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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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The Netherlands
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98-0509600
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(State or other jurisdiction
of incorporation or organization)
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(I.R.S. Employer
Identification No.)
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Prins Bernhardplein 200
1097 JB Amsterdam, The Netherlands
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None
(Zip code)
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(Address of Principal Executive Offices)
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Title of each class
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Name of each exchange on which registered
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Ordinary shares, par value €0.03 per share
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Nasdaq Global Select Market
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Contingent Value Rights
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Nasdaq Stock Market LLC
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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Emerging growth company
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Page
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EX-10.9
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EX-10.42
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EX-10.45
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EX-10.50
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EX-10.51
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EX-10.52
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EX-10.53
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EX-10.54
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EX-10.58
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EX-10.59
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EX-21.1
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EX-23.1
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EX-31.1
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EX-31.2
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EX-32.1
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EX-101 INSTANCE DOCUMENT
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EX-101 SCHEMA DOCUMENT
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EX-101 CALCULATION LINKBASE DOCUMENT
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EX-101 LABELS LINKBASE DOCUMENT
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EX-101 PRESENTATION LINKBASE DOCUMENT
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EX-101 DEFINITION LINKBASE DOCUMENT
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inability to achieve or sustain profitability;
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failure to achieve our financial guidance or projected goals and objectives, including long-term financial targets, in the time periods that we anticipate or announce publicly;
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failure to realize the anticipated benefits from previous acquisitions and dispositions, including our recent acquisition of Cartiva, Inc. (Cartiva);
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failure to obtain anticipated commercial sales of our AUGMENT
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Bone Graft and AUGMENT® Injectable Bone Graft products;
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liability for product liability claims on hip/knee (OrthoRecon) products sold by Wright Medical Technology, Inc. (WMT) prior to the divestiture of the OrthoRecon business;
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risks and uncertainties associated with our metal-on-metal master settlement agreements and the settlement agreements with certain of our insurance companies, including without limitation, the resolution of the remaining unresolved claims, the effect of the broad release of certain insurance coverage for present and future claims, and the resolution of WMT’s dispute with the remaining carriers;
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adverse outcomes in existing product liability litigation;
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copycat claims against our modular hip systems resulting from a competitor’s recall of its modular hip product;
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the ability of a creditor of any one particular entity within our corporate structure to reach the assets of the other entities within our corporate structure not liable for the underlying claims of the one particular entity, despite our corporate structure which is intended to ring-fence liabilities;
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new product liability claims;
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pending and future other litigation, which could have an adverse effect on our business, financial condition, or operating results;
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challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others;
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the possibility of private securities litigation or shareholder derivative suits;
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inadequate insurance coverage;
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inability to generate sufficient cash flow to satisfy our capital requirements, including future milestone payments, and existing debt, including the conversion features of our convertible senior notes, or refinance our existing debt as it matures;
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risks associated with our credit, security and guaranty agreement for our senior secured asset-based line of credit and term loan facility;
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inability to raise additional financing when needed and on favorable terms;
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the loss of key suppliers, which may result in our inability to meet customer orders for our products in a timely manner or within our budget;
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the incurrence of significant expenditures of resources to maintain relatively high levels of inventory, which could reduce our cash flows and increase the risk of inventory obsolescence, which could harm our operating results;
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our inability to timely manufacture products or instrument sets to meet demand;
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our private label manufacturers failing to provide us with sufficient supply of their products, or failing to meet appropriate quality requirements;
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our plans to bring the manufacturing of certain of our products in-house and possible disruptions we may experience in connection with such transition;
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our plans to increase our gross margins by taking certain actions designed to do so;
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inventory reductions or fluctuations in buying patterns by wholesalers or distributors;
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not successfully competing against our existing or potential competitors and the effect of significant recent consolidations amongst our competitors;
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not successfully developing and marketing new products and technologies and implementing our business strategy;
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insufficient demand for and market acceptance of our new and existing products;
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the reliance of our business plan on certain market assumptions;
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lack of suitable business development opportunities;
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inability to capitalize on business development opportunities;
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future actions of the SEC, the United States Attorney’s office, the U.S. Food and Drug Administration (FDA), the Department of Health and Human Services, or other U.S. or foreign government authorities, including those resulting from increased scrutiny under the U.S. 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;
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failure or delay in obtaining FDA or other regulatory clearance for our products;
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the compliance of our products and activities with the laws and regulations of the countries in which they are marketed, which compliance may be costly and time-consuming;
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the use, misuse or off-label use of our products that may harm our image in the marketplace or result in injuries that may lead to product liability suits, which could be costly to our business or result in governmental sanctions;
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changes in healthcare laws, which could generate downward pressure on our product pricing;
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ability of healthcare providers to obtain reimbursement for our products or a reduction in the current levels of reimbursement, which could result in reduced use of our products and a decline in sales;
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the potentially negative effect of our ongoing compliance efforts on our relationships with customers and on our ability to deliver timely and effective medical education, clinical studies, and new products;
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failures of, interruptions to, or unauthorized tampering with, our information technology systems;
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our inability to maintain effective internal controls;
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product quality or patient safety issues;
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geographic and product mix impact on our sales;
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deriving a significant portion of our revenues from operations in certain geographic markets that are subject to political, economic, and social instability, including in particular France, and risks and uncertainties involved in launching our products in certain new geographic markets;
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the negative impact of the commercial and credit environment on us, our customers, and our suppliers;
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inability to retain key sales representatives, independent distributors, and other personnel or to attract new talent;
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consolidation in the healthcare industry that could lead to demands for price concessions or the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, financial condition, or operating results;
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our clinical trials and their results and our reliance on third parties to conduct them;
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potentially burdensome tax measures; and
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fluctuations in foreign currency exchange rates.
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Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;
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Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;
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Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and
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Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products.
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Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;
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Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;
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Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and
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Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products.
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Total Shoulder Joint Replacement
. Our total shoulder joint replacement products have two components: a humeral implant consisting of a metal stem or base attached to a metal head, and a plastic implant for the glenoid (shoulder socket). Together, these two components mimic the function of a natural shoulder joint. Our total shoulder joint replacement products include the AEQUALIS ASCEND
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, AEQUALIS
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PRIMARY™, AEQUALIS
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PERFORM™ and SIMPLICITI
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shoulder systems. Our BLUEPRINT™ 3D Planning Software can be used with our AEQUALIS
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PERFORM™ Glenoid System to assist surgeons in accurately positioning the glenoid implant and replicating the pre-operative surgical plan. In addition, we received FDA 510(k) clearance in June 2016 of our AEQUALIS
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PERFORM™+ Glenoid System, the first anatomic augmented glenoid. This system was designed to specifically address posterior glenoid deficiencies and deliver bone preservation. SIMPLICITI
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is the first minimally invasive, ultra-short stem total shoulder available in the Unites States.
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Hemi Shoulder Joint Replacement
. Our hemi shoulder joint replacement products replace only the humeral head and allow it to articulate against the native glenoid. These products include our PYC HUMERAL HEAD™ and INSPYRE™. PYC stands for pyrocarbon, which is a biocompatible material that has low joint surface friction and a high resistance to wear. The PYC HUMERAL HEAD™ is currently available in certain international markets. The product received FDA clearance in 2015 for its investigational device exemption to conduct a clinical trial in the United States. We anticipate that this single arm study will enroll and implant 157 patients from up to 20 centers across the United States and will evaluate the safety and effectiveness of the device in patients with a primary diagnosis of partial shoulder replacement or hemi-arthroplasty. The study design uses a primary endpoint that is measured at two years.
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Reversed Shoulder Joint Replacement
. Our reversed shoulder joint replacement products are used in arthritic patients lacking rotator cuff function. The components are different from a traditional “total” shoulder in that the humeral implant has the plastic socket and the glenoid has the metal head. This design has the biomechanical impact of shifting the pivot point of the joint away from the body centerline and recruiting the deltoid muscles to enable the patient to elevate the arm. Our reversed joint replacement products include the AEQUALIS
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REVERSED II™ shoulder. We received FDA 510(k) clearance in December 2016 of our AEQUALIS
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PERFORM™ REVERSED Glenoid System, our first reverse augmented glenoid, and we commercially launched it during first quarter of 2017. This system was designed to specifically address posterior glenoid deficiencies and deliver bone preservation. We continue to release new options for our BLUEPRINT™ 3D Planning Software, which can be used with our AEQUALIS
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PERFORM™ REVERSED Glenoid System to assist surgeons in accurately positioning the glenoid implant and replicating the pre-operative surgical plan.
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Convertible Shoulder Joint Replacement
. Our convertible shoulder joint replacement products are modular implants that can be converted from a total or hemi shoulder implant to a reversed implant at a later date if the patient requires it. Our convertible joint replacement products include the AEQUALIS ASCEND
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FLEX™ convertible shoulder system, which provides anatomic and reversed options within a single system and is designed to offer precise intra-operative implant-to-patient fit and easy conversion to reversed if necessary. We received FDA 510(k) clearance of AEQUALIS
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FLEX REVIVE™ shoulder system in the third quarter of 2018. The AEQUALIS
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FLEX REVIVE™ shoulder system is the first system developed specifically for shoulder revision, which was designed to help surgeons remove the old implant with universal instrumentation designed specifically for shoulder applications, rebuild the new implant with control of height, version, and fixation, and to restore stability and function from successful humeral and glenoid reconstruction. AEQUALIS
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FLEX REVIVE™ was launched to limited users early in the first quarter of 2019 and full commercial launch is anticipated during the first half of 2019.
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Shoulder Resurfacing Implants
. An option for some patients is shoulder resurfacing where the damaged humeral head is sculpted to receive a metal “cap” that fits onto the bone, functioning as a new, smooth humeral head. This procedure can be less invasive than a total shoulder replacement. Our shoulder resurfacing implants are designed to preserve bone, which may benefit more active or younger patients with shoulder arthritis. Our resurfacing implants include the AEQUALIS
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RESURFACING HEAD™.
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Shoulder Trauma Devices
. Our shoulder trauma devices, such as plates, pins, screws, and nails, are non-articulating implants used to help stabilize fractures of the humerus. Our shoulder trauma products include the AEQUALIS
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IM NAIL™, AEQUALIS
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PROXIMAL HUMERAL PLATE™, AEQUALIS
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FRACTURE™ shoulder and AEQUALIS
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REVERSED FRACTURE™ shoulder.
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Total Elbow and Radial Head Replacement
. Our total elbow and radial head replacement products address the need for modularity in the anatomically highly-variable joint of the elbow and give surgeons the ability to reproduce the natural flexion/extension axis and restore natural kinematics of the elbow. Our total elbow replacement products include our LATITUDE
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EV™ total elbow prosthesis. Our radial head replacement products include our EVOLVE
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modular radial head device, which is a market leading radial head prosthesis that provides different combinations of heads and stems allowing the surgeon to choose implant heads and stems to accommodate the unpredictable anatomy of each patient.
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Elbow Fracture Repair
. We have several plating and screw products designed to repair a fractured elbow. Our radial head plating systems and screws are for surgeons who wish to repair rather than replace a damaged radial head and include our EVOLVE
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TRIAD™ fixation system. Our EVOLVE
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Elbow Plating System addresses fractures of the distal humerus and proximal ulna. Composed of polished stainless steel, this system was designed to accurately match the patient anatomy to reduce the need for intra-operative bending while providing a low-profile design to minimize post-operative irritation. Both of these products and several of our other products incorporate our ORTHOLOC™ 3Di Polyaxial Locking Technology to enable optimal screw placement and stability.
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Wrist Fracture Repair
. We have several plating and screw products designed to repair a fractured wrist. Our MICRONAIL
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II Intramedullary Distal Radius System is a next-generation minimally invasive treatment for distal radius fractures that is designed to provide immediate fracture stabilization with minimal soft tissue disruption. Also, as the nail is implanted within the bone, it has no external profile on top of the bone, thereby reducing the potential for tendon irritation or rupture, which is an appreciable problem with conventional plates designed to lie on top of the bone. In addition, our RAYHACK
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system is comprised of a series of precision cutting guides and procedure-specific plates for ulnar and radial shortening procedures and the surgical treatment of radial malunions and Keinbock’s Disease.
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Hand Fixation
. Our hand fixation products include our FUSEFORCE
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Hand Fixation System, which is a shape-memory compression-ready fixation system that can be used in fixation for fractures, fusions, or osteotomies of the bones in the hand.
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Thumb and Finger Joint Replacement
. Our Swanson finger joints are used in finger joint replacement for patients suffering from rheumatoid arthritis of the hand. With nearly 45 years of clinical success, Swanson digit implants are a foundation in our upper extremities business and are used by a loyal base of hand surgeons worldwide. Our ORTHOSPHERE
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implants are used in thumb joint replacement procedures.
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Total Ankle Joint Replacement
. Total ankle joint replacement, also known as total ankle arthroplasty, is a surgical procedure that orthopaedic surgeons use to treat ankle arthritis. Our total ankle joint replacement products include implants for the ankle that involve replacing the joint with an articulating multi-component implant. These joint implants may be mobile bearing, in which the plastic component is free to slide relative to the metal bearing surfaces, or fixed bearing, in which this component is constrained. Our INBONE
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Total Ankle Systems, including our third-generation INBONE
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II Total Ankle System, are modular prostheses that are designed to allow the surgeon to tailor the fixation stems for the tibial and talar components in order to maximize stability of the implant. The INBONE
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II Total Ankle System is the only ankle replacement that offers surgeons multiple implant options with different articular geometry. Our INFINITY
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Total Ankle System features a distinctive talar resurfacing option for preservation of talar bone. The combination and interchangeability of both the INBONE
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and INFINITY
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systems provide the surgeon with an implant continuum of care concept, allowing the surgeon to address a more bone conserving implant option with INFINITY
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all the way to addressing a more complex ankle deformity with INBONE
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. Our INBONE
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Ankle Fusion
. We have several products used in ankle fusion procedures, which fuse together the tibia, fibula, and talus bones into one bone, and are intended to treat painful, end-stage arthritis in the ankle joint. These products include our ORTHOLOC™ 3Di Ankle Fusion System, VALOR
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TTC fusion nail, and the legacy Tornier Maxlock Extreme
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Plate and Screws System.
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Ankle Fixation and Fracture Repair
. We sell a broad range of anatomically designed plates, screws, and nails used to stabilize and heal fractured ankle bones, including our ORTHOLOC
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3Di Ankle Fracture Low Profile System features a complete range of ankle fracture plates designed specifically for the foot and ankle surgeon. The system features low-profile, anatomic plate designs and ORTHOLOC™ 3Di polyaxial locking screw technology, providing an innovative fracture solution that is intended to address a primary need for one of the foot and ankle’s largest market segments.
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Foot Fusion
. We have several products used in foot fusion procedures, which fuse together three bones in the back of the foot into one bone and are used to treat a wide range of conditions, including arthritis, flat feet, rheumatoid arthritis, and previous injuries, such as fractures caused by wear and tear to bones and cartilage. Our foot fusion products include our ORTHOLOC™ 3Di Midfoot Plating System, VALOR
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TTC fusion nail and the legacy Tornier Maxlock Extreme
TM
Plate and Screws System.
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Foot Fixation and Fracture Repair
. Our foot fixation and fracture repair products include plates, screws, and nails used to stabilize and heal foot deformities and fractures. Our CHARLOTTE
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CLAW
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Compression Plate is the first ever locking compression plate designed for corrective foot surgeries. Our next-generation CLAW
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II Compression Plating System expands our plate and screw offering by introducing anatomic plates specifically designed for fusions of the midfoot, and the CLAW
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II Polyaxial Compression Plating System incorporates variable-angle locking screw technology and our ORTHOLOC™ 3Di Reconstruction Plating System utilizes our 3Di polyaxial locking technology. In April 2016, we further expanded the ORTHOLOC™ 3Di portfolio with the launch of the ORTHOLOC™
3Di CROSSCHECK
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Plating System. This modular addition is comprised of five uniquely designed plates which offer an inter-fragmentary solution. Our SALVATION™ limb salvage portfolio, which is designed to address the unique demands of advanced midfoot reconstruction, was commercially launched in the first half of 2016 and in the third quarter of 2017, we launched line extensions to the system. We also launched a number of line extensions to the SALVATION™ limb salvage portfolio in 2018. We expect continued demand for these new products. Other foot products include the MAXLOCK
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, MINIMAX LOCK™ and MINIMAX LOCK EXTREME™ plate and screw systems, BIOFOAM
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Wedge System, BIOARCH
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Subtalar Arthroereisis Implant, MDI Metatarsal Resurfacing Implant, and TENFUSE
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Nail Allograft.
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Hammertoe Correction.
Hammertoe is a contracture (bending) of one or both joints of the second, third, fourth, or fifth (little) toes. Our hammertoe correction products include the PRO-TOE
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VO Hammertoe Fixation System, PRO-TOE
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C2 Hammertoe Implant, PHALINX
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Hammertoe Fixation System, Cannulink Intraosseous Fixation System (IFS), and TENFUSE
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PIP Hammertoe Allograft.
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Toe Joint Replacement
. As a result of our recent acquisition of Cartiva, our lower extremities product portfolio now includes Cartiva's Synthetic Cartilage Implant (SCI), the only PMA approved product for treatment of first Metatarsal Phalangeal (MTP) joint osteoarthritis. We also sell our Swanson line of toe joint replacement products.
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Minimally-Invasive Foot and Ankle Surgery.
The MICA™ Minimally-Invasive Foot and Ankle system and PROstep™ Minimally Invasive Surgery System for Foot and Ankle were launched to limited users in the third quarter of 2017. These systems are designed on the premise that all “current” procedures can be performed through a smaller, minimally invasive, incision, with a focus on preserving the soft tissues. We have MICA™ Screws, MICA™ Machine, PROstep™ Power Box, PROstep™ Burrs, and instruments to perform minimally invasive procedures such as MICA™ Chevron, Akin, Calcaneal Osteotomies, Hammer toe/Claw toe, Cheilectomy, Bunionectomy, Bunionette and DMMO and PROstep™ Chevron, Akin, Calcaneal Osteotomies, Cheilectomy and DMMO. Full commercial launch of MICA™ and PROstep™ occurred early in the third quarter of 2018.
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AUGMENT
®
Bone Graft
. The newest addition to our biologics product portfolio is AUGMENT
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Bone Graft. Our AUGMENT
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Bone Graft product line is based on recombinant human platelet-derived growth factor (rhPDGF-BB), a synthetic copy of one of the body’s principal healing agents. We obtained FDA approval of AUGMENT
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Bone Graft for ankle and/or hindfoot fusion indications in the United States during third quarter of 2015. Prior to FDA approval, this product was available for sale in Canada for foot and ankle fusion indications and in Australia and New Zealand for hindfoot and ankle fusion indications. In June 2018, we received premarket approval from the FDA for AUGMENT
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Injectable Bone Graft. We acquired the AUGMENT
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Bone Graft product line from BioMimetic Therapeutics, Inc. (BioMimetic) in March 2013.
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Hard Tissue Repair
. Our other bone or hard tissue repair products include our PRO-DENSE
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Injectable Regenerative Graft. PRO-DENSE
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is a composite graft composed of surgical grade calcium sulfate and calcium phosphate, and in animal studies, has demonstrated excellent bone regenerative characteristics, forming new bone that is over three times stronger than the natural surrounding bone at the 13-week time point. Beyond 13 weeks, the regenerated bone gradually remodels to natural bone strength. Our PRO-STIM
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Injectable Inductive Graft is built on the PRO-DENSE
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material platform, but adds demineralized bone matrix (DBM), and has demonstrated accelerated healing compared to autograft in pre-clinical testing. Our other hard tissue repair products, including our IGNITE
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Power Mix Injectable Stimulus, FUSIONFLEX™ Demineralized Moldable Scaffold, ALLOMATRIX
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Injectable Putty, OSTEOSET
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Resorbable Bead Kit, MIIG
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Injectable Graft, ALLOPURE
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Allograft Bone Wedges, and TENSIX® DBM.
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Soft Tissue Repair
. Our soft tissue repair products include our GRAFTJACKET
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Regenerative Tissue Matrix, which is a human-derived soft tissue graft designed for augmentation of tendon and ligament repairs, such as those of the rotator cuff in the shoulder and Achilles tendon in the foot and ankle. GRAFTJACKET
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Maxforce Extreme is our thickest GRAFTJACKET
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matrix, which provides excellent suture holding power for augmenting challenging tendon and ligament repairs. We procure our GRAFTJACKET
®
product through a distribution agreement that expires December 31, 2019. In January 2019, we commenced commercialization of GRAFTJACKET NOW®, a ready to use human acellular dermal scaffold, procured through a separate distribution agreement. Other soft tissue repair products include our ACTISHIELD™ and ACTISHIELD™ CF Amniotic Barrier Membranes, and VIAFLOW™ and VIAFLOW™ C Flowable Placental Tissue Matrices.
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Develop new products and innovative technologies;
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Obtain and maintain regulatory clearances or approvals and reimbursement for our products;
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Manufacture and sell our products cost-effectively;
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Meet all relevant quality standards for our products and their markets;
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Respond to competitive pressures specific to each of our geographic markets, including our ability to enforce non-compete agreements;
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Protect the proprietary technology of our products and manufacturing processes;
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Market and promote our products;
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Continue to maintain a high level of medical education for our surgeons on our products;
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Attract and retain qualified scientific, management and sales employees and focused sales representatives; and
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Support our technology with clinically relevant studies.
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Quality System regulations, which govern, among other things, how manufacturers design, test, manufacture, modify, label, exercise quality control over and document manufacturing of their products;
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labeling and claims regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling;
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FDA guidance of off-label dissemination of information and responding to unsolicited requests for information;
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Medical Device Reporting (MDR) regulation, which requires reporting to the FDA certain adverse experiences associated with use of our products;
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complaint handling regulations designed to track, monitor, and resolve complaints related to our products;
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Part 806 reporting of certain corrections, removals, enhancements, and recalls of products;
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complying with federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to FDA’s Global Unique Device Identification Database (GUDID); and
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in some cases, ongoing monitoring and tracking of our products’ performance and periodic reporting to the FDA of such performance results.
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demand for products, which historically has been lowest in the third quarter;
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our ability to meet the demand for our products;
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the level of competition;
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the number, timing, and significance of new products and product introductions and enhancements by us and our competitors;
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our ability to develop, introduce, and market new and enhanced versions of our products on a timely basis;
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the timing of or failure to obtain regulatory clearances or approvals for products;
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changes in pricing policies by us and our competitors;
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changes in the treatment practices of orthopaedic surgeons;
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changes in distributor relationships and sales force size and composition;
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the timing of material expense- or income-generating events and the related recognition of their associated financial impact;
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the number and mix of products sold in the quarter and the geographies in which they are sold;
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the number of selling days;
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the availability and cost of components and materials;
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prevailing interest rates on our excess cash investments;
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fluctuations in foreign currency exchange rates;
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the timing of significant orders and shipments;
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ability to obtain reimbursement for our products and the timing of patients’ use of their calendar year medical insurance deductibles;
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work stoppages or strikes in the healthcare industry;
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changes in FDA and foreign governmental regulatory policies, requirements, and enforcement practices;
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changes in accounting standards, policies, estimates, and treatments;
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restructuring, impairment, and other special charges, costs associated with our pending litigation and U.S. governmental inquiries, and other charges;
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variations in cost of sales due to the amount and timing of excess and obsolete inventory charges, commodity prices, and manufacturing variances;
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income tax fluctuations and changes in tax rules;
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general economic factors; and
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increases of interest rates, which can increase the cost of borrowings under our ABL Credit Agreement, and generally affect the level of economic activity.
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make us more vulnerable to adverse changes in general U.S. and worldwide economic, industry, and competitive conditions and adverse changes in government regulation;
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•
|
limit our flexibility in planning for, or reacting to, changes in our business and our industry;
|
•
|
restrict our ability to make strategic acquisitions or dispositions or to exploit business opportunities;
|
•
|
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, contractual obligations, research and development efforts, acquisitions, debt service requirements, execution of our business strategy, or other purposes.
|
•
|
make loans and investments, including acquisitions and transactions with affiliates;
|
•
|
create liens or other encumbrances on our assets;
|
•
|
dispose of assets;
|
•
|
enter into contingent obligations;
|
•
|
engage in mergers or consolidations; and
|
•
|
pay dividends.
|
•
|
imposing fines and penalties on us;
|
•
|
preventing us from manufacturing or selling our products;
|
•
|
bringing civil or criminal charges against us and our officers and employees;
|
•
|
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.
|
•
|
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.
|
•
|
the imposition of additional U.S. and foreign governmental controls or regulations on orthopaedic implants and biologic products;
|
•
|
withdrawal from or revision to international trade policies or agreements and the imposition or increases in import and export licensing and other compliance requirements, customs duties and tariffs, import and export quotas and other trade restrictions, license obligations, and other non-tariff barriers to trade;
|
•
|
unexpected changes in tariffs, trade barriers and regulatory requirements;
|
•
|
the imposition of U.S. or international sanctions against a country, company, person, or entity with whom we do business that would restrict or prohibit continued business with that country, company, person, or entity;
|
•
|
economic instability, including currency risk between the U.S. dollar and foreign currencies, in our target markets;
|
•
|
economic weakness, including inflation, or political instability in particular foreign economies and markets;
|
•
|
the imposition of restrictions on the activities of foreign agents, representatives, and distributors;
|
•
|
scrutiny of foreign tax authorities, which could result in significant fines, penalties, and additional taxes being imposed upon us;
|
•
|
difficulties in managing and staffing international operations and increases in infrastructure costs including legal, tax, accounting, and information technology;
|
•
|
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 products to directly absorb medical costs or that may necessitate our reducing selling prices for our products;
|
•
|
unexpected changes in foreign regulatory requirements;
|
•
|
differing local product preferences and product requirements;
|
•
|
changes in tariffs and other trade restrictions, particularly related to the exportation of our biologic products, and including the current U.S. trade dispute with China;
|
•
|
work stoppages or strikes in the healthcare industry, such as those that have affected our operations in France, Canada, South Korea, and Finland in the past;
|
•
|
difficulties in protecting, enforcing and defending intellectual property rights;
|
•
|
foreign currency exchange controls that might prevent us from repatriating cash earned in countries outside the Netherlands;
|
•
|
longer payment cycles and difficulties in enforcing agreements and collecting receivables through certain foreign legal systems;
|
•
|
transportation delays and interruptions;
|
•
|
national and international conflicts, including foreign policy changes, acts of war or terrorist acts;
|
•
|
complex data privacy requirements and labor relations laws; and
|
•
|
exposure to different legal and political standards due to our conducting business in
approximately
50
countries.
|
•
|
variations in our net sales, earnings, and cash flow, and in particular variations that deviate from our projected financial information;
|
•
|
announcements of new investments, acquisitions, strategic partnerships, or joint ventures;
|
•
|
announcements of new products by us or our competitors;
|
•
|
announcements of divestitures or discontinuance of products or assets;
|
•
|
changes in financial estimates by securities analysts;
|
•
|
additions or departures of key personnel;
|
•
|
sales of our equity securities by our significant shareholders or management or sales of additional equity securities by our company;
|
•
|
pending and potential litigation or regulatory investigations; and
|
•
|
fluctuations in market prices for our products.
|
City
|
|
State/Country
|
|
Owned or
Leased
|
|
Occupancy
|
Memphis
|
|
Tennessee,
United States
|
|
Leased
|
|
Offices/R&D
|
Arlington
|
|
Tennessee,
United States
|
|
Leased
|
|
U.S. Lower Extremities & Biologics
Manufacturing/Warehouse/Distribution
|
Bloomington
|
|
Minnesota,
United States
|
|
Leased
|
|
U.S. Upper Extremities
Offices/Warehouse/Distribution
|
Columbia City
|
|
Indiana,
United States
|
|
Leased
|
|
Offices/R&D
|
Alpharetta
|
|
Georgia
|
|
Leased
|
|
U.S. Lower Extremities Offices/Manufacturing/Warehouse
|
Franklin
|
|
Tennessee,
United States
|
|
Leased
|
|
U.S. Lower Extremities & Biologics
Offices/Manufacturing/Warehouse
|
Montbonnot
|
|
France
|
|
Leased
|
|
International Extremities & Biologics;
U.S. Upper Extremities
Warehouse/Distribution/Offices/R&D
|
Montbonnot
|
|
France
|
|
Owned 51%
|
|
International Extremities & Biologics;
U.S. Upper Extremities
Manufacturing/Offices
|
Plouzané
|
|
France
|
|
Leased
|
|
Upper Extremities
R&D
|
Macroom
|
|
Ireland
|
|
Leased
|
|
International Extremities & Biologics Manufacturing/Offices
|
|
2013
|
2014
|
2015
|
2016
|
2017
|
2018
|
||||||||||||
Legacy Tornier / Wright Medical Group N.V.
|
$
|
100.00
|
|
$
|
139.20
|
|
$
|
128.81
|
|
$
|
127.45
|
|
$
|
121.38
|
|
$
|
144.94
|
|
Legacy Wright
|
100.00
|
|
88.21
|
|
69.79
|
|
—
|
|
—
|
|
—
|
|
||||||
Nasdaq Stock Market (US Companies)
|
100.00
|
|
117.56
|
|
125.74
|
|
138.99
|
|
146.41
|
|
142.89
|
|
||||||
Nasdaq Medical Equipment Index
|
100.00
|
|
117.40
|
|
137.79
|
|
152.21
|
|
216.51
|
|
245.51
|
|
||||||
SIC Code 384 - Surgical, Medical, and Dental Instruments and Supplies
|
100.00
|
|
122.41
|
|
129.24
|
|
140.74
|
|
180.72
|
|
181.37
|
|
|
Fiscal year ended
|
||||||||||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
|
December 27, 2015
1
|
|
December 31, 2014
|
||||||||||
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
836,190
|
|
|
$
|
744,989
|
|
|
$
|
690,362
|
|
|
$
|
405,326
|
|
|
$
|
298,027
|
|
Cost of sales
2
|
180,153
|
|
|
160,947
|
|
|
192,407
|
|
|
113,622
|
|
|
73,223
|
|
|||||
Gross profit
|
656,037
|
|
|
584,042
|
|
|
497,955
|
|
|
291,704
|
|
|
224,804
|
|
|||||
Operating expenses:
|
|
|
|
|
|
|
|
|
|
||||||||||
Selling, general and administrative
2
|
577,961
|
|
|
525,222
|
|
|
541,558
|
|
|
424,377
|
|
|
289,620
|
|
|||||
Research and development
2
|
59,142
|
|
|
50,115
|
|
|
50,514
|
|
|
39,339
|
|
|
24,963
|
|
|||||
Amortization of intangible assets
|
26,730
|
|
|
28,396
|
|
|
28,841
|
|
|
16,754
|
|
|
10,027
|
|
|||||
Total operating expenses
|
663,833
|
|
|
603,733
|
|
|
620,913
|
|
|
480,470
|
|
|
324,610
|
|
|||||
Operating loss
3
|
(7,796
|
)
|
|
(19,691
|
)
|
|
(122,958
|
)
|
|
(188,766
|
)
|
|
(99,806
|
)
|
|||||
Interest expense, net
4
|
80,247
|
|
|
74,644
|
|
|
58,530
|
|
|
41,358
|
|
|
17,398
|
|
|||||
Other expense (income), net
5
|
81,797
|
|
|
5,570
|
|
|
(3,148
|
)
|
|
10,884
|
|
|
129,626
|
|
|||||
Loss before income taxes
|
(169,840
|
)
|
|
(99,905
|
)
|
|
(178,340
|
)
|
|
(241,008
|
)
|
|
(246,830
|
)
|
|||||
Benefit for income taxes
6
|
(536
|
)
|
|
(34,968
|
)
|
|
(13,406
|
)
|
|
(3,652
|
)
|
|
(6,334
|
)
|
|||||
Net loss from continuing operations
|
(169,304
|
)
|
|
(64,937
|
)
|
|
(164,934
|
)
|
|
(237,356
|
)
|
|
(240,496
|
)
|
|||||
Loss from discontinued operations, net of tax
|
(201
|
)
|
|
(137,661
|
)
|
|
(267,439
|
)
|
|
(61,345
|
)
|
|
(19,187
|
)
|
|||||
Net loss
|
$
|
(169,505
|
)
|
|
$
|
(202,598
|
)
|
|
$
|
(432,373
|
)
|
|
$
|
(298,701
|
)
|
|
$
|
(259,683
|
)
|
Net loss from continuing operations per share
—
basic and diluted:
|
$
|
(1.50
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(1.60
|
)
|
|
$
|
(3.66
|
)
|
|
$
|
(4.69
|
)
|
Weighted-average number of ordinary shares outstanding —
basic and diluted
|
112,592
|
|
|
104,531
|
|
|
102,968
|
|
|
64,808
|
|
|
51,293
|
|
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
|
December 27, 2015
|
|
December 31, 2014
|
||||||||||
Consolidated Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
191,351
|
|
|
$
|
167,740
|
|
|
$
|
262,265
|
|
|
$
|
139,804
|
|
|
$
|
227,326
|
|
Restricted cash
|
—
|
|
|
—
|
|
|
150,000
|
|
|
—
|
|
|
—
|
|
|||||
Marketable securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,575
|
|
|||||
Working capital
|
136,106
|
|
|
151,599
|
|
|
285,107
|
|
|
352,946
|
|
|
249,958
|
|
|||||
Total assets
|
2,694,401
|
|
|
2,128,724
|
|
|
2,290,586
|
|
|
2,073,494
|
|
|
885,068
|
|
|||||
Long-term liabilities
|
1,294,816
|
|
|
1,124,733
|
|
|
1,129,204
|
|
|
811,530
|
|
|
419,204
|
|
|||||
Shareholders’ equity
|
932,459
|
|
|
588,696
|
|
|
686,864
|
|
|
1,055,026
|
|
|
278,803
|
|
|
Fiscal year ended
|
||||||||||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
|
December 27, 2015
|
|
December 31, 2014
|
||||||||||
Other Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash flow (used in) provided by operating activities
|
$
|
(63,729
|
)
|
|
$
|
(184,810
|
)
|
|
$
|
37,824
|
|
|
$
|
(195,870
|
)
|
|
$
|
(116,002
|
)
|
Cash flow (used in) provided by investing activities
|
(510,239
|
)
|
|
(109,421
|
)
|
|
(34,241
|
)
|
|
(15,970
|
)
|
|
145,630
|
|
|||||
Cash flow provided by financing activities
|
598,140
|
|
|
46,816
|
|
|
270,417
|
|
|
126,862
|
|
|
33,051
|
|
|||||
Depreciation
1
|
59,497
|
|
|
56,832
|
|
|
55,830
|
|
|
28,390
|
|
|
18,582
|
|
|||||
Share-based compensation expense
|
26,120
|
|
|
19,393
|
|
|
14,416
|
|
|
24,964
|
|
|
11,487
|
|
|||||
Capital expenditures
|
71,467
|
|
|
63,474
|
|
|
50,099
|
|
|
43,666
|
|
|
48,603
|
|
1
|
The 2015 results were restated for the divestiture of our Large Joints business. (See
Note 4
to consolidated financial statements).
|
2
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Fiscal year ended
|
||||||||||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
|
December 27, 2015
|
|
December 31, 2014
|
||||||||||
Cost of sales
|
$
|
585
|
|
|
$
|
565
|
|
|
$
|
414
|
|
|
$
|
287
|
|
|
$
|
254
|
|
Selling, general and administrative
|
23,608
|
|
|
17,705
|
|
|
13,216
|
|
|
22,777
|
|
|
10,149
|
|
|||||
Research and development
|
1,927
|
|
|
1,123
|
|
|
786
|
|
|
1,900
|
|
|
1,084
|
|
3
|
During the fiscal year ended December 30, 2018, we recognized: (a) $12.0 million of transaction and transition costs related to both the Cartiva acquisition and Wright/Tornier merger and (b) $0.4 million of inventory step-up amortization. During the fiscal year ended December 31, 2017, we recognized: (a) $12.4 million of transaction and transition costs related to the Wright/Tornier merger and (b) a benefit of $9.0 million from incentive and indirect tax projects. During the fiscal year ended December 25, 2016, we recognized: (a) $37.7 million of inventory step-up amortization; (b) $36.4 million of transaction and transition costs related to the Wright/Tornier merger; (c) $1.8 million of costs related to a legal settlement; (d) $1.3 million of costs associated with executive management changes; and (e) $0.2 million of costs associated with debt refinancing. During the fiscal year ended December 27, 2015, we recognized: (a) $82.2 million of due diligence, transaction, and transition costs related to the Wright/Tornier merger; (b) $14.2 million of share-based compensation acceleration; and (c) $10.3 million of inventory step-up amortization. During the fiscal year ended December 31, 2014, we recognized: (a) $14.1 million of due diligence, transaction, and transition costs related to the Biotech, Solana, and OrthoPro acquisitions; (b) $11.9 million of charges related to the Wright/Tornier merger; (c) $5.9 million of transition costs related to the OrthoRecon divestiture; (d) $2.1 million of costs associated with distributor conversions and non-competes; (e) $1.2 million of costs associated with management changes; and (f) $0.9 million of costs associated with a patent dispute settlement.
|
4
|
During the fiscal year ended December 30, 2018, we recognized: (a) $49.2 million of non-cash interest expense related to the amortization of the debt discount on our 2020, 2021, and 2023 convertible notes. During the fiscal year ended December 31, 2017, we recognized: (a) $45.5 million of non-cash interest expense related to the amortization of the debt discount on our 2017, 2020 and 2021 convertible notes and (b) $0.2 million of interest income from incentive and indirect tax projects. During the fiscal year ended December 25, 2016, we recognized: (a) $36.6 million of non-cash interest expense related to the amortization of the debt discount on our 2017, 2020 and 2021 convertible notes and (b) a $0.8 million of interest income related to the settlement of an IRS audit.
|
5
|
During the fiscal year ended December 30, 2018, we recognized: (a) a $39.9 million non-cash loss on extinguishment of debt to write-off unamortized debt discount and deferred financing fees associated with the extinguishment of $400.0 million of the 2020 Notes; (b) a $35.9 million loss for the mark-to-market adjustment of our derivative instruments; (c) a $3.2 million loss from foreign currency translation; (d) $1.8 million of charges due to the fair value adjustment to contingent consideration; and (e) a $0.1 million loss from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition. During the fiscal year ended December 31, 2017, we recognized: (a) a $5.3 million loss from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition; (b) $4.8 million gain for the mark-to-market adjustment of our derivative instruments; (c) a benefit of $0.6 million from incentive and indirect tax projects; and (d) $0.1 million of charges due to the fair value adjustment to contingent consideration. During the fiscal year ended December 25, 2016, we recognized: (a) $28.3 million gain for the mark-to-market adjustment of our derivative instruments; (b) a $12.3 million non-cash loss on extinguishment of debt to write-off unamortized debt discount and deferred financing fees associated with the partial settlement of 2017 and 2020 convertible notes; (c) a $8.7 million loss from mark-to-market adjustments on the Contingent Value Rights (CVRs) issued in connection with the BioMimetic acquisition; and (d) $0.5 million of charges due to the fair value adjustment to contingent consideration. During the fiscal year ended December 27, 2015, we recognized: (a) $9.8 million gain for the mark-to-market adjustment of our derivative instruments and (b) a $7.6 million gain from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition. During the fiscal year ended December 31, 2014, we recognized: (a) approximately $125 million from mark-to-market adjustments on the CVRs issued in connection with the BioMimetic acquisition; (b) $2.0 million of charges for the mark-to-market adjustment of our derivative instruments; and (c) $1.8 million of charges due to the fair value adjustment to contingent consideration associated with our acquisition of WG Healthcare.
|
6
|
During the fiscal year ended December 30, 2018, we recognized: (a) a $3.6 million tax benefit related to the realizability of deferred tax assets as result of the Cartiva acquisition; (b) a tax provision of $2.7 million due to a change in judgment regarding our ability to realize certain deferred tax assets; and (c) a $0.2 million U.S. tax benefit within continuing operations recorded as a result of the year to date pre-tax gain recognized within discontinued operations due to the previously announced $30.75 million insurance settlement. During the fiscal year ended December 31, 2017, we recognized: (a) a $25.0 million tax benefit related to the realizability of net operating losses and (b) tax law reform changes in the U.S. and France resulting in an $8.3 million tax benefit. During the fiscal year ended December 25, 2016, we recognized a $2.3 million income tax benefit related to the settlement of an IRS audit.
|
•
|
Upper extremities, which include joint implants and bone fixation devices for the shoulder, elbow, wrist, and hand;
|
•
|
Lower extremities, which include joint implants and bone fixation devices for the foot and ankle;
|
•
|
Biologics, which include products used to support treatment of damaged or diseased bone, tendons, and soft tissues or to stimulate bone growth; and
|
•
|
Sports medicine and other, which include products used across several anatomic sites to mechanically repair tissue-to-tissue or tissue-to-bone injuries and other ancillary products.
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
||||||||
|
Amount
|
% of net sales
|
|
Amount
|
% of net sales
|
||||||
Net sales
|
$
|
836,190
|
|
100.0
|
%
|
|
$
|
744,989
|
|
100.0
|
%
|
Cost of sales
1
|
180,153
|
|
21.5
|
%
|
|
160,947
|
|
21.6
|
%
|
||
Gross profit
|
656,037
|
|
78.5
|
%
|
|
584,042
|
|
78.4
|
%
|
||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
1
|
577,961
|
|
69.1
|
%
|
|
525,222
|
|
70.5
|
%
|
||
Research and development
1
|
59,142
|
|
7.1
|
%
|
|
50,115
|
|
6.7
|
%
|
||
Amortization of intangible assets
|
26,730
|
|
3.2
|
%
|
|
28,396
|
|
3.8
|
%
|
||
Total operating expenses
|
663,833
|
|
79.4
|
%
|
|
603,733
|
|
81.0
|
%
|
||
Operating loss
|
(7,796
|
)
|
(0.9
|
)%
|
|
(19,691
|
)
|
(2.6
|
)%
|
||
Interest expense, net
|
80,247
|
|
9.6
|
%
|
|
74,644
|
|
10.0
|
%
|
||
Other expense, net
|
81,797
|
|
9.8
|
%
|
|
5,570
|
|
0.7
|
%
|
||
Loss from continuing operations before income taxes
|
(169,840
|
)
|
(20.3
|
)%
|
|
(99,905
|
)
|
(13.4
|
)%
|
||
Benefit for income taxes
|
(536
|
)
|
(0.1
|
)%
|
|
(34,968
|
)
|
(4.7
|
)%
|
||
Net loss from continuing operations
|
(169,304
|
)
|
(20.2
|
)%
|
|
(64,937
|
)
|
(8.7
|
)%
|
||
Loss from discontinued operations, net of tax
|
(201
|
)
|
|
|
(137,661
|
)
|
|
||||
Net loss
|
$
|
(169,505
|
)
|
|
|
$
|
(202,598
|
)
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
% of net sales
|
|
December 31, 2017
|
% of net sales
|
||||||
Cost of sales
|
$
|
585
|
|
0.1
|
%
|
|
$
|
565
|
|
0.1
|
%
|
Selling, general and administrative
|
23,608
|
|
2.8
|
%
|
|
17,705
|
|
2.4
|
%
|
||
Research and development
|
1,927
|
|
0.2
|
%
|
|
1,123
|
|
0.2
|
%
|
|
|
Fiscal year ended
|
|||||||||
U.S.
|
|
December 30, 2018
|
|
December 31, 2017
|
|
% change
|
|||||
Lower extremities
|
|
$
|
250,735
|
|
|
$
|
228,044
|
|
|
10.0
|
%
|
Upper extremities
|
|
281,314
|
|
|
239,965
|
|
|
17.2
|
%
|
||
Biologics
|
|
83,077
|
|
|
78,361
|
|
|
6.0
|
%
|
||
Sports med & other
|
|
8,412
|
|
|
8,141
|
|
|
3.3
|
%
|
||
Total U.S.
|
|
$
|
623,538
|
|
|
$
|
554,511
|
|
|
12.4
|
%
|
|
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|
|||||
Lower extremities
|
|
$
|
60,749
|
|
|
$
|
58,473
|
|
|
3.9
|
%
|
Upper extremities
|
|
114,460
|
|
|
94,699
|
|
|
20.9
|
%
|
||
Biologics
|
|
25,757
|
|
|
22,276
|
|
|
15.6
|
%
|
||
Sports med & other
|
|
11,686
|
|
|
15,030
|
|
|
(22.2
|
)%
|
||
Total International
|
|
$
|
212,652
|
|
|
$
|
190,478
|
|
|
11.6
|
%
|
|
|
|
|
|
|
|
|||||
Total net sales
|
|
$
|
836,190
|
|
|
$
|
744,989
|
|
|
12.2
|
%
|
•
|
a
$39.9 million
charge for the write-off of unamortized deferred financing fees and debt discount associated with the extinguishment of $400.0 million of the 2020 Notes;
|
•
|
a
$35.9 million
loss for the net mark-to-market adjustments on our derivative assets and liabilities;
|
•
|
a
$3.2 million
loss from foreign currency translation; and
|
•
|
a
$1.8 million
loss on fair value adjustments to contingent consideration, including mark-to-market adjustments on CVRs issued in connection with the BioMimetic acquisition.
|
•
|
a $4.5 million loss on currency translation, including hedging activities;
|
•
|
a $5.3 million loss for the mark-to-market adjustment on CVRs; partially offset by
|
•
|
a $4.8 million gain for the net mark-to-market adjustments on our derivative assets and liabilities; and
|
•
|
a benefit of $0.6 million related to incentive and indirect tax projects.
|
|
Fiscal year ended December 30, 2018
|
||||||||||
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
||||||
Net sales
|
$
|
337,433
|
|
|
$
|
286,105
|
|
|
$
|
212,652
|
|
Operating income
|
96,153
|
|
|
97,644
|
|
|
1,492
|
|
|||
Operating income as a percent of net sales
|
28.5
|
%
|
|
34.1
|
%
|
|
0.7
|
%
|
|
Fiscal year ended December 31, 2017
|
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
309,713
|
|
|
$
|
244,798
|
|
|
$
|
190,478
|
|
Operating income
|
79,889
|
|
|
78,866
|
|
|
3,631
|
|
|||
Operating income as a percent of net sales
|
25.8
|
%
|
|
32.2
|
%
|
|
1.9
|
%
|
|
Fiscal year ended
|
||||||||||
|
December 31, 2017
|
|
December 25, 2016
|
||||||||
|
Amount
|
% of net sales
|
|
Amount
|
% of net sales
|
||||||
Net sales
|
$
|
744,989
|
|
100.0
|
%
|
|
$
|
690,362
|
|
100.0
|
%
|
Cost of sales
1,2
|
160,947
|
|
21.6
|
%
|
|
192,407
|
|
27.9
|
%
|
||
Gross profit
|
584,042
|
|
78.4
|
%
|
|
497,955
|
|
72.1
|
%
|
||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
2
|
525,222
|
|
70.5
|
%
|
|
541,558
|
|
78.4
|
%
|
||
Research and development
2
|
50,115
|
|
6.7
|
%
|
|
50,514
|
|
7.3
|
%
|
||
Amortization of intangible assets
|
28,396
|
|
3.8
|
%
|
|
28,841
|
|
4.2
|
%
|
||
Total operating expenses
|
603,733
|
|
81.0
|
%
|
|
620,913
|
|
89.9
|
%
|
||
Operating loss
|
(19,691
|
)
|
(2.6
|
)%
|
|
(122,958
|
)
|
(17.8
|
)%
|
||
Interest expense, net
|
74,644
|
|
10.0
|
%
|
|
58,530
|
|
8.5
|
%
|
||
Other expense (income), net
|
5,570
|
|
0.7
|
%
|
|
(3,148
|
)
|
(0.5
|
)%
|
||
Loss from continuing operations before income taxes
|
(99,905
|
)
|
(13.4
|
)%
|
|
(178,340
|
)
|
(25.8
|
)%
|
||
Benefit for income taxes
|
(34,968
|
)
|
(4.7
|
)%
|
|
(13,406
|
)
|
(1.9
|
)%
|
||
Net loss from continuing operations
|
(64,937
|
)
|
(8.7
|
)%
|
|
(164,934
|
)
|
(23.9
|
)%
|
||
Loss from discontinued operations, net of tax
|
(137,661
|
)
|
|
|
(267,439
|
)
|
|
||||
Net loss
|
$
|
(202,598
|
)
|
|
|
$
|
(432,373
|
)
|
|
1
|
Cost of sales includes amortization of inventory step-up adjustment of
$37.7 million
for the fiscal year ended
December 25, 2016
.
|
2
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Fiscal year ended
|
||||||||||
|
December 31, 2017
|
% of net sales
|
|
December 25, 2016
|
% of net sales
|
||||||
Cost of sales
|
$
|
565
|
|
0.1
|
%
|
|
$
|
414
|
|
0.1
|
%
|
Selling, general and administrative
|
17,705
|
|
2.4
|
%
|
|
13,216
|
|
1.9
|
%
|
||
Research and development
|
1,123
|
|
0.2
|
%
|
|
786
|
|
0.1
|
%
|
|
|
Fiscal year ended
|
|||||||||
U.S.
|
|
December 31, 2017
|
|
December 25, 2016
|
|
% change
|
|||||
Lower extremities
|
|
$
|
228,044
|
|
|
$
|
222,936
|
|
|
2.3
|
%
|
Upper extremities
|
|
239,965
|
|
|
201,579
|
|
|
19.0
|
%
|
||
Biologics
|
|
78,361
|
|
|
74,603
|
|
|
5.0
|
%
|
||
Sports med & other
|
|
8,141
|
|
|
8,429
|
|
|
(3.4
|
)%
|
||
Total U.S.
|
|
$
|
554,511
|
|
|
$
|
507,547
|
|
|
9.3
|
%
|
|
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|
|||||
Lower extremities
|
|
$
|
58,473
|
|
|
$
|
62,701
|
|
|
(6.7
|
)%
|
Upper extremities
|
|
94,699
|
|
|
86,502
|
|
|
9.5
|
%
|
||
Biologics
|
|
22,276
|
|
|
18,883
|
|
|
18.0
|
%
|
||
Sports med & other
|
|
15,030
|
|
|
14,729
|
|
|
2.0
|
%
|
||
Total International
|
|
$
|
190,478
|
|
|
$
|
182,815
|
|
|
4.2
|
%
|
|
|
|
|
|
|
|
|||||
Total net sales
|
|
$
|
744,989
|
|
|
$
|
690,362
|
|
|
7.9
|
%
|
•
|
a $4.5 million loss on currency translation, including hedging activities;
|
•
|
a loss of $5.3 million for the mark-to-market adjustment on CVRs issued in connection with the BioMimetic acquisition; partially offset by
|
•
|
a gain of $4.8 million for the net mark-to-market adjustments on our derivative assets and liabilities; and
|
•
|
a benefit of $0.6 million related to incentive and indirect tax projects.
|
•
|
a gain of $28.3 million for the mark-to-market adjustment on our derivatives; partially offset by
|
•
|
a $12.3 million write-off of unamortized debt discount and deferred financing fees; and
|
•
|
a loss of $8.7 million for the mark-to-market adjustment on the CVRs issued in connection with the BioMimetic acquisition.
|
|
Fiscal year ended December 31, 2017
|
||||||||||
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
||||||
Net sales
|
$
|
309,713
|
|
|
$
|
244,798
|
|
|
$
|
190,478
|
|
Operating income
|
79,889
|
|
|
78,866
|
|
|
3,631
|
|
|||
Operating income as a percent of net sales
|
25.8
|
%
|
|
32.2
|
%
|
|
1.9
|
%
|
|
Fiscal year ended December 25, 2016
|
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
300,847
|
|
|
$
|
206,700
|
|
|
$
|
182,815
|
|
Operating income
|
85,645
|
|
|
65,231
|
|
|
5,872
|
|
|||
Operating income as a percent of net sales
|
28.5
|
%
|
|
31.6
|
%
|
|
3.2
|
%
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Cash and cash equivalents
|
$
|
191,351
|
|
|
$
|
167,740
|
|
Working capital
1
|
136,106
|
|
|
151,599
|
|
1
|
The holders of the 2020 Notes may convert their notes at any time prior to August 15, 2019 solely into cash upon satisfaction of certain circumstances as described below. On or after August 15, 2019, holders may convert their 2020 Notes solely into cash, regardless of the foregoing circumstances. Due to the ability of the holders of the 2020 Notes to convert within the next year, the carrying value of the 2020 Notes were classified as current liabilities as of December 30, 2018. The respective balances were classified as long-term as of December 31, 2017.
|
|
Payments due by periods
|
||||||||||||||||||
Contractual obligations
|
Total
|
|
Less than 1 year
|
|
1-3 years
|
|
3-5 years
|
|
More than 5 years
|
||||||||||
Amounts reflected in consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital lease obligations
1
|
$
|
28,685
|
|
|
$
|
7,369
|
|
|
$
|
10,651
|
|
|
$
|
5,983
|
|
|
$
|
4,682
|
|
Notes payable
2
|
1,286,542
|
|
|
190,597
|
|
|
418,588
|
|
|
675,977
|
|
|
1,380
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Amounts not reflected in consolidated balance sheet:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating leases
|
$
|
41,232
|
|
|
$
|
9,606
|
|
|
$
|
13,517
|
|
|
$
|
7,111
|
|
|
$
|
10,998
|
|
Minimum supply obligations
|
4,480
|
|
|
1,913
|
|
|
2,567
|
|
|
—
|
|
|
—
|
|
|||||
Interest on notes payable
3
|
86,813
|
|
|
24,679
|
|
|
41,107
|
|
|
21,027
|
|
|
—
|
|
|||||
Purchase option for building
|
11,980
|
|
|
11,980
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Total contractual cash obligations
|
$
|
1,459,732
|
|
|
$
|
246,144
|
|
|
$
|
486,430
|
|
|
$
|
710,098
|
|
|
$
|
17,060
|
|
1
|
Payments include amounts representing interest.
|
2
|
Our notes payable include 2020 Notes, 2021 Notes, 2023 Notes, ABL Term Loan Facility, and other debt. See further discussion in
Note 9
to our consolidated financial statements contained in “
Item 8. Financial Statements and Supplementary Data
.”
|
3
|
Represents interest on 2020 Notes, 2021 Notes, 2023 Notes, ABL Term Loan Facility, and other debt. See further discussion in
Note 9
to our consolidated financial statements contained in “
Item 8. Financial Statements and Supplementary Data
.”
|
•
|
product liabilities, including the settlement of certain metal-on-metal hip replacement product liability litigation, described in
Note 16
to our consolidated financial statements contained in “
Item 8. Financial Statements and Supplementary Data
”
|
•
|
debt outstanding under the ABL Facility (we have reflected this debt as a current liability on our consolidated balance sheet as of
December 30, 2018
as required by US GAAP due to the weekly lockbox repayment/re-borrowing arrangement underlying the agreement, as well as the ability for the lenders to accelerate the repayment of the debt under certain circumstances) as described in
Note 9
to our consolidated financial statements contained in “
Item 8. Financial Statements and Supplementary Data
”
|
•
|
2023, 2021, and 2020 Notes Conversion Derivatives (see “
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
” for quantitative analysis on possible cash obligations upon maturity at various assumed stock prices)
|
•
|
contingent consideration of up to $42 million related to the BioMimetic acquisition which is payable if, prior to March 1, 2019, sales of AUGMENT
®
Bone Graft reach $70 million over 12 consecutive months
|
•
|
contingent consideration related to the IMASCAP acquisition of approximately
€16.7 million
or
$19.2 million
that may be required in potential sales earnouts and milestone payments for new software modules and a potential future implant system as described in
Note 6
and
Note 12
to our consolidated financial statements contained in “
Item 8. Financial Statements and Supplementary Data
”
|
•
|
unrecognized tax benefits of approximately
$5 million
, as certain of these matters may not require cash settlement due to the existence of net operating loss carryforwards as described in
Note 11
to our consolidated financial statements contained in “
Item 8. Financial Statements and Supplementary Data
.”
|
•
|
The patient specific implant is a reverse shoulder replacement implant having glenoid or glenoid and humeral implant components. We have an anticipated first clinical use in 2020 and launch in the second half of 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA and CE mark clearance. We have incurred expenses of approximately $0.1 million in the fiscal year ended December 30, 2018. Project cost to complete is estimated to be less than $2 million.
|
•
|
The CMC thumb implant is an arthroplasty device designed to resurface the CMC joint for the treatment of osteoarthritis. We anticipate the launch of CMC thumb implant in 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA clearance. Project cost to complete is estimated to be less than $3 million.
|
Share price
|
|
Shares (in thousands)
|
|
$42.68
|
(10% greater than strike price)
|
566
|
|
$46.56
|
(20% greater than strike price)
|
1,039
|
|
$50.44
|
(30% greater than strike price)
|
1,438
|
|
$54.32
|
(40% greater than strike price)
|
1,780
|
|
$58.20
|
(50% greater than strike price)
|
2,077
|
|
Share price
|
|
Shares (in thousands)
|
|
$33.00
|
(10% greater than strike price)
|
1,681
|
|
$36.00
|
(20% greater than strike price)
|
3,082
|
|
$39.00
|
(30% greater than strike price)
|
4,268
|
|
$42.00
|
(40% greater than strike price)
|
5,284
|
|
$45.00
|
(50% greater than strike price)
|
6,164
|
|
Share price
|
|
Shares (in thousands)
|
|
$44.95
|
(10% greater than strike price)
|
1,839
|
|
$49.03
|
(20% greater than strike price)
|
3,371
|
|
$53.12
|
(30% greater than strike price)
|
4,668
|
|
$57.20
|
(40% greater than strike price)
|
5,780
|
|
$61.29
|
(50% greater than strike price)
|
6,743
|
|
Wright Medical Group N.V.
Consolidated Financial Statements
for the Fiscal Years Ended December 30, 2018, December 31, 2017, and December 25, 2016
Index to Financial Statements
|
|
|
Page
|
Consolidated Financial Statements:
|
|
Wright Medical Group N.V.
Consolidated Balance Sheets
(In thousands, except share data)
|
|||||||
|
December 30, 2018
|
|
December 31, 2017
|
||||
Assets:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
191,351
|
|
|
$
|
167,740
|
|
Accounts receivable, net
|
141,019
|
|
|
130,610
|
|
||
Inventories (
Note 5
)
|
180,690
|
|
|
168,144
|
|
||
Prepaid expenses
|
11,823
|
|
|
13,555
|
|
||
Other current assets
1
|
78,349
|
|
|
86,845
|
|
||
Total current assets
|
603,232
|
|
|
566,894
|
|
||
|
|
|
|
||||
Property, plant and equipment, net (
Note 7
)
|
224,929
|
|
|
212,379
|
|
||
Goodwill (
Note 8
)
|
1,268,954
|
|
|
933,662
|
|
||
Intangible assets, net (
Note 8
)
|
282,332
|
|
|
231,001
|
|
||
Deferred income taxes (
Note 11
)
|
942
|
|
|
937
|
|
||
Other assets
1
|
314,012
|
|
|
183,851
|
|
||
Total assets
|
$
|
2,694,401
|
|
|
$
|
2,128,724
|
|
Liabilities and Shareholders’ Equity:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
48,359
|
|
|
$
|
41,831
|
|
Accrued expenses and other current liabilities (
Note 12
)
1
|
217,081
|
|
|
314,558
|
|
||
Current portion of long-term obligations (
Note 9
)
1
|
201,686
|
|
|
58,906
|
|
||
Total current liabilities
|
467,126
|
|
|
415,295
|
|
||
|
|
|
|
||||
Long-term debt and capital lease obligations (
Note 9
)
1
|
913,441
|
|
|
836,208
|
|
||
Deferred income taxes (
Note 11
)
|
13,146
|
|
|
15,780
|
|
||
Other liabilities (
Note 12
)
1
|
368,229
|
|
|
272,745
|
|
||
Total liabilities
|
1,761,942
|
|
|
1,540,028
|
|
||
Commitments and contingencies (
Note 16
)
|
|
|
|
||||
Shareholders’ equity:
|
|
|
|
||||
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 125,555,751 shares at December 30, 2018 and 105,807,424 shares at December 31, 2017
|
4,589
|
|
|
3,896
|
|
||
Additional paid-in capital
|
2,514,295
|
|
|
1,971,347
|
|
||
Accumulated other comprehensive (loss) income
|
(8,083
|
)
|
|
22,290
|
|
||
Accumulated deficit
|
(1,578,342
|
)
|
|
(1,408,837
|
)
|
||
Total shareholders’ equity
|
932,459
|
|
|
588,696
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,694,401
|
|
|
$
|
2,128,724
|
|
1
|
The holders of the 2020 Notes will have the ability to begin converting their 2020 Notes beginning August 15, 2019 through their maturity. Due to the ability of the holders of the 2020 Notes to convert within the next year, the carrying value of the 2020 Notes and the fair value of the 2020 Notes Conversion Derivative were classified as current liabilities, and the fair value of the 2020 Notes Hedges was classified as current assets as of December 30, 2018. The respective balances were classified as long-term as of December 31, 2017. See
Note 6
and
Note 9
.
|
Wright Medical Group N.V.
Consolidated Statements of Operations
(In thousands, except per share data)
|
|||||||||||
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Net sales
|
$
|
836,190
|
|
|
$
|
744,989
|
|
|
$
|
690,362
|
|
Cost of sales
1, 2
|
180,153
|
|
|
160,947
|
|
|
192,407
|
|
|||
Gross profit
|
656,037
|
|
|
584,042
|
|
|
497,955
|
|
|||
Operating expenses:
|
|
|
|
|
|
||||||
Selling, general and administrative
2
|
577,961
|
|
|
525,222
|
|
|
541,558
|
|
|||
Research and development
2
|
59,142
|
|
|
50,115
|
|
|
50,514
|
|
|||
Amortization of intangible assets
|
26,730
|
|
|
28,396
|
|
|
28,841
|
|
|||
Total operating expenses
|
663,833
|
|
|
603,733
|
|
|
620,913
|
|
|||
Operating loss
|
(7,796
|
)
|
|
(19,691
|
)
|
|
(122,958
|
)
|
|||
Interest expense, net
|
80,247
|
|
|
74,644
|
|
|
58,530
|
|
|||
Other expense (income), net
|
81,797
|
|
|
5,570
|
|
|
(3,148
|
)
|
|||
Loss from continuing operations before income taxes
|
(169,840
|
)
|
|
(99,905
|
)
|
|
(178,340
|
)
|
|||
Benefit for income taxes (
Note 11
)
|
(536
|
)
|
|
(34,968
|
)
|
|
(13,406
|
)
|
|||
Net loss from continuing operations
|
(169,304
|
)
|
|
(64,937
|
)
|
|
(164,934
|
)
|
|||
Loss from discontinued operations, net of tax (
Note 4
)
|
(201
|
)
|
|
(137,661
|
)
|
|
(267,439
|
)
|
|||
Net loss
|
$
|
(169,505
|
)
|
|
$
|
(202,598
|
)
|
|
$
|
(432,373
|
)
|
|
|
|
|
|
|
||||||
Net loss from continuing operations per share-basic and diluted (
Note 13
):
|
$
|
(1.50
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(1.60
|
)
|
Net loss from discontinued operations per share-basic and diluted (
Note 13
):
|
$
|
0.00
|
|
|
$
|
(1.32
|
)
|
|
$
|
(2.60
|
)
|
Net loss per share-basic and diluted (
Note 13
):
|
$
|
(1.51
|
)
|
|
$
|
(1.94
|
)
|
|
$
|
(4.20
|
)
|
|
|
|
|
|
|
||||||
Weighted-average number of ordinary shares outstanding-basic and diluted
|
112,592
|
|
|
104,531
|
|
|
102,968
|
|
1
|
Cost of sales includes amortization of inventory step-up adjustment of
$37.7 million
for the fiscal year ended December 25, 2016.
|
2
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Cost of sales
|
$
|
585
|
|
|
$
|
565
|
|
|
$
|
414
|
|
Selling, general and administrative
|
23,608
|
|
|
17,705
|
|
|
13,216
|
|
|||
Research and development
|
1,927
|
|
|
1,123
|
|
|
786
|
|
|
|
Fiscal year ended
|
||||||||||
|
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
|
|
|
|
|
|
|
||||||
Net loss
|
|
$
|
(169,505
|
)
|
|
$
|
(202,598
|
)
|
|
$
|
(432,373
|
)
|
|
|
|
|
|
|
|
||||||
Other comprehensive (loss) income, net of tax:
|
|
|
|
|
|
|
||||||
Changes in foreign currency translation
|
|
(30,373
|
)
|
|
41,751
|
|
|
(8,977
|
)
|
|||
Other comprehensive (loss) income
|
|
(30,373
|
)
|
|
41,751
|
|
|
(8,977
|
)
|
|||
|
|
|
|
|
|
|
||||||
Comprehensive loss
|
|
$
|
(199,878
|
)
|
|
$
|
(160,847
|
)
|
|
$
|
(441,350
|
)
|
Wright Medical Group N.V.
Consolidated Statements of Cash Flows
(In thousands)
|
|||||||||||
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Operating activities:
|
|
|
|
|
|
||||||
Net loss
|
$
|
(169,505
|
)
|
|
$
|
(202,598
|
)
|
|
$
|
(432,373
|
)
|
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation
|
59,497
|
|
|
56,832
|
|
|
56,782
|
|
|||
Share-based compensation expense (
Note 14
)
|
26,120
|
|
|
19,393
|
|
|
14,416
|
|
|||
Amortization of intangible assets
|
26,730
|
|
|
28,396
|
|
|
29,180
|
|
|||
Amortization of deferred financing costs and debt discount
|
54,630
|
|
|
50,379
|
|
|
40,487
|
|
|||
Deferred income taxes (
Note 11
)
|
(4,543
|
)
|
|
(13,791
|
)
|
|
(20,583
|
)
|
|||
Provision for excess and obsolete inventory
|
20,913
|
|
|
19,171
|
|
|
22,046
|
|
|||
Non-cash loss on extinguishment of debt
|
39,935
|
|
|
—
|
|
|
12,343
|
|
|||
Amortization of inventory step-up adjustment
|
352
|
|
|
—
|
|
|
41,503
|
|
|||
Non-cash adjustment to derivative fair value
|
35,934
|
|
|
(4,797
|
)
|
|
(28,273
|
)
|
|||
Loss on sale of business (
Note 4
)
|
—
|
|
|
—
|
|
|
21,342
|
|
|||
Mark-to-market adjustment for CVRs (
Note 2
)
|
140
|
|
|
5,320
|
|
|
8,688
|
|
|||
Other
|
(1,617
|
)
|
|
1,385
|
|
|
4,425
|
|
|||
Changes in assets and liabilities (net of acquisitions):
|
|
|
|
|
|
||||||
Accounts receivable
|
(8,223
|
)
|
|
2,483
|
|
|
(1,118
|
)
|
|||
Inventories
|
(35,887
|
)
|
|
(29,526
|
)
|
|
(187
|
)
|
|||
Prepaid expenses and other current assets
|
45,712
|
|
|
(22,744
|
)
|
|
22,441
|
|
|||
Accounts payable
|
6,022
|
|
|
6,260
|
|
|
1,495
|
|
|||
Accrued expenses and other liabilities
|
(14,839
|
)
|
|
(21,834
|
)
|
|
(11,251
|
)
|
|||
CVR product sales milestone payment
|
(42,044
|
)
|
|
—
|
|
|
—
|
|
|||
Metal on metal product liabilities (
Note 16
)
|
(103,056
|
)
|
|
(79,139
|
)
|
|
256,461
|
|
|||
Net cash (used in) provided by operating activities
|
(63,729
|
)
|
|
(184,810
|
)
|
|
37,824
|
|
|||
Investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(71,467
|
)
|
|
(63,474
|
)
|
|
(50,099
|
)
|
|||
Acquisition of businesses, net of cash acquired (
Note 3
)
|
(434,289
|
)
|
|
(44,128
|
)
|
|
—
|
|
|||
Purchase of intangible assets
|
(2,483
|
)
|
|
(2,099
|
)
|
|
(4,845
|
)
|
|||
Proceeds from sale of assets / businesses
|
—
|
|
|
280
|
|
|
20,703
|
|
|||
Other investing
|
(2,000
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in investing activities
|
(510,239
|
)
|
|
(109,421
|
)
|
|
(34,241
|
)
|
|||
Financing activities:
|
|
|
|
|
|
||||||
Issuance of ordinary shares
|
21,618
|
|
|
27,551
|
|
|
8,460
|
|
|||
Proceeds from equity offering
|
448,924
|
|
|
—
|
|
|
—
|
|
|||
Payment of equity offering costs
|
(25,896
|
)
|
|
—
|
|
|
—
|
|
|||
Issuance of warrants
|
102,137
|
|
|
—
|
|
|
54,629
|
|
|||
Payment of notes hedge options
|
(141,278
|
)
|
|
—
|
|
|
(99,816
|
)
|
|||
Repurchase of stock warrants
|
(23,972
|
)
|
|
—
|
|
|
(3,319
|
)
|
|||
Payment of notes premium
|
(55,643
|
)
|
|
—
|
|
|
(1,619
|
)
|
|||
Proceeds from notes hedge options
|
34,553
|
|
|
—
|
|
|
3,892
|
|
|||
Proceeds from exchangeable senior notes
|
675,000
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from other debt
|
25,243
|
|
|
34,901
|
|
|
425,821
|
|
|||
Payments of debt
|
(38,637
|
)
|
|
(11,517
|
)
|
|
—
|
|
|||
Redemption of convertible notes
|
(400,911
|
)
|
|
—
|
|
|
(102,974
|
)
|
|||
Payments of deferred financing costs
|
(14,701
|
)
|
|
—
|
|
|
(10,110
|
)
|
|||
Payment of equity issuance costs
|
(1,870
|
)
|
|
—
|
|
|
(998
|
)
|
|||
Payment of contingent consideration
|
(919
|
)
|
|
(1,429
|
)
|
|
(1,035
|
)
|
|||
Payments of capital leases
|
(5,508
|
)
|
|
(2,690
|
)
|
|
(2,514
|
)
|
|||
Net cash provided by financing activities
|
598,140
|
|
|
46,816
|
|
|
270,417
|
|
|||
|
|
|
|
|
|
Wright Medical Group N.V.
Consolidated Statements of Cash Flows (Continued)
(In thousands)
|
|||||||||||
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Effect of exchange rates on cash, cash equivalents and restricted cash
|
$
|
(561
|
)
|
|
$
|
2,890
|
|
|
$
|
(1,539
|
)
|
|
|
|
|
|
|
||||||
Net increase (decrease) in cash, cash equivalents and restricted cash
|
23,611
|
|
|
(244,525
|
)
|
|
272,461
|
|
|||
|
|
|
|
|
|
||||||
Cash, cash equivalents and restricted cash, beginning of year
1
|
167,740
|
|
|
412,265
|
|
|
139,804
|
|
|||
|
|
|
|
|
|
||||||
Cash, cash equivalents and restricted cash, end of year
1
|
$
|
191,351
|
|
|
$
|
167,740
|
|
|
$
|
412,265
|
|
1
|
As of
December 30, 2018
,
December 31, 2017
, and
December 25, 2016
, we had cash and cash equivalents of
$191.4 million
,
$167.7 million
, and
$262.3 million
, respectively. As of December 25, 2016, we had
$150.0 million
in restricted cash to secure our obligations under a Master Settlement Agreement (MSA) that WMT entered into in connection with the metal-on-metal hip litigation as described in
Note 16
.
|
Wright Medical Group N.V.
Consolidated Statements of Changes in Shareholders’ Equity
For the fiscal years ended December 25, 2016, December 31, 2017, and December 30, 2018
(In thousands, except share data)
|
||||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated deficit
|
|
Accumulated other comprehensive (loss) income
|
|
Total shareholders' equity
|
|||||||||||||
|
Number of
shares
|
|
Amount
|
|
||||||||||||||||||
Balance at December 27, 2015
1
|
102,672,678
|
|
|
$
|
3,790
|
|
|
$
|
1,835,586
|
|
|
$
|
(773,866
|
)
|
|
$
|
(10,484
|
)
|
|
$
|
1,055,026
|
|
2016 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(432,373
|
)
|
|
—
|
|
|
(432,373
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,977
|
)
|
|
(8,977
|
)
|
|||||
Issuances of ordinary shares
|
440,355
|
|
|
15
|
|
|
8,455
|
|
|
—
|
|
|
—
|
|
|
8,470
|
|
|||||
Vesting of restricted stock units
|
287,962
|
|
|
10
|
|
|
(10
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
14,406
|
|
|
—
|
|
|
—
|
|
|
14,406
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
50,312
|
|
|
—
|
|
|
—
|
|
|
50,312
|
|
|||||
Balance at December 25, 2016
|
103,400,995
|
|
|
$
|
3,815
|
|
|
$
|
1,908,749
|
|
|
$
|
(1,206,239
|
)
|
|
$
|
(19,461
|
)
|
|
$
|
686,864
|
|
2017 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(202,598
|
)
|
|
—
|
|
|
(202,598
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41,751
|
|
|
41,751
|
|
|||||
Issuances of ordinary shares
|
1,352,549
|
|
|
45
|
|
|
27,506
|
|
|
—
|
|
|
—
|
|
|
27,551
|
|
|||||
Shares issued in connection with IMASCAP acquisition
|
661,753
|
|
|
23
|
|
|
15,620
|
|
|
—
|
|
|
—
|
|
|
15,643
|
|
|||||
Vesting of restricted stock units
|
392,127
|
|
|
13
|
|
|
(13
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
19,485
|
|
|
—
|
|
|
—
|
|
|
19,485
|
|
|||||
Balance at December 31, 2017
|
105,807,424
|
|
|
$
|
3,896
|
|
|
$
|
1,971,347
|
|
|
$
|
(1,408,837
|
)
|
|
$
|
22,290
|
|
|
$
|
588,696
|
|
2018 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(169,505
|
)
|
|
—
|
|
|
(169,505
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(30,373
|
)
|
|
(30,373
|
)
|
|||||
Issuances of ordinary shares
|
1,043,685
|
|
|
36
|
|
|
21,582
|
|
|
—
|
|
|
—
|
|
|
21,618
|
|
|||||
Shares issued for public offering (
Note 13
)
|
18,248,932
|
|
|
641
|
|
|
422,387
|
|
|
—
|
|
|
—
|
|
|
423,028
|
|
|||||
Vesting of restricted stock units
|
455,710
|
|
|
16
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
26,039
|
|
|
—
|
|
|
—
|
|
|
26,039
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
72,956
|
|
|
—
|
|
|
—
|
|
|
72,956
|
|
|||||
Balance at December 30, 2018
|
125,555,751
|
|
|
$
|
4,589
|
|
|
$
|
2,514,295
|
|
|
$
|
(1,578,342
|
)
|
|
$
|
(8,083
|
)
|
|
$
|
932,459
|
|
1
|
During 2015, the 2014 balances of ordinary shares and additional paid in capital were restated to meet post-merger conversion values.
|
Land improvements
|
|
15
|
to
|
25
|
years
|
Buildings and building improvements
|
|
10
|
to
|
40
|
years
|
Machinery and equipment
|
|
3
|
to
|
14
|
years
|
Furniture, fixtures and office equipment
|
|
3
|
to
|
14
|
years
|
Surgical instruments
|
|
|
|
6
|
years
|
Completed technology
|
10
|
years
|
Distribution channels
|
10
|
years
|
Trademarks
|
5
|
years
|
Licenses
|
11
|
years
|
Customer relationships
|
17
|
years
|
Non-compete agreements
|
4
|
years
|
Other intangible assets
|
3
|
years
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Interest
|
$
|
30,552
|
|
|
$
|
24,641
|
|
|
$
|
18,678
|
|
Income taxes
|
$
|
6,254
|
|
|
$
|
7,359
|
|
|
$
|
4,334
|
|
Cash and cash equivalents
|
$
|
309
|
|
Accounts receivable
|
4,352
|
|
|
Inventories
|
2,686
|
|
|
Other current assets
|
486
|
|
|
Property, plant and equipment
|
1,446
|
|
|
Intangible assets
|
81,000
|
|
|
Total assets acquired
|
90,279
|
|
|
Current liabilities
|
(4,226
|
)
|
|
Deferred income taxes
|
(3,622
|
)
|
|
Total liabilities assumed
|
(7,848
|
)
|
|
Net assets acquired
|
$
|
82,431
|
|
|
|
||
Goodwill
|
351,445
|
|
|
|
|
||
Total preliminary purchase consideration
|
$
|
433,876
|
|
|
Year ended
December 30, 2018
|
|
Year ended
December 31, 2017
|
||||
Net sales
|
$
|
861,475
|
|
|
$
|
769,111
|
|
Net loss from continuing operations
|
(179,800
|
)
|
|
(68,722
|
)
|
Cash and cash equivalents
|
$
|
2,559
|
|
Accounts receivable
|
102
|
|
|
Other current assets
|
925
|
|
|
Property, plant and equipment
|
20
|
|
|
Intangible assets
|
10,865
|
|
|
Total assets acquired
|
14,471
|
|
|
Current liabilities
|
(2,173
|
)
|
|
Long-term debt
|
(886
|
)
|
|
Deferred income taxes
|
(2,343
|
)
|
|
Total liabilities assumed
|
(5,402
|
)
|
|
Net assets acquired
|
$
|
9,069
|
|
|
|
||
Goodwill
|
71,064
|
|
|
|
|
||
Total purchase consideration
|
$
|
80,133
|
|
|
Fiscal year ended
|
||
|
December 25, 2016
|
||
Net sales
|
$
|
35,318
|
|
Cost of sales
|
20,244
|
|
|
Selling, general and administrative
|
18,808
|
|
|
Loss from discontinued operations before income taxes
|
(3,734
|
)
|
|
Impairment loss on assets held for sale, before income taxes
|
21,342
|
|
|
Total loss from discontinued operations before income taxes
|
(25,076
|
)
|
|
Benefit for income taxes
|
(5,615
|
)
|
|
Total loss from discontinued operations, net of tax
|
$
|
(19,461
|
)
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Selling, general and administrative
|
(746
|
)
|
|
135,235
|
|
|
247,978
|
|
|||
Income (loss) from discontinued operations before income taxes
|
746
|
|
|
(135,235
|
)
|
|
(247,978
|
)
|
|||
Provision (benefit) for income taxes
|
221
|
|
|
(1,707
|
)
|
|
—
|
|
|||
Total income (loss) from discontinued operations, net of tax
|
$
|
525
|
|
|
$
|
(133,528
|
)
|
|
$
|
(247,978
|
)
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Raw materials
|
$
|
9,612
|
|
|
$
|
10,816
|
|
Work-in-process
|
26,839
|
|
|
28,581
|
|
||
Finished goods
|
144,239
|
|
|
128,747
|
|
||
|
$
|
180,690
|
|
|
$
|
168,144
|
|
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.
|
|
Location on consolidated balance sheet
|
December 30, 2018
|
||
2023 Notes Hedges
|
Other assets
|
$
|
115,923
|
|
2023 Notes Conversion Derivative
|
Other liabilities
|
$
|
116,833
|
|
|
Fiscal year ended
|
||
|
December 30, 2018
|
||
2023 Notes Hedges
|
$
|
(25,355
|
)
|
2023 Notes Conversion Derivative
|
7,792
|
|
|
Net loss on changes in fair value
|
$
|
(17,563
|
)
|
|
Location on consolidated balance sheet
|
December 30, 2018
|
December 31, 2017
|
||||
2021 Notes Hedges
|
Other assets
|
$
|
188,301
|
|
$
|
127,063
|
|
2021 Notes Conversion Derivative
|
Other liabilities
|
$
|
187,539
|
|
$
|
126,148
|
|
|
Fiscal year ended
|
||||||
|
December 30, 2018
|
|
December 31, 2017
|
||||
2021 Notes Hedges
|
$
|
61,238
|
|
|
$
|
(32,032
|
)
|
2021 Notes Conversion Derivative
|
(61,391
|
)
|
|
35,453
|
|
||
Net (loss)/gain on changes in fair value
|
$
|
(153
|
)
|
|
$
|
3,421
|
|
|
Location on consolidated balance sheet
|
December 30, 2018
|
Location on consolidated balance sheet
|
December 31, 2017
|
||||
2020 Notes Hedges
|
Other current assets
|
$
|
17,822
|
|
Other assets
|
$
|
45,033
|
|
2020 Notes Conversion Derivative
|
Accrued expenses and other current liabilities
|
$
|
17,386
|
|
Other liabilities
|
$
|
44,132
|
|
|
Fiscal year ended
|
||||||
|
December 30, 2018
|
|
December 31, 2017
|
||||
2020 Notes Hedges
|
$
|
7,342
|
|
|
$
|
(32,199
|
)
|
2020 Warrants Derivative
|
3,336
|
|
|
—
|
|
||
2020 Notes Conversion Derivative
|
(28,897
|
)
|
|
33,626
|
|
||
Net (loss)/gain on changes in fair value
|
$
|
(18,219
|
)
|
|
$
|
1,427
|
|
|
2020 Notes Conversion Derivative
|
2020 Notes
Hedge
|
2021 Notes Conversion Derivative
|
2021 Notes
Hedge |
2023 Notes Conversion Derivative
|
2023 Notes Hedge
|
Black Stock Volatility
1
|
34.48%
|
34.48%
|
42.2%
|
42.2%
|
31.9%
|
31.9%
|
Credit Spread for Wright
2
|
4.67%
|
N/A
|
4.50%
|
N/A
|
3.72%
|
N/A
|
Credit Spread for Deutsche Bank AG
3
|
N/A
|
1.38%
|
N/A
|
N/A
|
N/A
|
N/A
|
Credit Spread for Wells Fargo Securities, LLC
3
|
N/A
|
0.25%
|
N/A
|
N/A
|
N/A
|
N/A
|
Credit Spread for JPMorgan Chase Bank
3
|
N/A
|
0.3%
|
N/A
|
0.45%
|
N/A
|
0.56%
|
Credit Spread for Bank of America
3
|
N/A
|
N/A
|
N/A
|
0.46%
|
N/A
|
0.59%
|
1
|
Volatility selected based on historical and implied volatility of ordinary shares of Wright Medical Group N.V.
|
2
|
Credit spread implied from traded price.
|
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 30, 2018
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
191,351
|
|
$
|
191,351
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
17,822
|
|
—
|
|
—
|
|
17,822
|
|
||||
2021 Notes Hedges
|
188,301
|
|
—
|
|
—
|
|
188,301
|
|
||||
2023 Notes Hedges
|
115,923
|
|
—
|
|
—
|
|
115,923
|
|
||||
Total
|
$
|
513,397
|
|
$
|
191,351
|
|
$
|
—
|
|
$
|
322,046
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2020 Notes Conversion Derivative
|
$
|
17,386
|
|
$
|
—
|
|
$
|
—
|
|
$
|
17,386
|
|
2021 Notes Conversion Derivative
|
187,539
|
|
—
|
|
—
|
|
187,539
|
|
||||
2023 Notes Conversion Derivative
|
116,833
|
|
—
|
|
—
|
|
116,833
|
|
||||
Contingent consideration
|
19,248
|
|
—
|
|
—
|
|
19,248
|
|
||||
Contingent consideration (CVRs)
|
420
|
|
420
|
|
—
|
|
—
|
|
||||
Total
|
$
|
341,426
|
|
$
|
420
|
|
$
|
—
|
|
$
|
341,006
|
|
|
Total
|
Quoted prices
in active
markets
(Level 1)
|
Prices with
other
observable
inputs
(Level 2)
|
Prices with
unobservable
inputs
(Level 3)
|
||||||||
At December 31, 2017
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
167,740
|
|
$
|
167,740
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
45,033
|
|
—
|
|
—
|
|
45,033
|
|
||||
2021 Notes Hedges
|
127,063
|
|
—
|
|
—
|
|
127,063
|
|
||||
Total
|
$
|
339,836
|
|
$
|
167,740
|
|
$
|
—
|
|
$
|
172,096
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2020 Notes Conversion Derivative
|
$
|
44,132
|
|
$
|
—
|
|
$
|
—
|
|
$
|
44,132
|
|
2021 Notes Conversion Derivative
|
126,148
|
|
—
|
|
—
|
|
126,148
|
|
||||
Contingent consideration
|
19,188
|
|
—
|
|
—
|
|
19,188
|
|
||||
Contingent consideration (CVRs)
|
42,325
|
|
42,325
|
|
—
|
|
—
|
|
||||
Total
|
$
|
231,793
|
|
$
|
42,325
|
|
$
|
—
|
|
$
|
189,468
|
|
|
|
Balance at December 31, 2017
|
Additions
|
Transfers into Level 3
|
Gain/(loss) included in earnings
|
Settlements
|
Currency
|
Balance at December 30, 2018
|
|||||||
|
|
|
|
|
|
|
|
|
|||||||
2020 Notes Hedges
|
|
45,033
|
|
—
|
|
—
|
|
7,342
|
|
(34,553
|
)
|
—
|
|
17,822
|
|
2020 Notes Conversion Derivative
|
|
(44,132
|
)
|
—
|
|
—
|
|
(28,897
|
)
|
55,643
|
|
—
|
|
(17,386
|
)
|
2020 Warrants Derivative
|
|
—
|
|
(27,308
|
)
|
—
|
|
3,336
|
|
23,972
|
|
—
|
|
—
|
|
2021 Notes Hedges
|
|
127,063
|
|
—
|
|
—
|
|
61,238
|
|
—
|
|
—
|
|
188,301
|
|
2021 Notes Conversion Derivative
|
|
(126,148
|
)
|
—
|
|
—
|
|
(61,391
|
)
|
—
|
|
—
|
|
(187,539
|
)
|
2023 Notes Hedges
|
|
—
|
|
141,278
|
|
—
|
|
(25,355
|
)
|
—
|
|
—
|
|
115,923
|
|
2023 Notes Conversion Derivative
|
|
—
|
|
(124,625
|
)
|
—
|
|
7,792
|
|
—
|
|
—
|
|
(116,833
|
)
|
Contingent consideration
|
|
(19,188
|
)
|
—
|
|
—
|
|
(1,789
|
)
|
919
|
|
810
|
|
(19,248
|
)
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Land and land improvements
|
$
|
2,127
|
|
|
$
|
2,163
|
|
Buildings
|
43,087
|
|
|
41,537
|
|
||
Machinery and equipment
|
82,445
|
|
|
60,859
|
|
||
Furniture, fixtures and office equipment
|
161,614
|
|
|
142,299
|
|
||
Construction in progress
|
14,113
|
|
|
14,403
|
|
||
Surgical instruments
|
230,980
|
|
|
187,660
|
|
||
|
534,366
|
|
|
448,921
|
|
||
Less: Accumulated depreciation
|
(309,437
|
)
|
|
(236,542
|
)
|
||
|
$
|
224,929
|
|
|
$
|
212,379
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Buildings
|
$
|
12,017
|
|
|
$
|
15,530
|
|
Machinery and equipment
|
24,331
|
|
|
12,478
|
|
||
Furniture, fixtures and office equipment
|
559
|
|
|
960
|
|
||
|
36,907
|
|
|
28,968
|
|
||
Less: Accumulated depreciation
|
(11,906
|
)
|
|
(7,749
|
)
|
||
|
$
|
25,001
|
|
|
$
|
21,219
|
|
|
U.S. Lower Extremities
& Biologics |
U.S. Upper Extremities
|
International Extremities
& Biologics |
Total
|
||||||||
Goodwill at December 25, 2016
|
$
|
218,525
|
|
$
|
558,669
|
|
$
|
73,848
|
|
$
|
851,042
|
|
Goodwill associated with IMASCAP acquisition
|
—
|
|
71,981
|
|
—
|
|
71,981
|
|
||||
Foreign currency translation
|
—
|
|
—
|
|
10,639
|
|
10,639
|
|
||||
Goodwill at December 31, 2017
|
$
|
218,525
|
|
$
|
630,650
|
|
$
|
84,487
|
|
$
|
933,662
|
|
Goodwill associated with Cartiva acquisition
|
351,445
|
|
—
|
|
—
|
|
351,445
|
|
||||
Goodwill adjustment associated with IMASCAP acquisition
|
—
|
|
(917
|
)
|
—
|
|
(917
|
)
|
||||
Foreign currency translation
|
—
|
|
(1,883
|
)
|
(13,353
|
)
|
(15,236
|
)
|
||||
Goodwill at December 30, 2018
|
$
|
569,970
|
|
$
|
627,850
|
|
$
|
71,134
|
|
$
|
1,268,954
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||||||||||
|
Cost
|
|
Accumulated
amortization
|
|
Cost
|
|
Accumulated
amortization
|
||||||||
Indefinite life intangibles:
|
|
|
|
|
|
|
|
||||||||
IPRD technology
|
$
|
6,262
|
|
|
|
|
$
|
6,422
|
|
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Finite life intangibles:
|
|
|
|
|
|
|
|
||||||||
Distribution channels
|
250
|
|
|
$
|
250
|
|
|
900
|
|
|
$
|
640
|
|
||
Completed technology
|
174,596
|
|
|
55,114
|
|
|
149,645
|
|
|
40,810
|
|
||||
Licenses
|
6,547
|
|
|
1,851
|
|
|
5,268
|
|
|
1,530
|
|
||||
Customer relationships
|
179,605
|
|
|
30,935
|
|
|
129,693
|
|
|
23,268
|
|
||||
Trademarks
|
14,048
|
|
|
11,564
|
|
|
14,368
|
|
|
10,487
|
|
||||
Non-compete agreements
|
3,252
|
|
|
2,514
|
|
|
3,964
|
|
|
2,603
|
|
||||
Other
|
514
|
|
|
514
|
|
|
569
|
|
|
490
|
|
||||
Total finite life intangibles
|
378,812
|
|
|
$
|
102,742
|
|
|
304,407
|
|
|
$
|
79,828
|
|
||
|
|
|
|
|
|
|
|
||||||||
Total intangibles
|
385,074
|
|
|
|
|
310,829
|
|
|
|
||||||
Less: Accumulated amortization
|
(102,742
|
)
|
|
|
|
(79,828
|
)
|
|
|
||||||
Intangible assets, net
|
$
|
282,332
|
|
|
|
|
$
|
231,001
|
|
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Capital lease obligations
|
$
|
25,539
|
|
|
$
|
20,401
|
|
|
|
|
|
||||
2023 Notes
|
548,076
|
|
|
—
|
|
||
2021 Notes
|
321,286
|
|
|
300,051
|
|
||
2020 Notes
1
|
173,533
|
|
|
513,014
|
|
||
Term Loan Facility
|
18,979
|
|
|
—
|
|
||
Asset-based line of credit
|
17,761
|
|
|
53,645
|
|
||
Other debt
|
9,953
|
|
|
8,003
|
|
||
|
1,115,127
|
|
|
895,114
|
|
||
Less: current portion
1
|
(201,686
|
)
|
|
(58,906
|
)
|
||
|
$
|
913,441
|
|
|
$
|
836,208
|
|
1
|
The holders of the 2020 Notes may convert their notes at any time prior to August 15, 2019 solely into cash upon satisfaction of certain circumstances as described below. On or after August 15, 2019, holders may convert their 2020 Notes solely into cash, regardless of the foregoing circumstances. Due to the ability of the holders of the 2020 Notes to convert within the next year, the carrying value of the 2020 Notes were classified as current liabilities as of December 30, 2018. The respective balances were classified as long-term as of December 31, 2017.
|
|
December 30, 2018
|
||
Principal amount of 2023 Notes
|
$
|
675,000
|
|
Unamortized debt discount
|
(114,554
|
)
|
|
Unamortized debt issuance costs
|
(12,370
|
)
|
|
Net carrying amount of 2023 Notes
|
$
|
548,076
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Principal amount of 2021 Notes
|
$
|
395,000
|
|
|
$
|
395,000
|
|
Unamortized debt discount
|
(69,382
|
)
|
|
(89,332
|
)
|
||
Unamortized debt issuance costs
|
(4,332
|
)
|
|
(5,617
|
)
|
||
Net carrying amount of 2021 Notes
|
$
|
321,286
|
|
|
$
|
300,051
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Principal amount of 2020 Notes
|
$
|
186,589
|
|
|
$
|
587,500
|
|
Unamortized debt discount
|
(11,642
|
)
|
|
(66,418
|
)
|
||
Unamortized debt issuance costs
|
(1,414
|
)
|
|
(8,068
|
)
|
||
Net carrying amount of 2020 Notes
|
$
|
173,533
|
|
|
$
|
513,014
|
|
2019
|
$
|
190,597
|
|
2020
|
2,125
|
|
|
2021
|
416,463
|
|
|
2022
|
935
|
|
|
2023
|
675,042
|
|
|
Thereafter
|
1,380
|
|
|
|
$
|
1,286,542
|
|
2019
|
$
|
7,369
|
|
2020
|
6,106
|
|
|
2021
|
4,545
|
|
|
2022
|
3,553
|
|
|
2023
|
2,430
|
|
|
Thereafter
|
4,682
|
|
|
Total minimum payments
|
28,685
|
|
|
Less amount representing interest
|
(3,146
|
)
|
|
Present value of minimum lease payments
|
25,539
|
|
|
Current portion
|
(6,384
|
)
|
|
Long-term portion
|
$
|
19,155
|
|
|
Currency translation adjustment
|
||
Balance December 27, 2015
|
$
|
(10,484
|
)
|
Other comprehensive loss
|
(8,977
|
)
|
|
Balance December 25, 2016
|
$
|
(19,461
|
)
|
Other comprehensive income
|
41,751
|
|
|
Balance December 31, 2017
|
$
|
22,290
|
|
Other comprehensive loss
|
(30,373
|
)
|
|
Balance December 30, 2018
|
$
|
(8,083
|
)
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
U.S.
|
$
|
(144,987
|
)
|
|
$
|
(56,808
|
)
|
|
$
|
(140,190
|
)
|
Foreign
|
(24,853
|
)
|
|
(43,097
|
)
|
|
(38,150
|
)
|
|||
Loss from continuing operations before income taxes
|
$
|
(169,840
|
)
|
|
$
|
(99,905
|
)
|
|
$
|
(178,340
|
)
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Current (benefit) provision:
|
|
|
|
|
|
||||||
U.S.:
|
|
|
|
|
|
||||||
Federal
|
$
|
449
|
|
|
$
|
(23,781
|
)
|
|
$
|
(1,971
|
)
|
State
|
251
|
|
|
390
|
|
|
(281
|
)
|
|||
Foreign
|
3,307
|
|
|
2,214
|
|
|
3,860
|
|
|||
Total current (benefit) provision
|
4,007
|
|
|
(21,177
|
)
|
|
1,608
|
|
|||
Deferred (benefit) provision:
|
|
|
|
|
|
||||||
U.S.:
|
|
|
|
|
|
||||||
Federal
|
(2,841
|
)
|
|
(5,098
|
)
|
|
1,244
|
|
|||
State
|
(663
|
)
|
|
(93
|
)
|
|
142
|
|
|||
Foreign
|
(1,039
|
)
|
|
(8,600
|
)
|
|
(16,400
|
)
|
|||
Total deferred benefit
|
(4,543
|
)
|
|
(13,791
|
)
|
|
(15,014
|
)
|
|||
Total benefit for income taxes
|
$
|
(536
|
)
|
|
$
|
(34,968
|
)
|
|
$
|
(13,406
|
)
|
|
Fiscal year ended
|
|||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
|||
Income tax benefit at statutory rate
|
21.0
|
%
|
|
35.0
|
%
|
|
35.0
|
%
|
State income taxes
|
3.8
|
%
|
|
1.5
|
%
|
|
2.9
|
%
|
Change in valuation allowance
|
(22.9
|
)%
|
|
(3.5
|
)%
|
|
(32.6
|
)%
|
CVR fair market value adjustment
|
—
|
%
|
|
(1.9
|
)%
|
|
(1.7
|
)%
|
Foreign income tax rate differential
|
(0.6
|
)%
|
|
(6.1
|
)%
|
|
3.3
|
%
|
Changes in tax reserves
|
0.4
|
%
|
|
2.9
|
%
|
|
0.8
|
%
|
Effects of U.S. tax reform
|
—
|
%
|
|
6.5
|
%
|
|
—
|
%
|
Foreign rate changes
|
—
|
%
|
|
1.7
|
%
|
|
—
|
%
|
Other, net
|
(1.4
|
)%
|
|
(1.1
|
)%
|
|
(0.2
|
)%
|
Total
|
0.3
|
%
|
|
35.0
|
%
|
|
7.5
|
%
|
|
Fiscal year ended
|
||||||
|
December 30, 2018
|
|
December 31, 2017
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carryforwards
|
$
|
330,589
|
|
|
$
|
283,708
|
|
General business credit carryforwards
|
14,598
|
|
|
12,993
|
|
||
Reserves and allowances
|
56,675
|
|
|
90,246
|
|
||
Deferred interest
|
27,322
|
|
|
—
|
|
||
Share-based compensation expense
|
14,934
|
|
|
13,679
|
|
||
Convertible debt notes and conversion options
|
38,368
|
|
|
10,747
|
|
||
Other
|
3,616
|
|
|
1,642
|
|
||
Valuation allowance
|
(400,171
|
)
|
|
(366,825
|
)
|
||
|
|
|
|
||||
Total deferred tax assets
|
85,931
|
|
|
46,190
|
|
||
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
||||
Depreciation
|
5,095
|
|
|
6,383
|
|
||
Intangible assets
|
58,221
|
|
|
42,862
|
|
||
Convertible notes bond hedges
|
34,653
|
|
|
11,668
|
|
||
Other
|
166
|
|
|
120
|
|
||
|
|
|
|
||||
Total deferred tax liabilities
|
98,135
|
|
|
61,033
|
|
||
|
|
|
|
||||
Net deferred tax liabilities
|
$
|
(12,204
|
)
|
|
$
|
(14,843
|
)
|
|
Fiscal year ended
|
||||||
|
December 30, 2018
|
|
December 31, 2017
|
||||
Balance at beginning of fiscal year
|
$
|
6,025
|
|
|
$
|
8,095
|
|
Additions from acquisitions
|
109
|
|
|
—
|
|
||
Additions for tax positions related to current year
|
385
|
|
|
215
|
|
||
Additions for tax positions of prior years
|
718
|
|
|
20
|
|
||
Reductions for tax positions of prior years
|
(490
|
)
|
|
(3,174
|
)
|
||
Settlements
|
(1,983
|
)
|
|
—
|
|
||
Foreign currency translation
|
(154
|
)
|
|
869
|
|
||
Balance at end of fiscal year
|
$
|
4,610
|
|
|
$
|
6,025
|
|
|
December 30, 2018
|
|
December 31, 2017
|
||||
Employee bonuses
|
$
|
28,953
|
|
|
$
|
12,803
|
|
Other employee benefits
|
22,841
|
|
|
22,401
|
|
||
Royalties
|
12,330
|
|
|
12,563
|
|
||
Taxes other than income
|
7,897
|
|
|
8,933
|
|
||
Notes Conversion Derivatives (
Note 6
)
|
17,386
|
|
|
—
|
|
||
Commissions
|
19,356
|
|
|
19,330
|
|
||
Professional and legal fees
|
10,848
|
|
|
12,388
|
|
||
Contingent consideration (
Note 6
)
|
3,427
|
|
|
1,168
|
|
||
Product liability and other legal accruals (
Note 16
)
|
66,918
|
|
|
151,027
|
|
||
CVRs (
Note 6
)
|
420
|
|
|
42,044
|
|
||
Other
|
26,705
|
|
|
31,901
|
|
||
|
$
|
217,081
|
|
|
$
|
314,558
|
|
|
Fiscal year ended
|
|||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
|||
Weighted-average number of ordinary shares outstanding — basic and diluted
|
112,592
|
|
|
104,531
|
|
|
102,968
|
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Total cost of share-based arrangements
|
$
|
26,039
|
|
|
$
|
19,485
|
|
|
$
|
14,406
|
|
Amounts capitalized into inventory
|
(507
|
)
|
|
(669
|
)
|
|
(416
|
)
|
|||
Amortization of capitalized amounts
|
588
|
|
|
577
|
|
|
426
|
|
|||
Impact to net loss
|
$
|
26,120
|
|
|
$
|
19,393
|
|
|
$
|
14,416
|
|
Impact to basic and diluted loss per share
|
$
|
0.23
|
|
|
$
|
0.19
|
|
|
$
|
0.14
|
|
Weighted-average number of shares outstanding - basic and diluted
|
112,592
|
|
|
104,531
|
|
|
102,968
|
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
Stock options
|
$
|
11,177
|
|
|
$
|
8,988
|
|
|
$
|
5,844
|
|
Restricted stock units
|
11,514
|
|
|
9,373
|
|
|
8,416
|
|
|||
Performance share units
|
2,538
|
|
|
441
|
|
|
—
|
|
|||
Employee stock purchase plan
|
810
|
|
|
683
|
|
|
146
|
|
|||
Total compensation cost for share-based awards
|
$
|
26,039
|
|
|
$
|
19,485
|
|
|
$
|
14,406
|
|
|
Fiscal year ended
|
||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
Risk-free interest rate
|
2.6% - 2.9%
|
|
1.9% - 2.0%
|
|
1.1% - 1.4%
|
Expected option life
|
7 years
|
|
6 years
|
|
6 years
|
Expected price volatility
|
32%
|
|
33%
|
|
34%
|
|
Shares
(000’s)
|
|
Weighted-average exercise
price
|
|
Weighted-average remaining
contractual life
|
|
Aggregate intrinsic value*
($000’s)
|
||||
Outstanding at December 31, 2017
|
9,114
|
|
$
|
22.73
|
|
|
|
|
|
||
Granted
|
1,464
|
|
24.14
|
|
|
|
|
|
|||
Exercised
|
(750)
|
|
21.18
|
|
|
|
|
|
|||
Forfeited or expired
|
(625)
|
|
25.51
|
|
|
|
|
|
|||
Outstanding at December 30, 2018
|
9,203
|
|
$
|
22.89
|
|
|
6.52
|
|
$
|
36,809
|
|
Exercisable at December 30, 2018
|
6,086
|
|
$
|
22.30
|
|
|
5.46
|
|
$
|
28,127
|
|
*
|
The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of
December 30, 2018
and the respective exercise prices of the options. The market value as of
December 30, 2018
was
$26.51
per share, which
|
|
|
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 — $20.00
|
|
1,078
|
|
|
4.02
|
|
$
|
17.66
|
|
|
976
|
|
|
$
|
17.48
|
|
$20.01 — $21.00
|
|
2,276
|
|
|
6.32
|
|
20.64
|
|
|
1,835
|
|
|
20.64
|
|
||
$21.01 — $25.00
|
|
3,753
|
|
|
7.16
|
|
22.85
|
|
|
1,945
|
|
|
22.21
|
|
||
$25.01 — $32.00
|
|
2,096
|
|
|
6.87
|
|
28.10
|
|
|
1,330
|
|
|
28.27
|
|
||
|
|
9,203
|
|
|
6.52
|
|
$
|
22.89
|
|
|
6,086
|
|
|
$
|
22.30
|
|
|
Shares
(000’s)
|
|
Weighted-average
grant-date
fair value
|
|
Aggregate
intrinsic value*
($000’s)
|
|||||
Unvested at December 31, 2017
|
1,280
|
|
|
$
|
23.45
|
|
|
|
||
Granted
|
607
|
|
|
24.05
|
|
|
|
|||
Vested
|
(460
|
)
|
|
22.89
|
|
|
|
|||
Forfeited
|
(105
|
)
|
|
23.63
|
|
|
|
|||
Unvested at December 30, 2018
|
1,322
|
|
|
$
|
23.90
|
|
|
$
|
35,052
|
|
*
|
The aggregate intrinsic value is calculated as the market value of our ordinary shares as of
December 30, 2018
. The market value as of
December 30, 2018
was
$26.51
per share, which is the closing sale price of our ordinary shares on
December 28, 2018
, the last trading day prior to
December 30, 2018
, as reported by the Nasdaq Global Select Market.
|
|
Shares
(000’s)
|
|
Weighted-average
grant-date
fair value
|
|
Aggregate
intrinsic value*
($000’s)
|
|||||
Unvested at December 31, 2017
|
108
|
|
|
$
|
27.86
|
|
|
|
||
Granted
|
129
|
|
|
24.49
|
|
|
|
|||
Vested
|
—
|
|
|
—
|
|
|
|
|||
Forfeited
|
(4
|
)
|
|
27.86
|
|
|
|
|||
Unvested at December 30, 2018
|
233
|
|
|
$
|
26.00
|
|
|
$
|
6,176
|
|
*
|
The aggregate intrinsic value is calculated as the market value of our ordinary shares as of
December 30, 2018
. The market value as of
December 30, 2018
was
$26.51
per share, which is the closing sale price of our ordinary shares on
December 28, 2018
, the last trading day prior to
December 30, 2018
, as reported by the Nasdaq Global Select Market.
|
|
Shares
(000’s)
|
|
Weighted-average exercise
price
|
|
Weighted-average remaining
contractual life
|
|
Aggregate intrinsic value*
($000’s)
|
|||||
Outstanding at December 31, 2017
|
875
|
|
|
$
|
16.50
|
|
|
|
|
|
||
Granted
|
—
|
|
|
—
|
|
|
|
|
|
|||
Exercised
|
(182
|
)
|
|
19.71
|
|
|
|
|
|
|||
Forfeited or expired
|
—
|
|
|
—
|
|
|
|
|
|
|||
Outstanding at December 30, 2018
|
693
|
|
|
$
|
15.66
|
|
|
2.74
|
|
$
|
7,522
|
|
Exercisable at December 30, 2018
|
693
|
|
|
$
|
15.66
|
|
|
2.74
|
|
$
|
7,522
|
|
*
|
The aggregate intrinsic value is calculated as the difference between the market value of our ordinary shares as of
December 30, 2018
and the respective exercise prices of the options. The market value as of
December 30, 2018
was
$26.51
per share, which is the closing sale price of our ordinary shares on
December 28, 2018
, the last trading day prior to
December 30, 2018
, as reported by the Nasdaq Global Select Market.
|
|
|
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 |
||||||
$15.00 — $18.00
|
|
693
|
|
|
2.74
|
|
$
|
15.66
|
|
|
693
|
|
|
$
|
15.66
|
|
|
Fiscal year ended
|
||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
Risk-free interest rate
|
2.3% - 2.8%
|
|
1.3% - 1.9%
|
|
1.2% - 1.3%
|
Expected life
|
6 months
|
|
6 months
|
|
3 months
|
Expected price volatility
|
31%
|
|
24%
|
|
33%
|
2019
|
$
|
9,606
|
|
2020
|
7,498
|
|
|
2021
|
6,019
|
|
|
2022
|
4,433
|
|
|
2023
|
2,678
|
|
|
Thereafter
|
10,998
|
|
|
|
$
|
41,232
|
|
|
2018
|
||||||||||||||
|
First
quarter
|
|
Second
quarter
|
|
Third
quarter
|
|
Fourth
quarter
|
||||||||
Net sales
|
$
|
198,537
|
|
|
$
|
205,400
|
|
|
$
|
194,106
|
|
|
$
|
238,147
|
|
Cost of sales
|
41,139
|
|
|
45,558
|
|
|
44,307
|
|
|
49,149
|
|
||||
Gross profit
|
157,398
|
|
|
159,842
|
|
|
149,799
|
|
|
188,998
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
137,248
|
|
|
140,826
|
|
|
139,223
|
|
|
160,664
|
|
||||
Research and development
|
13,899
|
|
|
14,665
|
|
|
13,829
|
|
|
16,749
|
|
||||
Amortization of intangible assets
|
7,141
|
|
|
6,009
|
|
|
5,881
|
|
|
7,699
|
|
||||
Total operating expenses
|
158,288
|
|
|
161,500
|
|
|
158,933
|
|
|
185,112
|
|
||||
Operating (loss) income
|
(890
|
)
|
|
(1,658
|
)
|
|
(9,134
|
)
|
|
3,886
|
|
||||
Net loss from continuing operations, net of tax
|
(19,907
|
)
|
|
(90,621
|
)
|
|
(35,829
|
)
|
|
(22,947
|
)
|
||||
(Loss) income from discontinued operations, net of tax
|
(5,607
|
)
|
|
22,923
|
|
|
(6,696
|
)
|
|
(10,821
|
)
|
||||
Net loss
|
$
|
(25,514
|
)
|
|
$
|
(67,698
|
)
|
|
$
|
(42,525
|
)
|
|
$
|
(33,768
|
)
|
Net loss, continuing operations per share, basic and diluted
|
$
|
(0.19
|
)
|
|
$
|
(0.85
|
)
|
|
$
|
(0.32
|
)
|
|
$
|
(0.18
|
)
|
Net loss income per share, basic and diluted
|
$
|
(0.24
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
(0.38
|
)
|
|
$
|
(0.27
|
)
|
Weighted-average number of shares outstanding-basic and diluted
|
105,904
|
|
|
106,095
|
|
|
113,043
|
|
|
125,323
|
|
•
|
transaction and transition costs totaling
$0.9 million
,
$1.3 million
,
$2.0 million
, and
$7.8 million
during the first, second, third, and fourth quarters of
2018
, respectively; and
|
•
|
amortization of inventory step-up of
$0.4 million
in the fourth quarter of
2018
associated with inventory acquired from the Cartiva acquisition.
|
•
|
the after-tax effect of the above amounts within operating (loss) income;
|
•
|
the after-tax effects of non-cash interest expense related to the amortization of the debt discount on our 2020 Notes, 2021 Notes and 2023 Notes totaling
$12.0 million
,
$12.3 million
,
$12.3 million
, and
$12.6 million
during the first, second, third, and fourth quarters of
2018
, respectively;
|
•
|
the after-tax effects of a
$39.9 million
non-cash loss on extinguishment of debt to write-off unamortized debt discount and deferred financing fees associated with the partial settlement of the 2020 Notes during the second quarter of
2018
;
|
•
|
the after-tax effects of our mark-to-market adjustments on derivative assets and liabilities totaling a
$1.7 million
loss,
$32.9 million
loss,
$0.2 million
gain, and
$1.6 million
loss recognized in the first, second, third, and fourth quarters of
2018
, respectively;
|
•
|
the after-tax effects of non-cash foreign currency translation charges of
$0.8 million
,
$1.9 million
,
$0.2 million
, and
$0.3 million
during the first, second, third, and fourth quarters of
2018
, respectively;
|
•
|
the after-tax effects of our fair value adjustments to contingent consideration totaling a
$0.4 million
loss,
$0.4 million
loss,
$0.3 million
loss, and
$0.7 million
loss in the first, second, third, and fourth quarters of
2018
, respectively;
|
•
|
the after-tax effects of our CVR mark-to-market adjustments of
$3.9 million
gain,
$2.5 million
gain,
$3.4 million
loss, and
$3.2 million
loss recognized in the first, second, third, and fourth quarters of
2018
, respectively;
|
•
|
a tax benefit related to the realizability of deferred tax assets as result of the Cartiva acquisition of
$3.6 million
in the fourth quarter of
2018
;
|
•
|
a tax provision of
$2.7 million
due to a change in judgment regarding our ability to realize certain deferred tax assets in the fourth quarter of 2018; and
|
•
|
a U.S. tax (benefit) provision within continuing operations recorded as a result of the pre-tax gain recognized within discontinued operations due to the
$30.75 million
insurance settlement totaling
$(6.2) million
,
$2.2 million
, and
$3.8 million
in the second, third, and fourth quarters of
2018
, respectively.
|
|
2017
|
||||||||||||||
|
First
quarter |
|
Second
quarter |
|
Third
quarter |
|
Fourth
quarter |
||||||||
Net sales
|
$
|
177,191
|
|
|
$
|
179,693
|
|
|
$
|
170,503
|
|
|
$
|
217,602
|
|
Cost of sales
|
37,126
|
|
|
38,122
|
|
|
38,421
|
|
|
47,278
|
|
||||
Gross profit
|
140,065
|
|
|
141,571
|
|
|
132,082
|
|
|
170,324
|
|
||||
Operating expenses:
|
|
|
|
|
|
|
|
||||||||
Selling, general and administrative
|
129,834
|
|
|
130,818
|
|
|
131,421
|
|
|
133,149
|
|
||||
Research and development
|
12,432
|
|
|
12,547
|
|
|
11,992
|
|
|
13,144
|
|
||||
Amortization of intangible assets
|
7,397
|
|
|
6,999
|
|
|
7,178
|
|
|
6,822
|
|
||||
Total operating expenses
|
149,663
|
|
|
150,364
|
|
|
150,591
|
|
|
153,115
|
|
||||
Operating (loss) income
|
(9,598
|
)
|
|
(8,793
|
)
|
|
(18,509
|
)
|
|
17,209
|
|
||||
Net (loss) income from continuing operations, net of tax
|
(36,707
|
)
|
|
(20,960
|
)
|
|
(34,122
|
)
|
|
26,852
|
|
||||
(Loss) income from discontinued operations, net of tax
|
(21,992
|
)
|
|
(20,202
|
)
|
|
(97,748
|
)
|
|
2,281
|
|
||||
Net (loss) income
|
$
|
(58,699
|
)
|
|
$
|
(41,162
|
)
|
|
$
|
(131,870
|
)
|
|
$
|
29,133
|
|
Net (loss) income, continuing operations per share, basic
|
$
|
(0.35
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
0.26
|
|
Net (loss) income, continuing operations per share, diluted
|
$
|
(0.35
|
)
|
|
$
|
(0.20
|
)
|
|
$
|
(0.33
|
)
|
|
$
|
0.25
|
|
Net (loss) income per share, basic
|
$
|
(0.57
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(1.26
|
)
|
|
$
|
0.28
|
|
Net (loss) income per share, diluted
|
$
|
(0.57
|
)
|
|
$
|
(0.39
|
)
|
|
$
|
(1.26
|
)
|
|
$
|
0.27
|
|
Weighted-average number of shares outstanding-basic
|
103,663
|
|
|
104,377
|
|
|
104,836
|
|
|
105,195
|
|
||||
Weighted-average number of shares outstanding-diluted
|
103,663
|
|
|
104,377
|
|
|
104,836
|
|
|
106,578
|
|
•
|
transaction and transition costs totaling
$3.0 million
,
$3.2 million
,
$3.3 million
, and
$2.9 million
during the first, second, third, and fourth quarters of
2017
, respectively; and
|
•
|
a benefit from incentive and indirect tax projects of
$9.0 million
in the fourth quarter of
2017
.
|
•
|
the after-tax effect of the above amounts within operating (loss) income;
|
•
|
the after-tax effects of our CVR mark-to-market adjustments of
$6.2 million
loss,
$3.9 million
gain,
$4.5 million
loss, and
$1.4 million
gain recognized in the first, second, third, and fourth quarters of
2017
, respectively;
|
•
|
the after-tax effects of non-cash interest expense related to the amortization of the debt discount on our 2017 Notes, 2020 Notes and 2021 Notes totaling
$11.0 million
,
$11.2 million
,
$11.5 million
, and
$11.7 million
during the first, second, third, and fourth quarters of
2017
, respectively;
|
•
|
the after-tax effects of our mark-to-market adjustments on derivative assets and liabilities totaling a
$0.4 million
loss,
$4.3 million
gain,
$0.2 million
gain, and
$0.6 million
gain recognized in the first, second, third, and fourth quarters of
2017
, respectively;
|
•
|
the after-tax effects of our fair value adjustments to contingent consideration totaling a
$0.2 million
loss,
$0.1 million
loss, and
$0.2 million
gain in the second, third, and fourth quarters of
2017
, respectively;
|
•
|
a tax benefit related to the realizability of net operating losses of
$8.9 million
and
$16.0 million
in the third and fourth quarters of
2017
, respectively;
|
•
|
the tax effects of tax law reform in the U.S. and France totaling
$8.3 million
in the fourth quarter of
2017
; and
|
•
|
the tax effects of a benefit from incentive and indirect tax projects of
$0.8 million
in the fourth quarter of
2017
.
|
|
Fiscal year ended
|
||||||||||
|
December 30, 2018
|
|
December 31, 2017
|
|
December 25, 2016
|
||||||
United States
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
250,735
|
|
|
$
|
228,044
|
|
|
$
|
222,936
|
|
Upper extremities
|
281,314
|
|
|
239,965
|
|
|
201,579
|
|
|||
Biologics
|
83,077
|
|
|
78,361
|
|
|
74,603
|
|
|||
Sports med & other
|
8,412
|
|
|
8,141
|
|
|
8,429
|
|
|||
Total United States
|
$
|
623,538
|
|
|
$
|
554,511
|
|
|
$
|
507,547
|
|
|
|
|
|
|
|
||||||
EMEAC
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
46,342
|
|
|
$
|
42,333
|
|
|
$
|
43,805
|
|
Upper extremities
|
87,647
|
|
|
73,243
|
|
|
66,819
|
|
|||
Biologics
|
8,312
|
|
|
8,445
|
|
|
8,149
|
|
|||
Sports med & other
|
11,074
|
|
|
13,751
|
|
|
13,405
|
|
|||
Total EMEAC
|
$
|
153,375
|
|
|
$
|
137,772
|
|
|
$
|
132,178
|
|
|
|
|
|
|
|
||||||
Other
|
|
|
|
|
|
||||||
Lower extremities
|
$
|
14,407
|
|
|
$
|
16,140
|
|
|
$
|
18,896
|
|
Upper extremities
|
26,813
|
|
|
21,456
|
|
|
19,683
|
|
|||
Biologics
|
17,445
|
|
|
13,831
|
|
|
10,734
|
|
|||
Sports med & other
|
612
|
|
|
1,279
|
|
|
1,324
|
|
|||
Total other
|
$
|
59,277
|
|
|
$
|
52,706
|
|
|
$
|
50,637
|
|
|
|
|
|
|
|
||||||
Total net sales
|
$
|
836,190
|
|
|
$
|
744,989
|
|
|
$
|
690,362
|
|
|
December 30, 2018
|
||||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities & Biologics
|
|
Corporate
|
|
Total
|
||||||||||
Total assets
|
$
|
940,075
|
|
|
$
|
923,036
|
|
|
$
|
272,127
|
|
|
$
|
559,163
|
|
|
$
|
2,694,401
|
|
|
December 31, 2017
|
||||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities & Biologics
|
|
Corporate
|
|
Total
|
||||||||||
Total assets
|
$
|
490,528
|
|
|
$
|
929,930
|
|
|
$
|
301,985
|
|
|
$
|
406,281
|
|
|
$
|
2,128,724
|
|
|
Fiscal year ended December 30, 2018
|
||||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities & Biologics
|
|
Corporate
1
|
|
Total
|
||||||||||
Net sales from external customers
|
$
|
337,433
|
|
|
$
|
286,105
|
|
|
$
|
212,652
|
|
|
$
|
—
|
|
|
$
|
836,190
|
|
Depreciation expense
|
11,131
|
|
|
12,439
|
|
|
13,004
|
|
|
22,923
|
|
|
59,497
|
|
|||||
Amortization expense
|
—
|
|
|
—
|
|
|
—
|
|
|
26,730
|
|
|
26,730
|
|
|||||
Segment operating income (loss)
|
$
|
96,153
|
|
|
$
|
97,644
|
|
|
$
|
1,492
|
|
|
$
|
(190,720
|
)
|
|
$
|
4,569
|
|
Other:
|
|
|
|
|
|
|
|
|
|
||||||||||
Transaction and transition expenses
|
|
|
|
|
|
|
|
|
12,013
|
|
|||||||||
Inventory step-up amortization
|
|
|
|
|
|
|
|
|
352
|
|
|||||||||
Operating loss
|
|
|
|
|
|
|
|
|
(7,796
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
|
|
|
|
80,247
|
|
|||||||||
Other expense, net
|
|
|
|
|
|
|
|
|
81,797
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
|
|
|
|
$
|
(169,840
|
)
|
||||||||
Capital expenditures
|
$
|
21,153
|
|
|
$
|
26,346
|
|
|
$
|
17,566
|
|
|
$
|
6,402
|
|
|
$
|
71,467
|
|
|
Fiscal year ended December 31, 2017
|
||||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities & Biologics
|
|
Corporate
1
|
|
Total
|
||||||||||
Net sales from external customers
|
$
|
309,713
|
|
|
$
|
244,798
|
|
|
$
|
190,478
|
|
|
$
|
—
|
|
|
$
|
744,989
|
|
Depreciation expense
|
12,532
|
|
|
10,211
|
|
|
12,366
|
|
|
21,723
|
|
|
56,832
|
|
|||||
Amortization expense
|
—
|
|
|
—
|
|
|
—
|
|
|
28,396
|
|
|
28,396
|
|
|||||
Segment operating income (loss)
|
$
|
79,889
|
|
|
$
|
78,866
|
|
|
$
|
3,631
|
|
|
$
|
(178,642
|
)
|
|
$
|
(16,256
|
)
|
Other:
|
|
|
|
|
|
|
|
|
|
||||||||||
Transaction and transition expenses
|
|
|
|
|
|
|
|
|
12,400
|
|
|||||||||
Incentive and indirect tax projects
|
|
|
|
|
|
|
|
|
(8,965
|
)
|
|||||||||
Operating loss
|
|
|
|
|
|
|
|
|
(19,691
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
|
|
|
|
74,644
|
|
|||||||||
Other expense, net
|
|
|
|
|
|
|
|
|
5,570
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
|
|
|
|
$
|
(99,905
|
)
|
||||||||
Capital expenditures
|
$
|
19,355
|
|
|
$
|
22,897
|
|
|
$
|
19,555
|
|
|
$
|
1,667
|
|
|
$
|
63,474
|
|
|
Fiscal year ended December 25, 2016
|
||||||||||||||||||
|
U.S. Lower Extremities & Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities & Biologics
|
|
Corporate
1
|
|
Total
|
||||||||||
Net sales from external customers
|
$
|
300,847
|
|
|
$
|
206,700
|
|
|
$
|
182,815
|
|
|
$
|
—
|
|
|
$
|
690,362
|
|
Depreciation expense
|
13,000
|
|
|
11,190
|
|
|
11,427
|
|
|
20,213
|
|
|
55,830
|
|
|||||
Amortization expense
|
—
|
|
|
—
|
|
|
—
|
|
|
28,841
|
|
|
28,841
|
|
|||||
Segment operating income (loss)
|
$
|
85,645
|
|
|
$
|
65,231
|
|
|
$
|
5,872
|
|
|
$
|
(202,261
|
)
|
|
$
|
(45,513
|
)
|
Other:
|
|
|
|
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
|
|
|
|
37,689
|
|
|||||||||
Transaction and transition expenses
|
|
|
|
|
|
|
|
|
36,374
|
|
|||||||||
Legal settlement
|
|
|
|
|
|
|
|
|
1,800
|
|
|||||||||
Management changes
|
|
|
|
|
|
|
|
|
1,348
|
|
|||||||||
Costs associated with new convertible debt
|
|
|
|
|
|
|
|
|
234
|
|
|||||||||
Operating loss
|
|
|
|
|
|
|
|
|
(122,958
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
|
|
|
|
58,530
|
|
|||||||||
Other income, net
|
|
|
|
|
|
|
|
|
(3,148
|
)
|
|||||||||
Loss before income taxes
|
|
|
|
|
|
|
|
|
$
|
(178,340
|
)
|
||||||||
Capital expenditures
|
$
|
13,145
|
|
|
$
|
10,101
|
|
|
$
|
13,517
|
|
|
$
|
13,336
|
|
|
$
|
50,099
|
|
1
|
The Corporate category primarily reflects general and administrative expenses not specifically associated with the U.S. Lower Extremities & Biologics, U.S. Upper Extremities, and International Extremities & Biologics segments. These non-allocated corporate expenses relate to global administrative expenses that support all segments, including salaries and benefits of certain executive officers and expenses such as: information technology administration and support; corporate headquarters; legal, compliance, and corporate finance functions; insurance; and all share-based compensation.
|
Name
|
|
Age
|
|
Position
|
|
Robert J. Palmisano
|
|
74
|
|
|
President and Chief Executive Officer and Executive Director
|
Lance A. Berry
|
|
46
|
|
|
Executive Vice President, Chief Financial and Operations Officer
|
Kevin D. Cordell
|
|
53
|
|
|
Executive Vice President, Chief Global Commercial Officer
|
Jason D. Asper
|
|
44
|
|
|
Senior Vice President, Strategy, Corporate Development and Technology
|
Julie D. Dewey
|
|
57
|
|
|
Senior Vice President, Chief Communications Officer
|
James A. Lightman
|
|
61
|
|
|
Senior Vice President, General Counsel and Secretary
|
Andrew C. Morton
|
|
53
|
|
|
Senior Vice President and Chief Human Resources Officer
|
J. Wesley Porter
|
|
49
|
|
|
Senior Vice President, Chief Compliance Officer
|
Barry J. Regan
|
|
46
|
|
|
Senior Vice President, Operations
|
Kevin C. Smith
|
|
58
|
|
|
Senior Vice President, Quality and Regulatory
|
Jennifer S. Walker
|
|
51
|
|
|
Senior Vice President, Process Improvement
|
Peter S. Cooke
|
|
53
|
|
|
President, Emerging Markets, Australia and Japan
|
Patrick Fisher
|
|
45
|
|
|
President, Lower Extremities
|
Timothy L. Lanier
|
|
57
|
|
|
President, Upper Extremities
|
Steven P. Wallace
|
|
39
|
|
|
President, International
|
Julie B. Andrews
|
|
47
|
|
|
Vice President of Finance, Chief Accounting Officer
|
David D. Stevens
|
|
65
|
|
|
Chairman and Non-Executive Director
|
Gary D. Blackford
|
|
61
|
|
|
Non-Executive Director
|
J. Patrick Mackin
|
|
52
|
|
|
Non-Executive Director
|
John L. Miclot
|
|
59
|
|
|
Non-Executive Director
|
Kevin C. O’Boyle
|
|
62
|
|
|
Non-Executive Director
|
Amy S. Paul
|
|
67
|
|
|
Non-Executive Director
|
Richard F. Wallman
|
|
67
|
|
|
Non-Executive Director
|
Elizabeth H. Weatherman
|
|
58
|
|
|
Non-Executive Director
|
Director
|
|
Audit
|
|
Compensation
|
|
Nominating, corporate governance and compliance
|
|
Strategic transactions
|
Robert J. Palmisano
|
|
—
|
|
—
|
|
—
|
|
—
|
Gary D. Blackford
|
|
√
|
|
—
|
|
√
|
|
—
|
J. Patrick Mackin
|
|
—
|
|
√
|
|
—
|
|
—
|
John L. Miclot
|
|
—
|
|
Chair
|
|
—
|
|
—
|
Kevin C. O’Boyle
|
|
√
|
|
√
|
|
—
|
|
—
|
Amy S. Paul
|
|
—
|
|
—
|
|
Chair
|
|
—
|
David D. Stevens
|
|
—
|
|
—
|
|
√
|
|
√
|
Richard F. Wallman
|
|
Chair
|
|
—
|
|
—
|
|
√
|
Elizabeth H. Weatherman
|
|
—
|
|
√
|
|
√
|
|
Chair
|
Director
|
|
Audit
|
|
Compensation
|
|
Nominating, corporate governance and compliance
|
|
Strategic transactions
|
Robert J. Palmisano
|
|
—
|
|
—
|
|
—
|
|
—
|
Gary D. Blackford
|
|
—
|
|
—
|
|
Chair
|
|
—
|
J. Patrick Mackin
|
|
—
|
|
√
|
|
—
|
|
—
|
John L. Miclot
|
|
—
|
|
Chair
|
|
—
|
|
√
|
Kevin C. O’Boyle
|
|
Chair
|
|
—
|
|
—
|
|
√
|
Amy S. Paul
|
|
—
|
|
√
|
|
√
|
|
—
|
David D. Stevens
|
|
—
|
|
—
|
|
√
|
|
√
|
Richard F. Wallman
|
|
√
|
|
—
|
|
—
|
|
—
|
Elizabeth H. Weatherman
|
|
√
|
|
—
|
|
—
|
|
Chair
|
•
|
assisting our board of directors in monitoring the integrity of our consolidated financial statements, our compliance with legal and regulatory requirements insofar as they relate to our consolidated financial statements and financial reporting obligations and any accounting, internal accounting controls or auditing matters, our independent registered public accounting firm's qualifications and independence, and the performance of our internal audit function and independent registered public accounting firm;
|
•
|
appointing, compensating, retaining, and overseeing the work of any independent registered public accounting firm engaged for the purpose of performing any audit, review, or attest services and dealing directly with any such auditing firm; provided, that such appointment will be subject to shareholder ratification or decision in the case of the auditor for our Dutch statutory annual accounts;
|
•
|
providing a medium for consideration of matters relating to any audit issues;
|
•
|
establishing procedures for the receipt, retention, and treatment of complaints received by us regarding accounting, internal accounting controls, or auditing matters, and for the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters; and
|
•
|
reviewing and approving all related party transactions required to be disclosed under the U.S. federal securities laws.
|
•
|
reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive officers, evaluating the performance of these officers in light of those goals and objectives, and setting compensation of these officers based on such evaluations;
|
•
|
making recommendations to our board of directors with respect to incentive compensation and equity-based plans that are subject to board and shareholder approval, administering or overseeing all of our incentive compensation and equity-based plans, and discharging any responsibilities imposed on the committee by any of these plans;
|
•
|
reviewing and recommending to our board of directors any severance or similar termination payments proposed to be made to our Chief Executive Officer and reviewing and approving any severance or similar termination payments proposed to be made to any other executive officer;
|
•
|
reviewing and discussing with our Chief Executive Officer and reporting periodically to our board of directors plans for development and corporate succession plans for our executive officers and other key employees, which include transitional leadership in the event of an unplanned vacancy;
|
•
|
reviewing and discussing with management the “
Compensation Discussion and Analysis
” section of this report and based on such discussions, recommending to our board of directors whether the “
Compensation Discussion and Analysis
” section should be included in this report; and
|
•
|
approving, or recommending to our board of directors for approval, the compensation programs, and the payouts for all programs, applying to our non-executive directors, including reviewing the competitiveness of our non-executive director compensation programs and reviewing the terms to make sure they are consistent with our board of directors compensation policy adopted by the general meeting of our shareholders.
|
•
|
reviewing and making recommendations to our board of directors regarding the size and composition of our board of directors;
|
•
|
identifying, reviewing, and recommending nominees for election as directors;
|
•
|
making recommendations to our board of directors regarding corporate governance matters and practices, including any revisions to our internal rules for our board of directors; and
|
•
|
overseeing our compliance efforts with respect to our legal, regulatory, and quality systems requirements and ethical programs, including our code of business conduct, other than with respect to matters relating to our financial statements and financial reporting obligations and any accounting, internal accounting controls or auditing matters, which are within the purview of the audit committee.
|
•
|
reviewing and evaluating potential opportunities for strategic business combinations, acquisitions, mergers, dispositions, divestitures, investments, and similar strategic transactions involving our company or any one or more of our subsidiaries outside the ordinary course of our business that may arise from time to time;
|
•
|
approving on behalf of our board of directors any strategic transaction that may arise from time to time and is deemed appropriate by the strategic transactions committee and involves total cash consideration of less than $5.0 million; provided, however, that the strategic transactions committee is not authorized to approve any strategic transaction involving the issuance of capital stock or in which any director, officer, or affiliate of our company has a material interest;
|
•
|
making recommendations to our board of directors concerning approval of any strategic transactions that may arise from time to time and are deemed appropriate by the strategic transactions committee and are beyond the authority of the strategic transactions committee to approve;
|
•
|
reviewing integration efforts with respect to completed strategic transactions from time to time and making recommendations to management and our board of directors, as appropriate;
|
•
|
assisting management in developing, implementing, and adhering to a strategic plan and direction for its activities with respect to strategic transactions and making recommendations to management and our board of directors, as appropriate;
|
•
|
reviewing and approving the settlement or compromise of any material litigation or claim against us; and
|
•
|
reviewing and evaluating potential opportunities for restructuring our business in response to completed strategic transactions or otherwise in an effort to realize anticipated cost and expense savings for, and other benefits, to our company and making recommendations to management and our board of directors, as appropriate.
|
Named executive officer
|
|
Current officer position
|
Robert J. Palmisano
|
|
President and Chief Executive Officer
|
Lance A. Berry
|
|
Executive Vice President, Chief Financial and Operations Officer
|
Peter S. Cooke
|
|
President, Emerging Markets, Australia and Japan
|
Andrew C. Morton
|
|
Senior Vice President and Chief Human Resources Officer
|
Kevin D. Cordell
|
|
Executive Vice President, Chief Global Commercial Officer
|
•
|
Increased Revenue Growth
. We accelerated our top line growth from 8% to 12%.
|
•
|
Continued Growth of Total Ankle Business
. We continued to expand our market leading position in total ankle with growth of 15%.
|
•
|
Continued Growth of Shoulder Business.
We continued to grow our shoulder business at more than double the market rate of growth, growing 19% in 2018.
|
•
|
Gained Approval for AUGMENT
®
Injectable Bone Graft
. In June 2018, we received premarket approval from the FDA for AUGMENT® Injectable Bone Graft, which provides a clinically proven and safe and effective alternative to autograft for use in hindfoot and ankle fusion in an easy to use flowable formulation.
|
•
|
Completed Cartiva Acquisition
. In October 2018, we acquired Cartiva, Inc., an orthopaedic medical device company focused on treatment of osteoarthritis of the great toe. With this acquisition, we added Cartiva’s Synthetic Cartilage Implant, the first and only PMA product for the treatment of great toe osteoarthritis. Supported by compelling clinical performance and backed by Level I clinical evidence, this acquisition adds differentiated technology to our core portfolio.
|
Pay element
|
|
2018 actions
|
||||||||||||
Base salary
|
|
● Our CEO received no base salary increase.
|
||||||||||||
|
● Other NEOs received base salary increases between zero and 4.0%.
|
|||||||||||||
Short-term annual incentive
|
|
● Target bonus percentage for our CEO remained the same at 100% and remained the same for our other NEOs, ranging from 50% to 65% of base salary.
|
||||||||||||
|
● Our CEO’s and CFO’s short-term incentive is based 100% on corporate performance goals.
|
|||||||||||||
|
● Other NEOs’ short-term incentives are based on corporate performance goals, and in some cases, divisional and individual performance goals.
|
|||||||||||||
|
● Corporate performance payouts were 111.1% of target, based on fiscal 2018 performance.
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||
|
|
Measure
|
|
Weighting
|
|
Target performance
|
|
2018 actual performance
|
|
|||||
|
|
Global net sales
|
|
40%
|
|
|
$823.5
|
million
|
|
|
$822.6
|
million
|
|
|
|
|
Adjusted EBITDA
|
|
30%
|
|
143.1
|
million
|
|
145.6
|
million
|
|
|||
|
|
Free cash flow
|
|
30%
|
|
(3.0
|
) million
|
|
5.6
|
million
|
|
|||
|
|
|
|
|
|
|
|
|
|
|||||
|
● U.S. and international divisional performance payouts were 117.2% and 98.0% of target, respectively, based on fiscal 2018 performance.
|
Pay element
|
|
2018 actions
|
||||||||||||
Long-term incentive
|
|
● The long-term incentive (LTI) grant guideline for our CEO increased from 400% to 450% of base salary to align closer with targeted competitive levels and remained the same for other NEOs, ranging from 100% to 175%, except in the case of one NEO whose LTI increased to 225%.
|
||||||||||||
|
● LTI is delivered 1/3 in stock options, 1/3 in time-vested restricted stock unit (RSU) awards and 1/3 in performance share unit (PSU) awards.
|
|||||||||||||
|
● Stock options and RSU awards vest over four years.
|
|||||||||||||
|
● PSU awards vest and are paid out in Wright ordinary shares upon the achievement of a threshold net sales growth goal over a three-year period.
|
|||||||||||||
|
● Since PSU awards were first granted in 2017, there were no payouts of prior PSU awards during 2018.
|
|||||||||||||
Other
|
|
● We paid Mr. Morton a $200,000 signing bonus upon his hiring, 100% of which must be repaid if he voluntarily leaves Wright within one year of his start date and 50% of which must be repaid if he voluntarily leaves within two years of his start date.
|
||||||||||||
|
● In June 2016, we agreed to pay Mr. Cooke a $1.2 million retention payment to relocate his family to the United Kingdom. This payment, made in June 2018, is in lieu of any future change in control or severance payment under his separation pay agreement.
|
|||||||||||||
|
● In December 2018, we approved new compensation packages for Messrs. Berry and Cordell in connection with their promotions effective January 2019.
|
What we do
|
|
What we don't do
|
||
ü
|
Structure our executive officer compensation so that a significant portion of pay is at risk
|
|
x
|
No automatic salary increases
|
ü
|
Emphasize long-term performance in our equity-based incentive awards
|
|
x
|
No repricing of stock options unless approved by shareholders
|
ü
|
Use a mix of performance measures and caps on payouts
|
|
x
|
No excessive perquisites
|
ü
|
Require minimum vesting periods on equity awards
|
|
x
|
No new single-trigger change of control arrangements
|
ü
|
Require double-trigger for equity acceleration upon a change of control
|
|
x
|
No tax gross-ups, other than limited CEO and relocation tax gross-ups
|
ü
|
Maintain a competitive compensation package
|
|
x
|
No change in control excise tax gross-ups
|
ü
|
Have robust stock ownership guidelines and stock retention requirements for executive officers
|
|
x
|
No pledging or hedging of Wright securities
|
ü
|
Maintain a clawback policy
|
|
x
|
No short sales or derivative transactions in Wright shares, including hedges
|
ü
|
Hold an annual say-on-pay vote
|
|
x
|
No current payment of dividends on unvested awards
|
•
|
Reinforce our corporate mission, vision and values;
|
•
|
Attract and retain executives important to the success of our Company;
|
•
|
Align the interests of our executives with the interests of our shareholders; and
|
•
|
Reward executives for the achievement of Company performance objectives, the creation of shareholder value in the short- and long-term, and their contributions to the success of our Company.
|
•
|
Base salary and total compensation levels are generally targeted to be within a reasonable range of the 67
th
percentile of a group of similarly-sized peer companies. However, the specific competitiveness of any individual executive’s salary and compensation will be determined considering factors like the executive’s experience, skills and capabilities, contributions as a member of the executive management team, contributions to our overall performance, and the sufficiency of total compensation potential to ensure the retention of an executive when considering the compensation potential that may be available elsewhere.
|
•
|
At least two-thirds of the CEO’s compensation and half of other executives’ compensation opportunity should be in the form of variable compensation that is tied to financial results and/or creation of shareholder value.
|
•
|
The portion of total compensation that is performance-based or at-risk should increase with an executive’s overall responsibilities, job level, and compensation. However, compensation programs should not encourage excessive risk-taking behavior among executives and should support our commitment to corporate compliance.
|
•
|
Primary emphasis should be placed on company performance as measured against goals approved by the compensation committee rather than on individual performance.
|
•
|
At least half of the CEO’s compensation and one-third of other executives’ compensation opportunity should be in the form of stock-based incentive awards.
|
The Cooper Companies, Inc.
|
Masimo Corporation
|
NuVasive, Inc.
|
Globus Medical, Inc.
|
Merit Medical Systems, Inc.
|
ResMed Inc.
|
Greatbatch, Inc.
|
Natus Medical Incorporated
|
Insulet Corporation
|
Haemonetics Corporation
|
NxStage Medical, Inc.
|
Abiomed, Inc.
|
Integra LifeSciences Holdings Corporation
|
|
|
Trailing 12-month revenue
(in millions)
|
|
One-year
revenue growth
|
|
Three-year
revenue growth
|
|
Market capitalization
(in millions)
|
25
th
percentile
|
$432
|
|
6%
|
|
20%
|
|
$1,597
|
50
th
percentile
|
710
|
|
10%
|
|
30%
|
|
2,954
|
75
th
percentile
|
1,207
|
|
16%
|
|
44%
|
|
5,557
|
Wright's percentile rank
|
49%
|
|
65%
|
|
36%
|
|
47%
|
Element
|
|
Key characteristics
|
|
Purpose
|
|
Key 2018 changes
|
Base salary
(Fixed, cash)
|
|
A fixed amount, paid in cash periodically throughout the year and reviewed annually and, if appropriate, adjusted, effective typically April 1 of each year.
|
|
Provides a source of fixed income that is market competitive and reflects the scope and responsibility of the position held.
|
|
No base salary increase for the CEO.
Base salary increases between zero and 4.0% for the other NEOs.
|
Short-term incentive (STI)
(Variable, cash)
|
|
A variable, short-term element of compensation that is payable in cash based on achievement of key pre-established annual corporate, and in some cases, divisional financial goals and/or individual goals.
|
|
Motivates and rewards our executives for achievement of annual financial and other goals intended to achieve our annual operating plan objectives.
|
|
No changes in target bonus percentages for NEOs.
Corporate and divisional performance measures were the same as 2017, except eliminated AUGMENT net sales measure for US divisional goals.
|
Element
|
|
Key characteristics
|
|
Purpose
|
|
Key 2018 changes
|
Long-term incentives (LTI)
(Variable, stock option, restricted stock unit and performance share unit awards)
|
|
A variable, long-term element of compensation that is provided one-third in stock options, one-third in time-vested RSUs and one-third in PSU awards.
Stock options and RSUs vest over four years.
PSU awards vest and are paid out in our ordinary shares upon the achievement of a threshold three-year net sales growth goal.
|
|
Aligns the interests of our executives with our shareholders; encourages focus on long-term company financial performance measures that are deemed strategically and operationally important to our Company; promotes retention of our executives; and encourages significant ownership of our ordinary shares.
|
|
No significant changes made to long-term equity incentives, other than an increase in the LTI grant guideline for our CEO from 400% to 450% of base salary and for our CFO from 200% to 225% of base salary.
|
Perquisites and personal benefits
|
|
Includes personal insurance premiums, up to $5,000 reimbursement for financial and tax planning and tax preparation for all NEOs and supplemental long-term disability insurance.
Additional benefits for our CEO under his employment agreement.
Customary relocation benefits and assignment and expat benefits that are consistent with local policies and practices.
|
|
Assists in attracting new and retaining existing talent, allowing our executives to more efficiently use their time and supports them in effectively contributing to our Company success.
CEO benefits were critical to our ability to hire him.
|
|
No significant changes were made to perquisites and personal benefits, except the adoption of a supplemental long-term disability insurance policy effective January 1, 2019.
$200,000 sign-on bonus and $30,000 allowance for temporary housing and travel was paid to Mr. Morton upon his hiring.
$1.2 million retention payment paid to Mr. Cooke after completion of two-year ex pat service in the United Kingdom.
|
Retirement benefits
|
|
Includes a defined contribution retirement plan with a discretionary Company match.
No pension arrangements, post-retirement health coverage or nonqualified defined contribution or other deferred compensation plans.
|
|
Provides an opportunity for employees to save and prepare financially for retirement.
|
|
No significant changes made to retirement benefits.
|
Change in control and severance benefits
|
|
Customary “double-trigger” change in control and severance benefits for our CEO under his employment agreement and for other NEOs under separation pay agreements.
|
|
Attracts key executive talent and encourages continuity, stability and retention when considering the potential disruptive impact of an actual or potential corporate transaction.
|
|
No significant changes made to change in control and severance benefits.
|
Name
|
|
2017
base salary ($) |
|
2018
base salary
($)
|
|
2018 base salary % increase compared to 2017 base salary
|
Robert J. Palmisano
|
|
$958,514
|
|
$958,514
|
|
0.0%
|
Lance A. Berry
|
|
450,000
|
|
468,000
|
|
4.0%
|
Peter S. Cooke
|
|
397,440
|
|
407,376
|
|
2.5%
|
Andrew C. Morton
|
|
N/A
|
|
400,000
|
|
N/A
|
Kevin D. Cordell
|
|
470,656
|
|
480,069
|
|
2.0%
|
Name
|
|
Percentage of base salary
|
Robert J. Palmisano
|
|
100%
|
Lance A. Berry
|
|
65%
|
Peter S. Cooke
|
|
55%
|
Andrew C. Morton
|
|
50%
|
Kevin D. Cordell
|
|
60%
|
Named executive officer
|
|
Percentage based upon
corporate
performance goals
|
|
Percentage based upon
divisional performance goals |
|
Percentage based upon individual
performance goals
|
Robert J. Palmisano
|
|
100%
|
|
0%
|
|
0%
|
Lance A. Berry
|
|
100%
|
|
0%
|
|
0%
|
Peter S. Cooke
|
|
40%
|
|
60%
|
|
0%
|
Andrew C. Morton
|
|
80%
|
|
0%
|
|
20%
|
Kevin D. Cordell
|
|
40%
|
|
60%
|
|
0%
|
(1)
|
This performance measure was calculated using a non-GAAP financial measure, which we believe provides meaningful supplemental information regarding our core operational performance. The net sales goal and actual results were calculated based on a foreign currency exchange planning rate to adjust for any impact of foreign currency on underlying performance.
|
(2)
|
This performance measure was calculated using a non-GAAP financial measure, which we believe provides meaningful supplemental information regarding our core operational performance. Adjusted EBITDA from continuing operations means net loss from continuing operations plus charges for interest, income taxes, depreciation and amortization expenses, non-cash share-based compensation expense and non-operating income and expense. Additionally, adjusted EBITDA from continuing operations excluded transaction and transition costs associated with acquisitions and divestitures; tax benefit related to realizability of net operating losses; and bonus compensation.
|
(3)
|
This performance measure was calculated using a non-GAAP financial measure, which we believe provides meaningful supplemental information regarding our core operational performance. Adjusted free cash flow means net cash flow provided by operating activities (excluding net cash flow from certain discontinued operations, AUGMENT payment milestone and foreign currency gains and losses) less capital expenditures.
|
Performance level
|
|
Percent of target bonus earned
|
Minimum
|
|
0%
|
Threshold (50% payout)
|
|
50.1% to 99.9%
|
Target (100% payout)
|
|
100%
|
Above target (150% payout)
|
|
100.1% to 150%
|
High (200% payout)
|
|
150.1% to 200%
|
Performance level
|
|
Global net sales
|
|
Adjusted EBITDA
|
|
Free cash flow
|
Minimum
|
|
$769.2 million
|
|
$107.2 million
|
|
$(42.1) million
|
Threshold (50% payout)
|
|
$782.1 million
|
|
$117.6 million
|
|
$(17.5) million
|
Target (100% payout)
|
|
$823.5 million
|
|
$143.1 million
|
|
$(3.0) million
|
Above target (150% payout)
|
|
$842.5 million
|
|
$157.6 million
|
|
$11.5 million
|
High (200% payout)
|
|
$864.8 million
|
|
$182.2 million
|
|
$36.1 million
|
2018 corporate performance measures and weighting
|
|
Actual
|
|
Payout
|
Global net sales (40%)
|
|
$822.6 million
|
|
Between threshold and target
|
Adjusted EBITDA (30%)
|
|
$145.6 million
|
|
Between target and above target
|
Free cash flow (30%)
|
|
$5.6 million
|
|
Between target and above target
|
Overall weighted achievement rating
|
|
111.1%
|
|
Between target and above target
|
2018 divisional performance measures and weighting
|
|
International 2018 performance
|
|
U.S. 2018 performance
|
Net sales (40%)
|
|
Between threshold and target
|
|
Between target and above target
|
Adjusted EBITDA (30%)
|
|
Between threshold and target
|
|
Between target and above target
|
Days-on-hand (15%)
|
|
Between above target and maximum
|
|
Between threshold and target
|
Days sales outstanding (15%)
|
|
Between target and above target
|
|
Between target and above target
|
Overall weighted achievement rating
|
|
Slightly below target
|
|
Between target and above target
|
Named executive officer
|
|
2018 PIP bonus
|
||
Robert J. Palmisano
|
|
$
|
1,064,909
|
|
Lance A. Berry
|
|
337,966
|
|
|
Peter S. Cooke
|
|
231,316
|
|
|
Andrew C. Morton
|
|
237,760
|
|
|
Kevin D. Cordell
|
|
330,556
|
|
Named executive officer
|
|
Percentage based upon
corporate
performance goals
|
|
Percentage based upon
divisional performance goals |
|
Percentage based upon individual
performance goals
|
Robert J. Palmisano
|
|
100%
|
|
0%
|
|
0%
|
Lance A. Berry
|
|
100%
|
|
0%
|
|
0%
|
Peter S. Cooke
|
|
30%
|
|
50%
|
|
20%
|
Andrew C. Morton
|
|
80%
|
|
0%
|
|
20%
|
Kevin D. Cordell
|
|
30%
|
|
50%
|
|
20%
|
Named executive officer
|
|
Incentive grant guideline
expressed as % of base salary
|
|
Dollar value of
incentive grant guideline
as of
July 24, 2018 grant date ($)
|
||
Robert J. Palmisano
|
|
450%
|
|
$
|
4,313,313
|
|
Lance A. Berry
|
|
225%
|
|
1,053,000
|
|
|
Peter S. Cooke
|
|
100%
|
|
407,376
|
|
|
Kevin D. Cordell
|
|
175%
|
|
840,121
|
|
Stock options
|
|
RSU awards
|
|
PSU awards
|
Provides executives with the opportunity once vested to purchase our ordinary shares at a price fixed on the grant date regardless of future market price.
|
|
Provides executives a commitment by us to issue ordinary shares at the time the RSU award vests.
|
|
Gives executives a commitment from us to issue a certain number of ordinary shares dependent upon achievement of one or more performance measures.
|
Exercise price is equal to fair market value of an ordinary share on the grant date.
|
|
Vesting is time-based, in four annual installments.
|
|
At time of grant, the compensation committee establishes performance measures, weightings, goals, performance adjustment events, if any, and the performance period, as well as thresholds, targets, and maximums.
|
Vesting is time-based, with 25% of the shares underlying the stock option vesting on the one-year anniversary of the grant date and the remaining 75% of the underlying shares vesting over a three-year period thereafter in 36 nearly equal monthly installments.
|
|
Annual awards vest on each August 15th.
|
|
Performance periods typically begin on the first day of our third fiscal quarter and end on the last day of our second fiscal quarter of the third year thereafter.
|
|
|
New hire awards vest beginning on either August 15, November 15, March 1st or May 15th, depending on the grant date.
|
|
At the end of the performance period, the compensation committee certifies performance against the performance goals, including the applicability of any performance adjustment events, and a corresponding payout, which is expressed as a percent of target.
|
|
|
In all cases, the first vesting date is at least one year after the grant date.
|
|
Actual payouts for PSU awards can range from 0% (if the threshold levels of performance are not met) to 200% of the target award (if maximum levels of performance are met).
|
|
|
Provides the opportunity for capital accumulation and more predictable LTI value than stock options.
|
|
|
|
|
|
|
|
Benefits of all equity award types
|
||||
Incentivizes employees to maximize company performance, as the value of awards is directly tied to an appreciation in the value of our ordinary shares.
|
||||
Provides an effective retention mechanism because of vesting provisions.
|
||||
Strengthens the relationship between the long-term value of our ordinary shares and the potential financial gain for executives.
|
||||
Links a portion of an executive’s compensation to the interests of our shareholders by providing an incentive to achieve corporate goals and increase the market price of our ordinary shares over the vesting period.
|
Named executive officer
|
|
Stock
options (#)
|
|
RSU
awards (#)
|
|
PSU awards (assuming target performance) (#)
|
|||
Robert J. Palmisano
|
|
149,008
|
|
|
55,536
|
|
|
55,536
|
|
Lance A. Berry
|
|
36,377
|
|
|
13,558
|
|
|
13,558
|
|
Peter S. Cooke
|
|
14,073
|
|
|
5,245
|
|
|
5,245
|
|
Andrew C. Morton
|
|
65,062
|
|
|
22,707
|
|
|
N/A
|
|
Kevin D. Cordell
|
|
29,023
|
|
|
10,817
|
|
|
10,817
|
|
Retirement benefits
|
|
Our executives have the opportunity to participate in retirement plans maintained by our operating subsidiaries, including a 401(k) plan, on the same basis as our other employees. We believe these plans provide an opportunity for our executives to plan for and meet their retirement savings needs.
We do not provide pension arrangements or post-retirement health coverage for our employees, including NEOs, or nonqualified defined contribution or other deferred compensation plans.
|
Relocation, assignment and expat benefits
|
|
We provide our executives with customary relocation assistance benefits if they relocate at our request. Tax protection may be provided in these situations to avoid an executive being penalized from a tax perspective for a relocation on behalf of our company. During 2018, Mr. Morton received relocation benefits, together with a tax gross-up, in connection with his hiring.
For international assignments, we also provide customary assignment and expat benefits that are consistent with local policies and practices. Tax protection may be provided in these situations to avoid an executive being penalized from a tax perspective for a relocation or expat service on behalf of our company. During 2016, we asked Mr. Cooke, President, International, to relocate his family to the United Kingdom. To compensate and incentivize Mr. Cooke to relocate, we agreed to provide him standard and customary relocation, temporary assignment and expat benefits. These are described in more detail under “
Executive Compensation Tables and Narratives-Summary Compensation Information-All Other Compensation for 2018-Supplemental
” and include cost-of-living adjustments, medical coverage, housing allowance, educational tuition fees and related transportation costs, car lease, reimbursement of certain relocation expenses and tax and tax equalization benefits.
|
Perquisites and other benefits
|
|
We provide our executives with modest perquisites to attract and retain them. The perquisites provided to our NEOs during 2018 included $1,000 for certain personal insurance premiums and up to $5,000 reimbursement for financial and tax planning and tax preparation.
In addition, we are required to provide our CEO additional perquisites under the terms of his employment agreement, which we agreed upon at the time of his initial hiring by legacy Wright to attract him to our company. These additional perquisites include additional reimbursement for financial and tax planning and tax preparation, a monthly allowance of $7,500 for housing and automobile expenses, reimbursement for reasonable travel expenses between Memphis, Tennessee and his residences, and an annual physical examination. To the extent that the reimbursements for his housing and automobile expenses and travel expenses are not deductible by Mr. Palmisano for income tax purposes, such amounts are “grossed-up” for income tax purposes so that the reimbursed items will be received net of any deduction for income and payroll taxes. We agreed to this gross-up provision at the time of his initial hiring by legacy Wright to attract him to our company and ease the financial burden on him to travel to and from our U.S. corporate headquarters in Memphis, Tennessee.
In addition, in 2018, we provided certain additional benefits to Mr. Morton to encourage him to accept an offer of employment with us, including a $200,000 sign-on bonus, a full annual incentive bonus for 2018 and $30,000 allowance for temporary housing and travel. One-half of the sign-on bonus must be paid back by Mr. Morton if he voluntarily terminates his employment with Wright prior to the two-year anniversary of his hire date and the entire sign-on bonus must be paid back if he voluntarily terminates his employment prior to the one-year anniversary.
In June 2018, we paid Mr. Cooke a $1.2 million retention payment that was agreed upon in June 2016 when we agreed to relocate his family to the United Kingdom. This payment is in lieu of any future change in control or severance payment under his separation pay agreement.
We believe perquisites and certain other benefits are an important part of our overall compensation package and help us accomplish our goal of attracting, retaining, and rewarding top executive talent. The value of all of the perquisites and other compensation provided to our NEOs for 2018 can be found under “
Executive Compensation Tables and Narratives
-
Summary Compensation Information-All Other Compensation for 2018-Supplemental
.”
|
Named executive officer
|
|
Stock ownership target as a multiple of
base salary
|
|
In
compliance (yes/no)
|
Robert J. Palmisano
|
|
4x
|
|
Yes
|
Lance A. Berry
|
|
2x
|
|
Yes
|
Named executive officer
|
|
Stock ownership target as a multiple of
base salary
|
|
In
compliance (yes/no)
|
Peter S. Cooke
|
|
2x
|
|
Yes
|
Andrew C. Morton
|
|
2x
|
|
Yes
|
Kevin D. Cordell
|
|
2x
|
|
Yes
|
Responsible party
|
|
Roles and responsibilities
|
Compensation committee
(Comprised solely of independent directors and reports to the board of directors)
|
|
● Oversees all aspects of our executive compensation program.
|
|
● Annually reviews and approves our corporate goals and objectives relevant to CEO compensation.
|
|
|
● Evaluates CEO’s performance in light of such goals and objectives, and determines and recommends his compensation based on this evaluation.
|
|
|
● Determines and approves all executive officer compensation, including salary, bonus and equity and non-equity incentive compensation.
|
|
|
● Administers our equity compensation plans and reviews and recommends all equity awards.
|
|
|
● Reviews our incentive compensation arrangements to confirm that incentive pay does not encourage unnecessary risk-taking.
|
|
|
● Evaluates market competitiveness of each executive’s compensation.
|
|
|
● Evaluates proposed changes to our executive compensation program.
|
|
|
● Assists the Board in developing and evaluating potential candidates for executive positions and overseeing the development of succession plans.
|
|
|
● Has sole authority to hire consultants, approve their fees and determine the nature and scope of their work.
|
Responsible party
|
|
Roles and responsibilities
|
Board of directors
|
|
● Approves, upon recommendation of the compensation committee, all CEO compensation consistent with our shareholder-approved board of directors compensation policy.
|
|
● Approves, upon recommendation of the compensation committee, all equity grants.
|
|
Independent external compensation consultant
(Mercer (US) Inc.)
(Independent under Nasdaq listing rules and reports to the compensation committee)
|
|
● Advises on all significant aspects of executive compensation, as well as non-executive director compensation.
|
|
● Provides advice and guidance on the appropriateness and competitiveness of our executive compensation program relative to our performance and market practice.
|
|
|
● Reviews total compensation strategy and pay levels for executives.
|
|
|
● Examines our executive compensation program to ensure that each element supports our business strategy.
|
|
|
● Assists in selection of peer companies and gathering competitive market data.
|
|
|
● Provides advice with respect to our equity-based compensation plans.
|
|
|
● Attends on a regular basis compensation committee meetings.
|
|
President and Chief Executive Officer
|
|
● Reviews performance of other executive officers and makes recommendations with respect to their compensation.
|
|
● Confers with the compensation committee and compensation consultant concerning design and development of compensation and benefit plans.
|
|
|
● Provides no input or recommendations with respect to his own compensation.
|
|
Other members of senior management team
(Senior Vice President, Chief Human Resources Officer, Senior Vice President, General Counsel and Secretary, and Executive Vice President, Chief Financial and Operations Officer)
|
|
● Gathers compensation data regarding executives and coordinates the exchange of information among management, the compensation committee and compensation consultant.
|
|
● Assists the compensation committee by ensuring compliance with legal and regulatory requirements and educating the committee on executive compensation trends and best practices from a corporate governance perspective.
|
|
|
● Provides no input or recommendations with respect to their own compensation.
|
•
|
each executive’s position within the company and the level of responsibility;
|
•
|
the ability of the executive to impact key business initiatives;
|
•
|
the executive’s individual experience and qualifications;
|
•
|
compensation paid to executives of comparable positions by companies similar to us;
|
•
|
company performance, as compared to specific pre-established objectives;
|
•
|
individual performance, generally and as compared to specific pre-established objectives;
|
•
|
the executive’s current and historical compensation levels;
|
•
|
advancement potential and succession planning considerations;
|
•
|
an assessment of the risk that the executive would leave us and the harm to our business initiatives if the executive left;
|
•
|
the retention value of executive equity holdings, including outstanding stock options, RSU awards and PSU awards;
|
•
|
the dilutive effect on the interests of our shareholders of long-term equity-based incentive awards; and
|
•
|
anticipated share-based compensation expense as determined under applicable accounting rules.
|
Name and principal position
|
|
Year
|
|
Salary
(1)
($)
|
|
Bonus
(2)
($)
|
|
Stock awards
(3)
($)
|
|
Option
awards
(4)
($)
|
|
Non-equity incentive plan compensation
(5)
($)
|
|
All other
compen-sation
(6)
($)
|
|
Total
($)
|
||||||
Robert J. Palmisano
President and Chief Executive Officer and Executive Director
|
|
2018
|
|
957,008
|
|
|
—
|
|
2,720,153
|
|
|
1,413,445
|
|
|
1,064,909
|
|
|
220,932
|
|
|
6,376,447
|
|
|
2017
|
|
945,792
|
|
|
—
|
|
2,592,818
|
|
|
1,346,571
|
|
|
—
|
|
|
261,593
|
|
|
5,146,774
|
|
|
|
2016
|
|
905,095
|
|
|
—
|
|
2,003,654
|
|
|
2,004,824
|
|
|
1,435,928
|
|
|
264,272
|
|
|
6,613,773
|
|
|
Lance A. Berry
Executive Vice President, Chief Financial and Operations Officer
|
|
2018
|
|
463,154
|
|
|
—
|
|
664,071
|
|
|
345,061
|
|
|
337,966
|
|
|
16,606
|
|
|
1,826,858
|
|
|
2017
|
|
440,146
|
|
|
—
|
|
608,630
|
|
|
316,095
|
|
|
—
|
|
|
16,800
|
|
|
1,381,671
|
|
|
|
2016
|
|
409,119
|
|
|
—
|
|
449,375
|
|
|
449,628
|
|
|
418,650
|
|
|
17,430
|
|
|
1,744,202
|
|
|
Peter S. Cooke
(7)
President, Emerging Markets, Australia and Japan
|
|
2018
|
|
407,376
|
|
|
—
|
|
256,900
|
|
|
133,492
|
|
|
231,316
|
|
|
1,543,129
|
|
|
2,572,213
|
|
|
2017
|
|
395,200
|
|
|
—
|
|
268,793
|
|
|
139,585
|
|
|
—
|
|
|
284,536
|
|
|
1,088,114
|
|
|
|
2016
|
|
384,000
|
|
|
—
|
|
214,970
|
|
|
215,092
|
|
|
289,893
|
|
|
275,834
|
|
|
1,379,789
|
|
|
Andrew C. Morton
(8)
Senior Vice President and Chief Human Resources Officer
|
|
2018
|
|
292,308
|
|
|
200,000
|
|
445,965
|
|
|
470,431
|
|
|
237,760
|
|
|
243,412
|
|
|
1,889,876
|
|
Kevin D. Cordell
Executive Vice President, Chief Global Commercial Officer
|
|
2018
|
|
477,535
|
|
|
—
|
|
529,817
|
|
|
275,303
|
|
|
330,556
|
|
|
17,000
|
|
|
1,630,211
|
|
|
2017
|
|
466,371
|
|
|
—
|
|
556,978
|
|
|
289,276
|
|
|
84,718
|
|
|
16,800
|
|
|
1,414,143
|
|
|
|
2016
|
|
429,789
|
|
|
—
|
|
432,510
|
|
|
432,765
|
|
|
376,693
|
|
|
16,600
|
|
|
1,688,357
|
|
(1)
|
Five percent of Mr. Palmisano’s annual base salary was allocated to his service as an executive director and member of our board of directors.
|
(2)
|
We generally do not pay any discretionary bonuses or bonuses that are subjectively determined and did not pay any such bonuses to any named executive officers in 2018, other than a sign-on bonus paid to Mr. Morton as part of his offer package. Annual cash incentive bonus payouts based on performance against pre-established performance goals under our performance incentive plan are reported in the “Non-equity incentive plan compensation” column.
|
(3)
|
Amounts reported represent the aggregate grant date fair value for RSU and PSU awards for 2018 and 2017 and RSU awards for 2016, in each case computed in accordance with FASB ASC Topic 718. However, Mr. Morton only received RSU awards in 2018. The grant date fair value is determined based on the per share closing sale price of our ordinary shares on the grant date. Amounts reported for each named executive officer and each award for 2018 are set forth in the “Grants of Plan-Based Awards - 2018” table in the “Grant Date Fair Value of Stock and Option Awards” column. Set forth below is the 2018 grant date fair value of PSU awards assuming maximum levels of performance. The maximum value is calculated using the number of shares reflected in the “Maximum” column of the “Estimated Future Payouts Under Equity Incentive Plan Awards” section of the “Grants of Plan-Based Awards - 2018” table and the closing price of our ordinary shares on July 24, 2018, the grant date, of $24.49, as reported by Nasdaq Global Select Market.
|
Name
|
|
Grant Date Fair Value at Maximum Levels of Performance
($)
|
|
Mr. Palmisano
|
|
2,720,153
|
|
Mr. Berry
|
|
664,071
|
|
Mr. Cooke
|
|
256,900
|
|
Mr. Morton
|
|
—
|
|
Mr. Cordell
|
|
529,817
|
|
(4)
|
Amounts reported represent the aggregate grant date fair value for option awards granted to each named executive officer computed in accordance with FASB ASC Topic 718. The grant date fair value is determined based on our Black-Scholes option pricing model. The table below sets forth the specific assumptions used in the valuation of each such option award:
|
Grant
date
|
|
Grant date
fair value
per share ($)
|
|
Risk free
interest rate
|
|
Expected
life
|
|
Expected
volatility
|
|
Expected
dividend
yield
|
07/24/2018
|
|
9.49
|
|
2.750%
|
|
6.66 years
|
|
32.40%
|
|
—
|
03/26/2018
|
|
7.23
|
|
2.625%
|
|
6.10 years
|
|
32.50%
|
|
—
|
07/25/2017
|
|
9.80
|
|
1.875%
|
|
6.10 years
|
|
32.50%
|
|
—
|
07/19/2016
|
|
7.40
|
|
1.125%
|
|
6.08 years
|
|
34.00%
|
|
—
|
(5)
|
Amounts reported represent payouts under our performance incentive plan and for each year reflect the amounts earned for that year but paid during the following year.
|
(6)
|
Amounts reported in this column for 2018 are described under “-All Other Compensation for 2018 - Supplemental.”
|
(7)
|
A portion of Mr. Cooke’s other compensation was paid in British Pounds (GBP). The foreign currency exchange rate of 1.3362 U.S. dollars for 1 GBP, which reflects an average conversion rate for 2018, was used to calculate this portion of his other compensation for 2018.
|
(8)
|
Mr. Morton was appointed our Senior Vice President and Chief Human Resources Officer effective March 26, 2018 and was not a named executive officer in 2017 or 2016; therefore, his information is only provided for 2018.
|
Name
|
Retirement benefits
$
|
Retention Payment
$
|
Housing/car allowance
$
|
Commu-ting expenses
$
|
Relocation benefits
$
|
Financial and tax planning
$
|
Insurance premium
$
|
Gross-up payments
$
|
Office allowance $
|
COLA
$
|
Total other compen-sation
$
|
|||||||||||
Mr. Palmisano
|
11,000
|
|
—
|
|
90,000
|
|
34,908
|
|
—
|
|
5,000
|
|
10,800
|
|
69,224
|
|
—
|
|
—
|
|
220,932
|
|
Mr. Berry
|
10,606
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16,606
|
|
Mr. Cooke
|
—
|
|
1,226,112
|
|
259,759
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36,000
|
|
21,258
|
|
1,543,129
|
|
Mr. Morton
|
10,462
|
|
—
|
|
—
|
|
—
|
|
153,205
|
|
—
|
|
—
|
|
79,745
|
|
—
|
|
—
|
|
243,412
|
|
Mr. Cordell
|
11,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17,000
|
|
|
|
Board approval
date
|
Estimated future payouts under non-equity incentive plan awards
(1)
|
Estimated future payouts under non-equity incentive plan awards
(4)
|
All other stock awards: number of shares of stock or
units
(5)
(#)
|
All other option awards: number of securities underlying options
(6)
(#)
|
Exercise or base price of option awards
($/Sh)
|
Grant date fair value stock and option awards
(7)(8)
($)
|
||||||||||||||
Name
|
Grant
date
|
Thres-hold
(2)
($)
|
Target
($)
|
Maxi-mum
(3)
($)
|
Thres-hold
(#)
|
Target
(#)
|
Maxi-mum
(#)
|
|||||||||||||||
Robert J. Palmisano
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash incentive award
|
N/A
|
2/14/18
|
479,257
|
|
958,514
|
|
1,917,028
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
RSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
|
|
|
55,536
|
|
—
|
|
—
|
|
1,360,077
|
|
|||
PSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
27,768
|
|
55,536
|
|
111,072
|
|
—
|
|
—
|
|
—
|
|
1,360,077
|
|
Stock option
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
149,008
|
|
24.49
|
|
1,413,445
|
|
Lance A. Berry
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash incentive award
|
N/A
|
2/14/18
|
152,100
|
|
304,200
|
|
608,400
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
RSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
13,558
|
|
—
|
|
—
|
|
332,035
|
|
PSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
6,779
|
|
13,558
|
|
27,116
|
|
—
|
|
—
|
|
—
|
|
332,035
|
|
Stock option
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36,377
|
|
24.49
|
|
345,061
|
|
Peter S. Cooke
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash incentive award
|
N/A
|
2/14/18
|
112,029
|
|
224,057
|
|
448,114
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
RSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,245
|
|
—
|
|
—
|
|
128,450
|
|
PSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
2,623
|
|
5,245
|
|
10,490
|
|
—
|
|
—
|
|
—
|
|
128,450
|
|
Stock option
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
14,073
|
|
24.49
|
|
133,492
|
|
Andrew C. Morton
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash incentive award
|
N/A
|
2/14/18
|
100,000
|
|
200,000
|
|
400,000
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
RSU award
|
3/26/18
|
2/14/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
22,707
|
|
—
|
|
—
|
|
445,965
|
|
Stock option
|
3/26/18
|
2/14/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
65,062
|
|
19.64
|
|
470,431
|
|
Kevin D. Cordell
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash incentive award
|
N/A
|
2/14/18
|
144,020
|
|
288,041
|
|
576,082
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
RSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,817
|
|
—
|
|
—
|
|
264,908
|
|
PSU award
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
5,409
|
|
10,817
|
|
21,634
|
|
—
|
|
—
|
|
—
|
|
264,908
|
|
Stock option
|
7/24/18
|
7/24/18
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
29,023
|
|
24.49
|
|
275,303
|
|
(1)
|
Amounts reported represent estimated future payouts under our performance incentive plan. Actual payouts under these performance incentive plans are reflected in the “Non-equity incentive compensation” column of the Summary Compensation Table.
|
(2)
|
Threshold amounts for awards payable under the performance incentive plan assume the satisfaction of the threshold level of the lowest weighted corporate performance goal.
|
(3)
|
Maximum amounts reflect payouts at a maximum rate of 200% of target for our performance incentive plan.
|
(4)
|
Amounts reported represent PSU awards granted under our 2017 plan. The PSU awards have a three-year performance period from
July 2, 2018
to
June 25, 2021
. Information regarding the PSU awards is set forth within the “
Compensation Discussion and Analysis
” under “
Long-Term Incentives-PSU Awards
”.
|
(5)
|
Amounts reported represent RSU awards granted under our 2017 plan. The RSU awards vest and become issuable over time, with the last tranche becoming issuable on August 15, 2022, in each case, so long as the individual remains an employee or consultant of our company.
|
(6)
|
Amounts reported represent option awards granted under our 2017 plan. All options have a ten-year term and vest over a four-year period, with 25% of the underlying shares vesting on the one-year anniversary of the grant date and the remaining 75% of the underlying shares vesting over a three-year period thereafter in 36 as nearly equal as possible monthly installments, in each case, so long as the individual remains an employee or consultant of our company.
|
(7)
|
See notes (3) and (4) to the Summary Compensation Table for a discussion of the assumptions made in calculating the grant date fair value of stock and option awards.
|
(8)
|
Amounts reported represent the grant date fair value of PSU awards, assuming target performance, based on the closing price of our ordinary shares, as reported by the Nasdaq Global Select Market, on July 24, 2018, the date of grant, of $24.49. These amounts are reflected in the “Stock Awards” column of the Summary Compensation Table.
|
•
|
All outstanding stock options and SARs held by the participant will, to the extent exercisable, remain exercisable for a period of one year after such termination, but not later than the date the stock options or SARs expire and all outstanding stock options and SARs that are not exercisable will be terminated and forfeited; provided, however, that if the exercise of a stock option that is exercisable is prevented by securities laws or other restrictions, the stock option will remain exercisable until 30 days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the date the stock option expires;
|
•
|
All outstanding unvested restricted stock awards will be terminated and forfeited; and
|
•
|
All outstanding but unvested RSUs, performance awards, annual performance cash awards, other cash-based awards and other stock-based awards held by the participant will terminate and be forfeited. However, with respect to any awards that vest based on the achievement of performance goals, if a participant’s employment or other service with us is terminated prior to the end of the performance period of such award, but after the conclusion of a portion of the performance period (but in no event less than one year), the committee may cause shares to be delivered or payment made with respect to the participant’s award, but only if otherwise earned for the entire performance period and only with respect to the portion of the applicable performance period completed at the date of such event, with proration based on the number of months or years that the participant was employed or performed services during the performance period.
|
•
|
All outstanding stock options and SARs held by the participant that then are exercisable will remain exercisable for three months after the date of such termination, but will not be exercisable later than the date the stock options or SARs expire and all outstanding stock options and SARs that are not exercisable will be terminated and forfeited; provided, however, that if the exercise of a stock option that is exercisable is prevented by securities laws or other restrictions, the stock option will remain exercisable until 30 days after the date such exercise first would no longer be prevented by such provisions, but in any event no later than the date the stock option expires;
|
•
|
All outstanding unvested restricted stock awards will be terminated and forfeited; and
|
•
|
All outstanding unvested RSUs, performance awards, annual performance cash awards, other cash-based awards and other stock-based awards will be terminated and forfeited. However, with respect to any awards that vest based on the achievement of performance goals, if a participant’s employment or other service with us is terminated prior to the end of the performance period of such award, but after the conclusion of a portion of the performance period (but in no event less than one year), the committee may, in its sole discretion, cause shares to be delivered or payment made with respect to the participant’s award, but only if otherwise earned for the entire performance period and only with respect to the portion of the applicable performance period completed at the date of such event, with proration based on the number of months or years that the participant was employed or performed services during the performance period.
|
|
|
Option awards
|
|
Stock awards
|
|||||||||||||||||||
Name
|
|
Number of securities underlying unexercised options exercisable (#)
|
|
Number of securities underlying unexercised option unexercisable
(1)
(#)
|
|
Option exercise price ($)
|
|
Option expiration date
(2)
|
|
Number of shares or units of stock that have not vested
(3)
(#)
|
|
Market value of shares or units that have not vested
(4)
($)
|
|
Equity incentive plan awards: number of unearned shares, units or other rights that have not vested
(5)
(#)
|
|
Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested
(6)
($)
|
|||||||
Robert J. Palmisano
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
628,849
|
|
|
—
|
|
|
15.55
|
|
|
09/17/2021
|
|
|
|
|
|
|
|
|
||||
|
|
4,112
|
|
|
—
|
|
|
17.70
|
|
|
04/16/2022
|
|
|
|
|
|
|
|
|
||||
|
|
145,500
|
|
|
—
|
|
|
20.75
|
|
|
05/09/2022
|
|
|
|
|
|
|
|
|
||||
|
|
9,771
|
|
|
—
|
|
|
22.55
|
|
|
04/17/2023
|
|
|
|
|
|
|
|
|
||||
|
|
144,625
|
|
|
—
|
|
|
23.93
|
|
|
05/14/2023
|
|
|
|
|
|
|
|
|
||||
|
|
7,939
|
|
|
—
|
|
|
30.14
|
|
|
04/01/2024
|
|
|
|
|
|
|
|
|
||||
|
|
129,462
|
|
|
—
|
|
|
29.06
|
|
|
05/13/2024
|
|
|
|
|
|
|
|
|
||||
|
|
662,834
|
|
|
175,349
|
|
|
20.62
|
|
|
10/13/2025
|
|
|
|
|
|
|
|
|
||||
|
|
163,621
|
|
|
107,455
|
|
|
21.24
|
|
|
07/19/2026
|
|
|
|
|
|
|
|
|
||||
|
|
48,630
|
|
|
88,743
|
|
|
27.86
|
|
|
07/25/2027
|
|
|
|
|
|
|
|
|
||||
|
|
—
|
|
|
149,008
|
|
|
24.49
|
|
|
07/24/2028
|
|
|
|
|
|
|
|
|
||||
RSU awards
|
|
|
|
|
|
|
|
|
|
210,020
|
|
|
5,567,630
|
|
|
|
|
|
|||||
PSU awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
148,602
|
|
|
3,939,439
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option awards
|
|
Stock awards
|
|||||||||||||||||||
Name
|
|
Number of securities underlying unexercised options exercisable (#)
|
|
Number of securities underlying unexercised option unexercisable
(1)
(#)
|
|
Option exercise price ($)
|
|
Option expiration date
(2)
|
|
Number of shares or units of stock that have not vested
(3)
(#)
|
|
Market value of shares or units that have not vested
(4)
($)
|
|
Equity incentive plan awards: number of unearned shares, units or other rights that have not vested
(5)
(#)
|
|
Equity incentive plan awards: market or payout value of unearned shares, units or other rights that have not vested
(6)
($)
|
|||||||
Lance A. Berry
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
6,575
|
|
|
—
|
|
|
15.01
|
|
|
05/13/2019
|
|
|
|
|
|
|
|
|
||||
|
|
9,635
|
|
|
—
|
|
|
17.82
|
|
|
05/13/2020
|
|
|
|
|
|
|
|
|
||||
|
|
12,528
|
|
|
—
|
|
|
15.04
|
|
|
05/11/2021
|
|
|
|
|
|
|
|
|
||||
|
|
1,924
|
|
|
—
|
|
|
17.7
|
|
|
04/16/2022
|
|
|
|
|
|
|
|
|
||||
|
|
19,557
|
|
|
—
|
|
|
20.75
|
|
|
05/09/2022
|
|
|
|
|
|
|
|
|
||||
|
|
30,602
|
|
|
—
|
|
|
23.93
|
|
|
05/14/2023
|
|
|
|
|
|
|
|
|
||||
|
|
18,262
|
|
|
—
|
|
|
29.06
|
|
|
05/13/2024
|
|
|
|
|
|
|
|
|
||||
|
|
92,917
|
|
|
24,582
|
|
|
20.62
|
|
|
10/13/2025
|
|
|
|
|
|
|
|
|
||||
|
|
36,695
|
|
|
24,100
|
|
|
21.24
|
|
|
07/19/2026
|
|
|
|
|
|
|
|
|
||||
|
|
11,415
|
|
|
20,832
|
|
|
27.86
|
|
|
07/25/2027
|
|
|
|
|
|
|
|
|
||||
|
|
—
|
|
|
36,377
|
|
|
24.49
|
|
|
07/24/2028
|
|
|
|
|
|
|
|
|
||||
RSU awards
|
|
|
|
|
|
|
|
|
|
42,482
|
|
|
1,126,198
|
|
|
|
|
|
|||||
PSU awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,404
|
|
|
938,560
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Peter S. Cooke
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Stock options
|
|
18,709
|
|
|
—
|
|
|
29.06
|
|
|
05/13/2024
|
|
|
|
|
|
|
|
|
||||
|
|
4,048
|
|
|
13,572
|
|
|
20.62
|
|
|
10/13/2025
|
|
|
|
|
|
|
|
|
||||
|
|
2,420
|
|
|
11,529
|
|
|
21.24
|
|
|
07/19/2026
|
|
|
|
|
|
|
|
|
||||
|
|
5,040
|
|
|
9,200
|
|
|
27.86
|
|
|
07/25/2027
|
|
|
|
|
|
|
|
|
||||
|
|
—
|
|
|
14,073
|
|
|
24.49
|
|
|
07/24/2028
|
|
|
|
|
|
|
|
|
||||
RSU awards
|
|
|
|
|
|
|
|
|
|
19,529
|
|
|
517,714
|
|
|
|
|
|
|||||
PSU awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,893
|
|
|
394,813
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Andrew C. Morton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
—
|
|
|
65,062
|
|
|
19.64
|
|
|
03/26/2028
|
|
|
|
|
|
|
|
|
||||
RSU awards
|
|
|
|
|
|
|
|
|
|
22,707
|
|
|
601,963
|
|
|
|
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Kevin D. Cordell
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Stock options
|
|
34,626
|
|
|
—
|
|
|
30.08
|
|
|
09/26/2024
|
|
|
|
|
|
|
|
|
||||
|
|
53,095
|
|
|
14,047
|
|
|
20.62
|
|
|
10/13/2025
|
|
|
|
|
|
|
|
|
||||
|
|
35,319
|
|
|
23,196
|
|
|
21.24
|
|
|
07/19/2026
|
|
|
|
|
|
|
|
|
||||
|
|
10,446
|
|
|
19,065
|
|
|
27.86
|
|
|
07/25/2027
|
|
|
|
|
|
|
|
|
||||
|
|
—
|
|
|
29,023
|
|
|
24.49
|
|
|
07/24/2028
|
|
|
|
|
|
|
|
|
||||
RSU awards
|
|
|
|
|
|
|
|
|
|
34,298
|
|
|
909,240
|
|
|
|
|
|
|||||
PSU awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30,809
|
|
|
816,747
|
|
(1)
|
All stock options vest over a four-year period, with 25% of the underlying shares vesting on the one-year anniversary of the grant date and the remaining 75% of the underlying shares vesting over a three-year period thereafter in 36 as nearly equal as possible monthly installments, in each case so long as the individual remains an employee or consultant of our company. If a change in control of our company occurs, outstanding options may become immediately exercisable in full and remain exercisable for the remainder of their terms, depending upon the plan under which the options were granted and, in the case of options granted under the 2017 plan, whether the option is continued, assumed or substituted by the successor entity and whether the executive experiences a termination event in connection with or within two years following the change in control. For more information, see the discussion under “-
Potential Payments Upon a Termination or Change in Control.
”
|
(2)
|
All option awards have a 10-year term, but may terminate earlier if the recipient’s employment or service relationship with our company terminates.
|
(3)
|
The release dates and release amounts for the unvested RSU awards are as follows:
|
Name
|
05/15/2019
|
06/01/2019
|
08/15/2019
|
05/15/2020
|
06/01/2020
|
08/15/2020
|
05/15/2021
|
08/15/2021
|
05/15/2022
|
08/15/2022
|
||||||||||
Mr. Palmisano
|
—
|
|
96,000
|
|
25,517
|
|
—
|
|
23,584
|
|
25,517
|
|
—
|
|
25,518
|
|
—
|
|
13,884
|
|
Mr. Berry
|
—
|
|
15,441
|
|
6,120
|
|
—
|
|
5,290
|
|
6,121
|
|
—
|
|
6,120
|
|
—
|
|
3,390
|
|
Mr. Cooke
|
—
|
|
8,135
|
|
2,517
|
|
—
|
|
2,531
|
|
2,517
|
|
—
|
|
2,517
|
|
—
|
|
1,312
|
|
Mr. Morton
|
5,676
|
|
—
|
|
—
|
|
5,677
|
|
—
|
|
—
|
|
5,677
|
|
—
|
|
5,677
|
|
|
|
Mr. Cordell
|
—
|
|
10,893
|
|
5,203
|
|
—
|
|
5,091
|
|
5,203
|
|
—
|
|
5,203
|
|
—
|
|
2,705
|
|
(4)
|
The market value of RSU awards that had not vested as of
December 30, 2018
is based on the closing sale price of our ordinary shares, as reported by the Nasdaq Global Select Market, on the last trading day of our fiscal year,
December 28, 2018
(
$26.51
).
|
(5)
|
Amounts reported represent the number of PSU awards that were in progress based on actual levels of performance. The 2017 PSU awards will vest based on the achievement of the performance goal established for the June 26, 2017 to June 28, 2020 performance period and the 2018 PSU awards will vest based on the achievement of the performance goal established for the July 2, 2018 to June 25, 2021 performance period. For information regarding the treatment of such awards upon a change in control of our company, see the discussion under “-
Potential Payments Upon a Termination or Change in Control.
”
|
(6)
|
Amounts reported represent the value of PSU awards that were in progress based on the closing sale price of our ordinary shares, as reported by the Nasdaq Global Select Market, on the last trading day of our fiscal year,
December 28, 2018
(
$26.51
).
|
|
|
Option awards
(1)
|
|
Stock awards
(2)
|
||||||
Name
|
|
Number of shares
acquired
on exercise
(#)
|
|
Value
realized
on exercise
($)
|
|
Number of shares acquired on vesting
(#)
|
|
Value realized on vesting
($)
|
||
Robert J. Palmisano
|
|
|
|
|
|
|
|
|
||
Stock options
|
|
—
|
|
—
|
|
|
|
|
||
Restricted stock units
|
|
|
|
|
|
107,632
|
|
|
2,707,229
|
|
Lance A. Berry
|
|
|
|
|
|
|
|
|
||
Stock options
|
|
—
|
|
—
|
|
|
|
|
||
Restricted stock units
|
|
|
|
|
|
18,170
|
|
|
458,885
|
|
Peter S. Cooke
|
|
|
|
|
|
|
|
|
||
Stock options
|
|
24,799
|
|
195,778
|
|
|
|
|
||
Restricted stock units
|
|
|
|
|
|
9,341
|
|
|
235,428
|
|
Andrew C. Morton
|
|
|
|
|
|
|
|
|
||
Stock options
|
|
—
|
|
—
|
|
|
|
|
||
Restricted stock units
|
|
|
|
|
|
—
|
|
|
—
|
|
Kevin D. Cordell
|
|
|
|
|
|
|
|
|
||
Stock options
|
|
—
|
|
—
|
|
|
|
|
||
Restricted stock units
|
|
|
|
|
|
13,390
|
|
|
339,350
|
|
(1)
|
The value realized on exercise represents the gross number of shares acquired on exercise multiplied by the market price of our ordinary shares on the exercise date, as reported by the Nasdaq Global Select Market, less the per share exercise price.
|
(2)
|
The value realized on vesting of the RSU awards held by each of the named executive represents the gross number of ordinary shares acquired, multiplied by the closing sale price of our ordinary shares on the vesting date or the last trading day prior to the vesting date if the vesting date was not a trading day, as reported by the Nasdaq Global Select Market.
|
•
|
the acquisition (other than from us) by any person, entity or group, subject to certain exceptions, of 50% or more of either our then-outstanding ordinary shares or the combined voting power of our then-outstanding ordinary shares or the combined voting power of our then-outstanding capital stock entitled to vote generally in the election of directors;
|
•
|
the “continuity directors” cease for any reason to constitute at least a majority of our board of directors;
|
•
|
consummation of a reorganization, merger or consolidation, in each case, with respect to which persons who were our shareholders immediately prior to such reorganization, merger or consolidation do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the then-outstanding voting securities of the reorganized, merged, consolidated, or other surviving corporation (or its direct or indirect parent corporation);
|
•
|
approval by our shareholders of a liquidation or dissolution of our company; or
|
•
|
the consummation of the sale of all or substantially all of our assets with respect to which persons who were our shareholders immediately prior to such sale do not, immediately thereafter, own more than 50% of the combined voting power entitled to vote generally in the election of directors of the then-outstanding voting securities of the acquiring corporation (or its direct or indirect parent corporation).
|
•
|
All outstanding stock options and SARs held by such participant will become immediately vested and exercisable in full and will remain exercisable for the remainder of their respective terms;
|
•
|
All restrictions imposed on restricted stock, RSUs or deferred units that are not performance-based held by such participant will lapse and be of no further force and effect;
|
•
|
All performance-based awards held by such participant for which the performance period has been completed as of the date of such termination or resignation but have not yet been paid will vest and be paid in cash or shares and at such time as provided in the award agreement based on actual attainment of each performance goal; and
|
•
|
All performance-based awards held by such participant for which the performance period has not been completed as of the date of such termination or resignation will with respect to each performance goal vest and be paid out for the entire performance period (and not pro rata) based on actual performance achieved through the date of such termination or resignation with the manner of payment to be made in cash or shares as provided in the award agreement within 30 days following the date of termination or resignation.
|
•
|
All outstanding stock options and SARs will become fully vested and exercisable and the committee will give such participant a reasonable opportunity to exercise any and all stock options and SARs before but conditioned upon the resulting change in control and if a participant does not exercise all stock options and SARs, the committee will pay such participant the difference between the exercise price for the stock option or grant price for the SAR and the per share consideration provided to other similarly situated shareholders in the change in control, provided that if the exercise or grant price exceeds the consideration in the change in control, provided, however, that if the exercise price or grant price exceeds the consideration provided, then such exercised stock option or SAR will be canceled and terminated without payment;
|
•
|
All restrictions imposed on restricted stock, RSUs or deferred units that are not performance-based will lapse and be of no further force and effect, and RSUs and deferred units will be settled and paid in cash or shares and at such time as provided in the award agreement, provided, however, that if any such payment is to be made in shares, the committee may provide such holders the consideration provided to other similarly situated shareholders in the change in control;
|
•
|
All performance-based awards held by such participant for which the performance period has been completed as of the date of the change in control but have not yet been paid will vest and be paid in cash or shares and at such time as provided in the award agreement based on actual attainment of each performance goal; and
|
•
|
All performance-based awards held by such participant for which the performance period has not been completed as of the date of the change in control will with respect to each performance goal vest and be paid out for the entire performance period (and not pro rata) based on actual performance achieved through the date of the change in control with the manner
|
Name
|
|
Type of payment
(1)
|
|
Voluntary/
for cause
termination
($)
|
|
Involuntary
termination
without
cause
($)
|
|
Qualifying
change in
control
termination
($)
|
|
Death/
disability
($)
|
|
Change in control
($)
|
|||||
Robert J. Palmisano
|
|
Cash severance
|
|
—
|
|
|
4,792,570
|
|
|
5,751,084
|
|
|
—
|
|
|
—
|
|
|
|
Benefit continuation
|
|
—
|
|
|
19,920
|
|
|
19,920
|
|
|
—
|
|
|
—
|
|
|
|
Annual bonus
(2)
|
|
—
|
|
|
958,514
|
|
|
958,514
|
|
|
958,514
|
|
|
—
|
|
|
|
Outplacement benefits
|
|
—
|
|
|
30,000
|
|
|
30,000
|
|
|
—
|
|
|
—
|
|
|
|
Other termination benefits
(3)
|
|
—
|
|
|
6,000
|
|
|
6,000
|
|
|
—
|
|
|
—
|
|
|
|
Option award acceleration
(4)
|
|
—
|
|
|
—
|
|
|
1,900,090
|
|
|
—
|
|
|
1,900,090
|
|
|
|
RSU award acceleration
(5)
|
|
—
|
|
|
—
|
|
|
5,567,630
|
|
|
—
|
|
|
5,567,630
|
|
|
|
PSU award acceleration
(6)
|
|
—
|
|
|
—
|
|
|
2,705,849
|
|
|
—
|
|
|
2,705,849
|
|
|
|
Total
|
|
—
|
|
|
5,807,004
|
|
|
16,939,087
|
|
|
958,514
|
|
|
10,173,569
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Lance A. Berry
|
|
Cash severance
|
|
—
|
|
|
772,200
|
|
|
1,544,400
|
|
|
—
|
|
|
—
|
|
|
|
Benefit continuation
|
|
—
|
|
|
19,920
|
|
|
29,880
|
|
|
—
|
|
|
—
|
|
|
|
Annual bonus
(2)
|
|
—
|
|
|
304,200
|
|
|
304,200
|
|
|
304,200
|
|
|
—
|
|
|
|
Outplacement benefits
|
|
—
|
|
|
30,000
|
|
|
60,000
|
|
|
—
|
|
|
—
|
|
|
|
Other termination benefits
(3)
|
|
—
|
|
|
6,000
|
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|
|
Option award acceleration
(4)
|
|
—
|
|
|
—
|
|
|
345,277
|
|
|
—
|
|
|
345,277
|
|
|
|
RSU award acceleration
(5)
|
|
—
|
|
|
—
|
|
|
1,126,198
|
|
|
—
|
|
|
1,126,198
|
|
|
|
PSU award acceleration
(6)
|
|
—
|
|
|
—
|
|
|
648,991
|
|
|
—
|
|
|
648,991
|
|
|
|
Total
|
|
—
|
|
|
1,132,320
|
|
|
4,070,946
|
|
|
304,200
|
|
|
2,120,466
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Peter S. Cooke
|
|
Cash severance
(7)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
Benefit continuation
|
|
—
|
|
|
19,920
|
|
|
29,880
|
|
|
—
|
|
|
—
|
|
|
|
Annual bonus
(2)
|
|
—
|
|
|
224,057
|
|
|
224,057
|
|
|
224,057
|
|
|
—
|
|
|
|
Outplacement benefits
|
|
—
|
|
|
30,000
|
|
|
60,000
|
|
|
—
|
|
|
—
|
|
|
|
Other termination benefits
(3)
|
|
—
|
|
|
6,000
|
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|
|
Option award acceleration
(4)
|
|
—
|
|
|
—
|
|
|
169,124
|
|
|
—
|
|
|
169,124
|
|
|
|
RSU award acceleration
(5)
|
|
—
|
|
|
—
|
|
|
517,714
|
|
|
—
|
|
|
517,714
|
|
|
|
PSU award acceleration
(6)
|
|
—
|
|
|
—
|
|
|
266,929
|
|
|
—
|
|
|
266,929
|
|
|
|
Total
|
|
—
|
|
|
279,977
|
|
|
1,279,704
|
|
|
224,057
|
|
|
953,767
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Andrew C. Morton
(8)
|
|
Cash severance
|
|
—
|
|
|
600,000
|
|
|
1,200,000
|
|
|
—
|
|
|
—
|
|
|
|
Benefit continuation
|
|
—
|
|
|
19,920
|
|
|
29,880
|
|
|
—
|
|
|
—
|
|
|
|
Annual bonus
(2)
|
|
—
|
|
|
200,000
|
|
|
200,000
|
|
|
200,000
|
|
|
—
|
|
|
|
Outplacement benefits
|
|
—
|
|
|
30,000
|
|
|
60,000
|
|
|
—
|
|
|
—
|
|
|
|
Other termination benefits
(3)
|
|
—
|
|
|
6,000
|
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|
|
Option award acceleration
(4)
|
|
—
|
|
|
—
|
|
|
446,976
|
|
|
—
|
|
|
446,976
|
|
|
|
RSU award acceleration
(5)
|
|
—
|
|
|
—
|
|
|
601,963
|
|
|
—
|
|
|
601,963
|
|
|
|
Total
|
|
—
|
|
|
855,920
|
|
|
2,550,819
|
|
|
200,000
|
|
|
1,048,939
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Type of payment
(1)
|
|
Voluntary/
for cause
termination
($)
|
|
Involuntary
termination
without
cause
($)
|
|
Qualifying
change in
control
termination
($)
|
|
Death/
disability
($)
|
|
Change in control
($)
|
|||||
Kevin D. Cordell
|
|
Cash severance
|
|
—
|
|
|
768,110
|
|
|
1,536,221
|
|
|
—
|
|
|
—
|
|
|
|
Benefit continuation
|
|
—
|
|
|
19,920
|
|
|
29,880
|
|
|
—
|
|
|
—
|
|
|
|
Annual bonus
(2)
|
|
—
|
|
|
288,041
|
|
|
288,041
|
|
|
288,041
|
|
|
—
|
|
|
|
Outplacement benefits
|
|
—
|
|
|
30,000
|
|
|
60,000
|
|
|
—
|
|
|
—
|
|
|
|
Other termination benefits
(3)
|
|
—
|
|
|
6,000
|
|
|
12,000
|
|
|
—
|
|
|
—
|
|
|
|
Option award acceleration
(4)
|
|
—
|
|
|
—
|
|
|
263,606
|
|
|
—
|
|
|
263,606
|
|
|
|
RSU award acceleration
(5)
|
|
—
|
|
|
—
|
|
|
909,240
|
|
|
—
|
|
|
909,240
|
|
|
|
PSU award acceleration
(6)
|
|
—
|
|
|
—
|
|
|
551,753
|
|
|
—
|
|
|
551,753
|
|
|
|
Total
|
|
—
|
|
|
1,112,071
|
|
|
3,650,741
|
|
|
288,041
|
|
|
1,724,599
|
|
(1)
|
The benefit amounts set forth in the table do not reflect any reduction that may be necessary to prevent the payment from being subject to an excise tax under Code Section 280G, if applicable.
|
(2)
|
Assumes payment equal to full target annual bonus for the year in which the termination date occurs.
|
(3)
|
Reflects the cost of financial planning services and continued executive insurance. Reimbursement of reasonable attorneys’ fees and expenses is not included as the amount is not estimable.
|
(4)
|
Based on the difference between: (i) the per share market price of the ordinary shares underlying the unvested stock options held by such executive as of December 28, 2018, the last trading day of fiscal 2018, based upon the closing sale price of our ordinary shares, as reported by the Nasdaq Global Select Market, on the last trading day of our fiscal year, December 28, 2018 ($26.51), and (ii) the per share exercise price of the options held by such executive. The per share exercise price of all unvested stock options held by our named executive officers included in the table as of December 30, 2018 range from $19.64 to $27.86. The “Change in Control” scenario assumes that options granted under the 2017 plan are not continued, assumed or substituted with equivalent awards in connection with the change in control.
|
(5)
|
Based on: (i) the number of unvested RSU awards held by such executive as of December 30, 2018, multiplied by (ii) the per share market price of our ordinary shares as of December 28, 2018, the last trading day of fiscal 2018, based upon the closing sale price of our ordinary shares, as reported by the Nasdaq Global Select Market, on the last trading day of our fiscal year, December 28, 2018 ($26.51). The “Change in Control” scenario assumes that RSU awards granted under the 2017 plan are not continued, assumed or substituted with equivalent awards in connection with the change in control.
|
(6)
|
Amounts reported represent the value of the immediate payout of the target number of ordinary shares that the named executive officer would have been entitled to receive as payout for PSU awards. The value is based on: (a) the number of outstanding PSU awards at target, multiplied by (b) the closing sale price of our ordinary shares, as reported by the Nasdaq Global Select Market, on the last trading day of our fiscal year, December 28, 2018 ($26.51). The “Change in Control” scenario assumes that PSU awards granted under the 2017 plan are not continued, assumed or substituted with equivalent awards in connection with the change in control and are paid out, assuming target performance.
|
(7)
|
In June 2018 as part of Mr. Cooke’s letter agreement, we paid Mr. Cooke a retention payment in lieu of any future change in control or severance payment Mr. Cooke otherwise would be entitled to receive under his separation pay agreement.
|
(8)
|
Mr. Morton’s sign-on bonus and relocation benefits must be paid back by Mr. Morton if he voluntarily terminates his employment with Wright prior to the one-year anniversary of his hire date and 50% of the sign-on bonus must be paid if he voluntarily terminates his employment within years one and two of his hire date
|
•
|
the annual total compensation of our CEO was
$6,376,447
;
|
•
|
the annual total compensation of the employee identified at median of our company (excluding our CEO) was $72,926; and
|
•
|
based on this information, the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee (identified in accordance with SEC rules and as described in greater detail below) was estimated to be 87:1.
|
•
|
Selection of Determination Date and Employee Population
. We determined that, as of October 15, 2018, our worldwide employee population, excluding our CEO, consisted of 2,874 total employees, of which 1,779 employees were employed in the United States and 1,095 employees were employed in non-U.S. jurisdictions. In determining this population, we considered the employees of our subsidiaries and all of our worldwide employees other than our CEO, whether employed on a full-time, part-time, temporary or seasonal basis. We did not include any contractors or other non-employee workers in our employee population. As permitted under SEC rules, we selected October 15, 2018, which is within the last three months of the end of our fiscal year 2018, as the date we would use to identify our employee population and “median employee” to allow sufficient time to identify the median employee given the global scope of our operations.
|
•
|
Identification of Median Employee
. To identify the “median employee” from our employee population, we selected target annual total cash compensation, including annual base salary or hourly wages, target annual bonus, target commissions, and comparable cash elements of compensation in non-U.S. jurisdictions, for fiscal year 2018, as the most appropriate measure of compensation. To make them comparable, base salaries and wages for newly hired permanent employees who had worked less than a year were annualized. As part of this analysis, we converted target annual total cash compensation of our non-U.S. employees from local currency to U.S. dollars using average foreign currency exchange rates from January 1, 2018 to October 15, 2018.
|
•
|
annual base salaries for employees are not subject to performance risk and, for most non-executive employees, constitute the largest part of their total compensation;
|
•
|
performance-based, or at risk, compensation awarded to our employees, which for our higher-level employees constitutes the largest part of their total compensation, is appropriately balanced between annual and long-term performance and cash and equity compensation, utilizes several different performance measures and goals that are drivers of long-term success for our company and shareholders, and has appropriate maximums; and
|
•
|
a significant portion of performance-based compensation is in the form of long-term equity incentives which do not encourage unnecessary or excessive risk because they generally vest over a three to four-year period of time thereby focusing our employees on our long-term interests.
|
•
|
$2,000 increase in the premium for the chair of our compensation committee;
|
•
|
$1,000 increase in the premium for our compensation committee members (including our chair);
|
•
|
$15,000 increase in the annual equity-based compensation award; and
|
•
|
reduction in the vesting period of annual stock options from two years to one year.
|
|
|
Annual cash retainer
|
||
Description
|
|
2018
($)
|
|
2019
($) |
Non-executive director
|
|
60,000
|
|
60,000
|
Chairman premium
|
|
75,000
|
|
75,000
|
Audit committee chair premium
|
|
20,000
|
|
20,000
|
Compensation committee chair premium
|
|
13,000
|
|
15,000
|
Nominating, corporate governance and compliance committee chair premium
|
|
10,000
|
|
10,000
|
Strategic transactions committee chair premium
|
|
10,000
|
|
10,000
|
Audit committee member (including chair)
|
|
15,000
|
|
15,000
|
Compensation committee member (including chair)
|
|
7,000
|
|
8,000
|
Nominating, corporate governance and compliance committee member (including chair)
|
|
7,000
|
|
7,000
|
Strategic transactions committee member (including chair)
|
|
5,000
|
|
5,000
|
Name
|
|
Fees earned
or paid
in cash
(1)
($)
|
|
Stock
awards
(2)(3)
($)
|
|
Option
awards
(4)(5)
($)
|
|
All other compensation
(6)(7)
($)
|
|
Total
($)
|
|||||
Gary D. Blackford
|
|
82,000
|
|
|
93,160
|
|
|
94,017
|
|
|
4,000
|
|
|
273,177
|
|
J. Patrick Mackin
|
|
33,500
|
|
|
93,160
|
|
|
94,017
|
|
|
—
|
|
|
220,677
|
|
John L. Miclot
|
|
80,000
|
|
|
93,160
|
|
|
94,017
|
|
|
2,000
|
|
|
269,177
|
|
Kevin C. O’Boyle
|
|
82,000
|
|
|
93,160
|
|
|
94,017
|
|
|
4,000
|
|
|
273,177
|
|
Amy S. Paul
|
|
77,000
|
|
|
128,228
|
|
|
94,017
|
|
|
4,000
|
|
|
303,245
|
|
Name
|
|
Fees earned
or paid
in cash
(1)
($)
|
|
Stock
awards
(2)(3)
($)
|
|
Option
awards
(4)(5)
($)
|
|
All other compensation
(6)(7)
($)
|
|
Total
($)
|
|||||
David D. Stevens
|
|
147,000
|
|
|
93,160
|
|
|
94,017
|
|
|
4,000
|
|
|
338,177
|
|
Richard F. Wallman
|
|
100,000
|
|
|
138,720
|
|
|
94,017
|
|
|
4,000
|
|
|
336,737
|
|
Elizabeth H. Weatherman
|
|
89,000
|
|
|
133,689
|
|
|
94,017
|
|
|
4,000
|
|
|
320,706
|
|
(1)
|
Unless a director otherwise elects to convert all of his or her annual retainers into RSU awards, annual retainers are paid in cash on a quarterly basis in arrears within 30 days of the end of each calendar quarter. Three of our non-executive directors elected to convert their annual retainers covering the period of service from July 1, 2018 to June 30, 2019 into RSU awards and accordingly, were granted an RSU award on July 24, 2018 under our 2017 equity plan for that number of ordinary shares as determined based on the following formula: (a) the aggregate dollar amount of all annual cash retainers that otherwise would have been payable to the director for services to be rendered as a non-executive director, chairman and chair or member of any board committee (based on such director’s board committee memberships and chair positions as of the grant date), divided by (b) the 10‑trading day average closing sale price of an ordinary share, as reported by the Nasdaq Global Select Market, and as determined on the third trading day prior to the date of anticipated corporate approval of the award. The RSU award vests and the underlying shares become issuable in four as nearly equal as possible quarterly installments, on September 30, December 31, March 31 and June 30, in each case so long as the director is a director of our company as of such date.
|
Name
|
|
Total amount of retainers converted into RSU awards
($)
|
|
Number of
RSU awards
(#)
|
|
Amount of retainer converted into RSU awards attributable to 2018 service
($)
|
|
Grant date fair value of RSU awards
($)
|
|
Incremental grant date fair value of RSU awards received during 2018
($)
|
Ms. Paul
|
|
77,000
|
|
3,004
|
|
38,500
|
|
73,568
|
|
35,068
|
Mr. Wallman
|
|
100,000
|
|
3,902
|
|
50,000
|
|
95,560
|
|
45,560
|
Ms. Weatherman
|
|
89,000
|
|
3,472
|
|
44,500
|
|
85,029
|
|
40,529
|
(2)
|
On July 24, 2018, each non-executive director received an RSU award for 3,804 ordinary shares granted under the 2017 equity plan. The RSU awards vest and the underlying shares become issuable on the one-year anniversary of the grant date, so long as the director is a director of our company as of such date. In addition, as described above in note (1), each of Ms. Paul, Mr. Wallman and Ms. Weatherman elected to convert his or her annual retainers covering the period of service from July 1, 2018 to June 30, 2019 into RSU awards under our 2017 equity plan. The amount reported in the “Stock awards” column represents the aggregate grant date fair value for the July 24, 2018 RSU awards granted to each director in 2018 and for each of Ms. Paul, Mr. Wallman and Ms. Weatherman, the incremental grant date fair value for the additional RSU awards granted to him or her as described above in note (1), in each case as computed in accordance with FASB ASC Topic 718. The grant date fair value for RSU awards is determined based on the closing sale price of our ordinary shares on the grant date.
|
(3)
|
As of December 30, 2018, each non-executive director held the following number of unvested stock awards (all of which are in the form of RSU awards): Mr. Blackford (3,804); Mr. Mackin (3,804); Mr. Miclot (3,804); Mr. O’Boyle (3,804); Ms. Paul (6,057); Mr. Stevens (3,804); Mr. Wallman (6,731); and Ms. Weatherman (6,408).
|
(4)
|
On July 24, 2018, each non-executive director received a stock option to purchase 9,907 ordinary shares at an exercise price of $24.49 per share granted under the 2017 equity plan. Such option expires on July 24, 2028 and vests with respect to one-half of the underlying ordinary shares on each of July 24, 2019 and July 24, 2020, so long as the individual remains a director of our company as of such date. Amounts reported in the “Option awards” column represent the aggregate grant date fair value for option awards granted to each director in 2018 computed in accordance with FASB ASC Topic 718. The grant date fair value is determined based on our Black-Scholes option pricing model. The grant date fair value per share for the options granted on July 24, 2018 was $9.49 and was determined using the following specific assumptions: risk free interest rate: 2.75%; expected life: 6.66 years; expected volatility: 32.4%; and expected dividend yield: 0.
|
(5)
|
The table below provides information regarding the aggregate number of options to purchase ordinary shares outstanding at December 30, 2018 and held by each of the non-executive directors named in the above table:
|
Name
|
|
Aggregate number of shares underlying options
|
|
Exercisable/
unexercisable
|
|
Range of
exercise
price(s) ($)
|
|
Range of
expiration
date(s)
|
|
Mr. Blackford
|
|
89,354
|
|
|
74,309/15,045
|
|
15.01-29.06
|
|
05/13/2019-07/24/2028
|
Mr. Mackin
|
|
9,907
|
|
|
0/9,907
|
|
24.49
|
|
07/24/2028
|
Mr. Miclot
|
|
104,819
|
|
|
89,774/15,045
|
|
15.01-29.06
|
|
05/13/2019-07/24/2028
|
Mr. O’Boyle
|
|
103,508
|
|
|
88,463/15,045
|
|
18.04-27.86
|
|
06/03/2020-07/24/2028
|
Ms. Paul
|
|
104,819
|
|
|
89,774/15,045
|
|
15.01-29.06
|
|
05/13/2019-07/24/2028
|
Mr. Stevens
|
|
84,201
|
|
|
69,156/15,045
|
|
15.01-29.06
|
|
05/13/2019-07/24/2028
|
Mr. Wallman
|
|
39,747
|
|
|
24,702/15,045
|
|
21.24-27.86
|
|
05/12/2021-07/24/2028
|
Ms. Weatherman
|
|
31,947
|
|
|
16,902/15,045
|
|
21.24-27.86
|
|
07/19/2026-07/24/2028
|
(6)
|
Represents travel stipends.
|
(7)
|
We do not provide perquisites and other personal benefits to our non-executive directors. Any perquisites or personal benefits actually provided to any non-executive director were less than $10,000 in the aggregate.
|
Class of
|
|
|
|
Ordinary shares
beneficially owned
|
||
securities
|
|
Name and address of beneficial owner
|
|
Number
|
|
Percent
|
Ordinary shares
|
|
FMR LLC
(1)
|
|
18,762,241
|
|
14.9%
|
Ordinary shares
|
|
The Vanguard Group, Inc.
(2)
|
|
11,171,818
|
|
8.9%
|
Ordinary shares
|
|
T. Rowe Price Associates, Inc.
(3)
|
|
9,966,234
|
|
7.9%
|
Ordinary shares
|
|
BlackRock, Inc.
(4)
|
|
9,101,329
|
|
7.2%
|
*
|
Represents beneficial ownership of less than 1% of our outstanding ordinary shares.
|
(1)
|
Based solely on information contained in a Schedule 13G/A of FMR LLC, an investment advisor, filed with the SEC on February 13, 2019, with sole investment discretion with respect to all such shares and sole voting authority with respect to 2,266,333 shares. Abigail P. Johnson is a Director, the Chairman and Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR. Neither FMR nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (Fidelity Funds) advised by Fidelity Management & Research Company (FMR Co), a wholly owned subsidiary of FMR, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Co carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. The business address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.
|
(2)
|
Based solely on information contained in a Schedule 13G/A of The Vanguard Group, Inc., an investment adviser, filed with the SEC on February 11, 2019, reflecting beneficial ownership as of December 31, 2018, with sole investment discretion with respect to 10,912,341 shares, sole voting authority with respect to 254,103 shares, shared investment discretion with respect to 259,477 shares and shared voting authority with respect to 15,875 shares. The address of The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355.
|
(3)
|
Based solely on information contained in a Schedule 13G/A of T. Rowe Price Associates, Inc., an investment advisor, filed with the SEC on February 14, 2019, reflecting beneficial ownership as of December 31, 2018, with sole investment discretion with respect to all such shares, and sole voting authority with respect to 1,669,110 shares. The address of T. Rowe Price Associates, Inc. is 100 East Pratt Street, Baltimore, Maryland 21202.
|
(4)
|
Based solely on information contained in a Schedule 13G/A of BlackRock, Inc., a parent holding company, filed with the SEC on February 7, 2019, reflecting beneficial ownership as of December 31, 2018, with sole investment discretion with respect to all such shares, and sole voting authority with respect to 8,840,798 shares. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
|
Class of
|
|
|
|
Ordinary shares
beneficially owned(1)
|
|||
securities
|
|
Name and address of beneficial owner
|
|
Number
|
|
Percent
|
|
Ordinary shares
|
|
David D. Stevens
|
|
145,459
|
|
|
*
|
Ordinary shares
|
|
Gary D. Blackford
|
|
138,957
|
|
|
*
|
Ordinary shares
|
|
J. Patrick Mackin
|
|
4,000
|
|
|
*
|
Ordinary shares
|
|
John L. Miclot
|
|
127,185
|
|
|
*
|
Ordinary shares
|
|
Kevin C. O’Boyle
|
|
70,743
|
|
|
*
|
Ordinary shares
|
|
Amy S. Paul
|
|
130,902
|
|
|
*
|
Ordinary shares
|
|
Richard F. Wallman
|
|
146,500
|
|
|
*
|
Ordinary shares
|
|
Elizabeth H. Weatherman
|
|
28,041
|
|
|
*
|
Ordinary shares
|
|
Robert J. Palmisano
|
|
2,473,205
|
|
|
1.9%
|
Ordinary shares
|
|
Lance A. Berry
|
|
339,687
|
|
|
*
|
Ordinary shares
|
|
Peter S. Cooke
|
|
38,923
|
|
|
*
|
Ordinary shares
|
|
Andrew C. Morton
|
|
16,265
|
|
|
*
|
Ordinary shares
|
|
Kevin D. Cordell
|
|
174,984
|
|
|
*
|
Ordinary shares
|
|
All directors and executive officers as a group (24 persons)
|
|
4,659,997
|
|
|
3.6%
|
*
|
Represents beneficial ownership of less than 1% of our outstanding ordinary shares.
|
(1)
|
Includes for the persons listed below the following ordinary shares subject to options held by that person that are currently exercisable or become exercisable within 60 days of
February 22, 2019
and ordinary shares issuable upon the vesting of RSU awards within 60 days of
February 22, 2019
:
|
Name
|
|
Options
|
|
RSU awards
|
||
David D. Stevens
|
|
69,156
|
|
|
—
|
|
Gary D. Blackford
|
|
74,309
|
|
|
—
|
|
J. Patrick Mackin
|
|
—
|
|
|
—
|
|
John L. Miclot
|
|
89,774
|
|
|
—
|
|
Kevin C. O’Boyle
|
|
55,740
|
|
|
—
|
|
Amy S. Paul
|
|
89,774
|
|
|
751
|
|
Richard F. Wallman
|
|
24,702
|
|
|
975
|
|
Elizabeth H. Weatherman
|
|
16,902
|
|
|
868
|
|
Robert J. Palmisano
|
|
2,046,205
|
|
|
—
|
|
Lance A. Berry
|
|
256,958
|
|
|
—
|
|
Peter S. Cooke
|
|
38,923
|
|
|
—
|
|
Plan category
|
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants and rights
(a)
|
|
Weighted‑average
exercise price of
outstanding options,
warrants and rights
(b)
|
|
Number of securities
remaining available for
future issuance under
equity compensation
plans (excluding securities
reflected in column (a))
(c)
|
Equity compensation plans approved by security holders
|
|
9,136,421
(1)(2)(3)
|
|
$22.62
(4)
|
|
2,619,972
(5)
|
Equity compensation plans not approved by security holders
|
|
—
|
|
—
|
|
—
|
Total
|
|
9,136,421
(1)(2)(3)
|
|
$22.62
(4)
|
|
2,619,972
(5)
|
(1)
|
Amount includes ordinary shares issuable upon the exercise of stock options granted under the Wright Medical Group N.V. 2017 Equity and Incentive Plan, Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan and Tornier N.V. Amended and Restated Stock Option Plan, ordinary shares issuable upon the vesting of restricted stock unit awards granted under the Wright Medical Group N.V. 2017 Equity and Incentive Plan and Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan and performance share unit awards granted under the Wright Medical Group N.V. 2017 Equity and Incentive Plan, assuming maximum performance share unit award payouts. The actual number of shares that will be issued under the performance share unit awards is determined by the level of achievement of performance goals.
|
(2)
|
Excludes employee stock purchase rights under the Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan, which was approved by our shareholders on June 28, 2016. Under such plan, each eligible employee may purchase ordinary shares at semi-annual intervals on June 30th and December 31st each calendar year at a purchase price per share equal to 85% of the closing sales price per share of our ordinary shares on the first or last trading day of the offering period, whichever is lower.
|
(3)
|
Excludes an aggregate of 2,547,656 ordinary shares issuable upon the exercise of stock options granted under legacy Wright equity compensation plans and non-plan inducement option agreements assumed by us in connection with the Wright/Tornier merger. The weighted-average per share exercise price of these assumed stock options as of
December 30, 2018
was $21.71. No further grants or awards will be made under these assumed legacy Wright equity compensation plans and non-plan inducement option agreements.
|
(4)
|
Not included in the weighted-average exercise price calculation are 1,322,214 restricted stock unit awards and 465,974 performance share unit awards, assuming maximum performance share unit award payouts.
|
(5)
|
Amount includes 2,297,162 ordinary shares remaining available for future issuance under the Wright Medical Group N.V. 2017 Equity and Incentive Plan and 322,810 ordinary shares remaining available for future issuance under the Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan, assuming maximum performance share unit award payouts. No shares remain available for grant under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan, Tornier N.V. Amended and Restated Stock Option Plan or any of the legacy Wright equity compensation plans and arrangements since such plans and arrangements have been terminated with respect to future grants.
|
•
|
the amounts involved exceeded or will exceed $120,000; and
|
•
|
a related person (including any director, director nominee, executive officer, holder of more than 5% of our ordinary shares or any member of their immediate family) had or will have a direct or indirect material interest.
|
Fees
|
|
2018
|
|
2017
|
||||
Audit fees
|
|
$
|
2,398,575
|
|
|
$
|
2,050,153
|
|
Audit-related fees
|
|
50,125
|
|
|
72,550
|
|
||
Tax fees
|
|
65,000
|
|
|
—
|
|
||
All other fees
|
|
15,625
|
|
|
3,000
|
|
||
Total
|
|
$
|
2,529,325
|
|
|
$
|
2,125,703
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
2.1
|
|
Agreement and Plan of Merger dated as of August 24, 2018 among Wright Medical Group, Inc., Braves WMS, Inc., Wright Medical Group N.V., Cartiva, Inc. and Fortis Advisors LLC, as representative*
|
|
|
2.2
|
|
Business Sale Agreement dated October 21, 2016 between Tornier SAS, Corin France SAS, Corin Orthopaedics Holdings Limited and Certain Related Entities Party Thereto*
|
|
|
2.3
|
|
Agreement and Plan of Merger dated as of October 27, 2014 among Tornier N.V., Trooper Holdings Inc., Trooper Merger Sub Inc. and Wright Medical Group, Inc.*
|
|
|
2.4
|
|
Agreement and Plan of Merger dated as of January 30, 2014 among Wright Medical Group, Inc., WMMS, LLC, OrthoPro, L.L.C. and OP CHA, Inc., as Company Holders’ Agent*
|
|
|
2.5
|
|
Agreement and Plan of Merger dated as of January 30, 2014 among Wright Medical Group, Inc., Winter Solstice LLC, Solana Surgical, LLC, and Alan Taylor, as Members’ Representative*
|
|
|
2.6
|
|
Asset Purchase Agreement dated as of June 18, 2013 among MicroPort Medical B.V., MicroPort Scientific Corporation and Wright Medical Group, Inc.*
|
|
|
2.7
|
|
Agreement and Plan of Merger dated as of November 19, 2012 among BioMimetic Therapeutics, Inc., Wright Medical Group, Inc., Achilles Merger Subsidiary, Inc. and Achilles Acquisition Subsidiary, LLC*
|
|
|
3.1
|
|
Articles of Association of Wright Medical Group N.V.
|
|
|
4.1
|
|
Indenture dated as of June 28, 2018 among Wright Medical Group, Inc., Wright Medical Group N.V. and The Bank of New York Mellon Trust Company, N.A. (including the Form of the 1.625% Cash Convertible Senior Note due 2023)
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
4.2
|
|
Indenture dated as of May 20, 2016 between Wright Medical Group N.V. and The Bank of New York Mellon Trust Company, N.A. (including the Form of the 2.25% Cash Convertible Senior Note due 2021)
|
|
|
4.3
|
|
Contingent Value Rights Agreement dated as of March 1, 2013 between Wright Medical Group, Inc. and American Stock Transfer & Trust Company, LLC
|
|
|
4.4
|
|
Assignment and Assumption Agreement dated as of October 1, 2015 between Wright Medical Group, Inc., Wright Medical Group N.V. and American Stock Transfer & Trust Company, LLC, as Trustee
|
|
|
10.1
|
|
Wright Medical Group N.V. 2017 Equity and Incentive Plan**
|
|
|
10.2
|
|
Form of Option Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Stock Options Granted to Executive Officers**
|
|
|
10.3
|
|
Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Executive Officers**
|
|
|
10.4
|
|
Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to New Executive Officers**
|
|
|
10.5
|
|
Form of Performance Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Performance Awards Granted to Executive Officers**
|
|
|
10.6
|
|
Form of Option Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Stock Options Granted to Robert J. Palmisano**
|
|
|
10.7
|
|
Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Robert J. Palmisano**
|
|
|
10.8
|
|
Form of Performance Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Performance Awards Granted to Robert J. Palmisano**
|
|
|
10.9
|
|
Form of Option Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Stock Options Granted to Non-Executive Directors**
|
|
|
10.10
|
|
Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Non-Executive Directors**
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
10.11
|
|
Form of Restricted Stock Unit Award Agreement under the Wright Medical Group N.V. 2017 Equity and Incentive Plan Representing Restricted Stock Units Granted to Non-Executive Directors in Lieu of Cash Retainers**
|
|
|
10.12
|
|
Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan**
|
|
|
10.13
|
|
Form of Option Certificate under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Stock Options Granted to Executive Officers**
|
|
|
10.14
|
|
Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to Executive Officers**
|
|
|
10.15
|
|
Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to New Executive Officers**
|
|
|
10.16
|
|
Form of Option Certificate under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Stock Options Granted to Robert J. Palmisano**
|
|
|
10.17
|
|
Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to Robert J. Palmisano**
|
|
|
10.18
|
|
Form of Option Certificate under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Stock Options Granted to Non-Executive Directors**
|
|
|
10.19
|
|
Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to Non-Executive Directors**
|
|
|
10.20
|
|
Form of Stock Grant Certificate (in the Form of a Restricted Stock Unit) under the Wright Medical Group N.V. Amended and Restated 2010 Incentive Plan Representing Restricted Stock Units Granted to Non-Executive Directors in Lieu of Cash Retainers**
|
|
|
10.21
|
|
Tornier N.V. Amended and Restated 2010 Incentive Plan**
|
|
|
10.22
|
|
Form of Option Certificate under the Tornier N.V. 2010 Incentive Plan**
|
|
|
10.23
|
|
Tornier N.V. Amended and Restated Stock Option Plan**
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
10.24
|
|
Form of Option Agreement under the Tornier N.V. Stock Option Plan for Directors and Officers**
|
|
|
10.25
|
|
Wright Medical Group, Inc. Second Amended and Restated 2009 Equity Incentive Plan**
|
|
|
10.26
|
|
Form of Executive Stock Option Agreement under the Wright Medical Group, Inc. Second Amended and Restated 2009 Equity Incentive Plan**
|
|
|
10.27
|
|
Form of Non-Employee Director Stock Option Agreement under the Wright Medical Group, Inc. Second Amended and Restated 2009 Equity Incentive Plan**
|
|
|
10.28
|
|
Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**
|
|
|
10.29
|
|
First Amendment to the Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**
|
|
|
10.30
|
|
Form of Executive Stock Option Agreement under the Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**
|
|
|
10.31
|
|
Form of Non-Employee Director Stock Option Agreement under the Wright Medical Group, Inc. Fifth Amended and Restated 1999 Equity Incentive Plan**
|
|
|
10.32
|
|
Wright Medical Group N.V. Amended and Restated Employee Stock Purchase Plan**
|
|
|
10.33
|
|
Wright Medical Group N.V. Performance Incentive Plan**
|
|
|
10.34
|
|
Form of Indemnification Agreement**
|
|
|
10.35
|
|
Service Agreement effective as of October 1, 2015 between Wright Medical Group N.V. and Robert J. Palmisano**
|
|
|
10.36
|
|
Employment Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Robert J. Palmisano**
|
|
|
10.37
|
|
Guaranty by Wright Medical Group N.V. effective as of October 1, 2015 with respect to Wright Medical Group, Inc. Obligations under Employment Agreement with Robert J. Palmisano**
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
10.38
|
|
Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Robert J. Palmisano**
|
|
|
10.39
|
|
Inducement Stock Option Grant Agreement dated as of September 17, 2011 between Wright Medical Group, Inc. and Robert J. Palmisano**
|
|
|
10.40
|
|
Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Lance A. Berry**
|
|
|
10.41
|
|
Separation Pay Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Lance A. Berry**
|
|
|
10.42
|
|
Offer Letter dated December 7, 2018 between Wright Medical Group, Inc. and Lance A. Berry**
|
|
|
10.43
|
|
Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Kevin D. Cordell**
|
|
|
10.44
|
|
Separation Pay Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Kevin D. Cordell**
|
|
|
10.45
|
|
Offer Letter dated December 7, 2018 between Wright Medical Group, Inc. and Kevin D. Cordell**
|
|
|
10.46
|
|
Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement dated as of October 1, 2015 between Wright Medical Group, Inc. and Peter S. Cooke**
|
|
|
10.47
|
|
Separation Pay Agreement effective as of October 1, 2015 between Wright Medical Group, Inc. and Peter S. Cooke**
|
|
|
10.48
|
|
Letter Agreement dated as of June 8, 2016 regarding Assignment Offer and Assignment and Relocation Benefit Policy between Wright Medical Technology, Inc. and Peter S. Cooke**
|
|
|
10.49
|
|
Letter Agreement dated as of June 8, 2016 between Wright Medical Technology, Inc. and Peter S. Cooke**
|
|
|
10.50
|
|
Letter Agreement dated as of May 9, 2018 between Wright Medical Technology, Inc. and Peter S. Cooke**
|
|
|
10.51
|
|
Offer Letter dated December 7, 2018 between Wright Medical Group, Inc. and Peter S. Cooke**
|
|
|
10.52
|
|
Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement dated as of March 26, 2018 between Wright Medical Group, Inc. and Andrew C. Morton**
|
|
|
10.53
|
|
Separation Pay Agreement effective as of March 26, 2018 between Wright Medical Group, Inc. and Andrew C. Morton**
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
10.54
|
|
Offer Letter dated January 25, 2018 between Wright Medical Group, Inc. and Andrew C. Morton**
|
|
|
10.55
|
|
Form of Guaranty by Wright Medical Group N.V. with respect to Wright Medical Group, Inc. Obligations under Separation Pay Agreements with Executive Officers**
|
|
|
10.56
|
|
Amended and Restated Credit, Security and Guaranty Agreement dated as of May 7, 2018 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), MidCap Funding IV Trust (as Lender and Agent) and the Financial Institutions or Other Entities Parties Thereto
|
|
|
10.57
|
|
Limited Consent and Amendment No. 1 to Amended and Restated Credit, Security and Guaranty Agreement dated as of August 24, 2018 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), MidCap Funding IV Trust (as Lender and Agent) and the Financial Institutions or Other Entities Parties Thereto
|
|
|
10.58
|
|
Omnibus Limited Consent and Amendment No. 2 to Amended and Restated Credit, Security and Guaranty Agreement and Amendment No. 5 to Pledge Agreement dated as of December 10, 2018 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), MidCap Funding IV Trust (as Lender and Agent) and the Financial Institutions or Other Entities Parties Thereto
|
|
|
10.59
|
|
Amendment No. 3 to Amended and Restated Credit, Security and Guaranty Agreement dated as of February 25, 2019 among Wright Medical Group N.V. (as Guarantor), Wright Medical Group, Inc. (as Borrower), Certain Other Direct and Indirect Subsidiaries Listed on the Signature Pages Thereto (each as Borrower), Midcap Funding IV Trust (as Lender and Agent) and the Financial Institutions or other Entities Parties Thereto
|
|
|
10.60
|
|
Form of Exchange/Subscription Agreement dated as of June 20, 2018 among Wright Medical Group, Inc., Wright Medical Group N.V. and Each Investor Party Thereto
|
|
|
10.61
|
|
Form of Subscription Agreement dated as of June 20, 2018 among Wright Medical Group, Inc., Wright Medical Group N.V. and Each Investor Party Thereto
|
|
|
10.62
|
|
Bond Hedge Confirmation dated as of June 20, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
10.63
|
|
Bond Hedge Confirmation dated as of June 20, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and Bank of America, N.A.
|
|
|
10.64
|
|
Warrant Confirmation dated as of June 20, 2018 between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association
|
|
|
10.65
|
|
Warrant Confirmation dated as of June 20, 2018 between Wright Medical Group N.V. and Bank of America, N.A.
|
|
|
10.66
|
|
Call Spread Unwind Agreement dated as of June 21, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and JPMorgan Chase Bank, National Association
|
|
|
10.67
|
|
Call Spread Unwind Agreement dated as of June 21, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc., Deutsche Bank AG, London Branch and Deutsche Bank Securities, Inc.
|
|
|
10.68
|
|
Call Spread Unwind Agreement dated as of June 21, 2018 among Wright Medical Group N.V., Wright Medical Group, Inc. and Wells Fargo Bank, National Association
|
|
|
10.69
|
|
Call Option Transaction Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association
|
|
|
10.70
|
|
Call Option Transaction Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and Bank of America, N.A.
|
|
|
10.71
|
|
Warrants Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and JPMorgan Chase Bank, National Association
|
|
|
10.72
|
|
Warrants Confirmation dated as of May 12, 2016 between Wright Medical Group N.V. and Bank of America, N.A.
|
|
|
10.73
|
|
Agreement of Lease dated as of December 31, 2013 between RBM Cherry Road Partners and Wright Medical Technology, Inc.
|
|
|
10.74
|
|
First Amendment to Agreement of Lease dated as of January 1, 2014 between RBM Cherry Road Partners and Wright Medical Technology, Inc.
|
|
|
10.75
|
|
Second Amendment to Agreement of Lease dated as of January 1, 2014 between RBM Cherry Road Partners and Wright Medical Technology, Inc.
|
|
|
10.76
|
|
Third Amendment to Agreement of Lease dated as of May 1, 2015 between RBM Cherry Road Partners and Wright Medical Technology, Inc.
|
|
|
10.77
|
|
Lease Agreement dated as of May 14, 2012 between Liberty Property Limited Partnership, as Landlord, and Tornier, Inc., as Tenant
|
|
|
10.78
|
|
Commercial Lease dated December 23, 2008 between Seamus Geaney and Tornier Orthopedics Ireland Limited
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
10.79
|
|
Commercial Supply Agreement dated March 29, 2016 between BioMimetic Therapeutics, LLC and FUJIFILM Diosynth Biotechnologies U.S.A., Inc. (1)
|
|
|
10.80
|
|
Settlement Agreement dated as of November 1, 2016 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto
|
|
|
10.81
|
|
Second Settlement Agreement dated as of October 3, 2017 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto
|
|
|
10.82
|
|
Third Settlement Agreement dated as of October 3, 2017 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto
|
|
|
10.83
|
|
First Amendment to the Third Settlement Agreement dated as of December 29, 2017 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto
|
|
|
10.84
|
|
Second Amendment to the Third Settlement Agreement dated as of February 23, 2018 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto
|
|
|
10.85
|
|
Third Amendment to the Third Settlement Agreement dated as of March 29, 2018 between Wright Medical Technology, Inc. and the Counsel Listed on the Signature Pages Thereto
|
|
|
21.1
|
|
Subsidiaries of Wright Medical Group N.V.
|
|
|
23.1
|
|
Consent of KPMG LLP, an Independent Registered Public Accounting Firm
|
|
|
31.1
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
31.2
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
32.1
|
|
Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
101
|
|
The following materials from Wright Medical Group N.V.’s Annual Report on Form 10-K for the fiscal year ended December 30, 2018, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets as of December 30, 2018 and December 31, 2017, (ii) the Consolidated Statements of Operations for each of the fiscal years in the three-year period ended December 30, 2018, (iii) the Consolidated Statements of Comprehensive Loss for each of the fiscal years in the three-year period ended December 30, 2018, (iv) the Consolidated Statements of Cash Flows for each of the fiscal years in the three-year period ended December 30, 2018, (v) Consolidated Statements of Shareholders’ Equity for each of the fiscal years in the three-year period ended December 30, 2018, and (vi) Notes to Consolidated Financial Statements
|
|
Filed herewith
|
*
|
All exhibits and schedules to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant will furnish the omitted exhibits and schedules to the Securities and Exchange Commission upon request by the Securities and Exchange Commission.
|
**
|
A management contract or compensatory plan or arrangement.
|
(1)
|
Portions of this exhibit have been redacted and are subject to an order granting confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended (File No. 001-35065, CF #33696). The redacted material was filed separately with the Securities and Exchange Commission.
|
Note:
|
Certain instruments defining the rights of holders of long-term debt securities of the Registrant or its subsidiaries are omitted pursuant to Item 601(b)(4)(iii) of SEC Regulation S-K. The Registrant hereby undertakes to furnish to the Securities and Exchange Commission, upon request, copies of any such instruments.
|
WRIGHT MEDICAL GROUP N.V.
|
|
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 Executive Director
(Principal Executive Officer)
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Lance A. Berry
Lance A. Berry
|
|
Executive Vice President, Chief Financial and Operations Officer
(Principal Financial Officer)
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Julie B. Andrews
Julie B. Andrews
|
|
Vice President of Finance, Chief Accounting Officer
(Principal Accounting Officer)
|
|
February 26, 2019
|
|
|
|
|
|
/s/ David D. Stevens
David D. Stevens
|
|
Chairman
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Gary D. Blackford
Gary D. Blackford
|
|
Non-Executive Director
|
|
February 26, 2019
|
|
|
|
|
|
/s/ J. Patrick Mackin
J. Patrick Mackin
|
|
Non-Executive Director
|
|
February 26, 2019
|
|
|
|
|
|
/s/ John L. Miclot
John L. Miclot
|
|
Non-Executive Director
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Kevin C. O'Boyle
Kevin C. O'Boyle
|
|
Non-Executive Director
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Amy S. Paul
Amy S. Paul
|
|
Non-Executive Director
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Richard F. Wallman
Richard F. Wallman
|
|
Non-Executive Director
|
|
February 26, 2019
|
|
|
|
|
|
/s/ Elizabeth H. Weatherman
Elizabeth H. Weatherman
|
|
Non-Executive Director
|
|
February 26, 2019
|
Wright Medical Group N.V.
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 30, 2018
|
$
|
4,328
|
|
|
$
|
189
|
|
|
$
|
(1,472
|
)
|
|
$
|
3,045
|
|
December 31, 2017
|
$
|
4,469
|
|
|
$
|
1,243
|
|
|
$
|
(1,384
|
)
|
|
$
|
4,328
|
|
December 25, 2016
|
$
|
1,189
|
|
|
$
|
3,475
|
|
|
$
|
(195
|
)
|
|
$
|
4,469
|
|
Grant ID
:
|
[
Insert Grant ID
]
|
Participant
:
|
[
Insert Participant Name
]
|
Grant Date
:
|
[
Insert Grant Date
]
|
Total Number of Shares Subject to Option
:
|
[
Insert Number of Shares
], subject to adjustment as provided in the Plan.
|
Exercise Price Per Share:
|
U.S.
$[
Insert Exercise Price
], subject to adjustment as provided in the Plan.
|
Expiration Date:
|
No later than the ten (10) year anniversary of Grant Date, as provided in Section 3.2 of the Award Agreement.
|
Vesting Schedule
:
|
Except as otherwise provided in Section 3 of the Award Agreement, the Participant’s right to exercise the Option shall vest, in full, on the one-year anniversary of the Grant Date (the “
Scheduled Vesting Date
”), provided the Participant provides services to the Company or any Affiliate through the Scheduled Vesting Date.
|
8.
|
Miscellaneous
.
|
DATE:
|
December 7, 2018
|
POSITION:
|
Executive Vice President, Chief Operations & Chief Financial Officer
|
REPORTING TO:
|
Bob Palmisano
|
SALARY:
|
$515,000 annual salary, less withholdings for Federal, FICA, and State taxes
|
PAY FREQUENCY:
|
Bi-Weekly
|
INCENTIVE PLAN:
|
You are eligible to participate in the Employee Incentive Plan with a target payout of 75% of your eligible earnings. The actual payout for this period will be dependent upon business performance as well as your individual performance.
|
EQUITY:
|
Subject to Board of Directors approval and the terms of the Company’s equity incentive plan, you will be eligible for an equity grant under our long-term incentive grant guidelines. The target grant for your role is 275% of base salary, but your actual equity grant may be above or below your target depending on, among other factors, final recommendation and approval by the Board and shares available under our equity incentive plan.
|
AGREEMENTS:
|
Except for the terms of your new position, as described above, this letter agreement does not constitute a contract of employment for a specific term, you remain an employee at will, and this letter agreement does not change or modify any other existing agreements between you and the Company or any subsidiary, which agreements will remain in full force and effect in accordance with their existing terms.
|
EFFECTIVE DATE:
|
January 1, 2019
|
DATE:
|
December 7, 2018
|
POSITION:
|
Executive Vice President, Chief Global Commercial Officer
|
REPORTING TO:
|
Bob Palmisano
|
SALARY:
|
$515,000 annual salary, less withholdings for Federal, FICA, and State taxes
|
PAY FREQUENCY:
|
Bi-Weekly
|
INCENTIVE PLAN:
|
You are eligible to participate in the Employee Incentive Plan with a target payout of 70% of your eligible earnings. The actual payout for this period will be dependent upon business performance as well as your individual performance.
|
EQUITY:
|
Subject to Board of Directors approval and the terms of the Company’s equity incentive plan, you will be eligible for an equity grant under our long-term incentive grant guidelines. The target grant for your role is 225% of base salary, but your actual equity grant may be above or below your target depending on, among other factors, final recommendation and approval by the Board and shares available under our equity incentive plan.
|
AGREEMENTS:
|
Except for the terms of your new position, as described above, this letter agreement does not constitute a contract of employment for a specific term, you remain an employee at will, and this letter agreement does not change or modify any other existing agreements between you and the Company or any subsidiary, which agreements will remain in full force and effect in accordance with their existing terms.
|
EFFECTIVE DATE:
|
January 1, 2019
|
DATE:
|
December 7, 2018
|
POSITION:
|
President, Emerging Markets, Australia and Japan
|
REPORTING TO:
|
Kevin Cordell
|
SALARY:
|
$407,000.00 (USD) annual salary, less withholdings for Australian taxes and other legally mandated withholdings. This amount will not be eligible for merit increases for the first two years in the new role.
|
PAY FREQUENCY:
|
Bi-Weekly
|
INCENTIVE PLAN:
|
You remain eligible to participate in the Employee Incentive Plan with a target payout of 55% of your eligible earnings. The actual payout for this period will be dependent upon business performance as well as your individual performance. This target rate will be re-evaluated after the first year in the new role.
|
EQUITY:
|
Subject to Board of Directors approval and the terms of the Company’s equity incentive plan, you will be eligible for an equity grant under our long-term incentive grant guidelines. The target grant for your role is 100% of base salary, but your actual equity grant may be above or below your target depending on, among other factors, final recommendation and approval by the Board and shares available under our equity incentive plan.
|
BENEFITS:
|
You will be eligible for Wright Medical’s Australian benefits package, including the Superannuation contribution, health benefits and auto allowance of $20,000 (AUD) per year.
|
OTHER AGREEMENTS:
|
Your acceptance below will evidence your agreement and acknowledgement that, except for your new position, this
letter agreement does not constitute a contract of employment for a specific term, you remain an employee at will, and this letter agreement does not change or modify any other existing agreements between you and the Company or any subsidiary, including, without limitation, the Confidentiality, Non-Competition, Non-Solicitation and Intellectual Property Rights Agreement effective October 1, 2015, Indemnification Agreement effective October 1, 2015, Separation Pay Agreement effective October 1, 2015 (“SPA”), as modified by that certain letter agreement dated as of June 8, 2016 (the “2016 Relocation Agreement”), and that certain letter agreement dated as of May 9, 2018 (the “May 2018 Letter Agreement”), which agreements will remain in full force and effect in accordance with their existing terms;
provided
,
however
, that effective as of January 1, 2019, the Relocation Letter attached as Attachment 1 to the 2016 Relocation Agreement and the Company’s provision of benefits to you thereunder, shall terminate.
|
EFFECTIVE DATE:
|
January 1, 2019
|
Signature:
|
|
/s/ Andrew C. Morton
|
Name:
|
|
Andrew C. Morton
|
Date:
|
|
3/26/2018
|
Signature:
|
|
/s/ Lance A. Berry
|
Name:
|
|
Lance A. Berry
|
Title
|
|
Senior Vice President and Chief Financial Officer
|
Date:
|
|
3/26/2018
|
1.
|
Definitions
.
For the purposes of this Agreement, the following capitalized terms have the meanings set forth below:
|
WRIGHT MEDICAL GROUP, INC.
|
|
|
|
|
|
|
|
By:
|
/s/ Lance A. Berry
|
|
/s/ Andrew C. Morton
|
Name:
|
Lance A. Berry
|
|
Andrew C. Morton
|
Title:
|
Senior Vice President and Chief
|
|
|
|
Financial Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EXECUTIVE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
|
,
|
20
|
|
|
|
|
|
|
(Effective Date)
|
|
|
|
|
Signature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
a.
|
This Release is written in terms which the Executive understands;
|
b.
|
The Executive is advised of the Executive’s rights to consult an attorney to review and for advice regarding whether to sign this Release;
|
c.
|
The Executive does not waive any rights or claims that may arise after the date the Release is executed;
|
d.
|
The Executive is receiving consideration beyond anything of value to which the Executive already is entitled; and
|
e.
|
The Executive has been given a reasonable period of time to consider this Release (at least 21 days).
|
(a)
|
post-marked within the seven (7) day period;
|
(b)
|
properly addressed to:
|
(c)
|
sent by certified mail, return receipt requested.
|
|
|
|
|
|
|
EXECUTIVE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dated:
|
|
,
|
20
|
|
|
|
|
|
|
(Effective Date)
|
|
|
|
|
Signature
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name:
|
|
|
|
|
|
|
|
|
|
|
|
DEPARTMENT:
|
Human Resources
|
LOCATION:
|
1023 Cherry Road, Memphis, TN 38117
|
SALARY:
|
$400,000.00, annual salary, less withholdings for Federal, FICA, and State taxes
|
PAY FREQUENCY:
|
Bi-Weekly
|
START DATE:
|
To Be Determined
|
INCENTIVE PLAN:
|
You are
eligible to participate in the Employee Incentive Plan with a target payout of
50% of your eligible earnings. The actual payout for this period will be dependent upon business performance as well as your individual performance. If you are eligible to receive a payout in your first year, it will be based on a full year payout if your start date is on or before April 1, 2018. Please note that the actual terms of the Employee Incentive (Bonus) Plan govern eligibility and payout.
|
EQUITY:
|
Subject to Board of Directors approval and the terms of the Company’s equity incentive plan, you will be eligible for an equity grant under our long-term incentive grant guidelines. The target grant for your role is 125% of base salary, but your actual equity grant may be above or below your target depending on, among other factors, final recommendation and approval by the Board and shares available under our equity incentive plan. You will become eligible to participate in the equity program effective in 2019.
|
SIGN-ON BONUS:
|
$200,000.00, less applicable taxes, payable within 30 days of hire date. An additional $30,000.00, less applicable taxes, also payable within 30 days of your hire date will be provided to use for temporary housing and travel. In the event you voluntarily leave Wright Medical within 1 year of your hire date, you will be required to repay 100% of the sign-on bonus. If you voluntarily leave Wright Medical within year one and two, you will be required to repay 50% of the sign-on bonus.
|
EQUITY GRANT:
|
You will receive a new hire equity award, contingent upon Board of Directors approval, in the amount of $1,000,000.00. Your sign on equity will be a 50/50 split of RSUs and Options.
|
RELOCATION:
|
You are eligible to receive up to $150,000.00 for relocation.
A relocation assistance summary will be provided to you. In the event you terminate your employment with Wright Medical within 1 year from your hire date, you will be required to reimburse Wright Medical for all expenses that relate to your relocation assistance. Once you sign and return the offer, a representative from Cartus will contact you to go over all details regarding your relocation. Any exceptions to these amounts by have prior approval of Lance Berry, CFO.
|
PAID TIME OFF:
|
You will accrue a paid time off benefit of 15 days per year. This is prorated during your first year of employment based on your hire date.
|
(i)
|
Completing and passing a substance test within 72 hours of accepting our offer
|
(ii)
|
Successful verification of your employment and educational history combined with a criminal background check
|
(iii)
|
Signing Wright Medical’s Non-Compete on or before your first day of employment.
|
(iv)
|
Proving your eligibility to work in the United States by way of completion of the I-9 Form.
|
(v)
|
Completing general ethics and compliance training, including a certification related to our code of conduct within 30 days of your hire date.
|
[SIGNATURES APPEAR ON FOLLOWING PAGES]
|
AGENT:
|
MIDCAP FUNDING IV TRUST,
|
LENDERS:
|
MIDCAP FUNDING IV TRUST,
|
LENDERS:
|
APOLLO INVESTMENT CORPORATION,
as a Lender
By: Apollo Investment Management, L.P., as Advisor
By: ACC Management, LLC, as its General Partner
By:
/s/ Tanner Powell
Name: Tanner Powell
Title: Authorized Signatory
|
BORROWERS:
|
BioMimetic Therapeutics Canada, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President
|
|
BioMimetic Therapeutics LLC,
as a Borrower and a Pledgor
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Treasurer
|
|
BioMimetic Therapeutics USA, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President
|
|
INBONE Technologies, inc.,
as a Borrower and a Pledgor
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
OrthoHelix Surgical Designs, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
OrthoPro, L.L.C.,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: President and Chief Financial Officer
|
|
Solana Surgical, LLC,
as a Borrower
By: Wright Medical Group, Inc., its sole member
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Senior Vice President and Chief Financial Officer
|
|
Tornier US Holdings, Inc.,
as a Borrower and a Pledgor
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
Tornier, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
Trooper Holdings Inc.,
as a Borrower and a Pledgor
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
White Box Orthopedics, LLC,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: President and Chief Financial Officer
|
|
Wright Medical Capital, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
Wright Medical Technology, Inc.,
as a Borrower and a Pledgor
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
Wright Medical Group Intellectual Property, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
Wright Medical Group, Inc.,
as a Borrower and a Pledgor
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Senior Vice President and Chief Financial Officer
|
|
Cartiva, Inc.,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: President
|
GUARANTOR, PLEDGOR AND PARENT:
|
Wright Medical Group N.V.
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Senior Vice President and Chief Financial Officer
|
[SIGNATURES APPEAR ON FOLLOWING PAGES]
|
AGENT:
|
MIDCAP FUNDING IV TRUST,
|
LENDERS:
|
MIDCAP FUNDING IV TRUST,
|
LENDERS:
|
APOLLO INVESTMENT CORPORATION,
as a Lender
By: Apollo Investment Management, L.P., as Advisor
By: ACC Management, LLC, as its General Partner
By:
/s/ Tanner Powell
Name:
Tanner Powell
Title:
Authorized Signatory
|
BORROWERS:
|
BioMimetic Therapeutics Canada, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President
|
|
BioMimetic Therapeutics LLC,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Treasurer
|
|
BioMimetic Therapeutics USA, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President
|
|
OrthoHelix Surgical Designs, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
OrthoPro, L.L.C.,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: President and Chief Financial Officer
|
|
Solana Surgical, LLC,
as a Borrower
By: Wright Medical Group, Inc., its sole member
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Executive Vice President, Chief Financial and Operations Officer
|
|
Tornier US Holdings, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
Tornier, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
Trooper Holdings Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
|
|
Wright Medical Capital, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
Wright Medical Technology, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
Wright Medical Group Intellectual Property, Inc.,
as a Borrower
By:
/s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
|
|
Wright Medical Group, Inc.,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Executive Vice President, Chief Financial and Operations Officer
|
|
Cartiva, Inc.,
as a Borrower
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: President
|
GUARANTOR AND PARENT:
|
Wright Medical Group N.V.
By:
/s/ Lance A. Berry
Name: Lance A. Berry
Title: Executive Vice President, Chief Financial and Operations Officer
|
Lender
|
Revolving Loan Commitment Amount
|
Revolving Loan Commitment Percentage
|
Term Loan Tranche 1 Commitment Amount
|
Term Loan Tranche 1 Commitment Percentage
|
Term Loan Tranche 2 Commitment Amount
|
Term Loan Tranche 2 Commitment Percentage
|
MidCap Funding IV Trust
|
$116,666,666.67
|
66.6667%
|
$13,333,333.33
|
66.6667%
|
$0
|
0%
|
Apollo Investment Corporation
|
$58,333,333.33
|
33.3333%
|
$6,666,666.67
|
33.3333%
|
$11,666,666.67
|
33.3333%
|
MidCap Financial Trust
|
$0
|
0%
|
$0
|
0%
|
$23,333,333.33
|
66.6667%
|
|
|
|
|
|
|
|
TOTALS
|
$175,000,000.00
|
100%
|
$20,000,000.00
|
100%
|
$35,000,000.00
|
100%
|
|
Entity Name
|
Country of Incorporation
|
|
1
|
.
|
2Hip Holdings SAS
|
France
|
2
|
.
|
BioMimetic Therapeutics Canada, Inc.
|
Delaware, USA
|
3
|
.
|
BioMimetic Therapeutics Limited
|
United Kingdom
|
4
|
.
|
BioMimetic Therapeutics LLC
|
Delaware, USA
|
5
|
.
|
BioMimetic Therapeutics Pty Ltd
|
Australia
|
6
|
.
|
BioMimetic Therapeutics USA, Inc.
|
Delaware, USA
|
7
|
.
|
Biotech Benelux SPRL
|
Belgium
|
8
|
.
|
Biotech CH
|
Switzerland
|
9
|
.
|
Cartiva, Inc.
|
Delaware, USA
|
10
|
.
|
Felding Finance B.V.
|
The Netherlands
|
11
|
.
|
IMASCAP SAS
|
France
|
12
|
.
|
Imascap LLC
|
Delaware, USA
|
13
|
.
|
KHC-WDM, LLC
|
Delaware, USA
|
14
|
.
|
OrthoHelix Surgical Designs, Inc.
|
Delaware, USA
|
15
|
.
|
OrthoPro, L.L.C.
|
Utah, USA
|
16
|
.
|
SCI Calyx
|
France
|
17
|
.
|
Solana Surgical, LLC
|
California, USA
|
18
|
.
|
TMG France SAS
|
France
|
19
|
.
|
Tornier AG
|
Switzerland
|
20
|
.
|
Tornier Belgium N.V.
|
Belgium
|
21
|
.
|
Tornier do Brasil Produtos Médicos Ltda
|
Brazil
|
22
|
.
|
Tornier Espana S.A.
|
Spain
|
23
|
.
|
Tornier Japan K.K.
|
Japan
|
24
|
.
|
Tornier Orthopedics Ireland, Ltd.
|
Ireland
|
25
|
.
|
Tornier Orthopedics, Inc.
|
Canada
|
26
|
.
|
Tornier Pty Ltd.
|
Australia
|
27
|
.
|
Tornier SAS
|
France
|
28
|
.
|
Tornier Scandinavia A/S
|
Denmark
|
29
|
.
|
Tornier Srl
|
Italy
|
30
|
.
|
Tornier UK Limited
|
England
|
31
|
.
|
Tornier US Holdings, Inc.
|
Delaware, USA
|
32
|
.
|
Tornier GmbH
|
Germany
|
33
|
.
|
Tornier, Inc.
|
Delaware, USA
|
34
|
.
|
TriMed Biotech SAS
|
France
|
35
|
.
|
Trooper Holdings, Inc.
|
Delaware, USA
|
36
|
.
|
WG Healthcare UK Limited
|
United Kingdom
|
37
|
.
|
WM Netherlands C.V.
|
The Netherlands
|
38
|
.
|
WMG Holding, LLC
|
Delaware, USA
|
39
|
.
|
Wright International, Inc.
|
Delaware, USA
|
40
|
.
|
Wright Medical Australia Pty Limited
|
Australia
|
41
|
.
|
Wright Medical Belgium NV
|
Belgium
|
42
|
.
|
Wright Medical Brasil Ltda
|
Brazil
|
43
|
.
|
Wright Medical Capital, Inc.
|
Delaware, USA
|
44
|
.
|
Wright Medical Costa Rica, SA
|
Costa Rica
|
45
|
.
|
Wright Medical Deutschland GmbH
|
Germany
|
46
|
.
|
Wright Medical Device (Shanghai) Co., Ltd.
|
China
|
47
|
.
|
Wright Medical EMEA, B.V.
|
The Netherlands
|
48
|
.
|
Wright Medical Europe C.V.
|
The Netherlands
|
49
|
.
|
Wright Medical Europe Manufacturing SA
|
France
|
50
|
.
|
Wright Medical Europe SAS
|
France
|
51
|
.
|
Wright Medical France SAS
|
France
|
52
|
.
|
Wright Medical Group, Inc.
|
Delaware, USA
|
53
|
.
|
Wright Medical Group Intellectual Property, Inc.
|
Delaware, USA
|
54
|
.
|
Wright Medical Instruments Limited
|
United Kingdom
|
55
|
.
|
Wright Medical Italy SRL
|
Italy
|
56
|
.
|
Wright Medical Japan K.K.
|
Japan
|
57
|
.
|
Wright Medical Netherlands, B.V.
|
The Netherlands
|
58
|
.
|
Wright Medical Technology Canada Ltd.
|
Canada
|
59
|
.
|
Wright Medical Technology, Inc.
|
Delaware, USA
|
60
|
.
|
Wright Medical UK Limited
|
United Kingdom
|
61
|
.
|
Wright PacRim, Inc.
|
Delaware, USA
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended
December 30, 2018
of Wright Medical Group N.V.;
|
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
|
|
|
(Principal Executive Officer)
|
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended
December 30, 2018
of Wright Medical Group N.V.;
|
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
|
|
|
Executive Vice President, Chief Financial and Operations Officer
|
|
|
(Principal Financial Officer)
|
|
|
/s/ Robert J. Palmisano
|
|
|
Robert J. Palmisano
|
|
|
President and Chief Executive Officer
|
|
|
(Principal Executive Officer)
|
|
|
|
|
|
/s/ Lance A. Berry
|
|
|
Lance A. Berry
|
|
|
Executive Vice President, Chief Financial and Operations Officer
|
|
|
(Principal Financial Officer)
|
|