Wright Medical Group, Inc. Reports 2011 Fourth Quarter Financial Results and Provides 2012 Guidance


Wright Medical Group, Inc. Reports 2011 Fourth Quarter Financial Results and Provides 2012 Guidance


Company Takes Proactive Steps to Transform Business and Maximize Foot and Ankle Opportunity


ARLINGTON, Tenn.--(BUSINESS WIRE)--Wright Medical Group, Inc. (NASDAQ: WMGI), a global orthopaedic medical device company and a leading provider of surgical solutions for the foot and ankle market, today reported financial results for its fourth quarter ended December 31, 2011 and provided financial guidance for 2012.

 

Net sales totaled $126.9 million during the fourth quarter ended December 31, 2011, representing an 8% decrease from net sales of $138.3 million during the fourth quarter of 2010. Excluding the impact of foreign currency, net sales decreased 9% in the fourth quarter of 2011, as compared to the same period last year. During the fourth quarter of 2011, U.S. sales were negatively affected by previously announced distributor transitions that occurred in the third quarter of 2011 and challenges associated with implementing enhancements to the Company's compliance processes.

Net income for the fourth quarter of 2011 totaled $1.2 million or $0.03 per diluted share, compared to net income of $8.9 million or $0.22 per diluted share in the fourth quarter of 2010.

Net income for the fourth quarter of 2011 included the after-tax effects of $2.8 million of charges associated with the previously announced cost restructuring plan, $3.4 million of expenses associated with the Company's deferred prosecution agreement (DPA), and $2.4 million of non-cash stock-based compensation expense, as well as a $1.0 million income tax provision for an estimated IRS audit liability. Net income for the fourth quarter of 2010 included the after-tax effects of approximately $3.0 million of non-cash stock-based compensation expense and $1.3 million of expenses related to the U.S. governmental inquiry.

The Company's fourth quarter net income, as adjusted, was $6.7 million in 2011 compared to $11.8 million in 2010, while diluted earnings per share, as adjusted, was $0.17 in the fourth quarter of 2011 compared to $0.29 in the fourth quarter of 2010. A reconciliation of U.S. GAAP to "as adjusted" results is included in the attached financial tables.

Robert Palmisano, President and Chief Executive Officer, commented, "Although our fourth quarter results were stronger than anticipated, we are not satisfied with our 2011 financial performance relative to the market opportunities, and we have much work ahead of us to improve our execution, efficiency and return to a high growth company. My top priorities will be to grow our foot and ankle business above market rates, run a much more focused and efficient ortho-recon business, and increase cash generation. I believe these initiatives will in turn drive growth and shareholder value."

Palmisano continued, "We plan on making a number of important changes over the next several months that we believe will transform our business and deliver significant long-term shareholder return:
• First, we plan to make the necessary investments to aggressively convert a major portion of our U.S. independent distributor foot and ankle territories to direct sales representation in order to increase sales productivity and maximize the growth opportunity that we see in this business. We also believe this will benefit our ortho-recon franchise as it continues to be an important part of our business;
• Second, we will focus on driving significant improvements in customer satisfaction in our ortho-recon business while vigorously protecting our position;
• Third, we plan to significantly reduce inventories to improve cash flow and operational efficiency;
• Fourth, we are substantially increasing our investment in medical education and foot and ankle product development to drive market adoption of new products and technologies; and
• Lastly, we will pursue internal and external development opportunities to expand our extremities and biologic product portfolio."

Palmisano commented further, "As our guidance implies, these transformational changes for our business will require significant investment in 2012, which will negatively impact our full-year 2012 results. However, we believe these investments will generate significant future returns, including accelerating foot and ankle sales growth rates and improving inventory management and cash generation. We are enthusiastic about our plan and look forward to executing our current strategies and improving our performance."

Outlook

 The Company anticipates full year 2012 net sales to be in the range of $472 million to $489 million, as compared to $512.9 million in 2011.

The Company anticipates full year 2012 as-adjusted earnings per share excluding stock-based compensation to be in the range of $0.26 to $0.36 per diluted share, as compared to $0.84 per diluted share in 2011. The Company's earnings target excludes non-compete and transition costs associated with converting a major portion of independent foot and ankle territories to direct, costs associated with the previously announced cost restructuring, possible future acquisitions, other material future business developments, non-cash stock-based compensation expense, and costs associated with the Company's DPA (including the associated independent monitor).

As noted above, the Company's earnings target excludes the impact of non-cash stock-based compensation charges. While the amount of the non-cash stock-based compensation charges will vary depending upon a number of factors, the Company currently estimates that the after-tax impact of those expenses will be approximately $0.18 per diluted share for the full year 2012. Therefore, the Company anticipates full year 2012 as-adjusted earnings per share including stock-based compensation to be in the range of $0.08 to $0.18 per diluted share.

With regard to restructuring charges, the Company now anticipates incurring pre-tax restructuring charges related to the cost restructuring plan announced in September 2011 to range from $18 million to $25 million, of which $16.9 million of these charges have been incurred to date. The Company expects the remaining charges to be recorded during the first half of 2012.

From a cash flow perspective, the Company anticipates significant improvement over 2011 with 2012 free cash flow anticipated to be in the range of $25 million to $30 million, which represents annualized growth of 73% to 107%.

The Company's anticipated ranges for net sales, adjusted earnings per share, non-cash stock-based compensation charges, restructuring charges and free cash flow are forward-looking statements. They are subject to various risks and uncertainties that could cause the Company's actual results to differ materially from the anticipated targets. The anticipated targets are not predictions of the Company's actual performance. See the cautionary information about forward-looking statements in the "Safe-Harbor Statement" section of this press release.

Conference Call

 As previously announced, the Company will host a conference call starting at 3:30 p.m. Central Time today. The live dial-in number for the call is 877-556-5921 (U.S.) or 617-597-5474 (international). The participant passcode for the call is "Wright." To access a simultaneous webcast of the conference call via the internet, go to the "Corporate - Investor Information" section of the Company's website located at www.wmt.com.

A replay of the conference call by telephone will be available starting at 5:30 p.m. Central Time today and continuing until March 1, 2012. To hear this replay, dial 888-286-8010 (U.S.) or 617-801-6888 (international) and enter the passcode 82478477. A replay of the conference call will also be available via the internet starting today and continuing for at least 12 months. To access a replay of the conference call via the internet, go to the "Corporate - Investor Information - Audio Archives" section of the Company's website located at www.wmt.com.

The conference call may include a discussion of non-GAAP financial measures. Reference is made to the most directly comparable GAAP financial measures, the reconciliation of the differences between the two financial measures, and the other information included in this press release, the Form 8-K filed with the SEC today, or otherwise available in the "Corporate - Investor Information - Supplemental Financial Information" section of the Company's website located at www.wmt.com.

The conference call may include forward-looking statements. See the cautionary information about forward-looking statements in the "Safe-Harbor Statement" section of this press release.

About Wright Medical

 Wright Medical Group, Inc. is a global orthopaedic medical device company and a leading provider of surgical solutions for the foot and ankle market. The Company specializes in the design, manufacture and marketing of devices and biologic products for extremity, hip and knee repair and reconstruction. The Company has been in business for more than 60 years and markets its products in over 60 countries worldwide. For more information about Wright Medical, visit the Company's website at www.wmt.com.

Non-GAAP Financial Measures

 The Company uses non-GAAP financial measures, such as net sales, excluding the impact of foreign currency; operating income, as adjusted; net income, as adjusted; net income, as adjusted, per diluted share; effective tax rate, as adjusted; and free cash flow. The Company's management believes that the presentation of these measures provides useful information to investors. These measures may assist investors in evaluating the Company's operations, period over period. The measures exclude such items as costs related to the U.S. governmental inquiries and the DPA, restructuring charges, transaction costs, charges associated with the Company's liability for PROFEMUR® long modular neck claims, costs related to settlement of certain employment matters and the hiring of a new CEO, and non-cash stock-based expense, all of which may be highly variable, difficult to predict and of a size that could have substantial impact on the Company's reported results of operations for a period. Management uses these measures internally for evaluation of the performance of the business, including the allocation of resources and the evaluation of results relative to employee performance compensation targets. Investors should consider these non-GAAP measures only as a supplement to, not as a substitute for or as superior to, measures of financial performance prepared in accordance with GAAP.

Cautionary Note Regarding Forward-Looking Statements

This press release contains "forward-looking statements" as defined under U.S. federal securities laws, including statements regarding potential actions by the USAO, independent monitor, OIG and other agencies or their potential impact. These statements reflect management's current knowledge, assumptions, beliefs, estimates, and expectations and express management's current views of future performance, results, and trends and may be identified by their use of terms such as anticipate, believe, could, estimate, expect, intend, may, plan, predict, project, will, and other similar terms. Forward-looking statements are subject to a number of risks and uncertainties that could cause our actual results to materially differ from those described in the forward-looking statements. The reader should not place undue reliance on forward-looking statements. Such statements are made as of the date of this press release, and we undertake no obligation to update such statements after this date. Risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements include those discussed in our filings with the Securities and Exchange Commission (including those described in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2011, under the heading "Risk Factors" and elsewhere); future actions of the FDA or any other regulatory body or government authority that could delay, limit or suspend product development, manufacturing or sale or result in seizures, injunctions, monetary sanctions or criminal or civil liabilities; the impact of any such future actions of the FDA or any other regulatory body or government authority on our settlement of the federal investigation into our consulting arrangements with orthopaedic surgeons relating to our hip and knee products in the United States; the impact of such settlement of the federal investigation into our consulting arrangements with orthopaedic surgeons relating to our hip and knee products in the United States, including our compliance with the Deferred Prosecution Agreement through September 2012 and the Corporate Integrity Agreement through September 2015; and compliance reviews, the results of which may be required to be disclosed to government authorities, and which may uncover violations of law, including strict liability provisions of the federal Food, Drug and Cosmetic Act, that could lead to adverse action by the FDA or others. Our failure to comply with the Deferred Prosecution Agreement or the Corporate Integrity Agreement could expose us to significant liability including, but not limited to, exclusion from federal healthcare program participation, including Medicaid and Medicare, which would have a material adverse effect on our financial condition, results of operations and cash flows, potential prosecution, including under the previously-filed criminal complaint, civil and criminal fines or penalties, and additional litigation cost and expense. In addition, a breach of the DPA or the CIA could result in an event of default under the Senior Credit Facility, which in turn could result in an event of default under the Indenture.

Additional risks and uncertainties that could cause our actual results to materially differ from those described in forward-looking statements include the possibility of litigation brought by shareholders, including private securities litigation and shareholder derivative suits, which if initiated, could divert management's attention, harm our business and/or reputation and result in significant liabilities; demand for and market acceptance of our new and existing products; future actions of governmental authorities and other third parties; tax measures; business development and growth opportunities; product quality or patient safety issues; products liability claims; enforcement of our intellectual property rights; the geographic and product mix impact on our sales; retention of sales representatives and independent distributors; inventory reductions or fluctuations in buying patterns by wholesalers or distributors; ability to realize the anticipated benefits of restructuring initiatives; impact of the commercial and credit environment on us and our customers and suppliers; and in the implementation of our new compliance enhancements, including the duration and severity of delays related to medical education, research and development and clinical studies, and the impact of any such delays on our relationships with customers.

--Tables Follow--

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Condensed Consolidated Statements of Operations
 

 

(in thousands, except per share data--unaudited)

 

 

 

 

 

Three Months Ended

  

Twelve Months Ended

 

 

 


December 31,

2011
 
 


December 31,

2010
 

 

December 31,

2011
 
 


December 31,

2010
 


Net sales

 

$

126,872

 

 

$

138,287

 

 

$

512,947

 

 

$

518,973

 

Cost of sales

 

40,449

 

 

40,392

 

 

156,906

 

 

158,456

 

Cost of sales - restructuring

 

571

 

 

 

 

2,471

 

 

 

Gross profit

 

85,852

 

 

97,895

 

 

353,570

 

 

360,517

 

Operating expenses:

 

 

 

 

 

 

 

 

 

Selling, general and administrative

 

72,361

 

 

73,324

 

 

301,588

 

 

282,413

 

Research and development

 

6,331

 

 

8,902

 

 

30,114

 

 

37,300

 

Amortization of intangible assets

 

782

 

 

720

 

 

2,870

 

 

2,711

 

Restructuring charges

 

2,273

 

 

(220

)

 

14,405

 

 

919

 

Total operating expenses

 

81,747

 

 

82,726

 

 

348,977

 

 

323,343

 

Operating income

 

4,105

 

 

15,169

 

 

4,593

 

 

37,174

 

Interest expense, net

 

1,755

 

 

1,573

 

 

6,529

 

 

6,123

 

Other (income) expense, net

 

(56

)

 

(140

)

 

4,719

 

 

130

 

Income (loss) before income taxes

 

2,406

 

 

13,736

 

 

(6,655

)

 

30,921

 

Provision (benefit) for income taxes

 

1,243

 

 

4,867

 

 

(1,512

)

 

13,080

 

Net income (loss)

 

$

1,163

 

 

$

8,869

 

 

$

(5,143

)

 

$

17,841

 

Net income (loss) per share, basic

 

$

0.03

 

 

$

0.23

 

 

$

(0.13

)

 

$

0.47

 

Net income (loss) income per share, diluted

 

$

0.03

 

 

$

0.22

 

 

$

(0.13

)

 

$

0.47

 

Weighted-average number of shares outstanding-basic

 

38,430

 

 

37,962

 

 

38,279

 

 

37,802

 

Weighted-average number of shares outstanding-diluted

 

38,673

 

 

44,235

 

 

38,279

 

 

37,961

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Consolidated Sales Analysis
 

 

(dollars in thousands--unaudited)

 

 

 

 

 

Three Months Ended

  

Twelve Months Ended

 

 

 


December 31,

2011
 
 


December 31,

2010
 
 

%
change
 

 

December 31,

2011
 
 


December 31,

2010
 
 

%
change
 


Geographic

 

 

 

 

 

 

 

 

 

 

 

 

 

 Domestic

 

$

73,265

 

 

$

81,180

 

 

(9.7%

)

 

$

295,943

 

 

$

309,983

 

 

(4.5%

)

 

International

 

53,607

 

 

57,107

 

 

(6.1%

)

 

217,004

 

 

208,990

 

 

3.8%

 

 

Total net sales

 

$

126,872

 

 

$

138,287

 

 

(8.3%

)

 

$

512,947

 

 

$

518,973

 

 

(1.2%

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product Line

 

 

 

 

 

 

 

 

 

 

 

 

 

 Hip products

 

$

42,715

 

 

$

46,269

 

 

(7.7%

)

 

$

173,201

 

 

176,687

 

 

(2.0%

)

 

Knee products

 

30,559

 

 

35,112

 

 

(13.0%

)

 

123,988

 

 

128,854

 

 

(3.8%

)

 

Extremity products

 

36,077

 

 

34,752

 

 

3.8%

 

 

135,476

 

 

124,490

 

 

8.8%

 

 

Biologics products

 

15,563

 

 

19,935

 

 

(21.9%

)

 

69,409

 

 

79,231

 

 

(12.4%

)

 

Other

 

1,958

 

 

2,219

 

 

(11.8%

)

 

10,873

 

 

9,711

 

 

12.0%

 

 

Total net sales

 

$

126,872

 

 

$

138,287

 

 

(8.3%

)

 

$

512,947

 

 

$

518,973

 

 

(1.2%

)

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Supplemental Sales Information
 

 

(unaudited)

 

 

 

 

 

Fourth Quarter 2011 Sales Growth

 

 

 

Domestic
As

Reported
 
 

Int'l
Constant

Currency
 
 

Int'l
As

Reported
 
 

Total
Constant

Currency
 
 

Total
As

Reported
 


Hips

 

(15%

)

 

(6%

)

 

(4%

)

 

(9%

)

 

(8%

)

 

Knees

 

(13%

)

 

(13%

)

 

(13%

)

 

(13%

)

 

(13%

)

 

Extremities

 

5%

 

 

1%

 

 

1%

 

 

4%

 

 

4%

 

 

Biologics

 

(24%

)

 

(8%

)

 

(9%

)

 

(22%

)

 

(22%

)

 

Total

 

(10%

)

 

(8%

)

 

(6%

)

 

(9%

)

 

(8%

)

 


 

 

 

 

 

 

2011 Sales Growth

 

 

 

Domestic
As

Reported
 
 

Int'l
Constant

Currency
 
 

Int'l
As

Reported
 
 

Total
Constant

Currency
 
 

Total
As

Reported
 


Hips

 

(14%

)

 

0%

 

 

6%

 

 

(6%

)

 

(2%

)

 

Knees

 

(4%

)

 

(7%

)

 

(4%

)

 

(5%

)

 

(4%

)

 

Extremities

 

7%

 

 

9%

 

 

15%

 

 

8%

 

 

9%

 

 

Biologics

 

(15%

)

 

(5%

)

 

(2%

)

 

(13%

)

 

(12%

)

 

Total

 

(5%

)

 

(1%

)

 

4%

 

 

(3%

)

 

(1%

)

 


 

 

 

 

 

 

Sales as a % of Total Sales

 

 

 


Three Months Ended

December 31, 2011
 
 


Twelve Months Ended

December 31, 2011
 

 

 


Domestic

  

International

  

Total

 

Domestic

  

International

  

Total

 

 Hips

 

12

%

 

22

%

 

34

%

 

12

%

 

22

%

 

34

%

 

Knees

 

13

%

 

11

%

 

24

%

 

13

%

 

11

%

 

24

%

 

Extremities

 

23

%

 

5

%

 

28

%

 

21

%

 

5

%

 

26

%

 

Biologics

 

10

%

 

2

%

 

12

%

 

11

%

 

3

%

 

14

%

 

Total

 

58

%

 

42

%

 

100

%

 

58

%

 

42

%

 

100

%

 


 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Reconciliation of Net Sales to Net Sales Excluding the Impact of Foreign Currency
 

 

(dollars in thousands--unaudited)

 

 

 

 

 

Three Months Ended

  

Twelve Months Ended

 

 

 

December 31, 2011

 

December 31, 2011

 

 

 


International

Net Sales
 
 

Total
Net Sales
 

 

International

Net Sales
 
 

Total
Net Sales
 


Net sales, as reported

 

 $

53,607

 

 

$

126,872

 

 

$

217,004

 

 

$

512,947

 

 

Currency impact as compared to prior period

 

(815

)

 

(815

)

 

(10,570

)

 

(10,570

)

 


Net sales, excluding the impact of foreign currency
 


$

52,792

 

 

$

126,057

 

 

$

206,434

 

 

$

502,377

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Reconciliation of As Reported Results to Non-GAAP Financial Measures
 

 

(in thousands, except per share data--unaudited)

 

 

 

 

 

Three Months Ended

  

Twelve Months Ended

 

 

 


December 31,

2011
 
 


December 31,

2010
 

 

December 31,

2011
 
 


December 31,

2010
 


Operating Income

 

 

 

 

 

 

 

 

 

Operating income, as reported

 

 $

4,105

 

 

$

15,169

 

 

$

4,593

 

 

$

37,174

 

 

Reconciling items impacting Gross Profit:

 

 

 

 

 

 

 

 

 

 Non-cash, stock-based compensation

 

349

 

 

321

 

 

1,412

 

 

1,301

 

 

Cost of sales - restructuring

 

571

 

 

 

 

2,471

 

 

 

 

Employment matters (1)

 

 

 

 

 

99

 

 

 

 

Inventory step-up amortization

 

32

 

 

 

 

32

 

 

 

 

Total

 

952

 

 

321

 

 

4,014

 

 

1,301

 

 

Reconciling items impacting Selling, General and Administrative expenses:

 

 

 

 

 

 

 

 

 

 Non-cash, stock-based compensation

 

1,945

 

 

2,224

 

 

7,028

 

 

9,924

 

 

U.S. governmental inquiries/DPA related

 

3,379

 

 

1,283

 

 

12,920

 

 

10,902

 

 

Employment matters (1)

 

 

 

 

 

1,783

 

 

 

 

Product liability provision

 

 

 

 

 

13,199

 

 

 

 

Total

 

5,324

 

 

3,507

 

 

34,930

 

 

20,826

 

 

Reconciling items impacting Research and Development expenses:

 

 

 

 

 

 

 

 

 

 Non-cash, stock-based compensation

 

126

 

 

452

 

 

668

 

 

1,952

 

 

Employment matters (1)

 

 

 

 

 

135

 

 

 

 

Total

 

126

 

 

452

 

 

803

 

 

1,952

 

 

Other Reconciling Items:

 

 

 

 

 

 

 

 

 

 Restructuring charges

 

2,273

 

 

(220

)

 

14,405

 

 

919

 

 

Operating income, as adjusted

 

 $

12,780

 

 

$

19,229

 

 

$

58,745

 

 

$

62,172

 

 


Operating income, as adjusted, as a percentage of net sales
 


10.1

%

 

13.9

%

 

11.5

%

 

12.0

%

 


_______________________________

 


(1) Costs associated with settlement of certain employment matters and the hiring of a new CEO.

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Reconciliation of As Reported Results to Non-GAAP Financial Measures
 

 

(in thousands, except per share data--unaudited)

 

 

 

 

 

Three Months Ended

  

Twelve Months Ended

 

 

 


December 31,

2011
 
 


December 31,

2010
 

 

December 31,

2011
 
 


December 31,

2010
 


Net Income

 

 

 

 

 

 

 

 

 

Income (loss) before taxes, as reported

 

 $

2,406

 

 

$

13,736

 

 

$

(6,655

)

 

$

30,921

 

 

Pre-tax impact of reconciling items:

 

 

 

 

 

 

 

 

 

 Non-cash, stock-based compensation

 

2,420

 

 

2,997

 

 

9,108

 

 

13,177

 

 

U.S. governmental inquiries/DPA related

 

3,379

 

 

1,283

 

 

12,920

 

 

10,902

 

 

Deferred financing fees and transaction costs associated with Convertible Notes Tender Offer

 

 

 

 

 

4,099

 

 

 

 

Restructuring charges

 

2,844

 

 

(220

)

 

16,876

 

 

919

 

 

Employment matters (1)

 

 

 

 

 

2,017

 

 

 

 

Product liability provision

 

 

 

 

 

13,199

 

 

 

 

Inventory step-up amortization

 

32

 

 

 

 

32

 

 

 

 

Income before taxes, as adjusted

 

 11,081

 

 

17,796

 

 

51,596

 

 

55,919

 

 

 

 

 

 

 

 

 

 

 

 

Provision (benefit) for income taxes, as reported

 

 $

1,243

 

 

$

4,867

 

 

$

(1,512

)

 

$

13,080

 

 

Non-cash, stock-based compensation

 

853

 

 

1,144

 

 

2,946

 

 

4,410

 

 

U.S. governmental inquiries/DPA related

 

1,754

 

 

81

 

 

5,125

 

 

2,266

 

 

Deferred financing fees and transaction costs associated with Convertible Notes Tender Offer

 

 

 

 

 

1,599

 

 

 

 

Restructuring charges

 

1,591

 

 

(67

)

 

6,165

 

 

376

 

 

Employment matters (1)

 

 

 

 

 

720

 

 

 

 

Product liability provision

 

 

 

 

 

4,740

 

 

 

 

Inventory step-up amortization

 

12

 

 

 

 

12

 

 

 

 

IRS audit liability

 

(1,041

)

 

 

 

(1,041

)

 

 

 

Provision for income taxes, as adjusted

 

 $

4,412

 

 

$

6,025

 

 

$

18,754

 

 

$

20,132

 

 

Effective tax rate, as adjusted

 

 39.8

%

 

33.9

%

 

36.3

%

 

36.0

%

 

Net income, as adjusted

 

 $

6,669

 

 

$

11,771

 

 

$

32,842

 

 

$

35,787

 

 


_______________________________

 


(1) Costs associated with settlement of certain employment matters and the hiring of a new CEO.

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Reconciliation of As Reported Results to Non-GAAP Financial Measures
 

 

(continued)
 


 

 

 

 

Three Months Ended

  

Three Months Ended

 

 

 

December 31, 2011

 

December 31, 2010

 

 

 

As Reported

  

As Adjusted

 

As Reported

  

As Adjusted

 

Basic net income

 

 $

1,163

 

 

$

6,669

 

 

$

8,869

 

 

$

11,771

 

 

Interest expense on convertible notes

 

N/A

 

 

137

 

 

935

 

 

935

 

 

Diluted net income

 

 $

1,163

 

 

$

6,806

 

 

$

9,804

 

 

$

12,706

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares

 

 38,430

 

 

38,430

 

 

37,962

 

 

37,962

 

 

Dilutive effect of stock options and restricted shares

 

243

 

 

243

 

 

147

 

 

147

 

 

Dilutive effect of convertible notes

 

N/A

 

 

891

 

 

6,126

 

 

6,126

 

 

Diluted shares

 

 38,673

 

 

39,564

 

 

44,235

 

 

44,235

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share, diluted

 

 $

0.03

 

 

$

0.17

 

 

$

0.22

 

 

$

0.29

 

 

 

 

 

 

 

 

 

 

Twelve Months Ended

 

Twelve Months Ended

 

 

 

December 31, 2011

 

December 31, 2010

 

 

 

As Reported

 

As Adjusted

 

As Reported

 

As Adjusted

 

Basic net (loss) income

 

 $

(5,143

)

 

$

32,842

 

 

$

17,841

 

 

$

35,787

 

 

Interest expense on convertible notes

 

N/A

 

 

1,203

 

 

N/A

 

 

3,740

 

 

Diluted net income

 

 $

(5,143

)

 

$

34,045

 

 

$

17,841

 

 

$

39,527

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic shares

 

 38,279

 

 

38,279

 

 

37,802

 

 

37,802

 

 

Dilutive effect of stock options and restricted shares

 

N/A

 

 

136

 

 

159

 

 

159

 

 

Dilutive effect of convertible notes

 

N/A

 

 

1,909

 

 

N/A

 

 

6,126

 

 

Diluted shares

 

 38,279

 

 

40,324

 

 

37,961

 

 

44,087

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share, diluted

 

 $

(0.13

)

 

$

0.84

 

 

$

0.47

 

 

$

0.90

 

 

 

 

 

 

 

 

 

 


Three Months Ended
 


Twelve Months Ended

 

 

 


December 31,

2011
 

 

December 31,

2010
 

 

December 31,

2011
 

 

December 31,

2010
 


Net Income per Diluted Share

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss), as reported, per
diluted share
 


$

0.03

 

 

$

0.22

 

 

$

(0.13

)

 

$

0.47

 

 

Interest expense on convertible notes

 

0.00

 

 

N/A

 

 

0.03

 

 

0.08

 

 

Effect of convertible notes on diluted shares

 

(0.00

)

 

N/A

 

 

0.01

 

 

(0.07

)

 

Non-cash, stock-based compensation

 

0.04

 

 

0.04

 

 

0.15

 

 

0.20

 

 

U.S. governmental inquiries/DPA related

 

0.04

 

 

0.03

 

 

0.19

 

 

0.20

 

 

Deferred financing fees and transaction costs associated with Convertible Notes Tender Offer

 

 

 

 

 

0.06

 

 

 

 

Restructuring charges

 

0.03

 

 

(0.00

)

 

0.27

 

 

0.01

 

 

Employment matters (1)

 

 

 

 

 

0.03

 

 

 

 

Product liability provision

 

 

 

 

 

0.21

 

 

 

 

IRS audit liability

 

0.03

 

 

 

 

 

0.03

 

 

 

 


Net income, as adjusted, per diluted share
 


$

0.17

 

 

$

0.29

 

 

$

0.84

 

 

$

0.90

 

 


_______________________________

 

 


(1) Costs associated with settlement of certain employment matters and the hiring of a new CEO.

 

 


 

 

 

 

 

 

 

 

 

 

 

 

 

 


Wright Medical Group, Inc.
 

 

Condensed Consolidated Balance Sheets
 

 

(dollars in thousands--unaudited)

 

 

 

 

 


December 31,

2011
 
 


December 31,

2010
 


Assets

 

 

 

 

 

 Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

153,642

 

 

$

153,261

 

Marketable securities

 

13,597

 

 

19,152

 

Accounts receivable, net

 

98,995

 

 

105,336

 

Inventories

 

164,600

 

 

166,339

 

Prepaid expenses and other current assets

 

69,699

 

 

53,502

 

Total current assets

 

500,533

 

 

497,590

 

 

 

 

 

 

 

Property, plant and equipment, net

 

160,284

 

 

158,247

 

Goodwill and intangible assets, net

 

75,651

 

 

70,673

 

Marketable securities

 

4,502

 

 

17,193

 

Other assets

 

13,610

 

 

11,536

 

Total assets

 

$

754,580

 

 

$

755,239

 

 

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

 

 

 Current liabilities:

 

 

 

 

 

Accounts payable

 

$

11,651

 

 

$

15,862

 

Accrued expenses and other current liabilities

 

55,831

 

 

54,409

 

Current portion of long-term obligations

 

8,508

 

 

1,033

 

Total current liabilities

 

75,990

 

 

71,304

 

Long-term obligations

 

166,792

 

 

201,766

 

Other liabilities

 

43,334

 

 

11,197

 

Total liabilities

 

286,116

 

 

284,267

 

 

 

 

 

 

 

Stockholders' equity

 

468,464

 

 

470,972

 

Total liabilities and stockholders' equity

 

$

754,580

 

 

$

755,239

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


Contacts


 Investors & Media:
Wright Medical Group, Inc.
Julie D. Tracy, 901-290-5817
Sr. Vice President, Chief Communications Officer
[email protected]

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