News: Wright Medical Group N.V. Reports 2015 Third Quarter Financial Results -- Ctd 3 of 3

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