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8-K - FORM 8-K - WRIGHT MEDICAL GROUP INC | g28089e8vk.htm |
EXHIBIT 99.1
FOR RELEASE 7:30 A.M. CENTRAL Thursday, September 15, 2011 Contact: Lance Berry (901) 867-4607 |
Wright Medical Group, Inc. Announces
Cost Restructuring Plan
Cost Restructuring Plan
Company to Establish Stronger Platform for Growth, Enhance Profitability and
Build Shareholder Value
Build Shareholder Value
Expects to Achieve Incremental EPS in 2012
ARLINGTON, TN September 15, 2011 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, announced today that it is implementing a cost restructuring plan to foster growth,
enhance profitability and cash flow, and build shareholder value. Wright Medical expects that the
initial phase of this plan will be completed during the next nine months, with additional
efficiency initiatives to be implemented throughout 2012 and beyond.
Under the plan, Wright Medical has begun to implement numerous initiatives to reduce spending,
including streamlining select aspects of its international selling and distribution operations,
reducing the size of its international product portfolio, adjusting plant operations to align with
the Companys volume and mix expectations and rationalizing its research and development projects.
In total, Wright Medical plans to reduce its workforce by approximately 80 employees, or 6%. The
Company has notified affected employees and has taken steps to ensure a smooth transition.
Objectives of the plan include generating annual operating efficiencies to bolster the Companys
financial results in 2012 and beyond while enabling investments in longer term strategies for
growth. Wright Medical estimates that the plan will have a favorable impact to adjusted earnings
per share of approximately $0.05 to $0.06 in 2012, and a favorable annual impact of approximately
$0.08 thereafter.
David D. Stevens, Interim Chief Executive Officer stated, Our industry continues to face a
challenging economic environment and, after extensive analysis and consideration, we believe this
plan will enhance the Companys prospects for growth and value creation. We are taking these
actions now to better position the Company to grow its earnings in 2012 and we are confident that
this plan will result in a leaner, more cost efficient operation, which is in the best interest of
our business and all of our stakeholders. Additionally, the Company continues to have a strong
balance sheet and is positioned well for investments in acquisitions to drive future growth.
The Company expects to record total pre-tax charges related to the cost restructuring plan in the
range of approximately $25 million to $30 million, of which approximately $6 million to $8 million
is expected to be non-cash. These charges will include, among others, severance and benefits costs,
excess and obsolete inventory charges, asset impairment charges, external legal and professional
fees and contract termination costs. A majority of these charges are expected to be recorded in
the third and fourth quarters of 2011, with some additional charges to be recorded during the first
half of 2012.
The Companys adjusted earnings per share excludes costs associated with the restructuring plan,
the transaction costs and non-cash deferred financing fees associated with the Convertible Notes
tendered, possible future acquisitions, other material future business developments, non-cash
stock-based compensation expense, and costs associated with the Companys DPA (including the
associated independent monitor).
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements as defined under U.S. federal securities
laws. These statements reflect managements current knowledge, assumptions, beliefs, estimates, and
expectations and express managements 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. Readers 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, 2010, and our subsequently filed quarterly reports, under the heading Risk
Factors and elsewhere), and the impact of our 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
2011 (which could be extended) and the Corporate Integrity Agreement through September 2015. 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, extension of the term of
the Deferred Prosecution Agreement, 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 Deferred Prosecution Agreement or the
Corporate Integrity Agreement 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 managements 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; and impact of the commercial and credit environment on us
and our customers and suppliers.
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 Companys website
at www.wmt.com.