Legacy Tornier N.V. | |||||||||||||||
Consolidated Statements of Operations | |||||||||||||||
(in thousands, except per share data--unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | ||||||||||||
Revenue | $ | 74,944 | $ | 76,675 | $ | 246,257 | $ | 252,550 | |||||||
Cost of goods sold | 16,427 | 17,853 | 55,100 | 61,124 | |||||||||||
Cost of goods sold - acquisition related | — | 157 | — | 577 | |||||||||||
Gross profit | 58,517 | 58,665 | 191,157 | 190,849 | |||||||||||
78.1 | % | 76.5 | % | 77.6 | % | 75.6 | % | ||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative | 55,416 | 57,127 | 174,622 | 178,479 | |||||||||||
Research and development | 4,972 | 6,055 | 16,783 | 17,845 | |||||||||||
Amortization of intangible assets | 4,004 | 4,274 | 12,051 | 12,928 | |||||||||||
Special charges | 2,657 | (4,366 | ) | 6,860 | (994 | ) | |||||||||
Total operating expenses | 67,049 | 63,090 | 210,316 | 208,258 | |||||||||||
Operating (loss) income | (8,532 | ) | (4,425 | ) | (19,159 | ) | (17,409 | ) | |||||||
Other (income) expense | |||||||||||||||
Interest income | 64 | 18 | 82 | 126 | |||||||||||
Interest expense | (1,419 | ) | (1,250 | ) | (4,171 | ) | (3,964 | ) | |||||||
Foreign currency transaction loss | (315 | ) | (152 | ) | (410 | ) | (195 | ) | |||||||
Other non-operating income | 60 | 11 | 148 | 20 | |||||||||||
Loss before income taxes | (10,142 | ) | (5,798 | ) | (23,510 | ) | (21,422 | ) | |||||||
Income tax expense | (652 | ) | 477 | (1,743 | ) | 416 | |||||||||
Consolidated net loss | $ | (10,794 | ) | $ | (5,321 | ) | $ | (25,253 | ) | $ | (21,006 | ) | |||
Net loss per share | |||||||||||||||
Basic and diluted | $ | (0.22 | ) | $ | (0.11 | ) | $ | (0.51 | ) | $ | (0.43 | ) | |||
Weighted average ordinary shares outstanding | |||||||||||||||
Basic and diluted | 49,279 | 48,832 | 49,116 | 48,656 |
Legacy Tornier N.V. | |||||||||||||||||||||
Selected Revenue Information | |||||||||||||||||||||
(dollars in thousands--unaudited) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
September 27, 2015 | September 28, 2014 | % change | September 27, 2015 | September 28, 2014 | % change | ||||||||||||||||
Revenue by product category | |||||||||||||||||||||
Upper extremity joints and trauma | $ | 52,582 | $ | 48,963 | 7.4 | % | $ | 166,542 | $ | 155,845 | 6.9 | % | |||||||||
Lower extremity joints and trauma | 10,851 | 13,814 | (21.4 | %) | 36,756 | 43,356 | (15.2 | %) | |||||||||||||
Sports medicine and biologics | 2,680 | 3,009 | (10.9 | %) | 9,406 | 10,549 | (10.8 | %) | |||||||||||||
Total extremities | 66,113 | 65,786 | 0.5 | % | 212,704 | 209,750 | 1.4 | % | |||||||||||||
Large joints and other | 8,831 | 10,889 | (18.9 | %) | 33,553 | 42,800 | (21.6 | %) | |||||||||||||
Total | $ | 74,944 | $ | 76,675 | (2.3 | %) | $ | 246,257 | $ | 252,550 | (2.5 | %) | |||||||||
Revenue by geography | |||||||||||||||||||||
United States | $ | 48,838 | $ | 46,752 | 4.5 | % | $ | 151,912 | $ | 145,565 | 4.4 | % | |||||||||
International | 26,106 | 29,923 | (12.8 | %) | 94,345 | 106,985 | (11.8 | %) | |||||||||||||
Total | $ | 74,944 | $ | 76,675 | (2.3 | %) | $ | 246,257 | $ | 252,550 | (2.5 | %) |
Legacy Tornier N.V. | ||||||||||||||
Reconciliation of Revenue to Non-GAAP Revenue on a Constant Currency Basis | ||||||||||||||
(dollars in thousands--unaudited) | ||||||||||||||
Three Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | |||||||||||||
Revenue as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue as reported | Percent change on a constant currency basis | ||||||||||
Revenue by product category | ||||||||||||||
Upper extremity joints and trauma | 52,582 | 2,611 | 55,193 | 48,963 | 12.7 | % | ||||||||
Lower extremity joints and trauma | 10,851 | 432 | 11,283 | 13,814 | (18.3 | )% | ||||||||
Sports medicine and biologics | 2,680 | 199 | 2,879 | 3,009 | (4.3 | )% | ||||||||
Total extremities | 66,113 | 3,242 | 69,355 | 65,786 | 5.4 | % | ||||||||
Large joints and other | 8,831 | 1,433 | 10,264 | 10,889 | (5.7 | )% | ||||||||
Total | 74,944 | 4,675 | 79,619 | 76,675 | 3.8 | % | ||||||||
Revenue by geography | ||||||||||||||
United States | 48,838 | — | 48,838 | 46,752 | 4.5 | % | ||||||||
International | 26,106 | 4,675 | 30,781 | 29,923 | 2.9 | % | ||||||||
Total | 74,944 | 4,675 | 79,619 | 76,675 | 3.8 | % |
Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | Percent change on a constant currency basis | ||||||||||||
Revenue as reported | Foreign exchange impact as compared to prior period | Revenue on a constant currency basis | Revenue as reported | |||||||||||
Revenue by product category | ||||||||||||||
Upper extremity joints and trauma | 166,542 | 9,412 | 175,954 | 155,845 | 12.9 | % | ||||||||
Lower extremity joints and trauma | 36,756 | 1,366 | 38,122 | 43,356 | (12.1 | )% | ||||||||
Sports medicine and biologics | 9,406 | 756 | 10,162 | 10,549 | (3.7 | )% | ||||||||
Total extremities | 212,704 | 11,534 | 224,238 | 209,750 | 6.9 | % | ||||||||
Large joints and other | 33,553 | 6,706 | 40,259 | 42,800 | (5.9 | )% | ||||||||
Total | 246,257 | 18,240 | 264,497 | 252,550 | 4.7 | % | ||||||||
Revenue by geography | ||||||||||||||
United States | 151,912 | — | 151,912 | 145,565 | 4.4 | % | ||||||||
International | 94,345 | 18,240 | 112,585 | 106,985 | 5.2 | % | ||||||||
Total | 246,257 | 18,240 | 264,497 | 252,550 | 4.7 | % |
Legacy Tornier N.V. | |||||||||||||||
Reconciliation of Net Loss to Non-GAAP Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) | |||||||||||||||
(in thousands--unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | ||||||||||||
Revenue, as reported | $ | 74,944 | $ | 76,675 | $ | 246,257 | $ | 252,550 | |||||||
Net loss, as reported | $ | (10,794 | ) | $ | (5,321 | ) | $ | (25,253 | ) | $ | (21,006 | ) | |||
Interest income | (64 | ) | (18 | ) | (82 | ) | (126 | ) | |||||||
Interest expense | 1,419 | 1,250 | 4,171 | 3,964 | |||||||||||
Income tax expense (benefit) | 652 | (477 | ) | 1,743 | (416 | ) | |||||||||
Depreciation | 6,113 | 6,058 | 18,498 | 17,666 | |||||||||||
Amortization | 4,004 | 4,274 | 12,051 | 12,928 | |||||||||||
Subtotal Non-GAAP EBITDA | 1,330 | 5,766 | 11,128 | 13,010 | |||||||||||
Other non-operating (income) expense | (60 | ) | (11 | ) | (148 | ) | (20 | ) | |||||||
Foreign currency transaction loss (gain) | 315 | 152 | 410 | 195 | |||||||||||
Share-based compensation | 1,854 | 2,348 | 6,512 | 6,869 | |||||||||||
Inventory step-up from acquisition | — | 157 | — | 577 | |||||||||||
Special Charges: | |||||||||||||||
Acquisition, integration and distribution transition costs | (127 | ) | 214 | 691 | 2,250 | ||||||||||
Reversal of OrthoHelix contingent consideration liability | — | (5,000 | ) | — | (5,000 | ) | |||||||||
Instrument use tax refund | — | — | (2,000 | ) | — | ||||||||||
Restructuring | — | 420 | — | 1,431 | |||||||||||
Proposed merger-related costs | 2,784 | — | 8,169 | — | |||||||||||
Other | — | — | — | 325 | |||||||||||
Non-GAAP adjusted EBITDA | $ | 6,096 | $ | 4,046 | $ | 24,762 | $ | 19,637 | |||||||
Non-GAAP adjusted EBITDA margin | 8.1 | % | 5.3 | % | 10.1 | % | 7.8 | % |
Legacy Tornier N.V. | ||||||||||||||||
Reconciliation of Net Loss and Loss per Share to Adjusted Net Loss and Adjusted Net Loss per Share | ||||||||||||||||
(in thousands, except per share data--unaudited) | ||||||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | |||||||||||||
Net loss, as reported | $ | (10,794 | ) | $ | (5,321 | ) | $ | (25,253 | ) | $ | (21,006 | ) | ||||
Inventory step-up from acquisition, net of tax | — | (119 | ) | — | 284 | |||||||||||
Reversal of valuation allowance from acquisition | — | — | — | (146 | ) | |||||||||||
Special charges, net of tax: | ||||||||||||||||
Acquisition, integration and distribution transition costs | (106 | ) | 200 | 691 | 2,236 | |||||||||||
Reversal of OrthoHelix contingent consideration liability | — | (5,000 | ) | — | (5,000 | ) | ||||||||||
Instrument use tax refund | — | — | (2,000 | ) | — | |||||||||||
Restructuring | — | 420 | — | 1,431 | ||||||||||||
Proposed merger-related costs | 2,772 | — | 8,157 | — | ||||||||||||
Other | — | — | — | 325 | ||||||||||||
Non-GAAP adjusted net loss | (8,128 | ) | (9,820 | ) | (18,405 | ) | (21,876 | ) | ||||||||
Net loss per share, as reported | ||||||||||||||||
Basic and diluted | $ | (0.22 | ) | $ | (0.11 | ) | $ | (0.51 | ) | $ | (0.43 | ) | ||||
Inventory step-up from acquisition, net of tax | — | — | — | 0.01 | ||||||||||||
Reversal of valuation allowance from acquisition | — | — | — | (0.01 | ) | |||||||||||
Special charges, net of tax: | — | — | — | — | ||||||||||||
Acquisition, integration and distribution transition costs | — | 0.01 | 0.01 | 0.05 | ||||||||||||
Reversal of OrthoHelix contingent consideration liability | — | (0.11 | ) | — | (0.11 | ) | ||||||||||
Instrument use tax refund | — | — | (0.04 | ) | — | |||||||||||
Restructuring | — | 0.01 | — | 0.03 | ||||||||||||
Proposed merger-related costs | 0.06 | — | 0.17 | — | ||||||||||||
Other | — | — | — | 0.01 | ||||||||||||
Non-GAAP adjusted net loss per share | ||||||||||||||||
Basic and diluted | (0.16 | ) | (0.20 | ) | (0.37 | ) | (0.45 | ) | ||||||||
Weighted average ordinary shares outstanding | ||||||||||||||||
Basic and diluted | 49,279 | 48,832 | 49,116 | 48,656 |
Legacy Tornier N.V. | |||||||||||||||
Reconciliation of Net Cash Provided by Operating Activities to Non-GAAP Free Cash Flow | |||||||||||||||
(dollars in thousands--unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | ||||||||||||
Net cash provided by operating activities, as reported | $ | 11,299 | $ | (4,622 | ) | $ | 12,907 | $ | (4,517 | ) | |||||
Adjusted for: | |||||||||||||||
Additions of instruments, as reported | (4,808 | ) | (4,214 | ) | (14,089 | ) | (18,749 | ) | |||||||
Purchases of property, plant and equipment, as reported | (883 | ) | (3,248 | ) | (4,544 | ) | (8,128 | ) | |||||||
Non-GAAP adjusted free cash flow | $ | 5,608 | $ | (12,084 | ) | $ | (5,726 | ) | $ | (31,394 | ) |
Legacy Tornier N.V. | |||||||||||||||
Reconciliation of Gross Margin and Gross Margin % to Non-GAAP Adjusted Gross Margin and Gross Margin % | |||||||||||||||
(dollars in thousands--unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | ||||||||||||
Revenue, as reported | $ | 74,944 | $ | 76,675 | $ | 246,257 | $ | 252,550 | |||||||
Gross margin, as reported | $ | 58,517 | $ | 58,665 | $ | 191,157 | $ | 190,849 | |||||||
Gross margin %, as reported | 78.1 | % | 76.5 | % | 77.6 | % | 75.6 | % | |||||||
Adjusted for: | |||||||||||||||
Inventory step-up due to acquisition | — | 157 | — | 577 | |||||||||||
Non-GAAP adjusted gross margins | 58,517 | 58,822 | 191,157 | 191,426 | |||||||||||
Non-GAAP adjusted gross margin % | 78.1 | % | 76.7 | % | 77.6 | % | 75.8 | % |
Legacy Tornier N.V. | |||||||||||||||
Reconciliation of Operating Expenses to Non-GAAP Adjusted Operating Expenses | |||||||||||||||
(dollars in thousands--unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | ||||||||||||
Revenue, as reported | $ | 74,944 | $ | 76,675 | $ | 246,257 | $ | 252,550 | |||||||
Operating Expenses, as reported | 67,049 | 63,090 | 210,316 | 208,258 | |||||||||||
Operating expenses as a percentage of revenue, as reported | 89.5 | % | 82.3 | % | 85.4 | % | 82.5 | % | |||||||
Adjusted for: | |||||||||||||||
Amortization of intangible assets | (4,004 | ) | (4,274 | ) | (12,051 | ) | (12,928 | ) | |||||||
Special charges | (2,657 | ) | 4,366 | (6,860 | ) | 994 | |||||||||
Total adjustments | (6,661 | ) | 92 | (18,911 | ) | (11,934 | ) | ||||||||
Non-GAAP adjusted operating expenses | $ | 60,388 | $ | 63,182 | $ | 191,405 | $ | 196,324 | |||||||
Non-GAAP adjusted operating expenses as a percentage of revenue | 80.6 | % | 82.4 | % | 77.7 | % | 77.7 | % |
Legacy Tornier N.V. | |||||||
Condensed Consolidated Balance Sheets | |||||||
(dollars in thousands--unaudited) | |||||||
September 27, 2015 | December 28, 2014 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 30,111 | $ | 27,940 | |||
Accounts receivable, net | 62,303 | 63,583 | |||||
Inventories | 83,668 | 88,662 | |||||
Deferred income taxes and other current assets | 26,902 | 29,516 | |||||
Total current assets | 202,984 | 209,701 | |||||
Instruments, net | 59,728 | 62,888 | |||||
Property, plant and equipment, net | 42,632 | 44,662 | |||||
Goodwill and intangible assets, net | 318,115 | 339,902 | |||||
Deferred income taxes and other assets | 1,819 | 1,422 | |||||
Total assets | $ | 625,278 | $ | 658,575 | |||
Liabilities and stockholders' equity | |||||||
Current liabilities: | |||||||
Short-term borrowing and current portion of long-term debt | $ | 8,354 | $ | 7,394 | |||
Accounts payable | 15,306 | 15,073 | |||||
Accrued liabilities, deferred income taxes and other current liabilities | 59,046 | 61,994 | |||||
Total current liabilities | 82,706 | 84,461 | |||||
Other long-term debt | 77,774 | 68,105 | |||||
Deferred income taxes and other long-term liabilities | 25,571 | 27,119 | |||||
Total liabilities | 186,051 | 179,685 | |||||
Stockholders' equity | 439,227 | 478,890 | |||||
Total liabilities and stockholders' equity | $ | 625,278 | $ | 658,575 |
Legacy Tornier N.V. | |||||||||||||||
Consolidated Statements of Cash Flow | |||||||||||||||
(dollars in thousands--unaudited) | |||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||
September 27, 2015 | September 28, 2014 | September 27, 2015 | September 28, 2014 | ||||||||||||
Cash flows from operating activities | |||||||||||||||
Consolidated net loss | $ | (10,794 | ) | $ | (5,321 | ) | $ | (25,253 | ) | $ | (21,006 | ) | |||
Adjustments to reconcile consolidated net loss to net cash provided by (used in) operating activities | |||||||||||||||
Depreciation and amortization | 10,117 | 10,332 | 30,549 | 30,594 | |||||||||||
Non-cash foreign currency loss | 325 | 137 | 387 | 176 | |||||||||||
Deferred income taxes | 64 | (2,673 | ) | (2,812 | ) | (5,254 | ) | ||||||||
Share-based compensation | 1,854 | 2,348 | 6,512 | 6,869 | |||||||||||
Non-cash interest expense and discount amortization | 297 | 211 | 733 | 565 | |||||||||||
Inventory obsolescence | 3,555 | 2,711 | 8,568 | 8,389 | |||||||||||
Fair value adjustment of contingent consideration liability | (151 | ) | (5,327 | ) | 618 | (5,327 | ) | ||||||||
Inventory step up from acquisition | — | 157 | — | 577 | |||||||||||
Other non-cash items affecting earnings | 159 | (14 | ) | 410 | 312 | ||||||||||
Changes in operating assets and liabilities | |||||||||||||||
Accounts receivable | 5,439 | 2,204 | (774 | ) | (1,015 | ) | |||||||||
Inventories | (2,823 | ) | (6,260 | ) | (9,316 | ) | (21,586 | ) | |||||||
Accounts payable and accruals | (655 | ) | (3,954 | ) | 2,973 | 4,213 | |||||||||
Other current assets and liabilities | 3,494 | 634 | 29 | (2,713 | ) | ||||||||||
Other non-current assets and liabilities | 418 | 193 | 283 | 689 | |||||||||||
Net cash provided by (used in) operating activities | 11,299 | (4,622 | ) | 12,907 | (4,517 | ) | |||||||||
Cash flows from investing activities | |||||||||||||||
Acquisition-related cash payments | — | (20 | ) | (360 | ) | (2,020 | ) | ||||||||
Additions of instruments | (4,808 | ) | (4,214 | ) | (14,089 | ) | (18,749 | ) | |||||||
Purchases of property, plant and equipment | (883 | ) | (3,248 | ) | (4,544 | ) | (8,128 | ) | |||||||
Net cash used in investing activities | (5,691 | ) | (7,482 | ) | (18,993 | ) | (28,897 | ) | |||||||
Cash flows from financing activities | |||||||||||||||
Contingent consideration payments | (1,155 | ) | (1,171 | ) | (2,607 | ) | (6,793 | ) | |||||||
Change in short-term debt | — | 6,000 | 1,000 | 6,000 | |||||||||||
Repayments of long-term debt | (277 | ) | (160 | ) | (1,047 | ) | (723 | ) | |||||||
Proceeds from issuance of long-term debt | — | — | 10,067 | 477 | |||||||||||
Deferred financing costs | — | — | (114 | ) | — | ||||||||||
Issuance of ordinary shares | 235 | 932 | 1,958 | 3,128 | |||||||||||
Net cash (used in) provided by financing activities | (1,197 | ) | 5,601 | 9,257 | 2,089 | ||||||||||
Effect of currency exchange rates on cash and cash equivalents | (183 | ) | 662 | (1,000 | ) | 471 | |||||||||
Decrease in cash and cash equivalents | 4,228 | (5,841 | ) | 2,171 | (30,854 | ) | |||||||||
Cash and cash equivalents at beginning of period | 25,883 | 31,771 | 27,940 | 56,784 | |||||||||||
Cash and cash equivalents at end of period | $ | 30,111 | $ | 25,930 | $ | 30,111 | $ | 25,930 |
Wright Medical Group N.V. | ||||||||
Reconciliation of Estimated 2015 Net Sales to Estimated 2015 Pro Forma Net Sales | ||||||||
(dollars in millions--unaudited) | ||||||||
Twelve Months Ended | ||||||||
December 27, 2015 | ||||||||
Low-End of Range | High-End of Range | |||||||
Legacy Wright Medical Group year-to-date net sales | $ | 238.5 | $ | 238.5 | ||||
Estimated Wright Medical Group N.V. fourth quarter net sales | 161.0 | 167.0 | ||||||
Estimated 2015 Net Sales | $ | 399.5 | $ | 405.5 | ||||
Legacy Tornier N.V. year-to-date net sales | 246.2 | 246.2 | ||||||
Legacy Tornier N.V. sales of divested foot & ankle products | (9.7 | ) | (9.7 | ) | ||||
Estimated 2015 Pro Forma Net Sales | $ | 636 | $ | 642 |
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