For purposes of this Agreement, a “Change of Control” shall mean the first to occur on or after the Grant Date of any of the following:
|
2.3.
|
100% of the unvested Shares upon Grantee’s death.
|
3.
|
Restrictions
.
|
3.1.
|
The Shares granted hereunder may not be sold, pledged or otherwise transferred until the Shares become vested in accordance with this Agreement. The period of time between the Grant Date and the date that the Shares become vested is referred to as the “Restricted Period.”
|
3.2.
|
If at any time Grantee fails to maintain Grantee’s status as an Eligible Person, the balance of the Shares subject to the provisions of this Agreement which have not vested at the time of Grantee’s loss of status as an Eligible Person shall be forfeited by Grantee, and ownership transferred back to the Company.
|
3.3.
|
By accepting the Shares, Grantee represents and agrees for Grantee and Grantee’s transferees (whether by will or the laws of descent and distribution) that:
|
3.4.
|
The Company shall have the right, but not the obligation, to purchase and acquire from Grantee any or all of the Shares (the “Repurchased Shares”) if the Committee reasonably determines that Grantee has violated the covenants set forth in this Agreement or Grantee’s loss of status as an Eligible Person is a result of termination of employment for Cause (as defined in the Plan) or Grantee’s loss of status as an Eligible Person could have resulted from termination of employment for Cause. The Company may exercise the right granted to it under this Section 3.4 by delivering written notice to Grantee stating that the Company is exercising the repurchase right granted to it under this Section 3.4. The delivery of such notice by the Company to Grantee shall constitute a binding commitment of the Company to purchase and acquire all of the Repurchased Shares. The total purchase price for the Repurchased Shares shall be delivered to the Grantee against delivery by Grantee of certificates evidencing the Repurchased Shares no later than 30 days after the delivery of the election notice by the Company. The price per share of the Repurchased Shares shall be the lesser of 1) the Fair Market Value (as defined in the Plan) of each of the Repurchased Shares on the date of the Company's delivery of its written notice to Grantee or 2) the Fair Market Value of each of the Repurchased Shares on the date that such shares vested to the Grantee without regard to any election by the Grantee under Section 83(b) of the Internal Revenue Code of 1986, as amended (the “Code”).
|
3.5.
|
The Company shall have the right, and not the obligation, to cancel any or all of the Shares if the Committee
|
3.6.
|
Notwithstanding anything in this Section 3 to the contrary, the Company shall not be obligated to purchase any Stock at any time to the extent that the purchase would result in a violation of any law, statute, rule, regulation, order, writ, injunction, decree or judgment promulgated or entered by any Federal, state, local or foreign court or governmental authority applicable to the Company or any of its property.
|
3.7.
|
The parties intend the restrictions in Section 3.3 to be completely severable and independent, and any invalidity or unenforceability of any one or more such restrictions shall not render invalid or unenforceable any one or more restrictions.
|
4.
|
Legend.
All certificates representing any shares of Stock subject to the provisions of this Agreement shall have endorsed thereon the following legend:
|
5.
|
Issuance of Shares
. The Shares shall be issued and held in a restricted book entry account in the name of Grantee until expiration of the Restricted Period. Upon expiration of the Restricted Period, the Company shall remove the restrictions of such restricted book entry account for such Shares which have not been forfeited and with respect to which the Restricted Period has expired (to the nearest full share) and any cash dividend or stock dividends shall be credited to Grantee’s account with respect to such Shares and any interest thereon, if any. Notwithstanding the foregoing, the Company may, in its discretion, issue certificates for Shares for which the Restricted Period has expired in the name of Holder in lieu of removing the restrictions of such restricted book entry account.
|
6.
|
Stockholder Rights
. During the Restricted Period, Grantee shall have all the rights and privileges of a stockholder as to Shares, including the right to vote such Shares, except for the right to transfer the Shares as set forth in Section 3 and Section 7 of this Agreement and Section 10(b) of the Plan. Cash dividends and stock dividends with respect to the Shares shall be currently paid to Grantee.
|
7.
|
Changes in Stock
. In the event that as a result of (i) any stock dividend, stock split or other change in the Stock, or (ii) any merger or sale of all or substantially all of the assets or other acquisition of the Company, and by virtue of any such change Grantee shall in Grantee’s capacity as owner of unvested shares of Stock which have been awarded to Grantee (the “Prior Stock”) be entitled to new or additional or different shares or securities, such new or additional or different shares or securities shall thereupon be considered unvested Shares and shall be subject to all of the conditions and restrictions which were applicable to the Prior Stock pursuant to this Agreement.
|
8.
|
Disability of Grantee
. In the event of the Disability (as defined in the Plan) of Grantee, any unpaid but vested Shares shall be paid to Grantee if legally competent or to a legally designated guardian or representative if Grantee is legally incompetent.
|
9.
|
Death of Grantee
. In the event of Grantee’s death after the vesting date but prior to the payment of Shares, such Shares shall be paid to Grantee’s estate or designated beneficiary.
|
o
|
Grantee may deliver to the Company or its designee an amount of cash determined by the Company to be adequate to satisfy the Company’s withholding obligation. If Grantee does not deliver such amount of cash, the Company shall have the right to either delay delivery of the applicable Shares until payment is made or withhold an amount of the Grantee’s current or future remuneration in an amount that satisfies the Company’s withholding obligation. Notwithstanding the foregoing, the Grantee may direct the Company to withhold from the Shares to be issued the specific number of Shares having a fair market value on the vesting date equal to the amount required to satisfy the Company’s withholding obligation.
|
o
|
With the consent of the Company, Grantee may establish, witha registered broker(s) retained by the Company, a lawful 10b5-1 Plan which complies with such Company policies and procedures
|
13.1.
|
The Company shall not be required (i) to transfer on its books any shares of Stock of the Company which have been sold or transferred in violation of any provisions set forth in this Agreement, or (ii) to treat as owner of such shares or to accord the right to vote as such owner or to pay dividends to any transferee to whom such shares shall have been so transferred.
|
13.2.
|
The parties agree to execute such further instruments and to take such action as may be reasonably necessary to carry out the intent of this Agreement.
|
13.3.
|
Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon delivery to Grantee at the address of Grantee then on file with the Company.
|
13.4.
|
Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant Grantee any right to remain associated with the Company or any of its affiliates.
|
13.5.
|
This Agreement, subject to the provisions of the Plan, constitutes the entire agreement of the parties with respect to the subject matter hereof.
|
AGREED AND ACCEPTED:
|
|
WRIGHT MEDICAL GROUP, INC.
|
|
GRANTEE:
|
|
By:
|
/s/: James A. Lightman
|
|
|
|
James A. Lightman
|
|
|
|
General Counsel and Secretary
|
REFERENCE PAGE..............................................................................................................................................................
|
3
|
|
ARTICLE I GLOSSARY......................................................................................................................................................
|
5
|
|
ARTICLE II DEMISE, PREMISES, TERM, RENT.........................................................................................................
|
11
|
|
ARTICLE III REIMBURSABLE OPERATING EXPENSES AND TAXES..................................................................
|
14
|
|
ARTICLE IV USE AND OCCUPANCY..............................................................................................................................
|
18
|
|
ARTICLE V INITIAL CONSTRUCTION AND ALTERATIONS...................................................................................
|
22
|
|
ARTICLE VI REPAIRS........................................................................................................................................................
|
25
|
|
ARTICLE VII [RESERVED]...............................................................................................................................................
|
26
|
|
ARTICLE VIII REQUIREMENTS OF LAW.....................................................................................................................
|
26
|
|
ARTICLE IX SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT.......................................................
|
28
|
|
ARTICLE X RULES AND REGULATIONS.....................................................................................................................
|
30
|
|
ARTICLE XI INSURANCE, PROPERTY LOSS OR DAMAGE, REIMBURSEMENT..............................................
|
30
|
|
ARTICLE XII DESTRUCTION BY FIRE OR OTHER CAUSE....................................................................................
|
32
|
|
ARTICLE XIII EMINENT DOMAIN.................................................................................................................................
|
33
|
|
ARTICLE XIV ASSIGNMENT, SUBLETTING, MORTGAGE, ETC. .........................................................................
|
33
|
|
ARTICLE XV ACCESS TO PREMISES............................................................................................................................
|
35
|
|
ARTICLE XVI CERTIFICATE OF OCCUPANCY..........................................................................................................
|
36
|
|
ARTICLE XVII DEFAULT..................................................................................................................................................
|
36
|
|
ARTICLE XVIII REMEDIES AND DAMAGES...............................................................................................................
|
38
|
|
ARTICLE XIX FEES AND EXPENSES.............................................................................................................................
|
39
|
|
ARTICLE XX NO REPRESENTATIONS BY LANDLORD...........................................................................................
|
40
|
|
ARTICLE XXI END OF TERM..........................................................................................................................................
|
40
|
|
ARTICLE XXII POSSESSION............................................................................................................................................
|
41
|
|
ARTICLE XXIII NO WAIVER...........................................................................................................................................
|
41
|
|
ARTICLE XXIV WAIVER OF TRIAL BY JURY.............................................................................................................
|
41
|
|
ARTICLE XXV INABILITY TO PERFORM....................................................................................................................
|
42
|
|
ARTICLE XXVI BILLS AND NOTICES...........................................................................................................................
|
42
|
|
ARTICLE XXVII SERVICES AND EQUIPMENT...........................................................................................................
|
42
|
|
ARTICLE XXVIII [RESERVED]........................................................................................................................................
|
44
|
|
ARTICLE XXIX [RESERVED]...........................................................................................................................................
|
44
|
|
ARTICLE XXX SIGNS.........................................................................................................................................................
|
44
|
|
ARTICLE XXXI BROKER...................................................................................................................................................
|
44
|
|
ARTICLE XXXII INDEMNITY............................................................................................................................................
|
44
|
|
ARTICLE XXXIII RESERVED............................................................................................................................................
|
45
|
|
ARTICLE XXXIV MEMORANDUM OF LEASE...............................................................................................................
|
46
|
|
ARTICLE XXXV TENANT LABS........................................................................................................................................
|
46
|
|
ARTICLE XXXVI COVENANT OF QUIET ENJOYMENT..............................................................................................
|
46
|
|
ARTICLE XXXVII MISCELLANEOUS.............................................................................................................................
|
46
|
|
(1)
|
Premises: All of Building 1,
plus
the first floor of Building 2, as shown on the floor plans attached hereto as
Exhibit “E”
,
excluding, however, any portions thereof which are defined as Common Area(s). In the event that Selected Expansion Space shall be leased by Tenant in accordance with
Section 2.8
, then such area shall become a part of the Premises. It is acknowledged that no part of the Adjacent Property shall be a part of the Premises.
|
(2)
|
Commencement Date: January 1, 2014.
|
(3)
|
Expiration Date: October 31, 2024, subject to adjustment pursuant to any of the terms, conditions or covenants of this Lease (including, but not limited to, the terms and provisions of
Section 2.7
hereof).
|
(4)
|
Term: One Hundred Thirty (130) months, unless extended or terminated sooner as described and permitted herein, beginning on the Commencement Date and expiring on the Expiration Date.
|
(5)
|
Base Rent (or Base Rental): The amounts set forth in the schedules provided in
Exhibit “K”
, subject to adjustment pursuant to
Section 2.
8 or as otherwise specified herein.
|
(6)
|
Tenant’s Proportionate Share: Tenant’s Proportionate Share of the Real Property shall be 100% during the first three (3) years of the Term, then shall be 75% for the remainder of the Term, subject to upward adjustment in the event that Tenant elects to exercise all or a portion of the Expansion Option pursuant to
Section 2.8
hereof.
|
(7)
|
Landlord’s Proportionate Share: Landlord’s Proportionate Share of the Real Property shall be 0% during the first three (3) years of the Term, then shall be the difference between 100% and Tenant’s Proportionate Share for the remainder of the Term.
|
(8)
|
Calendar Year: For the purpose of this Lease, Calendar Year shall be a period of twelve (12) months commencing on each January 1 during the Term occurring on and after January 1, 2014.
|
(9)
|
Base Year: A period of twelve (12) months comprising Calendar Year 2014.
|
(10)
|
Permitted Use: Corporate headquarters, corporate and/or general office, administrative, research and development, marketing, customer service and/or other office related operations and including,
|
(11)
|
Security Deposit: NONE
|
(12)
|
Landlord’s Broker: CB Richard Ellis Memphis, LLC
|
(13)
|
Tenant’s Broker: NONE
|
(14)
|
Landlord’s Notice RBM Cherry Road Partners
|
(15)
|
Tenant’s Notice Wright Medical Technology, Inc.
|
(16)
|
Address for Payment RBM Cherry Road Partners
|
(a)
|
$4,444,579 in consideration of the termination of the Lease with respect to the initial Premises (consisting of all of Building 1 and the first floor of Building 2); plus
|
(b)
|
in the event that Tenant has exercised any Expansion Option, the product of: RSF in Tenant’s Selected Expansion Space divided by the total Expansion Area RSF, multiplied by $1,566,414 (together with (a), the “
Lease Termination Fee
”).
|
(i)
|
Perform simulated use testing of “Products” (e.g. medical devices, medical products, medical implants, biologic implants, biologic products, and related or similar products) and materials to determine the physical, chemical and mechanical properties of samples. Product samples for such simulated-use testing may be fabricated or assembled in the lab. Lab tests conducted on-site may include the use of mechanical test machines for fatigue testing, tensile testing, and similar tests. During these tests, Products are mechanically broken, damaged and/or crushed in these machines. Mechanical testing may also include use of slaughterhouse products (including, among other things, pork shoulder and bovine femur) and human cadaver tissues in simulated use scenarios.
|
i.
|
commercial general liability insurance in a form approved in the State of Tennessee (including broad form property damage coverages), with limits of liability not less than Ten Million Dollars ($10,000,000.00) per occurrence, which amount may be satisfied with a primary commercial general liability policy of not less than One Million Dollars ($1,000,000.00) and an excess or “umbrella” liability policy affording coverage, at least as broad as that afforded by the primary commercial general liability policy, in an amount not less than Five Million Dollars ($5,000,000.00), provided, however, that both policies together shall constitute the minimum $10,000,000 coverage per occurrence;
|
i.
|
“all risk” full replacement cost property insurance on the Buildings in amounts not less than $12,000,000 for Building 1 and $10,000,000 for Building 2, which shall include (A) earthquake and flood coverage and (B), as and to the extent customarily included by prudent owners of comparable first class office buildings in Memphis, Tennessee, boiler and machinery and electrical apparatus coverage;
|
i.
|
business interruption insurance in amounts not less than six months’ Base Rent; and
|
i.
|
“all risk” full replacement cost property insurance covering all Alterations, leasehold improvements and Tenant’s Property in an amount reasonably satisfactory to Landlord.
|
BY:
|
RBM Venture Company,
|
|
By:
|
/s/ Scott Imorde
|
|
|
|
Scott Imorde, President
|
|
|
By:
|
/s/ Lance A. Berry
|
|
|
Name:
|
Lance A. Berry
|
|
|
Title:
|
Sr. Vice President and Chief Financial Officer
|
|
Definitions
|
1.
|
Wherever in these Rules and Regulations the word “Tenant” is used, it shall be taken to apply to and include the Tenant and his agents, employees, invitees, licensees, visitors, subtenants and contractors, and shall be deemed of such number and gender as the circumstances require. The word “Landlord” shall be taken to include the employees and agents of Landlord.
|
Obstructions
|
2.
|
The streets, sidewalks, entrances, driveways, halls, passages, elevators, stairways and Common Areas provided by Landlord shall not be obstructed by Tenant.
|
Washrooms
|
3.
|
Toilet rooms, water-closets and other water apparatus shall not be used for any purposes other than those for which constructed.
|
Fire Prevention
|
4.
|
Tenant shall not do anything in the Premises or bring or keep anything therein, which shall in any way increase or tend to increase the risk of fire or the rate of fire insurance, or which shall conflict with the regulations of the Fire Department or the fire laws, or with the rules and regulations of the City of Memphis, or equivalent bodies, or with any insurance policy on the Buildings or any part thereof, or with any law, ordinance, rule or regulation affecting the occupancy and use the Premises, now existing or hereafter enacted or promulgated by any public authority or by the City of Memphis or any equivalent body.
|
Tenant's Equipment
|
5.
|
It is Tenant’s responsibility to properly operate all business equipment and coffee machines and to service such equipment and machines.
|
General
Prohibitions
|
6.
|
In order to insure proper use and care of the Premises, Tenant shall not, without the consent of Landlord or unless otherwise permitted in the Lease:
|
|
a.
|
Keep or permit animals or birds in the Buildings except as required for handicapped persons or except as used in a Permitted Use under the Lease.
|
|
b.
|
Use the Premises as sleeping apartments.
|
|
c.
|
Allow any sign, advertisement or notice to be fixed to the Buildings, inside or outside, without Landlord’s written consent, except as provided for in Section 30.1 of the Lease.
|
|
d.
|
Make improper noise or disturbances of any kind, or otherwise do anything to disturb other tenants or tend to injure the reputation of the Buildings.
|
|
e.
|
Mark or defile elevators, water closets, toilet rooms, walls, windows, doors or any other parts of the Buildings.
|
|
f.
|
Place anything on the outside of the Buildings, including roof setbacks, window ledges and other projections except as provided for in Sections 30.1 and 37.1 of the Lease; or drop anything from the windows, stairways or parapets; or place trash or other matter in the halls, stairways, elevators or light wells of the Buildings.
|
|
g.
|
Cover, block or obstruct any window, skylight, door or transom or any other surface that admits light, except building standard blinds.
|
|
h.
|
RESERVED
|
|
i.
|
RESERVED
|
|
j.
|
RESERVED
|
|
k.
|
RESERVED
|
|
l.
|
RESERVED
|
|
m.
|
Install call boxes, or any kind of wire in or on the Buildings without Landlord’s permission and direction, except as provided for in Sections 5.8 and 37.1 of the Lease.
|
|
n.
|
RESERVED
|
|
o.
|
RESERVED
|
|
p.
|
RESERVED
|
|
q.
|
RESERVED
|
|
r.
|
Leave the Land and enter the Adjacent Property, except via the designated entrance driveway between the Land and Cherry Road, but then only during the course of arriving and leaving for work.
|
Tenant Moves
|
7.
|
Landlord’s tenant move in/move out policy is as follows:
|
|
a.
|
RESERVED
|
|
b.
|
Tenant’s contractor shall provide a certificate of insurance evidencing liability, property damage and workmen’s compensation insurance of not less than $2,000,000, naming Landlord as additional insured.
|
Rights Reserved
to Landlord
|
8.
|
Without abatement or diminution in rent, Landlord reserves and shall have the following additional rights:
|
|
a.
|
During the last six (6) months of the Term or any part thereof, if during or prior to that time the Tenant vacates the Premises, to decorate, remodel, repair, alter or otherwise prepare the Premises for re-occupancy.
To install and maintain signs for other tenants.
|
|
b.
|
RESERVED
|
|
c.
|
Landlord may reasonably enter upon the Premises and may exercise any or all of the foregoing rights hereby reserved without being deemed guilty of an eviction or disturbance of Tenant’s use or possession and without being liable in any manner to the Tenant.
|
|
d.
|
RESERVED
|
Regulation
Change
|
9.
|
Landlord shall have the right to make such other and further reasonable rules and regulations as in the judgment of Landlord, may from time to time be needful for the safety, appearance, care and cleanliness of the Buildings and for the preservation of order therein, Landlord shall not be responsible to Tenant for any violation of rules and regulations by other tenants or occupants of the Real Property or Adjacent Property.
|
Smoking Areas
|
10.
|
Tenant shall have the right, from time to time, to designate and thereafter to change, alter or redesignate, smoking and non-smoking area(s) outside the Buildings, and shall prohibit or limit such activity in order to fully comply with any applicable governmental ordinance, law or regulation. Tenant shall not permit any of its employees, agents or invitees to smoke except in the designated smoking area(s) and, in any event, never inside the Buildings.
|
Plumbing
|
11.
|
Plumbing fixtures and appliances shall be used only for purposes for which constructed, and no sweepings, rubbish, rags or other unsuitable material shall be thrown or placed therein. Damage resulting to any such fixtures or appliances from misuse by Tenant shall be repaired and replaced at Tenant’s sole cost and expense, and Landlord shall not in any case be responsible therefor.
|
|
|
|
Miscellaneous
|
13.
|
In case of any conflict or inconsistency between the provisions of the Lease and of any of these Rules and Regulations, the provisions of this Lease shall control.
|
1.
|
The Commencement Date as defined in item (2) of the Reference Page of the Lease is January 1, 2014, and the Expiration Date as defined in item (3) of the Reference Page of the Lease is October 31, 2024.
|
2.
|
The initial Base Rent as defined in item (5) of the Reference Page of the Lease is as shown on the attached Schedule 1.
|
3.
|
Tenant has accepted possession of the Premises for occupancy, and the condition of the Premises and the Land is satisfactory and in conformity with the provisions of the Lease in all respects.
|
4.
|
Any capitalized terms not otherwise defined herein shall have the meaning as set forth in the Lease.
|
By:
|
/s/ Fred R. Courtney
|
|
|
|
|
Name:
|
Fred R. Courtney
|
|
By:
|
/s/ Scott Imorde
|
|
Title:
|
Director of Facilities & Maintenance
|
|
|
Scott Imorde, President
|
|
a.
|
Floor plan including furniture layout, partition layout, door layout, power and telephone outlet locations, items above standard finish, floor loading information beyond 70 psf, etc.
|
b.
|
Reflected ceiling plan including lighting layout, exit signs, registers, grilles, diffusers, exhaust fans, ceiling breaks, etc.
|
c.
|
Written scope sheet of special Tenant mechanical and electrical requirements and/or custom construction and finish requirements.
|
d.
|
Take-off sheet of building standard items shall be used.
|
2.
|
ARCHITECTURAL WORKING DRAWINGS FOR CONSTRUCTION
|
a.
|
Location and type of all partitions and doors (specify hardware and provide keying schedule), glass partitions, windows and glass doors (indicate framing sections if not building standard).
|
b.
|
Indication of all critical dimensions necessary for construction.
|
c.
|
Location of telephone/computer equipment room accompanied by an approval of the telephone company.
|
d.
|
Location of all building standard and above building standard electrical items including outlets, switches, telephone outlets and lighting.
|
e.
|
Location and type of equipment that require special electrical; requirements including manufacturer's specifications for use and operations.
|
f.
|
Location, weight per square foot and description of any exceptionally heavy equipment or filing system exceeding 75 psf live load including 20 psf for partitions.
|
g.
|
Requirements for special air conditioning or ventilation including occupancy information for each room and space.
|
h.
|
Type and color of floor covering, wall covering, and building standard and above-building standard paint or finishes.
|
i.
|
Requirements for special plumbing including all line sizes, fixtures and specifications.
|
j.
|
Location and type of kitchen equipment including specifications.
|
k.
|
Details showing:
|
(1)
|
Construction of all partition types;
|
(2)
|
Head, jamb and sill sections with elevations for all door types;
|
(3)
|
Shelving, cabinet work and architectural millwork with dimensions and dimensions of all equipment to be built in;
|
(4)
|
Special corridor entrance with framing and support requirements; and
|
(5)
|
Bracing or support of special walls, glass partitions, drapery track, etc.
|
3.
|
MECHANICAL/ELECTRICAL WORKING DRAWINGS FOR CONSTRUCTION
|
4.
|
Tenant shall be responsible for obtaining city review and approval of preliminary drawings (as referred to in paragraph 1 above). Tenant shall make application and obtain a city building permit.
|
BY:
|
RBM Venture Company,
|
|
By:
|
/s/ Scott Imorde
|
|
|
|
Scott Imorde, President
|
|
|
By:
|
/s/ Eric A. Stookey
|
|
|
Name:
|
Eric A. Stookey
|
|
|
Title:
|
President, Extremities
|
|
|
Year ended December 31,
|
|||||||||||||
|
2013
(1)
|
|
2012
(1)
|
|
2011
(1)
|
|
2010
|
|
2009
|
|||||
Ratio of earnings to fixed charges
|
(11.56
|
)
|
|
0.71
|
|
|
(0.45
|
)
|
|
1.29
|
|
|
2.62
|
|
1
|
.
|
Wright Medical Technology, Inc. (USA)
|
2
|
.
|
Wright Medical Capital, Inc. (USA)
|
3
|
.
|
Wright International, Inc. (USA)
|
4
|
.
|
White Box Orthopedics, LLC (USA)
|
5
|
.
|
KHC-WDM, LLC (USA)
|
6
|
.
|
Wright Medical Technology Canada Ltd. (Canada)
|
7
|
.
|
Wright Medical Japan, K.K. (Japan)
|
8
|
.
|
2Hip Holdings SAS (France)
|
9
|
.
|
Wright Medical Europe SAS (France)
|
10
|
.
|
Wright Medical Europe Manufacturing SA (France)
|
11
|
.
|
Wright Medical France SAS (France)
|
12
|
.
|
Wright Medical Italy Srl (Italy)
|
13
|
.
|
Wright Medical UK Limited (UK)
|
14
|
.
|
Wright Medical Instruments Limited (UK)
|
15
|
.
|
Wright Medical Deutschland GmbH (Germany)
|
16
|
.
|
Wright Medical Belgium NV (Belgium)
|
17
|
.
|
Wright Medical Netherlands, B.V. (Netherlands)
|
18
|
.
|
Wright Medical EMEA, B.V. (Netherlands)
|
19
|
.
|
Wright Medical Europe, C.V. (Netherlands)
|
20
|
.
|
INBONE Technologies, Inc. (USA)
|
21
|
.
|
Wright Medical Australia Pty Ltd. (Australia)
|
22
|
.
|
Wright Medical Costa Rica S.A. (Costa Rica)
|
23
|
.
|
Wright Medical Brasil Ltda (Brazil)
|
24
|
.
|
TMW Insurance, Inc. (USA)
|
25
|
.
|
WG Healthcare UK Limited (UK)
|
26
|
.
|
BioMimetic Therapeutics, LLC (USA)
|
27
|
.
|
BioMimetic Therapeutics, Ltd (UK)
|
28
|
.
|
BioMimetic Therapeutics, Pty Ltd (Australia)
|
29
|
.
|
BioMimetic Therapeutics USA, Inc. (USA)
|
30
|
.
|
BioMimetic Therapeutics Canada, Inc. (Canada)
|
31
|
.
|
Biotech International (France)
|
32
|
.
|
Biotech Ortho (France)
|
33
|
.
|
Biotech Benelux SPRL (Belgium)
|
34
|
.
|
Biotech CH (France)
|
35
|
.
|
TriMed Biotech, Inc. (USA)
|
36
|
.
|
TriMed Biotech SAS (France)
|
37
|
.
|
TriMed Hellas S.A (Greece)
|
38
|
.
|
Wright PacRim, Inc. (USA)
|
39
|
.
|
Solana Surgical, LLC (USA)
|
40
|
.
|
OrthoPro, LLC (USA)
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended
December 31, 2013
, of Wright Medical Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Robert J. Palmisano
|
|
|
Robert J. Palmisano
|
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended
December 31, 2013
, of Wright Medical Group, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Lance A. Berry
|
|
|
Lance A. Berry
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
/s/ Robert J. Palmisano
|
|
|
Robert J. Palmisano
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
/s/ Lance A. Berry
|
|
|
Lance A. Berry
|
|
|
Senior Vice President and Chief Financial Officer
|
|