8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 27, 2009
WRIGHT MEDICAL GROUP, INC.
(Exact name of registrant as specified in charter)
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Delaware
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000-32883
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13-4088127 |
(State or Other Jurisdiction
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(Commission
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(IRS Employer |
of Incorporation)
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File Number)
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Identification No.) |
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5677 Airline Road, |
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Arlington, Tennessee
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38002 |
(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code: (901) 867-9971
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On April 27, 2009, Wright Medical Group, Inc. issued a press release announcing its consolidated
financial results for the quarter ended March 31, 2009. A copy of the press release is furnished as
Exhibit 99 to this report.
The attached press release includes the following non-GAAP measures: operating income, as adjusted;
net income, as adjusted; net income, as adjusted, per diluted share; and effective tax rate, as
adjusted.
These non-GAAP measures are not in accordance with, or an alternative for, generally accepted
accounting principles and may be different from non-GAAP measures used by other companies. In
addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or
principles. We believe that non-GAAP measures have limitations in that they do not reflect all of
the amounts associated with our results of operations as determined in accordance with GAAP and
that these measures should only be used to evaluate our results of operations in conjunction with
the corresponding GAAP measures.
For our internal budgeting and resource allocation process, our management uses financial
information that does not include (a) restructuring charges, (b) non-cash stock-based compensation
expenses, (c) non-cash inventory step-up amortization, (d) costs associated with U.S. government
inquiries, and (e) the income tax effects of the foregoing. We use these non-GAAP financial
measures in making operating decisions because we believe the measures provide meaningful
supplemental information regarding our core operational performance and give us a better
understanding of how we should invest in research and development activities and how we should
allocate resources to both ongoing and prospective business initiatives. We use these measures to
help make budgeting and spending decisions, for example, as between product development expenses
and research and development, sales and marketing and general and administrative expenses.
Additionally, management is evaluated on the basis of these non-GAAP financial measures when
determining achievement of their incentive performance compensation targets. Further, these
non-GAAP financial measures facilitate managements internal comparisons to both our historical
operating results and to our competitors operating results.
As described above, we exclude the following items from one or more of our non-GAAP measures:
Restructuring charges. We exclude restructuring charges associated with the closure of our Toulon,
France operations from our non-GAAP measures, primarily because they are not reflective of our
ongoing operating results, and they are not used by management to assess the core profitability of
our business operations. We further believe that excluding this item from our non-GAAP results is
useful to investors in that it allows for period-over-period comparability.
Non-cash stock-based compensation expense. We exclude stock-based compensation expenses from our
non-GAAP measures primarily because they are non-cash expenses. We believe that it is useful to
investors to understand the application of SFAS 123R and its impact on our operational performance,
liquidity, and our ability to invest in R&D and fund acquisitions and capital expenditures. While
stock-based compensation expense calculated in accordance with SFAS 123R constitutes an ongoing and
recurring expense, such expense is excluded from our non-GAAP results because it is not an expense
that requires cash settlement and is not used by management to assess the core profitability of our
business operations. We further believe that excluding this item from our non-GAAP results is
useful to investors in that it allows for greater transparency to certain line items in our
financial statements. In addition, excluding this item from our non-GAAP results facilitates
comparisons to our competitors operating results.
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Non-cash inventory step-up amortization. We exclude inventory step-up amortization associated with
our recent acquisitions from our non-GAAP measures, primarily because they are not reflective of
our ongoing operating results, and they are not used by management to assess the core profitability
of our business operations. Additionally, because these are non-cash expenses, they do not impact
our operational performance, liquidity, or our ability to invest in R&D and fund acquisitions and
capital expenditures. We further believe that excluding this item from our non-GAAP results is
useful to investors in that it allows for period-over-period comparability.
Costs associated with the U.S. governmental inquiries. During 2008 and 2009, we recognized costs
associated with the ongoing U.S. governmental inquiries. Those costs resulted primarily from legal
fees incurred as we respond to these inquiries. We excluded those costs from our non-GAAP results
because such costs are not used by management to assess the core profitability of our business
operations. We further believe that these measures are useful to investors in that they allow for
period-over-period comparability.
Income tax effects of the foregoing. This amount is used to present each of the amounts described
above on an after-tax basis consistent with the presentation of net income, as adjusted.
We believe that non-GAAP measures have limitations in that they do not reflect all of the amounts
associated with our financial results as determined in accordance with GAAP and that these measures
should only be used to evaluate our financial results in conjunction with the corresponding GAAP
measures, and that is why we qualify the use of non-GAAP financial information in a statement when
non-GAAP information is presented.
We further believe that where the adjustments used in calculating net income, as adjusted, and net
income, as adjusted, per diluted share are based on specific, identified amounts that impact
different line items in the Condensed Consolidated Statements of Operations (including operating
income and net income), that it is useful to investors to understand how these specific line items
in the Condensed Consolidated Statements of Operations are affected by these adjustments for the
following reasons:
Operating income. Excluding non-cash stock-based compensation expense and inventory step-up
amortization from the calculation of operating income assists investors in evaluating
period-over-period changes without giving effect to these charges which are non-cash in nature, in
order to evaluate the results of the underlying operating activities for the periods presented.
Excluding restructuring charges and the costs associated with the U.S. governmental inquiries from
the calculation of operating income assists investors in evaluating period-over-period changes in
this measure without giving effect to transactions which do not relate to the performance of our
ongoing operations.
Net Income. Excluding non-cash stock-based compensation expense and inventory step-up amortization
from the calculation of net income assists investors in evaluating period-over-period changes
without giving effect to these charges which are non-cash in nature, in order to evaluate the
results of the underlying operating activities for the periods presented. Excluding restructuring
charges and the costs associated with the U.S. governmental inquiries from the calculation of net
income assists investors in evaluating period-over-period changes in this measure without giving
effect to transactions which do not relate to the performance of our ongoing operations.
Effective Tax Rate. Excluding the income tax effect of the non-GAAP, pre-tax adjustments from the
provision for income taxes assists investors in understanding the tax provision associated with
those adjustments and our effective tax rate related to our ongoing operations.
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Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
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Exhibit |
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Description |
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99
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Press release issued by Wright Medical Group, Inc. on April 27, 2009. |
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: April 27, 2009
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WRIGHT MEDICAL GROUP, INC.
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By: |
/s/ Gary D. Henley
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Gary D. Henley |
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President and Chief Executive Officer |
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EXHIBIT INDEX
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Exhibit |
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Number |
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Description |
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99
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Press release issued by Wright Medical Group, Inc. on April 27, 2009. |