Attached files

file filename
8-K - FORM 8-K - Wright Medical Group N.V.d920309d8k.htm

Exhibit 99.1

 

LOGO

Tornier Reports First Quarter 2015 Results

And Provides Updated 2015 Outlook

 

    Upper extremity constant currency growth of 14.0% led by Aequalis Ascend® Flex™

 

    Total extremities constant currency revenue growth of 9.2%

 

    Adjusted gross margin increased by 220 basis points to 77.3%

AMSTERDAM, The Netherlands (May 5, 2015) — Tornier N.V. (NASDAQ:TRNX), a global medical device company focused on providing surgical solutions to orthopaedic extremity specialists, reported today its financial results for the first quarter ended March 29, 2015.

Revenue for the first quarter of 2015 was $88.1 million compared to first quarter 2014 revenue of $89.0 million, a decrease of 1.0% as reported and an increase of 6.2% in constant currency. Foreign currency exchange rates negatively impacted first quarter 2015 reported revenue by $6.5 million.

First quarter 2015 revenue of Tornier’s extremities product categories totaled $74.8 million compared to $72.0 million during the prior year period, an increase of 3.9% as reported and 9.2% in constant currency.

Dave Mowry, President and Chief Executive Officer of Tornier, commented, “Our first quarter results were consistent with our expectations. The strength of our upper extremities continues to lead our performance, driven by our competitively superior team of specialist sales representatives, innovative technologies and our deep new product pipeline. In our lower extremities business, we continued to execute on long-term sales education and training initiatives, which will position this team for improved productivity, but we experienced anticipated distraction from our previously announced merger with Wright Medical Group, Inc.. We continue to be committed to our transaction with Wright and look forward to a combined organization that can deliver accelerated revenue growth and profitability.”

Mr. Mowry continued, “In March, we received FDA clearance for the Simpliciti® Shoulder System, making Tornier the first-to-market in the United States with an ultra-short stem, bone sparing, total shoulder arthroplasty system. There was significant interest in Simpliciti at the recent American Academy of Orthopedic Surgeons annual meeting, particularly as a potential option for younger, more active patients that have not been good candidates for traditional systems. We look forward to initiating a limited user release this quarter and ramping up to a full market launch by the end of this year.”

The Company’s first quarter 2015 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $10.4 million, or 11.8% of reported revenue, compared to $9.5 million, or 10.7% of revenue, in the same quarter of the prior year.

First Quarter 2015 Revenue Highlights

Extremities

 

    Revenue from the upper extremities joints and trauma category was $57.4 million, an increase of 14.0% in constant currency over the same quarter in 2014. This growth was led by the Aequalis Ascend family of shoulder joint replacement products, which continued to gain global surgeon acceptance.


LOGO

 

    Revenue from Tornier’s lower extremities joints and trauma category in the first quarter of 2015 reached $13.9 million, a decrease of 4.7% in constant currency. This reflects continued growth from the Company’s total ankle arthroplasty systems, offset by lower sales of core foot fixation products. As anticipated, distractions from the Company’s pending merger with Wright impacted results in all segments of the Company’s lower extremities business.

 

    Revenue from the sports medicine and biologics product category was $3.5 million in the first quarter of 2015, a decrease of 3.9% in constant currency over the same quarter in 2014, reflecting a decline in the Company’s soft tissue anchor and biologics products.

Large Joints

Constant currency revenue from large joints and other products decreased 6.1% in the first quarter of 2015, reflecting anticipated deceleration in Europe and a challenging comparison to the prior year period, which benefitted from the launch of new minimally invasive hip instrumentation.

Geographic Revenue

On a geographic basis as compared to the first quarter of 2014, Tornier’s international revenue decreased 10.1% as reported and increased 6.5% in constant currency, representing 40% of reported global revenue. Revenue in the United States increased by 6.0% and represented 60% of reported global revenue.

Fiscal Year 2015 Outlook

The following guidance assumes Tornier continues to be a standalone business for the full year of 2015. This guidance does not include the effects from any product line divestitures nor revenue or cost synergies or dis-synergies from the proposed merger with Wright, but it does anticipate some impact from distraction related to the announcement of the pending merger, particularly in the lower extremities business.

 

    The Company is increasing the bottom end of its full year constant currency guidance for extremities product categories revenue, with constant currency revenue now expected to be in the range of $304 to $312 million, representing growth in constant currency of 6.0% to 8.8% over last year. This growth is expected to be driven primarily by strength in upper extremities.

 

    For the full year 2015, the Company is updating its reported and constant currency revenue guidance to reflect deceleration in the large joint business and changes in foreign currency exchange rates, which is now anticipated to have a negative impact of approximately $25 million dollars on full year reported revenue, as compared to the Company’s prior estimate of $21 million dollars. As a result, 2015 reported revenue is projected to be in the range of $334.0 to $344.0 million, representing a change of (3.2)% to (0.3)% over last year, and 2015 constant currency revenue is projected to be in the range of $359.0 to $369.0 million, representing a change in constant currency of 4.1% to 7.0% over last year.

 

    The Company is updating its 2015 earnings per share guidance, with earnings per share expected to be in the range of a loss of $(0.60) to $(0.40) per share.

 

    The Company expects 2015 adjusted EBITDA guidance to be in the range of $35 to $38 million, or 10.5% to 11.0% of reported revenue.


LOGO

 

Conference Call

Tornier will host a conference call today at 4:30 p.m. eastern time to discuss its first quarter results and its outlook for 2015. The conference call will be available to interested parties through a live audio webcast available through the Company’s website at www.tornier.com. Those without internet access may join the call from within the U.S. by dialing (877) 673-5355; outside the U.S., dial (760) 666-3805.

A telephone replay will be available for ten days following the call by dialing (855) 859-2056 for domestic participants and (404) 537-3406 for international participants. When prompted, please enter the replay pin number 22980337. For those who are not available to listen to the live webcast, the call will be archived for one year on Tornier’s website.

Forward-Looking Statements

Statements contained in this release that relate to future, not past, events are forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current expectations of future events and often can be identified by words such as “believe,” “expect,” “should,” “project,” “anticipate,” “intend,” “will,” “can,” “may,” “could,” “continue,” “outlook,” “guidance,” “future, “look forward”, other words of similar meaning or the use of future dates. Examples of forward-looking statements in this release include Tornier’s financial guidance for the full year 2015 and Tornier’s expectations for improved sales force productivity, accelerated revenue growth and profitability for the combined company post-merger and the timing of the commercial launch of Simpliciti. Forward-looking statements by their nature address matters that are, to different degrees, uncertain. Uncertainties and risks may cause Tornier’s actual results to be materially different than those expressed in or implied by Tornier’s forward-looking statements. For Tornier, such uncertainties and risks include, among others, risks relating to Tornier’s proposed merger with Wright Medical Group, Inc., including the timing of the transaction; uncertainties as to whether Tornier shareholders and Wright shareholders will approve the transaction; the risk that competing offers will be made; the possibility that various closing conditions for the transaction may not be satisfied or waived, including that a governmental entity may prohibit, delay or refuse to grant approval for the consummation of the transaction, or the terms of such approval; the effects of disruption from the transaction making it more difficult to maintain relationships with employees, customers, vendors and other business partners; the risk that shareholder litigation in connection with the transaction may delay the merger or result in significant costs of defense, indemnification and liability; other business effects, including the effects of industry, economic or political conditions outside of Wright’s or Tornier’s control; the failure to realize synergies and cost-savings from the transaction or delay in realization thereof; the businesses of Wright and Tornier may not be combined successfully, or such combination may take longer, be more difficult, time-consuming or costly to accomplish than expected; operating costs and business disruption following completion of the transaction, including adverse effects on employee retention and on Wright’s and Tornier’s respective business relationships with third parties; transaction costs; actual or contingent liabilities; the adequacy of the combined company’s capital resources; and other risks and uncertainties, including Tornier’s future operating results and financial performance; Tornier’s reliance on its independent sales agencies and distributors to sell its products and the effect on its business and operating results of agency and distributor changes, transitions to direct selling models in certain geographies and the recent transition of its U.S. sales channel towards focusing separately on upper and lower extremity products; fluctuations in foreign currency exchange rates; the effect of global economic conditions; the European sovereign debt crisis and austerity


LOGO

 

measures; risks associated with Tornier’s international operations and expansion; the timing of regulatory approvals and introduction of new products; physician acceptance, endorsement, and use of new products; the effect of regulatory actions, changes in and adoption of reimbursement rates and product recalls; competitor activities; Tornier’s manufacturing capacity; Tornier’s leverage and access to credit under its credit agreement; and changes in tax and other legislation. More detailed information on these and other factors that could affect Tornier’s actual results are described in Tornier’s filings with the U.S. Securities and Exchange Commission, including its most recently filed annual report on Form 10-K for the fiscal year ended December 28, 2014 and subsequent quarterly report on Form 10-Q. Tornier undertakes no obligation to update its forward-looking statements.

About Tornier

Tornier is a global medical device company focused on providing solutions to surgeons who treat musculoskeletal injuries and disorders of the shoulder, elbow, wrist, hand, ankle and foot. The Company’s broad offering of over 95 product lines includes joint replacement, trauma, sports medicine, and biologic products to treat the extremities, as well as joint replacement products for the hip and knee in certain international markets. Since its founding approximately 70 years ago, Tornier’s “Specialists Serving Specialists” philosophy has fostered a tradition of innovation, intense focus on surgeon education, and commitment to advancement of orthopaedic technology stemming from its close collaboration with orthopaedic surgeons and thought leaders throughout the world. For more information regarding Tornier, visit www.tornier.com.

Tornier®, Aequalis®, Aequalis Ascend®, Aequalis Ascend® Flex™, and Simpliciti® are trademarks of Tornier N.V and its subsidiaries, registered as indicated in the United States, and in other countries. All other trademarks and trade names referred to in this release are the property of their respective owners.

Use of Non-GAAP Financial Measures

To supplement Tornier’s consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (GAAP), Tornier uses certain non-GAAP financial measures in this release. Reconciliations of the non-GAAP financial measures used in this release to the most comparable U.S. GAAP measures for the respective periods can be found in tables later in this release immediately following the detail of revenue by geography. Non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for Tornier’s financial results prepared in accordance with GAAP.


LOGO

 

Tornier N.V.

Condensed Consolidated Balance Sheets

(in thousands)

 

     March 29, 2015      December 28, 2014  
     (unaudited)         

Assets

     

Current assets

     

Cash and cash equivalents

   $ 36,057       $ 27,940   

Accounts receivable, net

     73,823         63,583   

Inventories

     83,617         88,662   

Deferred income taxes and other current assets

     25,954         29,516   
  

 

 

    

 

 

 

Total current assets

  219,451      209,701   

Instruments, net

  58,824      62,888   

Property, plant and equipment, net

  42,385      44,662   

Goodwill and intangibles, net

  323,244      339,902   

Deferred income taxes and other assets

  1,626      1,422   
  

 

 

    

 

 

 

Total assets

$ 645,530    $ 658,575   
  

 

 

    

 

 

 

Liabilities and shareholders’ equity

Current liabilities

Short-term borrowing and current portion of long-term debt

$ 17,255    $ 7,394   

Accounts payable

  16,592      15,073   

Accrued liabilities, deferred income taxes and other current liabilities

  60,445      61,994   
  

 

 

    

 

 

 

Total current liabilities

  94,292      84,461   

Long-term debt

  77,286      68,105   

Deferred income taxes and other long-term liabilities

  24,854      27,119   
  

 

 

    

 

 

 

Total liabilities

  196,432      179,685   

Shareholders’ equity

  449,098      478,890   
  

 

 

    

 

 

 

Total liabilities and shareholders’ equity

$ 645,530    $ 658,575   
  

 

 

    

 

 

 


LOGO

 

Tornier N.V.

Consolidated Statements of Operations

(in thousands, except per share data)

 

     Three months ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Revenue

   $ 88,092      $ 89,025   

Cost of goods sold

     19,984        22,202   

Cost of goods sold - acquisition related

     —          262   
  

 

 

   

 

 

 

Gross profit

  68,108      66,561   
  77.3   74.8

Operating expenses

Selling, general and administrative

  60,088      58,848   

Research and development

  5,938      5,722   

Amortization of intangible assets

  4,028      4,334   

Special charges

  1,737      2,686   
  

 

 

   

 

 

 

Total operating expenses

  71,791      71,590   

Operating loss

  (3,683   (5,029

Other income (expense)

Interest income

  3      68   

Interest expense

  (1,297   (1,349

Foreign currency transaction gain

  333      171   

Other non-operating income

  61      2   
  

 

 

   

 

 

 

Loss before income taxes

  (4,583   (6,137

Income tax (benefit) expense

  (533   900   
  

 

 

   

 

 

 

Consolidated net loss

$ (5,116 $ (5,237
  

 

 

   

 

 

 

Net loss per share

Basic and diluted

$ (0.10 $ (0.11

Weighted average ordinary shares outstanding

Basic and diluted

  48,989      48,524   


LOGO

 

Tornier N.V.

Consolidated Condensed Statements of Cash Flow

(in thousands)

 

     Three months ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Cash flows from operating activities

    

Consolidated net loss

   $ (5,116   $ (5,237

Adjustments to reconcile consolidated net loss to net cash (used in) provided by operating activities

    

Depreciation and amortization

     10,227        9,823   

Non-cash foreign currency gain

     (357     (171

Deferred income taxes

     (2,010     (1,171

Share-based compensation

     2,118        1,780   

Non-cash interest expense and discount amortization

     210        213   

Inventory obsolescence

     2,000        3,186   

Fair value adjustment of contingent consideration liability

     769        —     

Inventory step-up from acquisition

     —          262   

Other non-cash items affecting earnings

     548        82   

Changes in operating assets and liabilities, net of acquisitions

    

Accounts receivable

     (12,754     (4,504

Inventories

     (3,832     (7,432

Accounts payable and accruals

     4,714        7,610   

Other current assets and liabilities

     400        (278

Other non-current assets and liabilities

     246        (796
  

 

 

   

 

 

 

Net cash (used in) provided by operating activities

  (2,837   3,367   

Cash flows from investing activities

Acquisition-related cash payments

  —        (2,000

Additions of instruments

  (4,678   (6,800

Purchases of property, plant and equipment

  (2,411   (1,764
  

 

 

   

 

 

 

Net cash used in investing activities

  (7,089   (10,564

Cash flows from financing activities

Borrowing under line of credit

  10,000      —     

Proceeds from issuance of long-term debt

  10,063      —     

Repayments of long-term debt

  (315   (374

Contingent consideration payments

  (800   —     

Deferred financing costs

  (114   —     

Issuance of ordinary shares

  292      351   
  

 

 

   

 

 

 

Net cash provided by (used in) financing activities

  19,126      (23

Effect of currency exchange rates on cash and cash equivalents

  (1,083   (151
  

 

 

   

 

 

 

Increase (decrease) in cash and cash equivalents

  8,117      (7,371

Cash and cash equivalents at beginning of period

  27,940      56,784   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

$ 36,057    $ 49,413   
  

 

 

   

 

 

 


LOGO

 

Tornier N.V.

Selected Revenue Information

(in thousands)

 

     Three months ended  
     (unaudited)         
     March 29, 2015      March 30, 2014      Percent
change
 

Revenue by product category

        

Upper extremity joints and trauma

   $ 57,377       $ 53,055         8.1

Lower extremity joints and trauma

     13,934         15,073         -7.6

Sports medicine and biologics

     3,477         3,887         -10.5
  

 

 

    

 

 

    

 

 

 

Total extremities

  74,788      72,015      3.9

Large joints and other

  13,304      17,010      -21.8
  

 

 

    

 

 

    

 

 

 

Total

$ 88,092    $ 89,025      -1.0
  

 

 

    

 

 

    

 

 

 

Revenue by geography

United States

$ 52,970    $ 49,965      6.0

International

  35,122      39,060      -10.1
  

 

 

    

 

 

    

 

 

 

Total

$ 88,092    $ 89,025      -1.0
  

 

 

    

 

 

    

 

 

 


LOGO

 

Tornier N.V.

Reconciliation of Revenue to Non-GAAP Revenue on a Constant Currency Basis

(in thousands)

 

     Three months ended         
     (unaudited)         
     March 29, 2015      March 30, 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

   $ 57,377       $ 3,132       $ 60,509       $ 53,055         14.0

Lower extremity joints and trauma

     13,934         431         14,365         15,073         -4.7

Sports medicine and biologics

     3,477         259         3,736         3,887         -3.9
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total extremities

  74,788      3,822      78,610      72,015      9.2

Large joints and other

  13,304      2,671      15,975      17,010      -6.1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 88,092    $ 6,493    $ 94,585    $ 89,025      6.2
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue by geography

United States

$ 52,970    $ —      $ 52,970    $ 49,965      6.0

International

  35,122      6,493      41,615      39,060      6.5
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

$ 88,092    $ 6,493    $ 94,585    $ 89,025      6.2
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


LOGO

 

Tornier N.V.

Reconciliation of Net Loss to

Non-GAAP Adjusted Earnings Before Interest, Taxes, Depreciation

and Amortization (EBITDA)

(in thousands)

 

     Three months ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Revenue, as reported

   $ 88,092      $ 89,025   

Net loss, as reported

   $ (5,116   $ (5,237

Interest income

     (3     (68

Interest expense

     1,297        1,349   

Income tax expense (benefit)

     533        (900

Depreciation

     6,199        5,489   

Amortization

     4,028        4,334   
  

 

 

   

 

 

 

Subtotal Non-GAAP EBITDA

  6,938      4,967   

Other non-operating income

  (61   (2

Foreign currency transaction loss

  (333   (171

Share-based compensation

  2,118      1,780   

Inventory step-up from acquisition

  —        262   

Special charges:

Acquisition, integration and distribution transition costs

  924      1,913   

Instrument use tax refund

  (2,000   —     

Restructuring charges

  —        448   

Proposed merger-related costs

  2,813      —     

Other

  —        325   
  

 

 

   

 

 

 

Non-GAAP adjusted EBITDA

$ 10,399    $ 9,522   
  

 

 

   

 

 

 

Non-GAAP adjusted EBITDA margin

  11.8   10.7
  

 

 

   

 

 

 


LOGO

 

Tornier N.V.

Reconciliation of Net Loss and Net Loss per Share

to Non-GAAP Adjusted Net Loss and Non-GAAP Adjusted Net Loss per Share

(in thousands)

 

     Three months ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Net loss, as reported

   $ (5,116   $ (5,237

Inventory step-up from acquisition, net of tax

     —          250   

Special charges, net of tax:

    

Acquisition, integration and distribution transition costs

     924        1,913   

Instrument use tax refund

     (2,000     —     

Restructuring charges

     —          448   

Proposed merger-related costs

     2,811        —     

Other

     —          325   
  

 

 

   

 

 

 

Non-GAAP adjusted net loss

  (3,381   (2,301
  

 

 

   

 

 

 

Net loss per share, as reported

Basic and diluted

$ (0.10 $ (0.11

Inventory step-up from acquisition, net of tax

  —        0.01   

Special charges, net of tax:

  —        —     

Acquisition, integration and distribution transition costs

  0.02      0.03   

Instrument use tax refund

  (0.05   —     

Restructuring charges

  —        0.01   

Proposed merger-related costs

  0.06      —     

Other

  —        0.01   
  

 

 

   

 

 

 

Non-GAAP adjusted net loss per share

Basic and diluted

$ (0.07 $ (0.05
  

 

 

   

 

 

 

Weighted average ordinary shares outstanding

Basic and diluted

  48,989      48,524   


LOGO

 

Tornier N.V.

Reconciliation of Net Cash (Used in) Provided by Operating Activities

to Non-GAAP Adjusted Free Cash Flow

(in thousands)

 

     Three months ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Net cash (used in) provided by operating activities, as reported

   $ (2,837   $ 3,367   

Adjusted for:

    

Additions of instruments, as reported

     (4,678     (6,800

Purchases of property, plant and equipment, as reported

     (2,411     (1,764
  

 

 

   

 

 

 

Non-GAAP adjusted free cash flow

$ (9,926 $ (5,197
  

 

 

   

 

 

 

Tornier N.V.

Reconciliation of Gross Margin and Gross Margin %

to Non-GAAP Adjusted Gross Margin and Gross Margin %

(in thousands)

 

     Three months ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Revenue, as reported

   $ 88,092      $ 89,025   

Gross margin, as reported

   $ 68,108      $ 66,561   

Gross margin %, as reported

     77.3     74.8

Adjusted for:

    

Inventory step-up due to acquisition

     —          262   
  

 

 

   

 

 

 

Non-GAAP adjusted gross margin

  68,108      66,823   
  

 

 

   

 

 

 

Non-GAAP adjusted gross margin %

  77.3   75.1


LOGO

 

Tornier N.V.

Reconciliation of Operating Expenses and Operating Expenses as a % of Revenue to

Non-GAAP Adjusted Operating Expenses and Non-GAAP Adjusted Operating Expenses as a % of Revenue

 

     Three Months Ended  
     (unaudited)  
     March 29, 2015     March 30, 2014  

Revenue, as reported

   $ 88,092      $ 89,025   

Operating expenses, as reported

     71,791        71,590   

Operating expenses as a percentage of revenue, as reported

     81.5     80.4

Adjusted for:

    

Amortization of intangible assets

     (4,028     (4,334

Special charges

     (1,737     (2,686
  

 

 

   

 

 

 

Total adjustments

  (5,765   (7,020

Non-GAAP adjusted operating expenses

$ 66,026    $ 64,570   
  

 

 

   

 

 

 

Non-GAAP adjusted operating expenses as a percentage of revenue

  75.0   72.5
  

 

 

   

 

 

 


LOGO

 

Tornier N.V.

Reconciliation of Projected 2015 Operating Loss

to Projected Non-GAAP Adjusted EBITDA

(in millions)

 

     Year ended  
     (unaudited)  
     December 27, 2015  
     Low     High  

Revenue

   $ 334.0      $ 344.0   

Operating loss

   $ (21.3   $ (13.1

Adjusted for:

    

Depreciation and amortization expense

     41.0        38.8   

Share-based compensation

     10.2        8.7   

Special charges

     5.1        3.6   
  

 

 

   

 

 

 

Total adjustments

$ 56.3    $ 51.1   

Non-GAAP adjusted EBITDA

$ 35.0    $ 38.0   
  

 

 

   

 

 

 

Non-GAAP adjusted EBITDA margin

  10.5   11.0
  

 

 

   

 

 

 


LOGO

 

Tornier believes the non-GAAP financial measures presented above provide additional meaningful information for measuring Tornier’s financial performance and are measures frequently used by Tornier’s management, as well as securities analysts and investors. Tornier uses the non-GAAP financial measures as supplemental measures of its performance and believes such measures facilitate operating performance comparisons from period to period and company to company by factoring out potential differences caused by charges not related to Tornier’s regular, ongoing business, including non-cash charges, certain large and unpredictable charges, acquisitions, dispositions, litigation settlements and tax positions. Tornier’s management uses the non-GAAP financial measures to assess the performance of Tornier’s core operations, analyze underlying trends in Tornier’s businesses, establish operational goals and forecasts, and evaluate Tornier’s performance period over period and in relation to the operating results of its competitors. Tornier’s management uses the non-GAAP financial measures to help allocate its resources to both ongoing and prospective business initiatives and to help make budgeting and spending decisions, for example, between product development expenses, research and development expenses, and selling, general and administrative expenses. Tornier’s management is evaluated on the basis of several of these non-GAAP financial measures when determining achievement of performance incentive compensation goals.

Tornier believes that non-GAAP financial measures have limitations as analytical tools since they do not reflect all of the amounts associated with Tornier’s operating results as determined in accordance with GAAP and should only be used to evaluate Tornier’s operating results in conjunction with the corresponding GAAP measures. Accordingly, revenue on a constant currency basis should not be used as a substitute for revenue, EBITDA, adjusted EBITDA, adjusted net income (loss) and adjusted net income (loss) per share should not be used as a substitute for net income or net income per share; adjusted EBITDA margin should not be used as a substitute for net margin or operating margin; free cash flow should not be used as a substitute for cash flows from operations; and adjusted gross margin and gross margin percentage should not be used as a substitute for gross margin or gross margin as a percentage of revenue, in each case as determined in accordance with GAAP. Neither EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per share, free cash flow, adjusted gross margin and gross margin as a percentage of revenue, should be an indication of whether cash flow will be sufficient to fund Tornier’s cash requirements. Additionally, the calculation of non-GAAP financial measures is not based on any comprehensive or standard set of accounting rules or principles. Accordingly, Tornier’s definitions of revenue on a constant currency basis, EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted net income (loss), adjusted net income (loss) per share, free cash flow, adjusted gross margin and gross margin as a percentage of revenue, may differ from the definitions of other companies using the same or similar names limiting, to some extent, the usefulness of such measures for comparison purposes.

For further information regarding why Tornier believes that these non-GAAP financial measures provide useful information to investors, the specific manner in which management uses these measures, and some of the limitations associated with the use of these measures, please refer to Tornier’s current report on Form 8-K filed today with the Securities and Exchange Commission which attaches this release as an exhibit. This current report on Form 8-K is available on the SEC’s website at www.sec.gov or on Tornier’s website at www.tornier.com.


LOGO

 

Important Additional Information and Where to Find It

In connection with the proposed merger, Tornier has filed with the U.S. Securities and Exchange Commission (SEC) a registration statement on Form S-4 that includes a preliminary joint proxy statement of Wright and Tornier that also constitutes a preliminary prospectus of Tornier. The registration statement is not complete and will be further amended. Once finalized, Wright and Tornier will make the final definitive joint proxy statement/prospectus available to their respective shareholders. Investors are urged to read the final definitive joint proxy statement/prospectus when it becomes available, because it will contain important information. The registration statement, definitive joint proxy statement/prospectus and other documents filed by Tornier and Wright with the SEC will be available free of charge at the SEC’s website (www.sec.gov) and from Tornier and Wright. Requests for copies of the joint proxy statement/prospectus and other documents filed by Wright with the SEC may be made by contacting Julie D. Tracy, Senior Vice President and Chief Communications Officer by phone at (901) 290-5817 or by email at julie.tracy@wmt.com, and request for copies of the joint proxy statement/prospectus and other documents filed by Tornier may be made by contacting Shawn McCormick, Chief Financial Officer by phone at (952) 426-7646 or by email at shawn.mccormick@tornier.com.

Wright, Tornier, their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies from Wright’s and Tornier’s respective shareholders in connection with the proposed transaction. Information about the directors and executive officers of Wright and their ownership of Wright stock is set forth in Wright’s annual report on Form 10-K/A for the fiscal year ended December 31, 2014, which was filed with the SEC on April 30, 2015. Information regarding Tornier’s directors and executive officers is contained in Tornier’s annual report on Form 10-K for the fiscal year ended December 28, 2014, which was filed with the SEC on February 24, 2015, and its preliminary proxy statement for its 2015 annual general meeting of shareholders, which was filed with the SEC on April 28, 2015. These documents can be obtained free of charge from the sources indicated above. Certain directors, executive officers and employees of Wright and Tornier may have direct or indirect interest in the transaction due to securities holdings, vesting of equity awards and rights to severance payments. Additional information regarding the participants in the solicitation of Wright and Tornier shareholders will be included in the joint proxy statement/prospectus.

CONTACT:

Tornier N.V.

Shawn McCormick

Chief Financial Officer

(952) 426-7646

shawn.mccormick@tornier.com