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Exhibit 99.1

 

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Tornier Reports Second Quarter 2015 Results

Upper extremity constant currency growth of 11.9% led by the Aequalis Ascend™ Flex

AMSTERDAM, The Netherlands (August 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 second quarter ended June 28, 2015.

Revenue for the second quarter of 2015 was $83.2 million compared to second quarter 2014 revenue of $86.9 million, a decrease of 4.2% as reported and an increase of 4.0% in constant currency. Foreign currency exchange rates negatively impacted second quarter 2015 reported revenue by $7.1 million.

Second quarter 2015 revenue of Tornier’s extremities product categories totaled $71.8 million compared to $71.9 million during the prior year period, a decrease of 0.2% as reported and an increase of 6.0% in constant currency.

Dave Mowry, President and Chief Executive Officer of Tornier, commented, “Our second quarter performance highlights the strong momentum in our upper extremities business, driven by our innovative product portfolio and clinically superior sales team. The Aequalis Ascend™ Flex shoulder system delivered another quarter of above-market growth and we made good progress in our commercial preparations for the recently FDA cleared Simpliciti™ shoulder system. This includes working with key opinion leaders and developing Centers of Excellence for Simpliciti, laying the foundation for the next leg of growth in our upper extremities business as we enter 2016.”

Mr. Mowry continued, “As expected, our lower extremities business experienced distractions related to our pending merger with Wright Medical Group, Inc. However, we have been able to retain a high quality sales team and believe we have a very attractive combination of products and people to drive long-term growth for the future combined business. We are confident that the pending merger with Wright will leverage the strengths of both companies to create the premier high growth extremities and biologics company. Subject to FTC clearance, we expect the merger to close in the third quarter and are enthusiastic about the growth and profitability prospects for the combined organization.”

The Company’s second quarter 2015 adjusted EBITDA, as defined in the GAAP to non-GAAP reconciliation provided later in this release, was $8.3 million, or 9.9% of reported revenue, compared to $6.1 million, or 7.0% of revenue, in the same quarter of the prior year.

Second Quarter 2015 Revenue Highlights

Extremities

 

    Revenue from the upper extremities joints and trauma category was $56.6 million, an increase of 11.9% in constant currency over the same quarter in 2014. Growth was led by the Aequalis Ascend family of shoulder joint replacement products, which continued to gain global surgeon acceptance. The consistent performance of our upper extremities joints and trauma category demonstrates the success of the Company’s strategy to deliver superior products with a differentiated sales force.


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    Revenue from Tornier’s lower extremities joints and trauma category in the second quarter of 2015 reached $12.0 million, a decrease of 13.8% in constant currency. As anticipated, distractions from the Company’s pending merger with Wright have impacted results in all segments of the Company’s lower extremities business.

 

    Revenue from the sports medicine and biologics product category was $3.2 million in the second quarter of 2015, a decrease of 3.0% 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 5.7% in the second 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 second quarter of 2014, Tornier’s international revenue decreased 12.9% as reported and increased 5.7% in constant currency, representing 39.8% of reported global revenue. Revenue in the United States increased by 2.6% and represented 60.2% of reported global revenue.

Fiscal Year 2015 Outlook

Due to the anticipated closing of the Wright merger, which is expected to take place in the third quarter, Tornier will no longer be providing financial guidance. Tornier expects that its upper extremities joints and trauma category will continue to make strong and consistent contributions to the anticipated combined business and that its lower extremities joints and trauma category will enhance the already robust Wright lower extremities business over the long term.

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,” “anticipate,” “intend,” “will,” “can,” “may,” “could,” “continue,” “outlook,” “future, other words of similar meaning or the use of future dates. Examples of forward-looking statements in this release include Tornier’s expectations for the timing of the Wright merger, the future contributions of its upper and lower extremities joint and trauma businesses to the combined company and the growth and profitability prospects for the combined company. 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 pending merger with Wright Medical Group, Inc., including the timing of the transaction; 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 negative impact of the transaction on Tornier’s lower extremities joints and trauma revenue and business; the effects of disruption from the transaction making it more difficult to maintain relationships with employees, customers, vendors and other business partners; 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-


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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 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 reports 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.


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Tornier N.V.

Condensed Consolidated Balance Sheets

(in thousands)

 

     June 28, 2015     December 28, 2014  
     (unaudited  

Assets

    

Current assets

    

Cash and cash equivalents

   $ 25,883      $ 27,940   

Accounts receivable, net

     68,046        63,583   

Inventories

     85,074        88,662   

Deferred income taxes and other current assets

     30,515        29,516   
  

 

 

   

 

 

 

Total current assets

     209,518        209,701   

Instruments, net

     60,351        62,888   

Property, plant and equipment, net

     42,558        44,662   

Goodwill and intangibles, net

     322,701        339,902   

Deferred income taxes and other assets

     2,371        1,422   
  

 

 

   

 

 

 

Total assets

   $ 637,499      $ 658,575   
  

 

 

   

 

 

 

Liabilities and shareholders’ equity

    

Current liabilities

    

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

   $ 8,264      $ 7,394   

Accounts payable

     20,630        15,073   

Accrued liabilities, deferred income taxes and other current liabilities

     55,981        61,994   
  

 

 

   

 

 

 

Total current liabilities

     84,875        84,461   

Other long-term debt

     77,308        68,105   

Deferred income taxes and other long-term liabilities

     25,800        27,119   
  

 

 

   

 

 

 

Total liabilities

     187,983        179,685   

Shareholders’ equity

     449,516        478,890   
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 637,499      $ 658,575   
  

 

 

   

 

 

 


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Tornier N.V.

Consolidated Statements of Operations

(in thousands, except per share data)

 

     Three Months Ended     Six Months Ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Revenue

   $ 83,221      $ 86,850      $ 171,313      $ 175,875   

Cost of goods sold

     18,689        21,069        38,673        43,271   

Cost of goods sold - acquisition related

     —          158        —          420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     64,532        65,623        132,640        132,184   
     77.5     75.6     77.4     75.2

Operating expenses

        

Selling, general and administrative

     59,118        62,504        119,206        121,352   

Research and development

     5,873        6,068        11,811        11,790   

Amortization of intangible assets

     4,019        4,320        8,047        8,654   

Special charges

     2,466        686        4,203        3,372   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     71,476        73,578        143,267        145,168   

Operating (loss) income

     (6,944     (7,955     (10,627     (12,984

Other income (expense)

        

Interest income

     15        40        18        108   

Interest expense

     (1,455     (1,365     (2,752     (2,714

Foreign currency transaction loss

     (428     (214     (95     (43

Other non-operating income

     27        7        88        9   
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (8,785     (9,487     (13,368     (15,624

Income tax expense

     (558     (961     (1,091     (61
  

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated net loss

   $ (9,343   $ (10,448   $ (14,459   $ (15,685
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share

        

Basic and diluted

   $ (0.19   $ (0.21   $ (0.29   $ (0.32

Weighted average ordinary shares outstanding

        

Basic and diluted

     49,081        48,612        49,035        48,568   


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Tornier N.V.

Consolidated Statements of Cash Flow

(in thousands)

 

     Three Months Ended     Six months ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Cash flows from operating activities

        

Consolidated net loss

   $ (9,343     (10,448   $ (14,459   $ (15,685

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

        

Depreciation and amortization

     10,205        10,439        20,432        20,262   

Non-cash foreign currency (gain) loss

     419        210        62        39   

Deferred income taxes

     (866     (1,410     (2,876     (2,581

Share-based compensation

     2,540        2,741        4,658        4,521   

Non-cash interest expense and discount amortization

     226        141        436        354   

Inventory obsolescence

     3,013        2,492        5,013        5,678   

Fair value adjustment of contingent consideration liability

     —          —          769        —     

Inventory step up from acquisition

     —          158        —          420   

Other non-cash items affecting earnings

     (297     244        251        326   
       —         

Changes in operating assets and liabilities

       —         

Accounts receivable

     6,541        1,285        (6,213     (3,219

Inventories

     (2,661     (7,894     (6,493     (15,326

Accounts payable and accruals

     (1,086     557        3,628        8,167   

Other current assets and liabilities

     (3,865     (3,069     (3,465     (3,347

Other non-current assets and liabilities

     (381     1,292        (135     496   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     4,445        (3,262     1,608        105   

Cash flows from investing activities

        

Acquisition-related cash payments

     (360     (5,622     (360     (7,622

Additions of instruments

     (4,603     (7,735     (9,281     (14,535

Purchases of property, plant and equipment

     (1,250     (3,116     (3,661     (4,880
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash (used in) investing activities

     (6,213     (16,473     (13,302     (27,037

Cash flows from financing activities

        

Contingent consideration payments

     (652     —          (1,452     —     

Change in short-term debt

     (9,000     —          1,000        —     

Repayments of long-term debt

     (455     (189     (770     (563

Proceeds from issuance of long-term debt

     4        477        10,067        477   

Deferred financing costs

     —          —          (114     —     

Issuance of ordinary shares

     1,431        1,845        1,723        2,196   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     (8,672     2,133        10,454        2,110   

Effect of currency exchange rates on cash and cash equivalents

     266        (40     (817     (191
  

 

 

   

 

 

   

 

 

   

 

 

 

Decrease in cash and cash equivalents

     (10,174     (17,642     (2,057     (25,013

Cash and cash equivalents at beginning of period

     36,057        49,413        27,940        56,784   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 25,883      $ 31,771      $ 25,883      $ 31,771   
  

 

 

   

 

 

   

 

 

   

 

 

 


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Tornier N.V.

Selected Revenue Information

(in thousands)

 

     Three Months Ended     Six Months Ended  
     (unaudited)     (unaudited)  
     June 28, 2015      June 29, 2014      Percent
change
    June 28, 2015      June 29, 2014      Percent
change
 

Revenue by product category

                

Upper extremity joints and trauma

   $ 56,572       $ 53,826         5.1   $ 113,948       $ 106,881         6.6

Lower extremity joints and trauma

     11,971         14,469         -17.3     25,905         29,542         -12.3

Sports medicine and biologics

     3,249         3,653         -11.1     6,726         7,540         -10.8
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total extremities

     71,792         71,948         -0.2     146,579         143,963         1.8

Large joints and other

     11,429         14,902         -23.3     24,734         31,912         -22.5
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 83,221       $ 86,850         -4.2   $ 171,313       $ 175,875         -2.6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Revenue by geography

                

United States

   $ 50,104       $ 48,848         2.6   $ 103,073       $ 98,813         4.3

International

     33,117         38,002         -12.9     68,240         77,062         -11.4
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 

Total

   $ 83,221       $ 86,850         -4.2   $ 171,313       $ 175,875         -2.6
  

 

 

    

 

 

    

 

 

   

 

 

    

 

 

    

 

 

 


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Tornier N.V.

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

(in thousands)

 

     Three Months Ended         
     (unaudited)  
     June 28, 2015      June 29, 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

   $ 56,572       $ 3,657       $ 60,229       $ 53,826         11.9

Lower extremity joints and trauma

     11,971         498         12,469         14,469         -13.8

Sports medicine and biologics

     3,249         294         3,543         3,653         -3.0
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total extremities

     71,792         4,449         76,241         71,948         6.0

Large joints and other

     11,429         2,621         14,050         14,902         -5.7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 83,221       $ 7,070       $ 90,291       $ 86,850         4.0
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue by geography

              

United States

   $ 50,104       $ —         $ 50,104       $ 48,848         2.6

International

     33,117         7,070         40,187         38,002         5.7
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 83,221       $ 7,070       $ 90,291       $ 86,850         4.0
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 
     Six Months Ended         
     (unaudited)  
     June 28, 2015      June 29, 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

   $ 113,948       $ 6,797       $ 120,745       $ 106,881         13.0

Lower extremity joints and trauma

     25,905         931         26,836         29,542         -9.2

Sports medicine and biologics

     6,726         555         7,281         7,540         -3.4
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total extremities

     146,579         8,283         154,862         143,963         7.6

Large joints and other

     24,734         5,291         30,025         31,912         -5.9
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 171,313       $ 13,574       $ 184,887       $ 175,875         5.1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Revenue by geography

              

United States

   $ 103,073       $ —         $ 103,073       $ 98,813         4.3

International

     68,240         13,574         81,814         77,062         6.2
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 171,313       $ 13,574       $ 184,887       $ 175,875         5.1
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 


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Tornier N.V.

Reconciliation of Net Loss to

Non-GAAP Adjusted Earnings Before Interest, Taxes, Depreciation

and Amortization (EBITDA)

(in thousands)

 

     Three Months Ended     Six Months Ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Revenue, as reported

   $  83,221      $ 86,850      $ 171,313      $ 175,875   

Net loss, as reported

   $ (9,343   $ (10,448   $ (14,459   $ (15,685

Interest income

     (15     (40     (18     (108

Interest expense

     1,455        1,365        2,752        2,714   

Income tax expense (benefit)

     558        961        1,091        61   

Depreciation

     6,186        6,119        12,385        11,608   

Amortization

     4,019        4,320        8,047        8,654   
  

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal Non-GAAP EBITDA

     2,860        2,277        9,798        7,244   

Other non-operating (income) expense

     (27     (7     (88     (9

Foreign currency transaction loss (gain)

     428        214        95        43   

Share-based compensation

     2,540        2,741        4,658        4,521   

Inventory step-up from acquisition

     —          158        —          420   

Special Charges:

        

Acquisition, integration and distribution transition costs

     (106     123        818        2,036   

Instrument use tax refund

       —          (2,000     —     

Restructuring

     —          563        —          1,011   

Proposed merger-related costs

     2,572        —          5,385        —     

Other

     —          —          —          325   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted EBITDA

   $ 8,267      $ 6,069      $ 18,666      $ 15,591   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted EBITDA margin

     9.9     7.0     10.9     8.9
  

 

 

   

 

 

   

 

 

   

 

 

 


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Tornier N.V.

Reconciliation of Net Loss and Loss per Share

to Adjusted Net Loss and Adjusted Net Loss per Share

(in thousands)

 

     Three Months Ended     Six Months Ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Net loss, as reported

   $ (9,343   $ (10,448   $ (14,459   $ (15,685

Inventory step-up from acquisition, net of tax

     —          153        —          403   

Reversal of valuation allowance from acquisition

     —          (146     —          (146

Special charges, net of tax:

        

Acquisition, integration and distribution transition costs

     (106     123        818        1,011   

Instrument use tax refund

     —          —          (2,000     —     

Restructuring

     —          563        —          2,036   

Proposed merger-related costs

     2,572        —          5,385        —     

Other

     —          —          —          325   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted net loss

     (6,877     (9,755     (10,256     (12,056
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss per share, as reported

        

Basic and diluted

   $ (0.19   $ (0.21   $ (0.29   $ (0.32

Inventory step-up from acquisition, net of tax

     —          0.00        —          0.01   

Reversal of valuation allowance from acquisition

     —          (0.00     —          (0.00

Special charges, net of tax:

        

Acquisition, integration and distribution transition costs

     (0.00     —          0.02        0.02   

Instrument use tax refund

     —          —          (0.05     —     

Restructuring

     —          0.01        —          0.03   

Proposed merger-related costs

     0.05        —          0.11        —     

Other

     —          —          —          0.01   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted net loss per share

        

Basic and diluted

   $ (0.14   $ (0.20   $ (0.21   $ (0.25
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average ordinary shares outstanding

        

Basic and diluted

     49,081        48,612        49,035        48,568   


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Tornier N.V.

Reconciliation of Net Cash Provided by Operating Activities

to Non-GAAP Free Cash Flow

(in thousands)

 

     Three Months Ended     Six Months Ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Net cash provided by operating activities, as reported

   $ 4,445      $ (3,262   $ 1,608      $ 105   

Adjusted for:

        

Additions of instruments, as reported

     (4,603     (7,735     (9,281     (14,535

Purchases of property, plant and equipment, as reported

     (1,250     (3,116     (3,661     (4,880
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted free cash flow

   $ (1,408   $ (14,113   $ (11,334   $ (19,310
  

 

 

   

 

 

   

 

 

   

 

 

 

Tornier N.V.

Reconciliation of Gross Margin and Gross Margin %

to Non-GAAP Adjusted Gross Margin and Gross Margin %

(in thousands)

 

     Three Months Ended     Six months ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Revenue, as reported

   $ 83,221      $ 86,850      $ 171,313      $ 175,875   

Gross margin, as reported

   $ 64,532      $ 65,623      $ 132,640      $ 132,184   

Gross margin %, as reported

     77.5     75.6     77.4     75.2

Adjusted for:

        

Inventory step-up due to acquisition

     —          158        —          420   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted gross margins

     64,532        65,781        132,640        132,604   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted gross margin %

     77.5     75.7     77.4     75.4


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Tornier N.V.

Reconciliation of Operating Expenses to

Non-GAAP Adjusted Operating Expenses

 

     Three Months Ended     Six months ended  
     (unaudited)     (unaudited)  
     June 28, 2015     June 29, 2014     June 28, 2015     June 29, 2014  

Revenue, as reported

   $  83,221      $ 86,850      $ 171,313      $ 175,875   

Operating Expenses, as reported

     71,476        73,578        143,267        145,168   

Operating expenses as a percentage of revenue, as reported

     85.9     84.7     83.6     82.5

Adjusted for:

        

Amortization of intangible assets

     (4,019     (4,320     (8,047     (8,654

Special charges

     (2,466     (686     (4,203     (3,372
  

 

 

   

 

 

   

 

 

   

 

 

 

Total adjustments

     (6,485     (5,006     (12,250     (12,026

Non-GAAP adjusted operating expenses

   $ 64,991      $ 68,572      $ 131,017      $ 133,142   
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP adjusted operating expenses as a percentage of revenue

     78.1     79.0     76.5     75.7
  

 

 

   

 

 

   

 

 

   

 

 

 


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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.


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CONTACT:

Tornier N.V.

Shawn McCormick

Chief Financial Officer

(952) 426-7646

shawn.mccormick@tornier.com