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☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to
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The
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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.)
|
Prins Bernhardplein 200
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|
None
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|||
1097 JB
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Amsterdam,
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The
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Netherlands
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(Zip Code)
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(Address of principal executive offices)
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Title of each class
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Trading Symbol(s)
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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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WMGI
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Nasdaq Global Select Market
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Page
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•
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the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement that we entered into with Stryker Corporation (Stryker) and its wholly-owned acquisition subsidiary on November 4, 2019, pursuant to which we expect to become a wholly-owned subsidiary of Stryker;
|
•
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the failure to satisfy required closing conditions under the agreement with Stryker, including, but not limited to, the tender of a minimum number of our outstanding ordinary shares in the related tender offer, the adoption of certain resolutions relating to the transaction at an extraordinary general meeting of Wright’s shareholders (which condition has been met), and the receipt of required regulatory approvals, or the failure to complete the acquisition in a timely manner;
|
•
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risks related to disruption of management’s attention from our ongoing business operations due to the pendency of the transaction with Stryker;
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•
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the effect of the announcement of the transaction with Stryker on our operating results and business generally, including, but not limited to, our ability to retain and hire key personnel and maintain our relationships with customers, strategic partners and suppliers;
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•
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the impact of the pending transaction with Stryker on our strategic plans and operations and our ability to respond effectively to competitive pressures, industry developments and future opportunities;
|
•
|
the outcome of any legal proceedings that have been or in the future may be instituted against us and others relating to the proposed transaction with Stryker;
|
•
|
the effect of the global novel strain of coronavirus (COVID-19);
|
•
|
inability to achieve or sustain profitability;
|
•
|
failure to realize the anticipated benefits from previous acquisitions and dispositions, including our October 2018 acquisition of Cartiva, Inc. (Cartiva);
|
•
|
failure to obtain anticipated commercial sales of our AUGMENT® Bone Graft and AUGMENT® Injectable products;
|
•
|
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;
|
•
|
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 effect of the broad release of certain insurance coverage for present and future claims;
|
•
|
adverse outcomes in existing product liability litigation;
|
•
|
copycat claims against modular hip systems resulting from a competitor’s recall of its modular hip product;
|
•
|
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;
|
•
|
new product liability claims;
|
•
|
pending and future other litigation, which could have an adverse effect on our business, financial condition, or operating results;
|
•
|
challenges to our intellectual property rights or inability to defend our products against the intellectual property rights of others;
|
•
|
the possibility of private securities litigation or shareholder derivative suits;
|
•
|
inadequate insurance coverage;
|
•
|
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;
|
•
|
inability to raise additional financing when needed and on favorable terms;
|
•
|
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;
|
•
|
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;
|
•
|
our private label manufacturers failing to provide us with sufficient supply of their products, or failing to meet appropriate quality requirements;
|
•
|
our plans to bring the manufacturing of certain of our products in-house and possible disruptions we may experience in connection with such transition;
|
•
|
our plans to increase our gross margins by taking certain actions designed to do so;
|
•
|
inventory reductions or fluctuations in buying patterns by wholesalers or distributors;
|
•
|
not successfully competing against our existing or potential competitors and the effect of significant recent consolidations amongst our competitors;
|
•
|
not successfully developing and marketing new products and technologies and implementing our business strategy;
|
•
|
insufficient demand for and market acceptance of our new and existing products;
|
•
|
the reliance of our business plan on certain market assumptions;
|
•
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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;
|
•
|
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;
|
•
|
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;
|
•
|
changes in healthcare laws, which could generate downward pressure on our product pricing;
|
•
|
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;
|
•
|
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;
|
•
|
the negative impact of the commercial and credit environment on us, our customers, and our suppliers;
|
•
|
inability to retain key sales representatives, independent distributors, and other personnel or to attract new talent;
|
•
|
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;
|
•
|
our clinical trials and their results and our reliance on third parties to conduct them;
|
•
|
potentially burdensome tax measures; and
|
•
|
fluctuations in foreign currency exchange rates.
|
Wright Medical Group N.V.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(unaudited)
|
|||||||
|
March 29, 2020
|
|
December 29, 2019
|
||||
Assets:
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
102,837
|
|
|
$
|
166,856
|
|
Accounts receivable, net
|
125,393
|
|
|
147,400
|
|
||
Inventories
|
215,797
|
|
|
198,374
|
|
||
Prepaid expenses
|
15,570
|
|
|
16,031
|
|
||
Other current assets 1
|
188,926
|
|
|
214,997
|
|
||
Total current assets
|
648,523
|
|
|
743,658
|
|
||
|
|
|
|
||||
Property, plant and equipment, net
|
257,609
|
|
|
251,922
|
|
||
Goodwill
|
1,255,223
|
|
|
1,260,967
|
|
||
Intangible assets, net
|
248,841
|
|
|
257,382
|
|
||
Deferred income taxes
|
962
|
|
|
1,012
|
|
||
Other assets
|
69,424
|
|
|
70,699
|
|
||
Total assets
|
$
|
2,480,582
|
|
|
$
|
2,585,640
|
|
|
|
|
|
||||
Liabilities and Shareholders’ Equity:
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
43,921
|
|
|
$
|
32,121
|
|
Accrued expenses and other current liabilities 1
|
343,669
|
|
|
387,025
|
|
||
Current portion of long-term obligations 1
|
379,514
|
|
|
430,862
|
|
||
Total current liabilities
|
767,104
|
|
|
850,008
|
|
||
|
|
|
|
||||
Long-term debt and finance lease obligations
|
742,594
|
|
|
737,167
|
|
||
Deferred income taxes
|
10,002
|
|
|
10,384
|
|
||
Other liabilities
|
81,524
|
|
|
96,288
|
|
||
Total liabilities
|
1,601,224
|
|
|
1,693,847
|
|
||
|
|
|
|||||
Shareholders’ equity:
|
|
|
|
||||
Ordinary shares, €0.03 par value, authorized: 320,000,000 shares; issued and outstanding: 128,817,336 shares at March 29, 2020 and 128,614,026 shares at December 29, 2019
|
4,697
|
|
|
4,691
|
|
||
Additional paid-in capital
|
2,620,516
|
|
|
2,608,939
|
|
||
Accumulated other comprehensive loss
|
(38,611
|
)
|
|
(29,499
|
)
|
||
Accumulated deficit
|
(1,707,244
|
)
|
|
(1,692,338
|
)
|
||
Total shareholders’ equity
|
879,358
|
|
|
891,793
|
|
||
Total liabilities and shareholders’ equity
|
$
|
2,480,582
|
|
|
$
|
2,585,640
|
|
1
|
At March 29, 2020 and December 29, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end; and, therefore, the holders of
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(unaudited)
|
||||||||
|
|
Three months ended
|
||||||
|
|
March 29, 2020
|
|
March 31, 2019
|
||||
Net sales
|
|
$
|
218,540
|
|
|
$
|
230,127
|
|
Cost of sales 1
|
|
38,915
|
|
|
46,317
|
|
||
Gross profit
|
|
179,625
|
|
|
183,810
|
|
||
Operating expenses:
|
|
|
|
|
||||
Selling, general and administrative 1
|
|
154,589
|
|
|
153,306
|
|
||
Research and development 1
|
|
19,600
|
|
|
16,972
|
|
||
Amortization of intangible assets
|
|
8,124
|
|
|
7,587
|
|
||
Total operating expenses
|
|
182,313
|
|
|
177,865
|
|
||
Operating (loss) income
|
|
(2,688
|
)
|
|
5,945
|
|
||
Interest expense, net
|
|
20,470
|
|
|
19,695
|
|
||
Other (income) expense, net
|
|
(13,707
|
)
|
|
12,895
|
|
||
Loss from continuing operations before income taxes
|
|
(9,451
|
)
|
|
(26,645
|
)
|
||
Provision for income taxes
|
|
2,138
|
|
|
3,611
|
|
||
Net loss from continuing operations
|
|
(11,589
|
)
|
|
(30,256
|
)
|
||
Loss from discontinued operations, net of tax
|
|
(3,317
|
)
|
|
(6,345
|
)
|
||
Net loss
|
|
$
|
(14,906
|
)
|
|
$
|
(36,601
|
)
|
|
|
|
|
|
||||
|
$
|
(0.09
|
)
|
|
$
|
(0.24
|
)
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.05
|
)
|
|
|
$
|
(0.12
|
)
|
|
$
|
(0.29
|
)
|
|
|
|
|
|
|
||||
Weighted-average number of ordinary shares outstanding - basic and diluted:
|
|
128,743
|
|
|
125,812
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
Cost of sales
|
$
|
224
|
|
|
$
|
120
|
|
Selling, general and administrative
|
6,475
|
|
|
6,987
|
|
||
Research and development
|
631
|
|
|
514
|
|
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
Net loss
|
$
|
(14,906
|
)
|
|
$
|
(36,601
|
)
|
|
|
|
|
||||
Other comprehensive loss:
|
|
|
|
||||
Changes in foreign currency translation
|
(9,112
|
)
|
|
(11,303
|
)
|
||
Other comprehensive loss
|
(9,112
|
)
|
|
(11,303
|
)
|
||
|
|
|
|
||||
Comprehensive loss
|
$
|
(24,018
|
)
|
|
$
|
(47,904
|
)
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
|
|||||||
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
Operating activities:
|
|
|
|
||||
Net loss
|
$
|
(14,906
|
)
|
|
$
|
(36,601
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation
|
16,038
|
|
|
15,501
|
|
||
Share-based compensation expense
|
7,330
|
|
|
7,621
|
|
||
Amortization of intangible assets
|
8,124
|
|
|
7,587
|
|
||
Amortization of deferred financing costs and debt discount
|
13,690
|
|
|
13,547
|
|
||
Deferred income taxes
|
(254
|
)
|
|
(619
|
)
|
||
Provision for excess and obsolete inventory
|
1,573
|
|
|
3,506
|
|
||
Amortization of inventory step-up adjustment
|
—
|
|
|
352
|
|
||
Non-cash adjustment to derivative fair values
|
(15,697
|
)
|
|
(996
|
)
|
||
Net loss on exchange of cash convertible notes
|
—
|
|
|
14,274
|
|
||
—
|
|
|
(420
|
)
|
|||
Other
|
(488
|
)
|
|
(485
|
)
|
||
Changes in assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
21,001
|
|
|
2,426
|
|
||
Inventories
|
(21,568
|
)
|
|
(11,868
|
)
|
||
Prepaid expenses and other current assets
|
4,133
|
|
|
(286
|
)
|
||
Accounts payable
|
12,116
|
|
|
(4,597
|
)
|
||
Accrued expenses and other liabilities
|
(9,770
|
)
|
|
(3,392
|
)
|
||
(1,991
|
)
|
|
(12,971
|
)
|
|||
Net cash provided by (used in) operating activities
|
19,331
|
|
|
(7,421
|
)
|
||
Investing activities:
|
|
|
|
||||
Capital expenditures
|
(24,501
|
)
|
|
(25,448
|
)
|
||
Purchase of intangible assets
|
(2,126
|
)
|
|
(1,850
|
)
|
||
Acquisition of business
|
—
|
|
|
722
|
|
||
Other investing
|
—
|
|
|
(500
|
)
|
||
Net cash used in investing activities
|
(26,627
|
)
|
|
(27,076
|
)
|
||
Financing activities:
|
|
|
|
||||
Issuance of ordinary shares
|
4,234
|
|
|
11,001
|
|
||
Issuance of stock warrants
|
—
|
|
|
21,210
|
|
||
Payment of notes premium
|
(146
|
)
|
|
—
|
|
||
Payment of notes hedge options
|
—
|
|
|
(30,144
|
)
|
||
Repurchase of stock warrants
|
—
|
|
|
(11,026
|
)
|
||
Payment of equity issuance costs
|
—
|
|
|
(350
|
)
|
||
Proceeds from notes hedge options
|
351
|
|
|
16,849
|
|
||
Proceeds from other debt
|
—
|
|
|
2,974
|
|
||
Payments of debt
|
(58,383
|
)
|
|
(1,270
|
)
|
||
Payment of financing costs
|
—
|
|
|
(2,589
|
)
|
||
Payments of finance lease obligations
|
(1,874
|
)
|
|
(1,793
|
)
|
||
Net cash (used in) provided by financing activities
|
$
|
(55,818
|
)
|
|
$
|
4,862
|
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Cash Flows (Continued)
(In thousands)
|
|||||||
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
Effect of exchange rates on cash and cash equivalents
|
$
|
(905
|
)
|
|
$
|
(200
|
)
|
Net decrease in cash and cash equivalents
|
(64,019
|
)
|
|
(29,835
|
)
|
||
Cash and cash equivalents, beginning of period
|
166,856
|
|
|
191,351
|
|
||
Cash and cash equivalents, end of period
|
$
|
102,837
|
|
|
$
|
161,516
|
|
Wright Medical Group N.V.
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(In thousands, except share data)
(unaudited)
|
||||||||||||||||||||||
|
Three months ended March 29, 2020
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive loss
|
|
Accumulated deficit
|
|
Total shareholders’ equity
|
|||||||||||||
|
Number of shares
|
|
Amount
|
|||||||||||||||||||
Balance at December 29, 2019
|
128,614,026
|
|
|
$
|
4,691
|
|
|
$
|
2,608,939
|
|
|
$
|
(29,499
|
)
|
|
$
|
(1,692,338
|
)
|
|
$
|
891,793
|
|
2020 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14,906
|
)
|
|
(14,906
|
)
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(9,112
|
)
|
|
—
|
|
|
(9,112
|
)
|
|||||
Issuances of ordinary shares
|
188,715
|
|
|
6
|
|
|
4,228
|
|
|
—
|
|
|
—
|
|
|
4,234
|
|
|||||
Vesting of restricted stock units
|
14,595
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
7,349
|
|
|
—
|
|
|
—
|
|
|
7,349
|
|
|||||
Balance at March 29, 2020
|
128,817,336
|
|
|
$
|
4,697
|
|
|
$
|
2,620,516
|
|
|
$
|
(38,611
|
)
|
|
$
|
(1,707,244
|
)
|
|
$
|
879,358
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
|
Three months ended March 31, 2019
|
|||||||||||||||||||||
|
Ordinary shares
|
|
Additional paid-in capital
|
|
Accumulated other comprehensive loss
|
|
Accumulated deficit
|
|
Total shareholders’ equity
|
|||||||||||||
|
Number of shares
|
|
Amount
|
|||||||||||||||||||
Balance at December 30, 2018
|
125,555,751
|
|
|
$
|
4,589
|
|
|
$
|
2,514,295
|
|
|
$
|
(8,083
|
)
|
|
$
|
(1,578,342
|
)
|
|
$
|
932,459
|
|
2019 Activity:
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(36,601
|
)
|
|
(36,601
|
)
|
|||||
Cumulative impact of lease accounting adoption
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
229
|
|
|
229
|
|
|||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,303
|
)
|
|
—
|
|
|
(11,303
|
)
|
|||||
Issuances of ordinary shares
|
546,560
|
|
|
19
|
|
|
10,982
|
|
|
—
|
|
|
—
|
|
|
11,001
|
|
|||||
Vesting of restricted stock units
|
3,219
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Share-based compensation
|
—
|
|
|
—
|
|
|
7,636
|
|
|
—
|
|
|
—
|
|
|
7,636
|
|
|||||
Issuance of stock warrants, net of repurchases and equity issuance costs
|
—
|
|
|
—
|
|
|
9,834
|
|
|
—
|
|
|
—
|
|
|
9,834
|
|
|||||
Balance at March 31, 2019
|
126,105,530
|
|
|
$
|
4,608
|
|
|
$
|
2,542,747
|
|
|
$
|
(19,386
|
)
|
|
$
|
(1,614,714
|
)
|
|
$
|
913,255
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 29, 2020
|
|
December 29, 2019
|
||||
Raw materials
|
$
|
13,248
|
|
|
$
|
12,681
|
|
Work-in-process
|
31,057
|
|
|
27,528
|
|
||
Finished goods
|
171,492
|
|
|
158,165
|
|
||
|
$
|
215,797
|
|
|
$
|
198,374
|
|
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.
|
|
March 29, 2020
|
|
December 29, 2019
|
||||||||
|
Location on condensed consolidated balance sheet
|
|
Amount
|
|
Location on condensed consolidated balance sheet
|
|
Amount
|
||||
2023 Notes Hedges
|
Other assets
|
|
$
|
40,413
|
|
|
Other assets
|
|
$
|
39,240
|
|
2023 Notes Conversion Derivative
|
Other liabilities
|
|
$
|
17,480
|
|
|
Other liabilities
|
|
$
|
31,555
|
|
2021 Notes Hedges
|
Other current assets
|
|
$
|
157,194
|
|
|
Other current assets
|
|
$
|
183,437
|
|
2021 Notes Conversion Derivative
|
Accrued expenses and other current liabilities
|
|
$
|
152,688
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
179,478
|
|
2020 Notes Hedges
|
Other current assets
|
|
$
|
—
|
|
|
Other current assets
|
|
$
|
1,969
|
|
2020 Notes Conversion Derivative
|
Accrued expenses and other current liabilities
|
|
$
|
—
|
|
|
Accrued expenses and other current liabilities
|
|
$
|
1,666
|
|
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
2023 Notes Hedges
|
$
|
1,173
|
|
|
$
|
55,190
|
|
2023 Notes Conversion Derivative
|
14,075
|
|
|
(55,723
|
)
|
||
2021 Notes Hedges
|
(26,243
|
)
|
|
61,921
|
|
||
2021 Notes Conversion Derivative
|
26,790
|
|
|
(60,760
|
)
|
||
2020 Notes Hedges
|
(1,618
|
)
|
|
8,250
|
|
||
2020 Notes Conversion Derivative
|
1,520
|
|
|
(7,882
|
)
|
||
Net gain on changes in fair value
|
$
|
15,697
|
|
|
$
|
996
|
|
|
2021 Notes Conversion Derivative
|
2021 Notes
Hedge
|
2023 Notes Conversion Derivative
|
2023 Notes
Hedge
|
Black Stock Volatility (1)
|
29.0%
|
29.0%
|
15.8%
|
15.8%
|
Credit Spread for Wright (2)
|
0.21%
|
N/A
|
0.29%
|
N/A
|
Credit Spread for Deutsche Bank AG (3)
|
N/A
|
N/A
|
N/A
|
0.12%
|
Credit Spread for Wells Fargo Securities, LLC (3)
|
N/A
|
N/A
|
N/A
|
N/A
|
Credit Spread for JPMorgan Chase Bank (3)
|
N/A
|
0.80%
|
N/A
|
0.86%
|
Credit Spread for Bank of America (3)
|
N/A
|
0.10%
|
N/A
|
0.11%
|
(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)
|
||||||||
March 29, 2020
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
102,837
|
|
$
|
102,837
|
|
$
|
—
|
|
$
|
—
|
|
2021 Notes Hedges
|
157,194
|
|
—
|
|
—
|
|
157,194
|
|
||||
2023 Notes Hedges
|
40,413
|
|
—
|
|
—
|
|
40,413
|
|
||||
Total
|
$
|
300,444
|
|
$
|
102,837
|
|
$
|
—
|
|
$
|
197,607
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
||||||||
2021 Notes Conversion Derivative
|
$
|
152,688
|
|
$
|
—
|
|
$
|
—
|
|
$
|
152,688
|
|
2023 Notes Conversion Derivative
|
17,480
|
|
—
|
|
—
|
|
17,480
|
|
||||
Contingent consideration
|
28,162
|
|
—
|
|
—
|
|
28,162
|
|
||||
Total
|
$
|
198,330
|
|
$
|
—
|
|
$
|
—
|
|
$
|
198,330
|
|
|
Total
|
Quoted prices
in active markets (Level 1) |
Prices with
other observable inputs (Level 2) |
Prices with
unobservable inputs (Level 3) |
||||||||
December 29, 2019
|
|
|
|
|
||||||||
Assets
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
166,856
|
|
$
|
166,856
|
|
$
|
—
|
|
$
|
—
|
|
2020 Notes Hedges
|
1,969
|
|
—
|
|
—
|
|
1,969
|
|
||||
2021 Notes Hedges
|
183,437
|
|
—
|
|
—
|
|
183,437
|
|
||||
2023 Notes Hedges
|
39,240
|
|
—
|
|
—
|
|
39,240
|
|
||||
Total
|
$
|
391,502
|
|
$
|
166,856
|
|
$
|
—
|
|
$
|
224,646
|
|
|
|
|
|
|
||||||||
Liabilities
|
|
|
|
|
|
|
|
|
||||
2020 Notes Conversion Derivative
|
$
|
1,666
|
|
$
|
—
|
|
$
|
—
|
|
$
|
1,666
|
|
2021 Notes Conversion Derivative
|
179,478
|
|
—
|
|
—
|
|
179,478
|
|
||||
2023 Notes Conversion Derivative
|
31,555
|
|
—
|
|
—
|
|
31,555
|
|
||||
Contingent consideration
|
28,077
|
|
—
|
|
—
|
|
28,077
|
|
||||
Total
|
$
|
240,776
|
|
$
|
—
|
|
$
|
—
|
|
$
|
240,776
|
|
|
Balance at December 29, 2019
|
Additions
|
Transfers into Level 3
|
Gain/(loss) on fair value adjustments included in earnings
|
Settlements
|
Currency
|
Balance at March 29, 2020
|
|||||||||
2020 Notes Hedges
|
$
|
1,969
|
|
—
|
|
—
|
|
(1,618
|
)
|
(351
|
)
|
—
|
|
$
|
—
|
|
2020 Notes Conversion Derivative
|
$
|
(1,666
|
)
|
—
|
|
—
|
|
1,520
|
|
146
|
|
—
|
|
$
|
—
|
|
2021 Notes Hedges
|
$
|
183,437
|
|
—
|
|
—
|
|
(26,243
|
)
|
—
|
|
—
|
|
$
|
157,194
|
|
2021 Notes Conversion Derivative
|
$
|
(179,478
|
)
|
—
|
|
—
|
|
26,790
|
|
—
|
|
—
|
|
$
|
(152,688
|
)
|
2023 Notes Hedges
|
$
|
39,240
|
|
—
|
|
—
|
|
1,173
|
|
—
|
|
—
|
|
$
|
40,413
|
|
2023 Notes Conversion Derivative
|
$
|
(31,555
|
)
|
—
|
|
—
|
|
14,075
|
|
—
|
|
—
|
|
$
|
(17,480
|
)
|
Contingent consideration
|
$
|
(28,077
|
)
|
—
|
|
—
|
|
(454
|
)
|
—
|
|
369
|
|
$
|
(28,162
|
)
|
|
March 29, 2020
|
|
December 29, 2019
|
||||
Property, plant and equipment, at cost
|
$
|
671,750
|
|
|
$
|
648,318
|
|
Less: Accumulated depreciation
|
(414,141
|
)
|
|
(396,396
|
)
|
||
|
$
|
257,609
|
|
|
$
|
251,922
|
|
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
|
Total
|
||||||||
Balance at December 29, 2019
|
$
|
569,970
|
|
|
$
|
625,926
|
|
|
$
|
65,071
|
|
|
$
|
1,260,967
|
|
Foreign currency translation
|
—
|
|
|
(880
|
)
|
|
(4,864
|
)
|
|
(5,744
|
)
|
||||
Balance at March 29, 2020
|
$
|
569,970
|
|
|
$
|
625,046
|
|
|
$
|
60,207
|
|
|
$
|
1,255,223
|
|
|
|
|
|
|
|
|
|
||||||||
Balance at December 30, 2018
|
$
|
569,970
|
|
|
$
|
627,850
|
|
|
$
|
71,134
|
|
|
$
|
1,268,954
|
|
Foreign currency translation
|
—
|
|
|
(1,549
|
)
|
|
(4,880
|
)
|
|
(6,429
|
)
|
||||
Balance at March 31, 2019
|
$
|
569,970
|
|
|
$
|
626,301
|
|
|
$
|
66,254
|
|
|
$
|
1,262,525
|
|
|
March 29, 2020
|
|
December 29, 2019
|
||||||||||||
|
Cost
|
|
Accumulated
amortization
|
|
Cost
|
|
Accumulated
amortization
|
||||||||
Indefinite life intangibles:
|
|
|
|
|
|
|
|
||||||||
In-process research and development (IPRD) technology
|
$
|
6,835
|
|
|
$
|
—
|
|
|
$
|
6,238
|
|
|
$
|
—
|
|
Total indefinite life intangibles
|
6,835
|
|
|
|
|
6,238
|
|
|
|
||||||
|
|
|
|
|
|
|
|
||||||||
Finite life intangibles:
|
|
|
|
|
|
|
|
||||||||
Completed technology
|
170,922
|
|
|
76,018
|
|
|
172,111
|
|
|
72,140
|
|
||||
Licenses
|
9,247
|
|
|
3,115
|
|
|
9,247
|
|
|
2,835
|
|
||||
Customer relationships
|
179,871
|
|
|
43,754
|
|
|
181,094
|
|
|
41,389
|
|
||||
Trademarks
|
13,840
|
|
|
11,814
|
|
|
14,002
|
|
|
11,834
|
|
||||
Non-compete agreements
|
6,077
|
|
|
4,446
|
|
|
5,713
|
|
|
4,090
|
|
||||
Other
|
1,940
|
|
|
744
|
|
|
2,022
|
|
|
757
|
|
||||
Total finite life intangibles
|
381,897
|
|
|
$
|
139,891
|
|
|
384,189
|
|
|
$
|
133,045
|
|
||
|
|
|
|
|
|
|
|
||||||||
Total intangibles
|
388,732
|
|
|
|
|
390,427
|
|
|
|
||||||
Less: Accumulated amortization
|
(139,891
|
)
|
|
|
|
(133,045
|
)
|
|
|
||||||
Intangible assets, net
|
$
|
248,841
|
|
|
|
|
$
|
257,382
|
|
|
|
|
Maturity by Fiscal Year
|
|
March 29, 2020
|
|
December 29, 2019
|
||||
Finance lease obligations
|
2020-2026
|
|
$
|
23,995
|
|
|
$
|
25,086
|
|
Convertible Notes
|
|
|
|
|
|
||||
1.625% Notes
|
2023
|
|
702,535
|
|
|
695,748
|
|
||
2.25% Notes 1
|
2021
|
|
350,834
|
|
|
344,635
|
|
||
2.0% Notes
|
2020
|
|
—
|
|
|
55,997
|
|
||
Term loan facility
|
2021
|
|
19,379
|
|
|
19,296
|
|
||
Asset-based line of credit 2
|
2021
|
|
19,725
|
|
|
20,652
|
|
||
Other debt
|
2020-2024
|
|
5,640
|
|
|
6,615
|
|
||
|
|
|
1,122,108
|
|
|
1,168,029
|
|
||
Less: Current portion 1,2
|
|
|
(379,514
|
)
|
|
(430,862
|
)
|
||
Long-term debt and finance lease obligations
|
|
|
$
|
742,594
|
|
|
$
|
737,167
|
|
1
|
As of March 29, 2020 and December 29, 2019, the sale price condition (as defined below) for the 2021 Notes was satisfied and, therefore, the 2021 Notes are convertible at any time during the succeeding calendar quarterly period. As a result, the carrying value of the 2021 Notes was classified as a current liability as of March 29, 2020 and December 29, 2019.
|
2
|
We have reflected this debt as a current liability as of March 29, 2020 and December 29, 2019, 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 below.
|
|
March 29, 2020
|
|
December 29, 2019
|
||||
Principal amount of 2023 Notes
|
$
|
814,556
|
|
|
$
|
814,556
|
|
Unamortized debt discount
|
(101,751
|
)
|
|
(107,916
|
)
|
||
Unamortized debt issuance costs
|
(10,270
|
)
|
|
(10,892
|
)
|
||
Net carrying amount of 2023 Notes
|
$
|
702,535
|
|
|
$
|
695,748
|
|
|
|
|
|
||||
Principal amount of 2021 Notes
|
$
|
395,000
|
|
|
$
|
395,000
|
|
Unamortized debt discount
|
(41,570
|
)
|
|
(47,405
|
)
|
||
Unamortized debt issuance costs
|
(2,596
|
)
|
|
(2,960
|
)
|
||
Net carrying amount of 2021 Notes
|
$
|
350,834
|
|
|
$
|
344,635
|
|
|
|
|
|
||||
Principal amount of 2020 Notes
|
$
|
—
|
|
|
$
|
56,455
|
|
Unamortized debt discount
|
—
|
|
|
(408
|
)
|
||
Unamortized debt issuance costs
|
—
|
|
|
(50
|
)
|
||
Net carrying amount of 2020 Notes
|
$
|
—
|
|
|
$
|
55,997
|
|
|
2021 Notes
|
|
2023 Notes
|
||||
Conversion rate
|
46.8165
|
|
|
29.9679
|
|
||
Conversion price
|
$
|
21.36
|
|
|
$
|
33.37
|
|
Early Conversion date
|
May 15, 2021
|
|
|
December 15, 2022
|
|
||
Maturity date
|
November 15, 2021
|
|
|
June 15, 2023
|
|
|
2020 Notes
|
|
2021 Notes
|
|
2023 Notes
|
Exercisable period
|
200 trading day period beginning on May 15, 2020
|
|
100 trading day period beginning on February 15, 2022
|
|
120 trading day period beginning on September 15, 2023
|
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
2023 Notes
|
$
|
6,166
|
|
|
$
|
5,524
|
|
2021 Notes
|
5,835
|
|
|
5,296
|
|
||
2020 Notes
|
408
|
|
|
1,445
|
|
|
Three months ended March 29, 2020
|
||
|
Currency translation adjustment
|
||
Balance at December 29, 2019
|
$
|
(29,499
|
)
|
Other comprehensive loss
|
(9,112
|
)
|
|
Balance at March 29, 2020
|
$
|
(38,611
|
)
|
|
Three months ended March 31, 2019
|
||
|
Currency translation adjustment
|
||
Balance at December 30, 2018
|
$
|
(8,083
|
)
|
Other comprehensive loss
|
(11,303
|
)
|
|
Balance at March 31, 2019
|
$
|
(19,386
|
)
|
|
|
|
Three months ended
|
||||
|
March 29, 2020
|
|
March 31, 2019
|
||
Weighted-average number of ordinary shares outstanding-basic and diluted
|
128,743
|
|
|
125,812
|
|
|
Three months ended March 29, 2020
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate 1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
86,537
|
|
$
|
87,256
|
|
$
|
44,747
|
|
$
|
—
|
|
$
|
218,540
|
|
Depreciation expense
|
3,021
|
|
3,292
|
|
3,607
|
|
6,118
|
|
16,038
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
8,124
|
|
8,124
|
|
|||||
Segment operating income (loss)
|
$
|
20,176
|
|
$
|
33,868
|
|
$
|
(4,999
|
)
|
$
|
(45,613
|
)
|
$
|
3,432
|
|
Other:
|
|
|
|
|
|
||||||||||
Transaction & transition costs
|
|
|
|
|
6,120
|
|
|||||||||
Operating loss
|
|
|
|
|
(2,688
|
)
|
|||||||||
Interest expense, net
|
|
|
|
|
20,470
|
|
|||||||||
Other income, net
|
|
|
|
|
(13,707
|
)
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(9,451
|
)
|
|
Three months ended March 31, 2019
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate 1
|
Total
|
||||||||||
Net sales from external customers
|
$
|
94,816
|
|
$
|
82,951
|
|
$
|
52,360
|
|
$
|
—
|
|
$
|
230,127
|
|
Depreciation expense
|
2,688
|
|
3,151
|
|
3,763
|
|
5,899
|
|
15,501
|
|
|||||
Amortization expense
|
—
|
|
—
|
|
—
|
|
7,587
|
|
7,587
|
|
|||||
Segment operating income (loss)
|
$
|
28,941
|
|
$
|
31,448
|
|
$
|
(1,489
|
)
|
$
|
(52,179
|
)
|
$
|
6,721
|
|
Other:
|
|
|
|
|
|
||||||||||
Inventory step-up amortization
|
|
|
|
|
352
|
|
|||||||||
Transition costs
|
|
|
|
|
424
|
|
|||||||||
Operating income
|
|
|
|
|
5,945
|
|
|||||||||
Interest expense, net
|
|
|
|
|
19,695
|
|
|||||||||
Other expense, net
|
|
|
|
|
12,895
|
|
|||||||||
Loss before income taxes
|
|
|
|
|
$
|
(26,645
|
)
|
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.
|
|
|
|
Three months ended
|
||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||
United States
|
|
|
|
||||
Lower extremities
|
$
|
65,365
|
|
|
$
|
71,308
|
|
Upper extremities
|
86,240
|
|
|
81,727
|
|
||
Biologics
|
20,422
|
|
|
22,640
|
|
||
Sports med & other
|
1,766
|
|
|
2,092
|
|
||
Total United States
|
$
|
173,793
|
|
|
$
|
177,767
|
|
|
|
|
|
||||
EMEAC
|
|
|
|
||||
Lower extremities
|
$
|
10,663
|
|
|
$
|
12,258
|
|
Upper extremities
|
19,659
|
|
|
23,277
|
|
||
Biologics
|
1,699
|
|
|
2,072
|
|
||
Sports med & other
|
2,269
|
|
|
2,626
|
|
||
Total EMEAC
|
$
|
34,290
|
|
|
$
|
40,233
|
|
|
|
|
|
||||
Other
|
|
|
|
||||
Lower extremities
|
$
|
2,825
|
|
|
$
|
3,293
|
|
Upper extremities
|
5,222
|
|
|
6,188
|
|
||
Biologics
|
2,250
|
|
|
2,466
|
|
||
Sports med & other
|
160
|
|
|
180
|
|
||
Total other
|
$
|
10,457
|
|
|
$
|
12,127
|
|
|
|
|
|
||||
Total net sales
|
$
|
218,540
|
|
|
$
|
230,127
|
|
|
March 29, 2020
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
|
Total
|
||||||||||
Total assets
|
$
|
945,197
|
|
$
|
907,322
|
|
$
|
290,136
|
|
$
|
337,927
|
|
$
|
2,480,582
|
|
|
December 29, 2019
|
||||||||||||||
|
U.S. Lower Extremities & Biologics
|
U.S. Upper Extremities
|
International Extremities & Biologics
|
Corporate
|
Total
|
||||||||||
Total assets
|
$
|
952,187
|
|
$
|
914,317
|
|
$
|
292,929
|
|
$
|
426,207
|
|
$
|
2,585,640
|
|
•
|
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
|
|
Three months ended
|
||||||||||
|
March 29, 2020
|
|
March 31, 2019
|
||||||||
|
Amount
|
% of net sales
|
|
Amount
|
% of net sales
|
||||||
Net sales
|
$
|
218,540
|
|
100.0
|
%
|
|
$
|
230,127
|
|
100.0
|
%
|
Cost of sales 1
|
38,915
|
|
17.8
|
%
|
|
46,317
|
|
20.1
|
%
|
||
Gross profit
|
179,625
|
|
82.2
|
%
|
|
183,810
|
|
79.9
|
%
|
||
Operating expenses:
|
|
|
|
|
|
|
|
||||
Selling, general and administrative 1
|
154,589
|
|
70.7
|
%
|
|
153,306
|
|
66.6
|
%
|
||
Research and development 1
|
19,600
|
|
9.0
|
%
|
|
16,972
|
|
7.4
|
%
|
||
Amortization of intangible assets
|
8,124
|
|
3.7
|
%
|
|
7,587
|
|
3.3
|
%
|
||
Total operating expenses
|
182,313
|
|
83.4
|
%
|
|
177,865
|
|
77.3
|
%
|
||
Operating (loss) income
|
(2,688
|
)
|
(1.2
|
)%
|
|
5,945
|
|
2.6
|
%
|
||
Interest expense, net
|
20,470
|
|
9.4
|
%
|
|
19,695
|
|
8.6
|
%
|
||
Other (income) expense, net
|
(13,707
|
)
|
(6.3
|
)%
|
|
12,895
|
|
5.6
|
%
|
||
Loss from continuing operations before income taxes
|
(9,451
|
)
|
(4.3
|
)%
|
|
(26,645
|
)
|
(11.6
|
)%
|
||
Provision for income taxes
|
2,138
|
|
1.0
|
%
|
|
3,611
|
|
1.6
|
%
|
||
Net loss from continuing operations
|
$
|
(11,589
|
)
|
(5.3
|
)%
|
|
$
|
(30,256
|
)
|
(13.1
|
)%
|
Loss from discontinued operations, net of tax
|
(3,317
|
)
|
|
|
(6,345
|
)
|
|
||||
Net loss
|
$
|
(14,906
|
)
|
|
|
$
|
(36,601
|
)
|
|
1
|
These line items include the following amounts of non-cash, share-based compensation expense for the periods indicated:
|
|
Three months ended
|
||||||||||
|
March 29, 2020
|
% of net sales
|
|
March 31, 2019
|
% of net sales
|
||||||
Cost of sales
|
$
|
224
|
|
0.1
|
%
|
|
$
|
120
|
|
0.1
|
%
|
Selling, general and administrative
|
6,475
|
|
3.0
|
%
|
|
6,987
|
|
3.0
|
%
|
||
Research and development
|
631
|
|
0.3
|
%
|
|
514
|
|
0.2
|
%
|
|
Three months ended
|
|||||||||
|
March 29, 2020
|
|
March 31, 2019
|
|
% change
|
|||||
U.S.
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
65,365
|
|
|
$
|
71,308
|
|
|
(8.3
|
)%
|
Upper extremities
|
86,240
|
|
|
81,727
|
|
|
5.5
|
%
|
||
Biologics
|
20,422
|
|
|
22,640
|
|
|
(9.8
|
)%
|
||
Sports med & other
|
1,766
|
|
|
2,092
|
|
|
(15.6
|
)%
|
||
Total U.S.
|
173,793
|
|
|
177,767
|
|
|
(2.2
|
)%
|
||
|
|
|
|
|
|
|||||
International
|
|
|
|
|
|
|||||
Lower extremities
|
$
|
13,488
|
|
|
$
|
15,551
|
|
|
(13.3
|
)%
|
Upper extremities
|
24,881
|
|
|
29,465
|
|
|
(15.6
|
)%
|
||
Biologics
|
3,949
|
|
|
4,538
|
|
|
(13.0
|
)%
|
||
Sports med & other
|
2,429
|
|
|
2,806
|
|
|
(13.4
|
)%
|
||
Total International
|
44,747
|
|
|
52,360
|
|
|
(14.5
|
)%
|
||
|
|
|
|
|
|
|||||
Total net sales
|
$
|
218,540
|
|
|
$
|
230,127
|
|
|
(5.0
|
)%
|
|
Three months ended March 29, 2020
|
||||||||||
|
U.S. Lower Extremities
& Biologics
|
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics
|
||||||
Net sales
|
$
|
86,537
|
|
|
$
|
87,256
|
|
|
$
|
44,747
|
|
Operating income (loss)
|
$
|
20,176
|
|
|
$
|
33,868
|
|
|
$
|
(4,999
|
)
|
Operating income (loss) as a percent of net sales
|
23.3
|
%
|
|
38.8
|
%
|
|
(11.2
|
)%
|
|
Three months ended March 31, 2019
|
||||||||||
|
U.S. Lower Extremities
& Biologics |
|
U.S. Upper Extremities
|
|
International Extremities
& Biologics |
||||||
Net sales
|
$
|
94,816
|
|
|
$
|
82,951
|
|
|
$
|
52,360
|
|
Operating income (loss)
|
$
|
28,941
|
|
|
$
|
31,448
|
|
|
$
|
(1,489
|
)
|
Operating income (loss) as a percent of net sales
|
30.5
|
%
|
|
37.9
|
%
|
|
(2.8
|
)%
|
|
March 29, 2020
|
|
December 29, 2019
|
||||
Cash and cash equivalents
|
$
|
102,837
|
|
|
$
|
166,856
|
|
Working capital 1
|
(118,581
|
)
|
|
(106,350
|
)
|
1
|
As of March 29, 2020 and December 29, 2019, the closing price of our ordinary shares was greater than 130% of the 2021 Notes conversion price for 20 or more of the 30 consecutive trading days preceding the quarter-end, and, therefore, the holders of the 2021 Notes are able to convert the notes during the succeeding quarterly period. Due to the ability of the holders of the 2021 Notes to convert the notes, the carrying value of the 2021 Notes and the fair value of the 2021 Notes Conversion Derivatives were classified as current liabilities and the fair value of the 2021 Notes Hedges was classified as current assets as of March 29, 2020 and December 29, 2019.
|
•
|
The next generation reverse shoulder implant system is a reverse shoulder replacement implant having glenoid or glenoid and humeral implant components. We have an anticipated first clinical use in 2021 and launch in the second half of 2022; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA and CE mark clearance. We have incurred expenses of less than $0.1 million in the three months ended March 29, 2020. 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 the CMC thumb implant no earlier than 2021; however, the risks and uncertainties associated with completion are dependent upon testing validations and FDA premarket approval. We have incurred expenses of approximately $0.1 million in the three months ended March 29, 2020. Project cost to complete is estimated to be less than $3 million.
|
Share price
|
|
Shares (in thousands)
|
$44.95
|
(10% greater than strike price)
|
2,219
|
$49.03
|
(20% greater than strike price)
|
4,068
|
$53.12
|
(30% greater than strike price)
|
5,633
|
$57.20
|
(40% greater than strike price)
|
6,974
|
$61.29
|
(50% greater than strike price)
|
8,137
|
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
|
(a)
|
Exhibits.
|
Exhibit No.
|
|
Exhibit
|
|
Method of Filing
|
2.1
|
|
Purchase Agreement, dated November 4, 2019, among Wright Medical Group N.V., Stryker Corporation and Stryker B.V.*
|
|
|
3.1
|
|
Articles of Association of Wright Medical Group N.V.
|
|
|
3.2
|
|
Amendment of the Articles of Association, dated April 24, 2020, of Wright Medical Group N.V.
|
|
|
10.1
|
|
Amendment No. 4 to Amended and Restated Credit, Security and Guaranty Agreement
|
|
|
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
|
|
|
101
|
|
The following materials from Wright Medical Group N.V.’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets as of March 29, 2020 and December 29, 2019, (ii) the Consolidated Statements of Operations for the three months ended March 29, 2020 and March 31, 2019, (iii) the Consolidated Statements of Comprehensive Loss for the three months ended March 29, 2020 and March 31, 2019, (iv) the Consolidated Statements of Cash Flows for the three months ended March 29, 2020 and March 31, 2019, (v) the Consolidated Statements of Changes in Shareholders’ Equity for the three months ended March 29, 2020 and March 31, 2019, and (vi) Notes to Consolidated Financial Statements (The instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.)
|
|
Filed herewith
|
104
|
|
The cover page from Wright Medical Group N.V.’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 29, 2020 is formatted in iXBRL (Inline eXtensible Business Reporting Language)
|
|
Included in Exhibit 101
|
WRIGHT MEDICAL GROUP N.V.
|
|
By:
|
/s/ Robert J. Palmisano
|
|
Robert J. Palmisano
|
|
President and Chief Executive Officer
|
|
(principal executive officer)
|
|
|
By:
|
/s/ Lance A. Berry
|
|
Lance A. Berry
|
|
Executive Vice President, Chief Financial and Operations Officer
|
|
(principal financial officer)
|
(a)
|
Credit Parties shall not permit, (i) at any time during the period commencing on May 7, 2020 and ending on December 27, 2020, Credit Party Liquidity to be less than sixty percent (60%) of Consolidated Liquidity and (ii) at any time on or after December 28, 2020, Credit Party Liquidity to be less than fifty percent (50%) of Consolidated Liquidity; and
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(b)
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Credit Parties shall not permit, at any time during the period commencing on May 7, 2020 and ending on May 15, 2021, (i) Total Liquidity to be less than $100,000,000 or (ii) Undrawn Availability to be less than $50,000,000.”
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[SIGNATURES APPEAR ON FOLLOWING PAGES]
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AGENT:
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MIDCAP FUNDING IV TRUST,
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LENDERS:
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MIDCAP FUNDING IV TRUST,
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LENDERS:
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APOLLO INVESTMENT CORPORATION,
as a Lender
By: Apollo Investment Management, L.P., as Advisor
By: ACC Management, LLC, as its General Partner
By: /s/ Joseph D. Glatt
Name: Joseph D. Glatt
Title: Vice President
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BORROWERS:
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BIOMIMETIC THERAPEUTICS LLC,
as a Borrower
By: /s/ Lance A. Berry
Name: Lance A. Berry
Title: Treasurer
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BIOMIMETIC THERAPEUTICS USA, INC.,
as a Borrower
By: /s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President
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ORTHOHELIX SURGICAL DESIGNS, INC.,
as a Borrower
By: /s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
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TORNIER US HOLDINGS, INC.,
as a Borrower
By: /s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
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TORNIER, INC.,
as a Borrower
By: /s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
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TROOPER HOLDINGS INC.,
as a Borrower
By: /s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Treasurer
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WRIGHT MEDICAL TECHNOLOGY, INC.,
as a Borrower
By: /s/ W. Dean Morgan
Name: W. Dean Morgan
Title: Vice President, Tax and Treasury
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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
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GUARANTOR AND PARENT:
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WRIGHT MEDICAL GROUP N.V.
By: /s/ Lance A. Berry
Name: Lance A. Berry
Title: Executive Vice President, Chief Financial and Operations Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Wright Medical Group N.V.;
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2.
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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;
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3.
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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;
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4.
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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:
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(a)
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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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ Robert J. Palmisano
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Robert J. Palmisano
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President and Chief Executive Officer
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1.
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I have reviewed this quarterly report on Form 10-Q of Wright Medical Group N.V.;
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2.
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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;
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3.
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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;
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4.
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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:
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(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;
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(b)
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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;
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(c)
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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
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(d)
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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
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5.
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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):
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(a)
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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
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(b)
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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.
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/s/ Lance A. Berry
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Lance A. Berry
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Executive Vice President, Chief Financial and Operations Officer
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/s/ Robert J. Palmisano
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Robert J. Palmisano
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President and Chief Executive Officer
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/s/ Lance A. Berry
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Lance A. Berry
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Executive Vice President, Chief Financial and Operations Officer
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