UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 3, 2011
or
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 1-35065
TORNIER N.V.
(Exact name of registrant as specified in its charter)
The Netherlands |
|
98-0509600 |
(State or Other Jurisdiction |
|
(IRS Employer |
of Incorporation or Organization) |
|
Identification Number) |
Fred Roeskestraat 123 |
|
|
1076 EE Amsterdam, The Netherlands |
|
None |
(Address of Principal Executive Offices) |
|
(Zip Code) |
(+ 31) 20 675 4002
(Registrants Telephone Number, Including Area Code)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) x Yes o No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o |
|
Accelerated filer o |
|
|
|
Non-accelerated filer x |
|
Smaller reporting company o |
(Do not check if a smaller reporting company) |
|
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes x No
As of August 10, 2011, there were 39,170,863 ordinary shares outstanding.
TORNIER N.V.
QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JULY 3, 2011
On January 28, 2011, Tornier B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) changed its legal form by converting to Tornier N.V., a public company with limited liability (naamloze vennootschap). This is referred to as the conversion in this report.
References to Tornier, Company, we, our or us in this report refer to Tornier B.V. and its subsidiaries prior to the conversion and to Tornier N.V. and its subsidiaries upon and after the conversion, unless the context otherwise requires.
This report contains references to among others, our trademarks Aequalis®, Ascend, Piton®, Biofiber, Stabilis, Wave®, ArthroTunneler® and Tornier. All other trademarks or trade names referred to in this report are the property of their respective owners.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements. within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact included in this report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements including, in particular, the statements about our plans, objectives, strategies and prospects regarding, among other things, our financial condition, results of operations and business. We have identified some of these forward-looking statements with words like believe, may, will, should, could, expect, intend, plan, predict, anticipate, estimate or continue other words and terms of similar meaning and the use of future dates. These forward-looking statements may be contained throughout this report, including but not limited to statements under the caption Managements Discussion and Analysis of Financial Condition and Results of Operations. These forward-looking statements are based on current expectations about future events affecting us and are subject to uncertainties and factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control and could cause our actual results to differ materially from those matters expressed or implied by our forward-looking statements. Forward-looking statements (including oral representations) are only predictions or statements of current plans and can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties, including, among other things, risks associated with:
· a history of operating losses and negative cash flow;
· not successfully developing and marketing new products and technologies and implementing our business strategy;
· not successfully competing against our existing or potential competitors;
· continuing weakness in the global economy, which could reduce the availability or affordability of private insurance or may affect patient decision to undergo elective procedures.
· deriving a significant portion of our revenues from operations in international markets that are subject to political, economic and social instability;
· our private label manufacturers failing to provide us with sufficient supply of their products, or failing to meet appropriate quality requirements;
· the loss of one of our key suppliers, which may result in our inability to meet customer orders for our products in a timely manner or within our budget;
· our patents and other intellectual property rights not adequately protecting our products, which may result in our loss of market share to our competitors;
· the incurrence of significant expenditures of resources to maintain relatively high levels of inventory, which could reduce our cash flows;
· turmoil in the credit markets and the financial services industry, which may negatively affect our business;
· the inability to raise capital when needed, which could force us to delay, reduce, eliminate or abandon our commercialization efforts or product development programs;
· restrictive covenants in our outstanding debt agreements that may limit our operating flexibility;
· consolidation in the healthcare industry that could lead to demands for price concessions or to the exclusion of some suppliers from certain of our markets, which could have an adverse effect on our business, financial condition or results of operations;
· regulatory clearances or approvals and the extensive regulatory requirements to which we are subject;
· the compliance of our products with the laws and regulations of the foreign countries in which they are marketed, which compliance may be costly and time-consuming;
· the use, misuse or off-label use of our products that may harm our image in the marketplace or result in injuries that lead to product liability suits, which could be costly to our business or result in U.S. Food and Drug Administration (FDA) sanctions; and
· healthcare reform legislation and its future implementation, possible additional legislation, regulation and other governmental pressure in the United States and globally, which may affect utilization, pricing, reimbursement, taxation and rebate policies of governmental agencies and private payors, which could have an adverse effect on our business, financial condition or results of operations.
For more information regarding these and other uncertainties and factors that could cause our actual results to differ materially from what we have anticipated in our forward-looking statements or otherwise could materially adversely affect our business, financial condition or operating results, see our annual report on Form 10-K for the fiscal year ended January 2, 2011 under the heading Part I Item 1A. Risk Factors on pages 24 through 53 of such report. The risks and uncertainties described above and under the heading Part I Item 1A Risk Factors in our annual report on Form 10-K for the fiscal year ended January 2, 2011 are not exclusive and further information concerning us and our business, including factors that potentially could materially affect our financial results or condition, may emerge from time to time. We assume no obligation to update, amend or clarify forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements. We advise you, however, to consult any further disclosures we make on related subjects in our annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K we file with or furnish to the Securities and Exchange Commission.
PART I FINANCIAL INFORMATION
TORNIER N.V. AND SUBSIDIARIES
(In Thousands, Except Share and Per Share Amounts)
|
|
July 3, |
|
January 2, |
| ||
|
|
(unaudited) |
|
|
| ||
Assets |
|
|
|
|
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
59,733 |
|
$ |
24,838 |
|
Accounts receivable (net of allowance of $2,709 and $2,519, respectively) |
|
47,666 |
|
42,758 |
| ||
Inventories |
|
86,191 |
|
77,525 |
| ||
Income taxes receivable |
|
37 |
|
2,835 |
| ||
Deferred income taxes |
|
623 |
|
2,587 |
| ||
Prepaid taxes |
|
12,697 |
|
11,179 |
| ||
Prepaid expenses |
|
2,256 |
|
7,444 |
| ||
Other current assets |
|
4,257 |
|
4,048 |
| ||
Total current assets |
|
213,460 |
|
173,214 |
| ||
Instruments, net |
|
47,480 |
|
42,378 |
| ||
Property, plant and equipment, net |
|
34,825 |
|
33,680 |
| ||
Goodwill |
|
139,056 |
|
131,830 |
| ||
Intangible assets, net |
|
109,400 |
|
109,024 |
| ||
Deferred income taxes |
|
477 |
|
440 |
| ||
Other assets |
|
667 |
|
612 |
| ||
Total assets |
|
$ |
545,365 |
|
$ |
491,178 |
|
Liabilities and shareholders equity |
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
| ||
Short-term borrowings and current portion of long-term debt |
|
$ |
13,572 |
|
$ |
28,392 |
|
Accounts payable |
|
16,765 |
|
12,890 |
| ||
Accrued liabilities |
|
34,365 |
|
34,620 |
| ||
Income taxes payable |
|
224 |
|
327 |
| ||
Deferred income taxes |
|
52 |
|
20 |
| ||
Total current liabilities |
|
64,978 |
|
76,249 |
| ||
Notes payable |
|
|
|
84,261 |
| ||
Other long-term debt |
|
27,272 |
|
25,467 |
| ||
Deferred income taxes |
|
23,454 |
|
28,706 |
| ||
Contingent liabilities |
|
1,246 |
|
1,860 |
| ||
Other non-current liabilities |
|
3,580 |
|
4,396 |
| ||
Total liabilities |
|
120,530 |
|
220,939 |
| ||
Shareholders equity: |
|
|
|
|
| ||
Ordinary shares, 0.03 par value; authorized 175,000,000; issued and outstanding 39,042,986 and 29,568,731 at July 3, 2011 and January 2, 2011, respectively |
|
1,550 |
|
1,156 |
| ||
Additional paid-in capital |
|
601,872 |
|
437,307 |
| ||
Accumulated deficit |
|
(210,370 |
) |
(183,532 |
) | ||
Accumulated other comprehensive income |
|
31,783 |
|
15,308 |
| ||
Total shareholders equity |
|
424,835 |
|
270,239 |
| ||
Total liabilities and shareholders equity |
|
$ |
545,365 |
|
$ |
491,178 |
|
The accompanying notes are an integral part of the consolidated financial statements.
TORNIER N.V. AND SUBSIDIARIES
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
|
|
Three months ended |
|
Six months ended |
| ||||||||
|
|
July 3, |
|
July 4, |
|
July 3, |
|
July 4, |
| ||||
|
|
(unaudited) |
|
(unaudited) |
| ||||||||
Revenue |
|
$ |
65,158 |
|
$ |
54,563 |
|
$ |
134,593 |
|
$ |
116,406 |
|
Cost of goods sold |
|
18,017 |
|
14,725 |
|
38,058 |
|
32,001 |
| ||||
Gross profit |
|
47,141 |
|
39,838 |
|
96,535 |
|
84,405 |
| ||||
Operating expenses: |
|
|
|
|
|
|
|
|
| ||||
Sales and marketing |
|
34,872 |
|
29,721 |
|
69,571 |
|
64,191 |
| ||||
General and administrative |
|
6,362 |
|
4,668 |
|
12,387 |
|
11,194 |
| ||||
Research and development |
|
5,189 |
|
4,003 |
|
10,299 |
|
8,816 |
| ||||
Amortization of intangible assets |
|
2,897 |
|
2,881 |
|
5,707 |
|
5,878 |
| ||||
Special charges |
|
132 |
|
28 |
|
132 |
|
252 |
| ||||
Total operating expenses |
|
49,452 |
|
41,301 |
|
98,096 |
|
90,331 |
| ||||
Operating loss |
|
(2,311 |
) |
(1,463 |
) |
(1,561 |
) |
(5,926 |
) | ||||
Other income (expense): |
|
|
|
|
|
|
|
|
| ||||
Interest expense |
|
(489 |
) |
(4,935 |
) |
(2,967 |
) |
(10,765 |
) | ||||
Foreign currency transaction gain (loss) |
|
226 |
|
(3,445 |
) |
147 |
|
(5,739 |
) | ||||
Loss on extinguishment of debt |
|
|
|
|
|
(29,475 |
) |
|
| ||||
Other non-operating income (expense) |
|
35 |
|
(153 |
) |
16 |
|
61 |
| ||||
Loss before income taxes |
|
(2,539 |
) |
(9,996 |
) |
(33,840 |
) |
(22,369 |
) | ||||
Income tax (expense) benefit |
|
(330 |
) |
1,393 |
|
7,002 |
|
3,715 |
| ||||
Consolidated net loss |
|
(2,869 |
) |
(8,603 |
) |
(26,838 |
) |
(18,654 |
) | ||||
Net loss attributable to non-controlling interest |
|
|
|
|
|
|
|
(695 |
) | ||||
Net loss attributable to Tornier |
|
(2,869 |
) |
(8,603 |
) |
(26,838 |
) |
(17,959 |
) | ||||
Accretion of non-controlling interest |
|
|
|
|
|
|
|
(679 |
) | ||||
Net loss attributable to ordinary shareholders |
|
$ |
(2,869 |
) |
$ |
(8,603 |
) |
$ |
(26,838 |
) |
$ |
(18,638 |
) |
Net loss per share: |
|
|
|
|
|
|
|
|
| ||||
Basic and diluted |
|
$ |
(0.07 |
) |
$ |
(0.31 |
) |
$ |
(0.72 |
) |
$ |
(0.72 |
) |
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
| ||||
Basic and diluted |
|
39,040 |
|
27,411 |
|
37,248 |
|
26,039 |
|
The accompanying notes are an integral part of the consolidated financial statements.
TORNIER N.V. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(In Thousands)
|
|
Six months ended |
| ||||
|
|
July 3, |
|
July 4, |
| ||
|
|
(unaudited) |
| ||||
Cash flows from operating activities: |
|
|
|
|
| ||
Consolidated net loss |
|
$ |
(26,838 |
) |
$ |
(18,654 |
) |
Adjustments to reconcile consolidated net loss to cash provided by operating activities: |
|
|
|
|
| ||
Depreciation and amortization |
|
13,891 |
|
13,011 |
| ||
Non-cash foreign currency loss |
|
603 |
|
4,106 |
| ||
Deferred income taxes |
|
(6,165 |
) |
(3,722 |
) | ||
Share-based compensation |
|
2,910 |
|
2,835 |
| ||
Non-cash interest expense and discount amortization |
|
2,040 |
|
9,819 |
| ||
Inventory obsolescence |
|
2,466 |
|
2,738 |
| ||
Change in fair value of warrant liability |
|
|
|
(418 |
) | ||
Loss on extinguishment of debt |
|
29,475 |
|
|
| ||
Other non-cash items affecting earnings |
|
336 |
|
1,245 |
| ||
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|
| ||
Accounts receivable |
|
(3,657 |
) |
(1,378 |
) | ||
Inventories |
|
(6,680 |
) |
(10,443 |
) | ||
Accounts payable and accruals |
|
2,011 |
|
5,186 |
| ||
Other current assets and liabilities |
|
3,295 |
|
(1,894 |
) | ||
Other non-current assets and liabilities |
|
(1,222 |
) |
78 |
| ||
Net cash provided by operating activities |
|
12,465 |
|
2,509 |
| ||
Cash flows from investing activities: |
|
|
|
|
| ||
Acquisition-related cash payments |
|
(1,635 |
) |
(1,652 |
) | ||
Additions of instruments |
|
(8,456 |
) |
(7,854 |
) | ||
Purchases of property, plant and equipment |
|
(1,476 |
) |
(5,651 |
) | ||
Net cash used in investing activities |
|
(11,567 |
) |
(15,157 |
) | ||
Cash flows from financing activities: |
|
|
|
|
| ||
Change in short-term debt |
|
(16,764 |
) |
13,801 |
| ||
Repayments of long-term debt |
|
(4,015 |
) |
(7,297 |
) | ||
Proceeds from issuance of long-term debt |
|
3,509 |
|
2,165 |
| ||
Deferred financing costs |
|
(2,629 |
) |
(525 |
) | ||
Repayment of notes payable |
|
(116,108 |
) |
|
| ||
Issuance of ordinary shares |
|
168,308 |
|
938 |
| ||
Net cash provided by financing activities |
|
32,301 |
|
9,082 |
| ||
Effect of exchange rate changes on cash and cash equivalents |
|
1,696 |
|
(1,194 |
) | ||
Increase in cash and cash equivalents |
|
34,895 |
|
(4,760 |
) | ||
Cash and cash equivalents: |
|
|
|
|
| ||
Beginning of period |
|
24,838 |
|
37,969 |
| ||
End of period |
|
$ |
59,733 |
|
$ |
33,209 |
|
|
|
|
|
|
| ||
Non-cash investing and finance activities: |
|
|
|
|
| ||
Fixed assets acquired pursuant to capital lease |
|
$ |
646 |
|
$ |
|
|
The accompanying notes are an integral part of the consolidated financial statements.
TORNIER N.V. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
(unaudited)
1. Business Description
Tornier N.V. (Tornier or the Company) is a global medical device company focused on surgeons that treat musculoskeletal injuries and disorders of the shoulder, elbow, wrist, hand, ankle and foot. The Company refers to these surgeons as extremity specialists. The Company sells to this extremity specialist customer base a broad line of joint replacement, trauma, sports medicine and biologic products to treat extremity joints. The Companys motto of specialists serving specialists encompasses this focus. In certain international markets, Tornier also offers joint replacement products for the hip and knee. The Company currently sells over 80 product lines in approximately 35 countries.
2. Summary of Significant Accounting Policies
Basis of Presentation
The unaudited condensed consolidated financial statements include the accounts of Tornier N.V. and all of its wholly and majority owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (U.S.) for interim financial information and the instructions to quarterly report on Form 10-Q and Rule 10-01 of Regulation S-X. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the U.S. have been condensed or omitted pursuant to these rules and regulations. Accordingly, these unaudited consolidated interim financial statements should be read in conjunction with the Companys consolidated financial statements and related notes included in the Companys annual report on Form 10-K for the year ended January 2, 2011, as filed with the U.S. Securities and Exchange Commission (SEC).
In the opinion of the Companys management, the unaudited interim financial statements have been prepared on the same basis as the audited financial statements and include all adjustments, consisting of normal recurring accruals, necessary for the fair presentation of the Companys interim results. The results of operations for any interim period are not indicative of results for the full fiscal year.
The condensed consolidated financial statements are prepared in conformity with United States generally accepted accounting principles (GAAP) and include amounts that are based on managements best estimates and judgments. Actual results could differ from those estimates. All amounts are presented in U.S. Dollars ($), except where expressly stated as being in other currencies, e.g., Euros ().
Certain amounts reported in previous periods have been reclassified to conform to the current period presentation.
On January 28, 2011, the Company executed a 3-to-1 reverse stock split of the Companys ordinary shares. All share and per share amounts for all periods presented in these condensed consolidated financial statements reflect this split.
On January 28, 2011, the Company made a change to its legal form by converting from Tornier B.V., a private company with limited liability (besloten vennootschap met beperkte aansprakelijkheid) to Tornier N.V., a public company with limited liability (naamloze vennootschap).
The Companys fiscal quarters are generally determined on a 13-week basis and always end on a Sunday. As a result, the Companys fiscal year is generally 364 days. Fiscal year-end periods end on the Sunday nearest to December 31. Every few years, it is necessary to add an extra week to a quarter to make it a 14-week period in order to have the year end fall on the Sunday nearest to December 31. For example, the first two quarters of 2010 include an extra week of operations compared to the first two quarters of 2011.
Recent Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (FASB) issued ASU 2010-6, Fair Value Measurements and Disclosures (ASC Topic 820): Improving Disclosures about Fair Value Measurements, which requires reporting entities to make new disclosures about recurring or nonrecurring fair value measurements including (i) significant transfers into and out of Level 1 and Level 2 fair value measurements and (ii) information on purchases, sales, issuances and settlements on a gross basis in the
reconciliation of Level 3 fair value measurements. ASU 2010-6 was effective for interim and annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures which are effective for interim and annual periods beginning after December 15, 2010. The Company adopted the additional disclosures required for Level 1 and Level 2 fair value measurements in the first quarter of 2010 and Level 3 disclosures during the first quarter of 2011.
In May 2011, the FASB issued ASU 2011-4, Fair Value Measurement (ASC Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS, which was intended by the FASB and the International Accounting Standards Board (IASB) to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards (IFRSs). Additional disclosures required by this amendment include information about transfers between Level 1 and Level 2 instruments, information regarding the sensitivity of Level 3 instruments, and categorization by level of items that are not measured at fair value in the statement of financial position (but for which disclosure of fair value is still required). The guidance is effective prospectively for fiscal years beginning after December 15, 2011 and interim periods within those years. The adoption of this guidance is not expected to have a material impact on the Companys financial position or operating results.
Although there are other new accounting pronouncements issued or proposed by the FASB, which the Company has adopted or will adopt, as applicable, the Company does not believe any of these other accounting pronouncements has had or will have a material impact on the Companys financial position or operating results.
3. Fair Value of Financial Instruments
The Company applies ASC Topic 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that framework. ASC Topic 820 defines fair value as an exit price, which is the price that would be received for an asset or paid to transfer a liability in the Companys principal or most advantageous market in an orderly transaction between market participants on the measurement date. The fair value hierarchy established in ASC Topic 820 generally requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs reflect the entitys own assumptions based on market data and the entitys judgments about the assumptions that that market participants would use in pricing the asset or liability, and are to be developed based on the best information available in the circumstances.
When an active market for certain financial instruments does not exist, it may be appropriate to use unobservable inputs to determine fair value. The carrying value of the Companys cash and cash equivalents, accounts receivable, and accounts payable approximates the fair value of these financial instruments at July 3, 2011 and January 2, 2011. Assets and liabilities measured at fair value are done so on a recurring basis. U.S. GAAP requires fair value measurements to be classified and disclosed in one of the following three categories:
Level 1Assets and liabilities with unadjusted, quoted prices listed on active market exchanges.
Level 2Assets and liabilities determined using prices for recently traded assets and liabilities with similar underlying terms, as well as directly or indirectly observable inputs, such as interest rates and yield curves that are observable at commonly quoted intervals.
Level 3Assets and liabilities that are not actively traded on a market exchange. This category includes situations where there is little, if any, market activity for the asset or liability. The prices are determined using significant unobservable inputs or valuation techniques.
Cash and cash equivalents are classified as Level 1 fair value measurements. As of July 3, 2011, the Company had no material assets or liabilities with recurring Level 2 or Level 3 fair value measurements.
4. Inventories
Inventory balances consist of the following (in thousands):
|
|
July 3, |
|
January 2, |
| ||
Raw materials |
|
$ |
6,795 |
|
$ |
7,913 |
|
Work-in-process |
|
9,006 |
|
5,356 |
| ||
Finished goods |
|
70,390 |
|
64,256 |
| ||
Total |
|
$ |
86,191 |
|
$ |
77,525 |
|
5. Property, Plant and Equipment
Property, plant and equipment balances consist of the following (in thousands):
|
|
July 3, |
|
January 2, |
| ||
Land |
|
$ |
2,349 |
|
$ |
2,195 |
|
Building and improvements |
|
11,684 |
|
10,087 |
| ||
Machinery and equipment |
|
23,507 |
|
20,420 |
| ||
Furniture, fixtures and office equipment |
|
24,676 |
|
22,066 |
| ||
Software |
|
4,756 |
|
4,134 |
| ||
Construction in progress |
|
140 |
|
129 |
| ||
|
|
67,112 |
|
59,031 |
| ||
Accumulated depreciation |
|
(32,287 |
) |
(25,351 |
) | ||
Property, plant and equipment, net |
|
$ |
34,825 |
|
$ |
33,680 |
|
6. Instruments
Instruments included in long-term assets on the consolidated balance sheets consist of the following (in thousands):
|
|
July 3, |
|
January 2, |
| ||
Instruments |
|
$ |
67,809 |
|
$ |
58,356 |
|
Instruments in process |
|
17,861 |
|
15,007 |
| ||
Accumulated depreciation |
|
(38,190 |
) |
(30,985 |
) | ||
Instruments, net |
|
$ |
47,480 |
|
$ |
42,378 |
|
7. Goodwill and Other Intangible Assets
The following table summarizes the changes in the carrying amount of goodwill (in thousands):
Balance at January 2, 2011 |
|
$ |
131,830 |
|
Contingent payment on acquisition |
|
877 |
| |
Foreign currency translation |
|
6,349 |
| |
Balance at July 3, 2011 |
|
$ |
139,056 |
|
The components of identifiable intangible assets are as follows (in thousands):
|
|
Gross value |
|
Accumulated |
|
Net value |
| |||
Balances at July 3, 2011 |
|
|
|
|
|
|
| |||
Intangible assets subject to amortization: |
|
|
|
|
|
|
| |||
Developed technology |
|
$ |
79,609 |
|
$ |
(28,046 |
) |
$ |
51,563 |
|
Customer relationships |
|
65,665 |
|
(21,574 |
) |
44,091 |
| |||
Licenses |
|
4,058 |
|
(1,780 |
) |
2,278 |
| |||
Other |
|
1,738 |
|
(1,019 |
) |
719 |
| |||
Intangible assets not subject to amortization: |
|
|
|
|
|
|
| |||
Trade name |
|
10,749 |
|
|
|
10,749 |
| |||
Total |
|
$ |
161,819 |
|
$ |
(52,419 |
) |
$ |
109,400 |
|
|
|
Gross value |
|
Accumulated |
|
Net value |
| |||
Balances at January 2, 2011 |
|
|
|
|
|
|
| |||
Intangible assets subject to amortization: |
|
|
|
|
|
|
| |||
Developed technology |
|
$ |
76,561 |
|
$ |
(24,164 |
) |
$ |
52,397 |
|
Customer relationships |
|
61,838 |
|
(18,275 |
) |
43,563 |
| |||
Licenses |
|
3,965 |
|
(1,492 |
) |
2,473 |
| |||
Other |
|
1,645 |
|
(967 |
) |
678 |
| |||
Intangible assets not subject to amortization: |
|
|
|
|
|
|
| |||
Trade name |
|
9,913 |
|
|
|
9,913 |
| |||
Total |
|
$ |
153,922 |
|
$ |
(44,898 |
) |
$ |
109,024 |
|
Estimated annual amortization expense for fiscal years ending 2011 through 2015 is as follows (in thousands):
|
|
Amortization expense |
| |
2011 |
|
$ |
10,686 |
|
2012 |
|
10,431 |
| |
2013 |
|
10,395 |
| |
2014 |
|
10,352 |
| |
2015 |
|
10,344 |
| |
8. Other Long-Term Debt
A summary of debt is as follows (in thousands):
|
|
July 3, |
|
January 2, |
| ||
|
|
|
|
|
| ||
Lines of credit |
|
$ |
4,698 |
|
$ |
20,639 |
|
Mortgages |
|
6,398 |
|
6,342 |
| ||
Other term debt |
|
27,190 |
|
24,522 |
| ||
Shareholder debt |
|
2,558 |
|
2,356 |
| ||
Total debt |
|
40,844 |
|
53,859 |
| ||
Less current portion |
|
(13,572 |
) |
(28,392 |
) | ||
Long-term debt |
|
$ |
27,272 |
|
$ |
25,467 |
|
The Companys European subsidiaries have established unsecured lines of credit totaling $23.7 million and $21.9 million at July 3, 2011 and January 2, 2011, respectively. Borrowings under these lines were $4.7 million and $15.4 million at July 3, 2011 and January 2, 2011, respectively. Borrowings under these lines have variable interest rates based on the Euro Overnight Index Average plus 1.3% or a three-month Euro plus 0.5%-3.0%.
The Companys U.S. subsidiary has established a $10.0 million secured line of credit at July 3, 2011 and January 2, 2011. This line of credit expires in July 2012 and is callable by the bank at any time. Also, the line is secured by working capital and equipment. Borrowings under the line were zero and $5.2 million at July 3, 2011 and January 2, 2011, respectively. Borrowings under the line of credit bear interest at a 30-day LIBOR plus 2.25%, with a floor interest rate of 5%. This line contains customary affirmative and negative covenants and events of default. As of July 3, 2011, the Companys U.S. subsidiary was subject to a covenant to maintain no less than $39.0 million of tangible net worth. Also as of July 3, 2011, the Company was subject to a covenant to maintain a maximum debt to tangible net worth ratio of 1.50. The covenants relate to the U.S. subsidiarys ratios only. The Company was in compliance with all covenants as of July 3, 2011.
The Company has a mortgage secured by the Companys U.S. subsidiarys office building in Stafford, Texas. This mortgage had an outstanding amount of $1.3 million at July 3, 2011 and January 2, 2011. This mortgage bears a fixed interest rate of 6.7%.
The Company also has a mortgage secured by an office building in Grenoble, France. This mortgage had an outstanding balance of $5.1 million and $5.0 million at July 3, 2011 and January 2, 2011, respectively. This mortgage bears a fixed interest rate of 4.9%.
The Companys U.S. subsidiary had long-term debt secured by its working capital and equipment that was repaid during the second quarter of 2011. This debt had an outstanding amount of $0.3 million at January 2, 2011. This debt accrued interest based on a variable rate of LIBOR plus 2.25%.
The Companys international subsidiaries have other long-term secured and unsecured notes totaling $27.2 million and $24.2 million at July 3, 2011 and January 2, 2011, respectively, with initial maturities ranging from 3 to 10 years. A portion of these notes have fixed interest rates that range from 2.9% to 7.5%. The remaining notes carry a variable interest rate based on LIBOR, plus 1.2%, or a three-month Euro, plus 0.3% to 1.5%.
One of the Companys 51%-owned and consolidated subsidiaries borrowed $2.6 million from a member of the Board of Directors who is also a 49% owner of the consolidated subsidiary. This loan was used to partially fund the purchase of real estate in Grenoble, France, to be used as a manufacturing facility. Interest on the debt is variable based on three-month Euro plus 0.5%. The non-controlling interest in this subsidiary is deemed immaterial to the consolidated financial statements.
9. Notes Payable and Warrants to Issue Ordinary Shares
In April 2009, the Company issued notes payable in the amount of 37 million (approximately $49.3 million) to a group of investors that included existing shareholders, new investors and management of the Company. The notes carried a fixed interest rate of 8.0% with interest payments accrued in kind semi-annually. The notes were scheduled to mature in March 2014.
In connection with the note agreement, the Company also issued warrants to purchase an aggregate of 2.9 million ordinary shares at an exercise price of $16.98 per share. The Company recorded the warrants as liabilities with an offsetting debt discount recorded as a reduction of the carrying value of the notes. The debt discount was being amortized as additional interest expense over the life of the notes.
In February 2008, the Company issued notes payable in the amount of 34.5 million (approximately $52.4 million) to a group of investors that included existing shareholders and management of the Company. The notes carried a fixed interest rate of 8.0% with interest payments accrued in-kind. The notes were scheduled to mature on February 28, 2013. Also, in connection with the 2008 note agreement, the Company issued warrants to purchase an aggregate of 3.1 million ordinary shares at a price of $16.98 per share. The Company had recorded the warrants as liabilities with an offsetting debt discount recorded as a reduction of the carrying value of the notes. The debt discount was being amortized as additional interest expense over the life of the notes.
Notes payable balances were as follows:
|
|
February 14, |
|
January 2, |
| ||
Gross notes payable |
|
$ |
116,109 |
|
$ |
114,357 |
|
Discount to notes payable |
|
(29,352 |
) |
(30,096 |
) | ||
Net notes payable |
|
$ |
86,757 |
|
$ |
84,261 |
|
In February 2011, the Company used approximately $116.1 million (86.4 million) of the net proceeds from its initial public offering to repay all of the outstanding indebtedness under the notes payable, including accrued interest thereon. At the time of repayment, the Company recognized a loss on debt extinguishment of $29.5 million and related deferred tax benefit of $7.5 million to recognize the remaining balance of unamortized discount on the notes and to reverse the related deferred tax liability.
In May 2010, the Company executed agreements with 100% of the warrant holders that acquired warrants under the February 2008 and April 2009 notes payable and warrant issuances to exchange their outstanding warrants for the Companys ordinary shares. Each warrant holder agreed to exchange their warrants under the February 2008 and April 2009 agreements for ordinary shares of the Company at an exchange ratio of 0.6133 and 0.6410, respectively. In order to settle the warrant liabilities related to the February 2008 and April 2009 warrant issuances, the Company issued 1,894,076 and 1,885,624 ordinary shares, respectively. The Company determined the fair value of its ordinary shares to be $22.50 per share at the date of the exchange which resulted in the issuance of ordinary shares with a total value of $85.0 million. This amount, net of $21.7 million of tax was recognized as an increase to equity at the time of the exchange. The Company recognized a gain on the change in fair value of the warrant liability of $0.2 million in non-operating expense, net during the year ended January 2, 2011 to adjust the carrying value of the warrant liability to the final settlement amount. The Company also recognized $11.6 million of foreign currency transaction loss on the warrant liability for the year ended January 2, 2011. This transaction settled the warrant liability of $85.2 million included in the consolidated balance sheet at December 27, 2009.
Changes in the carrying value of warrants are as follows:
Warrant value at December 28, 2008 |
|
$ |
29,277 |
|
Impact of adoption of ASC Topic 815fair value adjustment |
|
(1,159 |
) | |
Issuance of 2009 warrants at fair value |
|
29,070 |
| |
Change in fair value during the year |
|
28,027 |
| |
Warrant value at December 27, 2009 |
|
$ |
85,215 |
|
Change in fair value during the period |
|
(147 |
) | |
Warrant value at April 4, 2010 |
|
$ |
85,068 |
|
Change in fair value during the period |
|
(25 |
) | |
Fair value of shares issued to settle liability and recognized in equity on May 27, 2010 |
|
85,043 |
| |
Warrant value at July 4, 2010 |
|
$ |
|
|
10. Share-Based Compensation
Below is a summary of the allocation of share-based compensation recognized within the consolidated financial statements (in thousands):
|
|
Three months ended |
|
Six months ended |
| ||||||||
|
|
July 3, |
|
July 4, |
|
July 3, |
|
July 4, |
| ||||
|
|
(unaudited) |
|
(unaudited) |
| ||||||||
Cost of goods sold |
|
$ |
195 |
|
$ |
123 |
|
$ |
387 |
|
$ |
229 |
|
Sales and marketing |
|
582 |
|
328 |
|
979 |
|
774 |
| ||||
General and administrative |
|
690 |
|
628 |
|
1,313 |
|
1,538 |
| ||||
Research and development |
|
97 |
|
104 |
|
180 |
|
201 |
| ||||
Total |
|
$ |
1,564 |
|
$ |
1,183 |
|
$ |
2,859 |
|
$ |
2,742 |
|
During the six months ended July 3, 2011, the Company granted options to purchase an aggregate of 0.6 million ordinary shares and 0.2 million restricted stock units at a weighted average fair value of $12.55 and $25.49 per share, respectively, to be recognized on a straight line basis over their service period of four years. The weighted average per share exercise price for options granted during the six months ended July 3, 2011 is $24.43. As of July 3, 2011, the Company had approximately 4.3 million stock options (of which approximately 2.6 million were exercisable) and 0.2 million restricted stock units outstanding. The fair value of each option grant was estimated on the date of grant using the Black-Scholes option pricing model using the following weighted-average assumptions:
|
|
Six months |
|
|
|
July 3, 2011 |
|
Risk-free interest rate |
|
2.2 |
% |
Expected life in years |
|
6.1 |
|
Expected volatility |
|
48.6 |
% |
Expected dividend yield |
|
0.0 |
% |
The Company had $20.4 million of total unrecognized compensation cost related to unvested stock-based compensation arrangements granted to employees as of July 3, 2011. That cost is expected to be recognized over a weighted-average period of 3.0 years.
11. Income Taxes
The Company operates in multiple income tax jurisdictions both inside and outside the United States. Income tax authorities in these jurisdictions regularly perform audits of the Companys income tax filings. Accordingly, management must determine the appropriate allocation of income to each of these jurisdictions based on current interpretations of complex income tax regulations. Income tax audits associated with the allocation of this income and other complex issues, including inventory transfer pricing and cost sharing, product royalty and foreign branch arrangements, may require an extended period of time to resolve and may result in significant income tax adjustments if changes to the income allocation are required between jurisdictions with different income tax rates.
During the first quarter of 2011, the Company recognized $7.5 million of deferred tax benefit related to the $29.5 million loss on extinguishment of debt previously discussed. This benefit was the result of reversing the remaining deferred tax liability related to the unamortized debt discount on the Companys notes payable at the time of repayment. Offsetting this deferred tax benefit are estimated income tax expenses primarily related to the Companys French subsidiaries. Given the Companys history of operating losses, the Company does not generally recognize a provision for income taxes in the United States and certain of the Companys European sales offices.
The income tax benefit in the first six months of 2010 primarily relates to tax benefit recorded related to the Companys French subsidiaries as well as deferred tax benefit on the amortization of the debt discount recognized on the Companys notes payable.
12. Capital Stock and Earnings Per Share
The Company had 39.0 million and 29.6 million ordinary shares issued and outstanding as of July 3, 2011 and July 4, 2010, respectively.
The Company completed an initial public offering of its ordinary shares pursuant to a registration statement that was declared effective by the SEC on February 2, 2011. The Company sold 8,750,000 shares, at an initial price to the public of $19.00 per share (before underwriters discounts and commissions) on February 8, 2011 and received net proceeds of approximately $149.5 million, after underwriters discounts and commissions of approximately $10.8 million and offering related expenses of $5.9 million. Subsequently, on March 7, 2011, the Company sold an additional 721,274 ordinary shares at an offering price of $19.00 per share (before underwriters discounts and commissions) due to the exercise of the underwriters overallotment option, and received additional net proceeds of approximately $12.8 million, after underwriters discounts and commissions of approximately $0.9 million. Aggregate gross proceeds from the offering, including the exercise of the over-allotment option, were $179.9 million and net proceeds received after underwriters discounts and commissions and offering related expenses were approximately $162.3 million.
The Company had options to purchase ordinary shares and restricted stock units outstanding of 4.5 million and 3.5 million ordinary shares at July 3, 2011 and July 4, 2010, respectively. None of the options or restricted stock units were included in diluted earnings per share for the six months ended July 3, 2011 and July 4, 2010, respectively, because the Company recorded a net loss in all periods and, therefore, including these instruments would be anti-dilutive.
13. Other Comprehensive Income (Loss)
Other comprehensive income (loss) refers to revenues, expenses, gains, and losses that under U.S. GAAP are included in comprehensive income (loss) but are excluded from net earnings, as these amounts are recorded directly as an adjustment to shareholders equity. Other comprehensive income (loss) is comprised mainly of foreign currency translation adjustments.
The reconciliation of net loss to comprehensive loss is as follows (in thousands):
|
|
Three months ended |
|
Six months ended |
| ||||||||
|
|
July 3, |
|
July 4, |
|
July 3, |
|
July 4, |
| ||||
|
|
(unaudited) |
|
(unaudited) |
| ||||||||
Net loss |
|
$ |
(2,869 |
) |
$ |
(8,603 |
) |
$ |
(26,838 |
) |
$ |
(17,959 |
) |
Foreign currency translation adjustments |
|
4,726 |
|
(8,483 |
) |
16,475 |
|
(14,099 |
) | ||||
Total comprehensive income (loss) |
|
$ |
1,857 |
|
$ |
(17,086 |
) |
$ |
(10,363 |
) |
$ |
(32,058 |
) |
14. Non-Controlling Interests
The Company currently markets the Piton Knotless Anchor (Piton), an arthroscopic technology for rotator cuff repair. The Piton was based on technology developed by Sapphire Medical, Inc. (Sapphire). In April 2007, C2M Medical, Inc. (C2M) acquired all the assets related to the Piton technology from Sapphire. C2M was a company founded and owned by certain current shareholders of the Company. The Company had no equity ownership interest in C2M.
Under the terms of the purchase agreement between C2M and Sapphire, C2M paid Sapphire $7.5 million upon execution of the transaction. C2M also agreed to pay Sapphire a $5.0 million milestone payment upon completion of 75 surgeries using the Piton and a separate $7.5 million milestone payment once the Piton was commercially launched to the sales force. These milestones were paid by C2M during 2008. Additionally, C2M agreed to pay Sapphire an earnout equal to 25% of Piton sales for the first three years after launch.
In January 2008, the Company began negotiating a licensing agreement with C2M for use of its Piton technology to launch as an anchor product in the Companys newly developed sports medicine product portfolio. In June 2008, the Company executed an exclusive worldwide license agreement with C2M for use of the Piton technology. The terms of the agreement called for the Company to assume the remaining obligation of C2M under its purchase agreement with Sapphire related to future earnout payments equal to 25% of Piton sales for the three-year period after product launch. C2M had the right to terminate the license agreement at any time after 18 months from the execution of the license. The terms of the license also included an option purchase agreement (the Option Agreement) that allowed the Company to purchase 100% of the common stock of C2M once cumulative Piton sales reach $5.0 million or C2M terminated the license (the Call Option). Additionally, the license included a clause, whereby C2M could require the Company to purchase 100% of C2Ms common stock if sales of the Piton anchor products exceeded $5.0 million (the Put Option). Under both the Call Option and the Put Option, the purchase price of C2M would be equal to the paid-in capital of C2M and was required to be paid in the Companys ordinary shares. The paid-in capital of C2M as of December 2008 and 2009 was approximately $23.2 million, which consisted of the purchase price paid to Sapphire for the Piton technology, including milestones paid, and an additional amount of capital to fund development activities.
The Company determined that C2M was a variable interest entity (VIE) as of June 2008. The Option Agreement allowed for the Company to purchase C2M at a fixed price regardless of the actual performance of the Piton products. As a result, C2M did not have the right to receive expected residual returns that would instead be enjoyed by the Company. The Company was considered the primary beneficiary of C2M because it had the obligation to absorb the majority of the expected losses and the right to absorb the majority of the expected returns. As a result, the Company was required to consolidate C2M. This conclusion was reached due to the existence of the Put Option and Call Option to acquire C2M at a price that was fixed upon entry into the license agreement. Accordingly, the financial position and results of operations of C2M have been included in the consolidated financial statements from the date of execution of the license agreement. The liabilities recognized as a result of consolidating C2M consist primarily of the fair value of the obligations C2M had under its purchase agreement with Sapphire. As of July 3, 2011 and January 2, 2011, the only material liability recognized relates to the estimated remaining earnout payments due under the original Sapphire purchase agreement. The Company is required to make these earnout payments on behalf of C2M in accordance with the license agreement. The assets of C2M consist of only cash used to fund ongoing operations and the Piton technology intangible asset.
Pursuant to authoritative guidance, the equity interests in C2M not owned by the Company were reported as non-controlling interests on the consolidated balance sheet of the Company. Losses incurred by C2M are charged to the Company and to the non-controlling interest holders based on their ownership percentage. Prior to the acquisition of the noncontrolling interest by the Company, the non-controlling interest holders held 100% of the equity interests in C2M, and therefore, none of the results of operations are allocated to the Company. Therefore, the noncontrolling interest was accounted for in the consolidated financial statements as a contingently redeemable non-controlling interest that is initially recorded at fair value and classified as mezzanine equity.
However, pursuant to authoritative guidance, if the fair value of the contingently redeemable non-controlling interest is less than the current redemption value, and it is probable that the contingency related to the Put Option will be met, then the carrying value of the contingently redeemable non-controlling interest must be adjusted to its redemption value through a charge directly to equity. The Company recognized $0.7 million in accretion charges during the fiscal six month period ended July 4, 2010, to reflect the contingently redeemable non-controlling interest at its current redemption value as it is probable the $5 million sales contingency included in the Put Option would be met. No such accretion charges were recorded during the six month period ended July 3, 2011. The Company recognized $1.6 million in net losses during the six month period ended July 4, 2010 as a result of the consolidation of C2M. These net losses consist primarily of intangible asset amortization and, as such, the results of consolidation of C2M did not have a significant impact on the consolidated cash flows of the Company.
During the first quarter of 2010, the Company exercised its Put Option to acquire the outstanding shares of C2M in exchange for the Companys ordinary shares. The transaction represents the acquisition of a non-controlling interest and as a result was accounted for as an equity transaction in accordance with Accounting Standards Codification (ASC) 810-10. Upon exercise of the Put Option, a non-controlling interest in C2M no longer existed. The balance of the non-controlling interest was eliminated and the fair value of the ordinary shares issued in the acquisition, $23.2 million, was recorded as a component of shareholders equity.
15. Litigation
On October 25, 2007, two of the Companys former sales agents filed a complaint in the U.S. District Court for the Southern District of Illinois, alleging that the Company had breached their agency agreements and committed fraudulent and negligent misrepresentations. The jury rendered a verdict on July 31, 2009, awarding the plaintiffs a total of $2.6 million in actual damages and $4.0 million in punitive damages. While the court struck the award of punitive damages on March 31, 2010, it denied the Companys
motion to set aside the verdict or order a new trial. The Company has filed a notice of appeal with the U.S. Court of Appeals for the Seventh Circuit in respect of the remaining actual damages.
The consolidated appeal has been argued before the U.S. Court of Appeals for the Seventh Circuit, and the Company is awaiting the Courts decision.
The Company has considered the facts of the case and related case law and, based on this information, believes that the verdict rendered on July 31, 2009 was inappropriate given the related facts and supporting legal arguments. The Company has considered the progress of the case, the views of legal counsel and the facts and arguments presented at the original jury trial and the fact that the Company intends to vigorously defend its position through the appellate courts in assessing the probability of a loss occurring for this matter. The Company believes it must assess the probability of the incurrence of a loss, and the ability to reasonably estimate such loss, based on the possible outcomes of the entire legal process including the appeals process. The Company believes its legal appeal is strong and that the range of possible outcomes is between zero and $6.6 million. After assessing all relevant information, the Company does not believe there to be a reasonably estimable loss within the range of possible outcomes that is probable of occurring. As a result, the Company has not recorded an accrual for any loss related to this issue. The Company has determined that a loss is reasonably possible, and management estimates the range of loss to be between zero and $6.6 million, the amount of the initial jury verdict. The Company believes it has a strong defense against these claims and is vigorously contesting these allegations. As of July 3, 2011, no accrual was recorded relating to this case.
In addition to the item noted above, the Company is subject to various other legal proceedings, product liability claims and other matters which arise in the ordinary course of business. In the opinion of management, the amount of liability, if any, with respect to these matters will not materially affect the Companys consolidated results of operations or financial position.
16. Special Charges
During the year ended December 27, 2009, the Company consolidated its U.S. operations and closed quality and regulatory sales and marketing functions in San Diego, California. Additionally, manufacturing operations in Beverly, Massachusetts, were also closed. Additionally, the Company opened sales offices in Scandinavia and the United Kingdom in 2009. The Company incurred $1.9 million in costs related to the consolidation and launching of the sales sites. The operating costs for Scandinavia and the United Kingdom are included in sales and marketing expense. Included in the $1.9 million of special charges are expenses incurred related to severance, lease termination, and moving costs related to consolidation of the Companys U.S. operations, as well as expenses for travel, consulting, and legal costs incurred to launch the sales sites. All expenses were paid in 2009.
During the second quarter of 2011, the Company recorded $0.1 million in special charges for severance related expenses related to the Companys consolidation of its U.S. operations.
17. Subsequent Events
The Company has evaluated subsequent events after July 3, 2011 and concluded that no material transactions occurred subsequent to that date that provided additional evidence about conditions that existed at or after July 3, 2011 that require adjustment to the consolidated financial statements.
ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion of our financial condition and results of operations together with the consolidated financial statements and the notes thereto included elsewhere in this report, and other financial information included in this report. The following discussion may contain predictions, estimates and other forward-looking statements that involve a number of risks and uncertainties, including those discussed under Special Note Regarding Forward-Looking Statements and elsewhere in this report. These risks could cause our actual results to differ materially from any future performance suggested below.
Our fiscal quarters are generally determined on a 13-week basis and always end on a Sunday. As a result, our fiscal year is generally 364 days. Our year-end periods end on the Sunday nearest to December 31. Every few years, it is necessary to add an extra week to a quarter to make it a 14-week period in order to have our year end fall on the Sunday nearest to December 31. For example, the first two quarters of 2010 includes an extra week of operations compared to the first two quarters of 2011. For purposes of this managements discussion and analysis of financial condition and results of operations, references to:
· the second quarter of 2011 or three months ended July 3, 2011 refers to the 13-week period ended July 3, 2011;
· the first two quarters of 2011or six months ended July 3, 2011 refers to the 26-week period ended July 3, 2011;
· the second quarter of 2010 or the three months ended July 4, 2010 refers to the 13-week period ended July 4, 2010; and
· the first two quarters of 2010 or six months ended July 4, 2010 refers to the 27-week period ended July 4, 2011.
Overview
We are a global medical device company focused on surgeons that treat musculoskeletal injuries and disorders of the shoulder, elbow, wrist, hand, ankle and foot. We refer to these surgeons as extremity specialists. We sell to this extremity specialist customer base a broad line of joint replacement, trauma, sports medicine and biologic products to treat extremity joints. Our motto of specialists serving specialists encompasses this focus. In certain international markets, we also offer joint replacement products for the hip and knee. We currently sell over 80 product lines in approximately 35 countries.
We believe we are differentiated by our full portfolio of upper and lower extremity products, our dedicated extremity-focused sales organization and our strategic focus on extremities. We further believe that we are well positioned to benefit from the opportunities in the extremity products marketplace as we are among the global leaders in the shoulder and ankle joint replacement markets. We have also expanded our technology base and product offering to include: new joint replacement products based on new materials; improved trauma products based on innovative designs; and proprietary biologic materials for soft tissue repair. In the United States, which is the largest orthopaedic market, we believe that our single, specialists serving specialists distribution channel is strategically aligned with what we believe is an ongoing trend in orthopaedics for surgeons to specialize in certain parts of the anatomy or certain types of procedures.
Our principal products are organized in four major categories: upper extremity joints and trauma, lower extremity joints and trauma, sports medicine and biologics, and large joints and other. Our upper extremity joints and trauma products include joint replacement and bone fixation devices for the shoulder, hand, wrist and elbow. Our lower extremity joints and trauma products include joint replacement and bone fixation devices for the foot and ankle. Our sports medicine and biologics product category includes products used across several anatomic sites to repair or regenerate soft tissue. Our large joints and other products include hip and knee joint replacement implants and ancillary products.
In the United States, we sell products from our upper extremity joints and trauma, lower extremity joints and trauma, and sports medicine and biologics product categories; we do not market large joints in the United States nor do we currently have plans to do so. While we market our products to extremity specialists, our revenue is generated from sales to healthcare institutions and distributors. We sell through a single sales channel consisting of a network of independent commission-based sales agencies, with occasional variations based upon individual territories. Internationally, in select markets, we sell our full product portfolio, including upper extremity joints and trauma, lower extremity joints and trauma, sports medicine and biologics and large joints. We utilize several distribution approaches depending on the individual market requirements, including direct sales organizations in the largest European markets and independent distributors for most other international markets.
We have significantly grown our business during the past several years and have built an extremities focused business that offers a broad range of products to a focused group of specialty surgeons. We believe this strategy has been the primary factor in enabling our revenue growth during such time. During the past several years we also have increased our operating expenses significantly. We have strategically invested with particular emphasis on product development, acquisition of strategic products and technologies, manufacturing capacity, sales commissions and infrastructure to support both current and anticipated future growth.
Foreign Currency Exchange Rates
A substantial portion of our business is located outside the United States and as a result we generate revenue and incur expenses denominated in currencies other than the U.S. dollar. The majority of our operations denominated in currencies other than the U.S. dollar are denominated in Euros. In the first two quarters of 2011 and 2010, 47% and 45%, of our revenues, respectively, were denominated in foreign currencies. As a result, our revenue can be significantly impacted by fluctuations in foreign currency exchange rates. We expect that foreign currencies will continue to represent a similarly significant percentage of our revenues in the future. Selling, marketing and administrative costs and research and development costs related to these revenues are largely denominated in the same foreign currencies, thereby limiting our foreign currency transaction risk exposure. We, therefore, believe that the risk of a significant impact on our earnings from foreign currency fluctuations is mitigated to some extent.
A substantial portion of the products we sell in the United States are manufactured in countries where costs are incurred in Euros. Fluctuations in the Euro to U.S. dollar exchange rate will have an impact on the cost of the products we manufacture in those countries, but we would not likely be able to change our U.S. dollar selling prices of those same products in the United States in response to those cost fluctuations. As a result, fluctuations in the Euro to U.S. dollar exchange rates could have a significant impact on the cost of the inventory produced and a related impact on our gross profit in the future periods in which that inventory is sold. Fluctuations in the value of foreign currencies relative to the U.S. dollar impact our operating results. Impacts associated with fluctuations in foreign currency exchange rates are discussed in more detail under Item 3 Quantitative and Qualitative Disclosures about Market Risk. In countries with currencies other than the U.S. dollar, assets and liabilities are translated into U.S. dollars using end-of-period exchange rates; and revenues, expenses and cash flows are translated using average rates of exchange. Constant currency growth rates used in the following discussion of results of operations eliminate the impact of period-over-period foreign currency fluctuations.
We evaluate our results of operations on both an as reported and a constant currency basis. The constant currency presentation is a non-GAAP financial measure, which excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations, consistent with how we evaluate our performance. We calculate constant currency percentages by converting our current-period local currency financial results using the prior-period foreign currency exchange rates and comparing these adjusted amounts to our prior-period reported results. This calculation may differ from similarly-titled measures used by others; and, accordingly, the constant currency presentation is not meant to be a substitution for recorded amounts presented in conformity with GAAP nor should such amounts be considered in isolation.
Results of Operations
Comparison of three months ended July 3, 2011 to three months ended July 4, 2010
The following table sets forth, for the periods indicated, our results of operations as a percentage of revenue:
|
|
Three months ended |
| ||
|
|
July 3, |
|
July 4, |
|
Revenue |
|
100 |
% |
100 |
% |
Cost of goods sold |
|
28 |
% |
27 |
% |
Gross profit |
|
72 |
% |
73 |
% |
Operating expenses: |
|
|
|
|
|
Selling and marketing |
|
54 |
% |
54 |
% |
General and administrative |
|
10 |
% |
9 |
% |
Research and development |
|
8 |
% |
7 |
% |
Amortization of intangible assets |
|
4 |
% |
5 |
% |
Special charges |
|
0 |
%* |
0 |
%* |
Operating loss |
|
(4 |
)% |
(3 |
)% |
* Not meaningful
The following tables set forth, for the periods indicated, our revenue by product category and geography expressed as dollar amounts and the changes in revenue between the specified periods expressed as percentages:
|
|
Three months ended |
|
|
|
|
| ||||
Revenue by Product Category |
|
July 3, |
|
July 4, |
|
Percent |
|
Percent |
| ||
|
|
($ in thousands) |
|
(as |
|
(constant |
| ||||
|
|
|
|
|
|
reported) |
|
currency) |
| ||
Upper extremity joints and trauma |
|
$ |
40,795 |
|
$ |
33,940 |
|
20 |
% |
15 |
% |
Lower extremity joints and trauma |
|
6,447 |
|
5,592 |
|
15 |
% |
11 |
% | ||
Sports medicine and biologics |
|
3,583 |
|
3,076 |
|
17 |
% |
12 |
% | ||
Total extremities |
|
50,825 |
|
42,608 |
|
19 |
% |
14 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Large joints and other |
|
14,333 |
|
11,955 |
|
20 |
% |
5 |
% | ||
Total |
|
$ |
65,158 |
|
$ |
54,563 |
|
19 |
% |
12 |
% |
|
|
Three months ended |
|
|
|
|
| ||||
Revenue by Geography |
|
July 3, |
|
July 4, |
|
Percent |
|
Percent |
| ||
|
|
($ in thousands) |
|
(as |
|
(constant |
| ||||
|
|
|
|
|
|
reported) |
|
currency) |
| ||
United States |
|
$ |
34,395 |
|
$ |
30,669 |
|
12 |
% |
12 |
% |
International |
|
30,763 |
|
23,894 |
|
29 |
% |
12 |
% | ||
Total |
|
$ |
65,158 |
|
$ |
54,563 |
|
19 |
% |
12 |
% |
Revenue. Revenue increased by 19% to $65.2 million during the three months ended July 3, 2011 from $54.6 million during the three months ended July 4, 2010, as a result of increased sales in each of our product categories, with the most significant increase occurring in our upper extremity joints and trauma and large joints and other categories. The growth across all product categories was due primarily to increased demand and product expansion and was impacted favorably by fluctuations in foreign currency exchange rates. Our overall revenue growth of 19% consisted of 12% growth in the United States and 29% growth in our international geographies. On a constant currency basis, both our international and overall revenue growth was 12%.
Revenue by product category. Revenue in upper extremity joints and trauma increased by 20% to $40.8 million during the three months ended July 3, 2011 from $33.9 million during the three months ended July 4, 2010, primarily as a result of the continued increase in sales of our Aequalis and Aequalis Ascend shoulder products as well as fluctuations in foreign currency exchange rates. We believe that increased sales of our Aequalis shoulder products resulted from continued market growth in shoulder replacement procedures and continued market movement toward reversed shoulder replacement procedures. We also saw an increase in sales of our Ascend shoulder product which continued to gain share in the shoulder replacement market. Revenue in lower extremity joints and trauma increased by 15% to $6.4 million during the three months ended July 3, 2011 from $5.6 million during the three months ended July 4, 2010, due to increased sales in our ankle replacement products in both the United States and internationally and increased sales of our foot and ankle fixation products due to expanded instrument set availability for key new products such as the Stabilis Ankle Fusion System and the wave Calcaneal Fracture System. Revenue in sports medicine and biologics increased by 17% to $3.6 million during the three months ended July 3, 2011 from $3.1 million during the three months ended July 4, 2010, as a result of increased sales of our anchor products. Revenue in large joints and other increased by 20% to $14.3 million during the three months ended July 3, 2011 from $12.0 million during the three months ended July 4, 2010, primarily due to increased sales of hip and knee products in France and certain export markets. This growth rate was also negatively impacted by a large initial shipment to a new stocking distributor during the second quarter of 2010 that did not recur in 2011. The growth in all our product categories was also significantly impacted favorably by fluctuations in foreign currency exchange rates due to the weakening of the U.S. Dollar versus the Euro. Excluding the impact of foreign currency exchange rate fluctuations our large joints and other category experienced a 5% growth rate. The maturity of our large joint revenue is denominated in foreign currency and is, therefore, the product category most significantly impacted by foreign currency fluctuations.
Revenue by geography. Revenue in the United States increased by 12% to $34.4 million during the three months ended July 3, 2011 from $30.7 million during the three months ended July 4, 2010, primarily driven by continued increase in sales in upper extremity joints and trauma products including, in particular, our Aequalis and Ascend shoulder replacement products. The United States revenue increase was also impacted by increases in sales of our foot and ankle fixation products. International revenue increased by 29% to $30.8 million during the three months ended July 3, 2011 from $23.9 million during the three months ended July 4, 2010, primarily due to increased sales in upper extremities, large joints and sports medicine in France, Australia, Germany and sales to certain stocking distributors across various countries in which we have no current direct sales force. International revenue was also impacted favorably by fluctuations in foreign currency exchange rates. Excluding the impact of foreign currency fluctuations, international revenue growth was 12%.
Cost of goods sold. Our cost of goods sold increased by 22% to $18.0 million during the three months ended July 3, 2011 from $14.7 million during the three months ended July 4, 2010. As a percentage of revenue, cost of goods sold increased to 28% during the three months ended July 3, 2011 from 27% during the three months ended July 4, 2010, primarily due to a change in geographical revenue mix. Our international revenue generally results in a higher level of cost of goods sold as a percentage of revenue than our United States revenue due to the differences in selling prices in various countries. Our international revenue represented 47% of total revenue during the second quarter of 2011 compared to 44% during the second quarter of 2010. Our cost of goods sold and corresponding gross profit as a percentage of revenue can be expected to fluctuate in future periods depending upon
certain factors, including, among others, changes in our product sales mix and prices, distribution channels and geographies, manufacturing yields, inventory reserves required, levels of production volume and fluctuating inventory costs due to changes in currency exchange rates since the period they were manufactured.
Selling and marketing. Our selling and marketing expenses increased by 17% to $34.9 million during the three months ended July 3, 2011 from $29.7 million during the three months ended July 4, 2010. As a percentage of revenue, selling and marketing expenses remained at 54% during the three months ended July 3, 2011 and the three months ended July 4, 2010. The change is primarily a result of $0.8 million of additional instrument depreciation and maintenance costs from a larger volume of instruments in the field and $1.7 million of additional variable commissions and royalties on higher revenue. Additionally, $2.1 million of the increase was related to foreign currency exchange rate fluctuations.
General and administrative. Our general and administrative expenses increased by 36% to $6.4 million during the three months ended July 3, 2011 from $4.7 million during the three months ended July 4, 2010. As a percentage of revenue, general and administrative expenses increased to 10% during the three months ended July 3, 2011 compared to 9% during the three months ended July 4, 2010. The increase was due to additional legal, audit and administrative fees incurred as a result of being a U.S. public reporting company. Much of our legal and accounting spending in the second quarter of 2010 was related to our initial public offering and was capitalized rather than expensed. The increase also included $0.4 million of legal fees and payments related to the settlement of an outstanding product liability claim and $0.3 million related to foreign currency exchange rate fluctuations.
Research and development. Our research and development expenses increased by 30% to $5.2 million during the three months ended July 3, 2011 from $4.0 million during the three months ended July 4, 2010. As a percentage of revenue, research and development expenses increased to 8% during the three months ended July 3, 2011 compared to 7% during the three months ended July 4, 2010. The increase was the result of increased clinical study related expenses and certain biologic related development projects. The increase is also related to $0.3 million of increased share-based compensation and $0.3 million related to foreign currency exchange rate fluctuations.
Amortization of intangible assets. Amortization of intangible assets was $2.9 million during the three months ended July 3, 2011 and the three months ended July 4, 2010. There were no material changes in the gross amounts nor in the amortization period.
Special charges. We recorded special charges of $0.1 million during the second quarter of 2011, which were primarily related to the closure of our Beverly research and development facility. Special charges during the second quarter of 2010 were immaterial.
Interest expense. Our interest expense decreased by 90% to $0.5 million during the three months ended July 3, 2011 from $4.9 million during the three months ended July 4, 2010 as a result of the repayment of our notes payable in February 2011.
Foreign currency transaction gain (loss). Our foreign currency transaction gain was $0.2 million during the three months ended July 3, 2011 compared to a loss of $3.4 million during the three months ended July 4, 2010. The primary driver of our foreign currency transaction loss in the first three months of 2010 was related to the revaluation of our warrant liability which was denominated in a currency other than our functional currency. We settled our warrant liability in May 2010 by exchanging all the outstanding warrants for our ordinary shares.
Other non-operating income (expense). Our other non-operating income was immaterial during the second quarter of 2011, compared to $0.2 million other non-operating expense during the second quarter of 2010. Our non-operating income in 2010 related to the adjustment of our warrant liability to fair value at the end of each reporting period. We settled our warrant liability in May 2010 by exchanging all the outstanding warrants for our ordinary shares.
Income tax (expense) benefit. Our effective tax rate for the second quarter of 2011 and 2010 was (13%) and 14%, respectively. The change in our effective tax rate from the second quarter of 2010 to the second quarter of 2011 primarily relates to the relative percentage of our pre-tax loss made up by our U.S. and international operations. During the second quarter of 2011 we incurred income tax expense related to certain of our international jurisdictions. During the second quarter of 2010, we incurred losses in certain international jurisdictions that generated an income tax benefit in excess of expense. In both periods, given our history of operating losses, we did not record a provision for income taxes in the U.S. and certain of our European sales offices.
Comparison of six months ended July 3, 2011 to six months ended July 4, 2010
The following table sets forth, for the periods indicated, our results of operations as a percentage of revenue:
|
|
Six months ended |
| ||
|
|
July 3, |
|
July 4, |
|
Revenue |
|
100 |
% |
100 |
% |
Cost of goods sold |
|
28 |
% |
27 |
% |
Gross profit |
|
72 |
% |
73 |
% |
Operating expenses: |
|
|
|
|
|
Selling and marketing |
|
52 |
% |
55 |
% |
General and administrative |
|
9 |
% |
10 |
% |
Research and development |
|
8 |
% |
8 |
% |
Amortization of intangible assets |
|
4 |
% |
5 |
% |
Special charges |
|
0 |
%* |
0 |
%* |
Operating loss |
|
(1 |
)% |
(5 |
)% |
* Not meaningful
The following tables set forth, for the periods indicated, our revenue by product category and geography expressed as dollar amounts and the changes in revenue between the specified periods expressed as percentages:
|
|
Six months ended |
|
|
|
|
| ||||
Revenue by Product Category |
|
July 3, |
|
July 4, |
|
Percent |
|
Percent |
| ||
|
|
($ in thousands) |
|
(as |
|
(constant |
| ||||
|
|
|
|
|
|
reported) |
|
currency) |
| ||
Upper extremity joints and trauma |
|
$ |
82,950 |
|
$ |
70,587 |
|
18 |
% |
15 |
% |
Lower extremity joints and trauma |
|
13,079 |
|
11,848 |
|
10 |
% |
8 |
% | ||
Sports medicine and biologics |
|
7,440 |
|
6,517 |
|
14 |
% |
12 |
% | ||
Total extremities |
|
103,469 |
|
88,952 |
|
16 |
% |
14 |
% | ||
|
|
|
|
|
|
|
|
|
| ||
Large joints and other |
|
31,124 |
|
27,454 |
|
13 |
% |
7 |
% | ||
Total |
|
$ |
134,593 |
|
$ |
116,406 |
|
16 |
% |
12 |
% |
|
|
Six months ended |
|
|
|
|
| ||||
Revenue by Geography |
|
July 3, |
|
July 4, |
|
Percent |
|
Percent |
| ||
|
|
($ in thousands) |
|
(as |
|
(constant |
| ||||
|
|
|
|
reported) |
|
currency) |
| ||||
United States |
|
$ |
71,416 |
|
$ |
64,464 |
|
11 |
% |
11 |
% |
International |
|
63,177 |
|
51,942 |
|
22 |
% |
14 |
% | ||
Total |
|
$ |
134,593 |
|
$ |
116,406 |
|
16 |
% |
12 |
% |
Revenue. Revenue increased by 16% to $134.6 million during the six months ended July 3, 2011 from $116.4 million during the six months ended July 4, 2010, as a result of increased sales in each of our product categories, with the most significant increase occurring in our upper extremity joints and trauma category. Growth across all product categories was due primarily to increased demand and favorable fluctuations in foreign currency exchange rates and was partially offset by the existence of an extra week of sales in the first half of 2010. Our overall revenue growth of 16% consisted of 11% growth in the United States and 22% growth in our international geographies. Excluding the impact of foreign currency exchange rate fluctuations, international and overall revenue growth were 14% and 12%, respectively.
Revenue by product category. Revenue in upper extremity joints and trauma increased by 18% to $83.0 million during the six months ended July 3, 2011 from $70.6 million during the six months ended July 4, 2010, primarily as a result of the continued increase in sales of our Aequalis and Aequalis Ascend shoulder products. We believe that increased sales of our Aequalis shoulder products resulted from continued market growth in shoulder replacement procedures and continued market movement towards reversed shoulder replacement procedures. We also saw an increase in sales of our Ascend shoulder products which continued to gain share in the shoulder replacement market. Revenue in lower extremity joints and trauma increased by 10% to $13.1 million during the six months ended July 3, 2011 from $11.8 million during the six months ended July 4, 2010, primarily due to increased sales in our ankle replacement products in both the United States and internationally increased sales of our foot and ankle fixation products due to expanded instrument set availability for key new products such as the Stabilis Ankle Fusion System and the wave Calcaneal Fracture System. Revenue in sports medicine and biologics increased by 14% to $7.4 million during the six months ended July 3, 2011 from $6.5 million during the six months ended July 4, 2010, as a result of increased sales of our suture and suture anchor products. Revenue in large joints and other increased by 13% to $31.1 million during the six months ended July 3, 2011 from $27.4 million during the six months ended July 4, 2010, primarily due to increased sales of hip and knee products in France and certain export markets. The growth in all of our product categories was favorably impacted by fluctuations in foreign currency exchange rates primarily due to the weakening of the U.S. dollar versus the Euro.
category, the factors driving the increased sales were partially offset by the impact of an extra week of sales in the first two fiscal quarters of 2010.
Revenue by geography. Revenue in the United States increased by 11% to $71.4 million during the six months ended July 3, 2011 from $64.5 million during the six months ended July 4, 2010, primarily driven by continued increase in sales in upper extremity joints and trauma products including in particular our Aequalis and Ascend shoulder replacement products. The U.S. revenue increase was also impacted by increases in sales of our ankle fixation products. International revenue increased by 22% to $63.2 million during the six months ended July 3, 2011 from $51.9 million during the six months ended July 4, 2010, primarily due to increased revenue in France, Australia, Germany and sales to certain stocking distributors across various countries in which we have no current direct sales force. In each geography, the factors driving the increased sales were partially offset by the existence of an extra week of sales in the first two quarters of 2010. Foreign currency exchange rate fluctuations also had a favorable impact on international revenue growth during the first two quarters of 2011. Excluding the impact of foreign currency fluctuations, international revenue grew 14%.
Cost of goods sold. Our cost of goods sold increased by 19% to $38.1 million during the six months ended July 3, 2011 from $32.0 million during the six months ended July 4, 2010. As a percentage of revenue, cost of goods sold increased to 28% during the six months ended July 3, 2011 from 27% during the six months ended July 4, 2010, primarily due to a change in geographical revenue mix. Our international revenue generally results in a higher level of cost of goods sold as a percentage of revenue than our United States revenue due to the differences in selling prices in various countries. Our international revenue represented 47% of total revenue during the six months ended July 3, 2011 compared to 45% during the six months ended July 4, 2010. Our cost of goods sold and corresponding gross profit as a percentage of revenue can be expected to fluctuate in future periods depending upon certain factors, including, among others, changes in our product sales mix and prices, distribution channels and geographies, manufacturing yields, inventory reserves required, levels of production volume and fluctuating inventory costs due to changes in currency exchange rates since the period they were manufactured.
Selling and marketing. Our selling and marketing expenses increased by 8% to $69.6 million during the six months ended July 3, 2011 from $64.2 million during the six months ended July 4, 2010. As a percentage of revenue, selling and marketing expense decreased to 52% during the six months ended July 3, 2011 from 55% during the six months ended July 4, 2010. The change is primarily a result of $1.0 million of additional instrument depreciation and maintenance costs from a larger volume of instruments in the field and $2.3 million of additional variable commissions and royalties on higher revenue. Additionally, $2.0 million of the increase was related to foreign currency exchange rate fluctuations. Other non-variable selling and marketing expenses remained consistent with prior year, however, the first six months of 2010 included an additional week of operations.
General and administrative. Our general and administrative expenses increased by 11% to $12.4 million during the six months ended July 3, 2011 from $11.2 million during the six months ended July 4, 2010. As a percentage of revenue, general and administrative expenses decreased to 9% during the six months ended July 3, 2011 compared to 10% during the six months ended July 4, 2010. The increase was due to additional legal, audit and administrative fees incurred as a result of being a U.S. public reporting company. Much of our legal and accounting spending in the first six months of 2010 was related to our initial public offering and was recorded as a reduction of the IPO proceeds rather than expensed. The increase also included $0.4 million of legal fees and payments related to the settlement of an outstanding product liability claim and $0.3 million related to foreign currency exchange rate fluctuations.
Research and development. Our research and development expenses increased by 17% to $10.3 million during the six months ended July 3, 2011 from $8.8 million during the six months ended July 4, 2010. As a percentage of revenue, research and development expenses remained at 8% during the six months ended July 3, 2011 and the six months ended July 4, 2010. The increase was the result of increased clinical study related expenses and certain biologic related development projects partially offset by increased expenses related to the additional week of operations included in the first two quarters of 2010. The increase is also related to $0.4 million of increased share-based compensation and $0.3 million related to foreign currency exchange rate fluctuations.
Amortization of intangible assets. Amortization of intangible assets decreased by 3% to $5.7 million during the six months ended July 3, 2011 from $5.9 million during the six months ended July 4, 2010 as a result of the complete amortization of certain license related intangibles.
Special charges. We recorded special charges of $0.1 million during the six months ended July 3, 2011 compared to $0.3 million for the six months ended July 4, 2010. The special charges in the first two quarters of 2011 were primarily related to the closure of our Beverly research and development facility. The special charges in the first two quarters of 2010 were primarily related to the relocation of our U.S. headquarters and the establishment of our sales office in the United Kingdom.
Interest expense. Our interest expense decreased by 72% to $3.0 million during the six months ended July 3, 2011 from $10.8 million during the six months ended July 4, 2010 as a result of the repayment of our notes payable in February 2011.
Foreign currency transaction gain (loss). Our foreign currency transaction gain was $0.1 million during the six months ended July 3, 2011 compared to a loss of $5.7 million during the six months ended July 4, 2010. The primary driver of our foreign currency transaction loss in the first two quarters of 2010 was related to the revaluation of our warrant liability which was denominated in a currency other than our functional currency. We settled our warrant liability in May 2010 by exchanging all the outstanding warrants for our ordinary shares.
Loss on extinguishment of debt. We recognized a $29.5 million loss on extinguishment of debt during the six months ended July 3, 2011 due to the repayment of our notes payable. Our notes payable were issued in 2008 and 2009 together with warrants to purchase ordinary shares of the company. At the time of issuance, we recognized the estimated fair value of the warrants as a warrant liability with an offsetting debt discount to reduce the carrying value of the notes payable to the estimated fair value at the time of issuance. This debt discount was then amortized as additional interest expense over the term of the notes. At the time of repayment in the first quarter of 2011, we wrote-off the remaining unamortized portion of the discount as a loss on the extinguishment of debt. We had no such expense related to the extinguishment of debt during 2010. See Note 9 of our consolidated financial statements for further discussion of the accounting treatment of the notes payable and related warrants.
Other non-operating income (expense). Our other non-operating expense was immaterial during the first six months of 2011 and 2010.
Income tax (expense) benefit. Our effective tax rate for the first two quarters of 2011 and 2010 was 21% and 17%, respectively. The change in our effective tax rate from the first two quarters of 2010 to the first two quarters of 2011 primarily relates to the relative percentage of our pre-tax loss made up by our French operations. Our income tax benefit increased to $7.0 million during the first two quarters of 2011 compared to $3.7 million for the first two quarters of 2010. During the first two quarters of 2011, we recognized $7.5 million of deferred tax benefit related to the $29.5 million loss on extinguishment of debt previously discussed. This benefit was the result of reversing the remaining deferred tax liability related to the unamortized debt discount on our notes payable at the time of repayment. Offsetting this deferred tax benefit are estimated income tax expenses primarily related to our French subsidiaries. Given our history of operating losses, we do not generally record a provision for income taxes in the United States and certain of our European sales offices. Our income tax benefit in the first two quarters of 2010 primarily related to a tax benefit recorded related to our French subsidiaries as well as deferred tax benefit on the amortization of the debt discount recognized on our notes payable.
Seasonality and Quarterly Fluctuations
Our business is seasonal in nature. Historically, demand for our products has been the lowest in our third quarter as a result of the European holiday schedule during the summer months.
We have experienced and expect to continue to experience meaningful variability in our revenue and gross profit among quarters, as well as within each quarter, as a result of a number of factors including, among others, the number and mix of products sold in the quarter or the geographies in which they are sold; the demand for, and pricing of our products and the products of our competitors; the timing of or failure to obtain regulatory clearances or approvals for products; costs, benefits and timing of new product introductions; the level of competition; the timing and extent of promotional pricing or volume discounts; changes in average selling prices; the availability and cost of components and materials; number of selling days; fluctuations in foreign currency exchange rates; and impairment and other special charges.
Liquidity and Capital Resources
Since inception, we have generated significant operating losses. These, combined with significant charges not related to cash from operations, amortization of acquired intangible assets, and fair value adjustments to our warrant liability, have resulted in an accumulated deficit of $210.4 million as of July 3, 2011. Historically, our liquidity needs have been met through a combination of sales of our equity securities together with issuances of notes payable and warrants to both current shareholders and new investors and other bank related debt. In February 2011, we completed an initial public offering from which we received net proceeds of approximately $149.5 million after underwriters discounts, commissions and offering expenses. Our notes payable were repaid in full during the first quarter of 2011 using a portion of these proceeds. Additionally, in March 2011, we sold additional ordinary shares due to the exercise of the underwriters overallotment option from which we received additional net proceeds of approximately $12.8 million after underwriters discounts and commissions and offering expenses.
As of July 3, 2011, we had $40.8 million in short-term and long-term debt. Certain of these debt agreements include financial covenants that (i) require us to have a minimum level of tangible net worth in our U.S. operating subsidiary, (ii) have various levels of performance tests of debt to equity and debt to modified income specifically related to our French operating subsidiary and
(iii) restrict our ability to borrow in our U.S. operating subsidiary if there is a default under the agreement, all of which may have an impact on our liquidity.
The following table sets forth, for the periods indicated, certain liquidity measures:
|
|
As of |
| ||||
|
|
July 3, |
|
January 2, |
| ||
|
|
($ in thousands) |
| ||||
Cash and cash equivalents |
|
$ |
59,733 |
|
$ |
24,838 |
|
Working capital |
|
148,482 |
|
96,965 |
| ||
Line of credit availability |
|
29,037 |
|
11,252 |
| ||
Operating activities. Net cash provided by operating activities was $12.5 million during the six months ended July 3, 2011 compared to net cash provided by operating activities of $2.5 million during the six months ended July 4, 2010, primarily driven by improvement in our consolidated net loss adjusted for non-cash items and a lower use of cash for working capital during the first six months of 2011 as compared to the first six months of 2010. During the first six months of 2011 we also received a $2.8 million income tax refund in the United States related to a one-time ability to carry income tax losses back to a previous period in which our United States subsidiary had previously paid income taxes.
Investing activities. Net cash used in investing activities was $11.6 million during the six months ended July 3, 2011 compared to net cash used in investing activities of $15.2 million during the six months ended July 4, 2010. The decrease in net cash used in investing activities is primarily due to reduced purchases of property, plant and equipment and reduced acquisition-related payments. During the first six months of 2010 purchases of property, plant and equipment included those to finish preparing our French manufacturing facility. The first six months of both 2011 and 2010 include acquisition-related payments made in accordance with the contingent purchase price of the acquisition of our Piton technology. This purchase agreement requires that we make payments equal to 25% of the sales of Piton for a three-year period ending in the third quarter of 2011. The first quarter of 2010 also included an additional contingent consideration payment made related to a 2007 acquisition upon achievement of a specific revenue milestone related to our Ascend shoulder products. Our industry is capital intensive, particularly as it relates to surgical instrumentation. Historically, our capital expenditures have consisted principally of surgical instruments, purchased manufacturing equipment, research and testing equipment, computer systems and office furniture and equipment.
Financing activities. Net cash provided by financing activities was $32.3 million during the six months ended July 3, 2011 compared to $9.1 million during the six months ended July 4, 2010. The increase in net cash provided by financing activities was due to the receipt of approximately $168.3 million from the completion of our initial public offering and subsequent exercise of the underwriters overallotment option, after underwriters discounts and commissions and offering expenses. This was offset in part by the repayment of notes payable of $116.1 million with a portion of the net proceeds from our initial public offering. We also used proceeds of our initial public offering to reduce our short-term borrowings under various lines of credit by $16.8 million.
Other liquidity information. We have funded our cash needs since 2006 through the issuance of equity, notes payable and warrants to a group of investors and through our initial public offering. Although it is difficult for us to predict our future liquidity requirements, we believe that our cash balance of approximately $59.7 million and our existing available credit lines of $29.0 million as of July 3, 2011 will be sufficient to fund our working capital requirements and operations and permit anticipated capital expenditures during the remainder of 2011. In the event that we would require additional working capital to fund future operations, we could seek to acquire that through additional equity or debt financing arrangements which may or may not be available on favorable terms at such time.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements, as defined by the rules and regulations of the SEC that have or are reasonably likely to have a material effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources. As a result, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged in these arrangements.
Contractual Obligations and Commitments
We refer you to the description of our contractual obligations and commitments as of January 2, 2011 as set forth in our annual report on Form 10-K for the fiscal year ended January 2, 2011. There were no material changes to such information since that date through July 3, 2011, other than the repayment of our notes payable in February 2011, as previously described.
Critical Accounting Policies
Information on judgments related to our most critical accounting policies and estimates is discussed in Item 7 of our annual report on Form 10-K for the year ended January 2, 2011. Certain of our more critical accounting estimates require the application of significant judgment by management in selecting the appropriate assumptions in determining the estimate. By their nature, these judgments are subject to an inherent degree of uncertainty. We develop these judgments based on our historical experience, terms of existing contracts, our observance of trends in the industry, information provided by our customers, and information available from other outside sources, as appropriate. Actual results may differ from these judgments under different assumptions or conditions. Different, reasonable estimates could have been used for the current period. Additionally, changes in accounting estimates are reasonably likely to occur from period to period. Both of these factors could have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. All of our significant accounting policies are more fully described in Note 2 to our consolidated financial statements set forth in our annual report on Form 10-K for the year ended January 2, 2011. There have been no significant changes to the policies related to our critical accounting estimates since January 2, 2011.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to various market risks, which may result in potential losses arising from adverse changes in market rates and prices, such as interest rates and foreign currency exchange rate fluctuations. We do not enter into derivatives or other financial instruments for trading or speculative purposes. We believe we are not exposed to a material market risk with respect to our invested cash and cash equivalents.
Interest Rate Risk
Borrowings under our various revolving lines of credit in the United States and in Europe generally bear interest at variable annual rates. Borrowings under our various term loans in the United States and Europe are mixed between variable and fixed interest rates. As of July 3, 2011, we had $4.7 million in borrowings under our revolving lines of credit and $36.1 million in borrowings under various term loans. Based upon this debt level, a 10% increase in the interest rate on such borrowings would not have a material impact on our interest expense.
At July 3, 2011, our cash and cash equivalents were $59.7 million. Based on our annualized average interest rate, a 10% decrease in the interest rate on such balances would result in an immaterial impact on an annual basis.
Foreign Currency Exchange Rate Risk
Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies could adversely affect our financial results. In the first two quarters of 2011 and 2010, approximately 47% and 45% of our revenues, respectively, were denominated in foreign currencies. We expect that foreign currencies will continue to represent a similarly significant percentage of our revenues in the future. Operating expenses related to these revenues are largely denominated in the same respective currency, thereby limiting our transaction risk exposure. However, for revenues not denominated in U.S. dollars, if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases and if we price our products in the foreign currency, we will receive less in U.S. dollars than we did before the rate increase went into effect. If we price our products in U.S. dollars and competitors price their products in local currency, an increase in the relative strength of the U.S. dollar could result in our prices not being competitive in a market where business is transacted in the local currency.
During the three and six months ended July 4, 2011, approximately 81% and 82%, respectively, of our revenues denominated in foreign currencies were derived from EU countries and was denominated in Euros. Additionally, we have significant intercompany payables and debt with certain European subsidiaries, which are denominated in foreign currencies, principally the Euro. Our principal exchange rate risk therefore exists between the U.S. dollar and the Euro. Fluctuations from the beginning to the end of any given reporting period result in the remeasurement of our foreign currency-denominated cash, receivables, payables and debt, generating currency transaction gains or losses that impact our non-operating income/expense levels in the respective period and are reported in foreign currency transaction gain (loss) in our consolidated financial statements. We recorded a foreign currency transaction gain of approximately $0.2 million and $0.1 million during the three and six months ended July 4, 2011, respectively, related to the translation of our foreign-denominated receivables, payables and debt into U.S. dollars. We do not currently hedge our exposure to foreign currency exchange rate fluctuations. We may, however, hedge such exposure to foreign currency exchange rates in the future.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our President and Chief Executive Officer and Global Chief Financial Officer, referred to collectively herein as the Certifying Officers, are responsible for establishing and maintaining our disclosure controls and procedures. The Certifying Officers have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 240.13a-15(e) and 240.15d-15(e) promulgated under the Securities Exchange Act of 1934) as of the end of the period covered in this report. Based on that review and evaluation, which included inquiries made to certain of our other employees, the Certifying Officers have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures, as designed and implemented, are effective in ensuring that information relating to our company required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, including ensuring that such information is accumulated and communicated to our management, including the Certifying Officers, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There was no change in our internal control over financial reporting that occurred during the second quarter of 2011 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
A description of our legal proceedings in Note 15 of our consolidated financial statements included in this report is incorporated herein by reference.
We are affected by risks specific to us as well as factors that affect all businesses operating in a global market. In addition to the other information set forth in this report, careful consideration should be taken of the factors described in our annual report on Form 10-K for the fiscal year ended January 2, 2011 under the heading Part I Item 1A. Risk Factors, which could materially adversely affect our business, financial condition or operating results. There has been no material change in those risk factors.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Recent Sales of Unregistered Securities
During the second quarter of 2011, we did not issue any ordinary shares or other equity securities of our company that were not registered under the Securities Act of 1933, as amended.
Use of Proceeds from Registered Securities
Our initial public offering was effected through a registration statement on Form S-1 (File No. 333-167370) that was declared effective by the SEC on February 2, 2011. An aggregate of 10,062,500 ordinary shares were registered (including the underwriters over-allotment of 1,312,500 ordinary shares), of which we sold 8,750,000 shares, at an initial price to the public of $19.00 per share (before underwriters discounts and commissions). The offering closed on February 8, 2011, and, as a result, we received net proceeds of approximately $149.5 million, after underwriters discounts and commissions of approximately $10.8 million and offering related expenses of $5.9 million. Merrill Lynch, Pierce, Fenner & Smith Incorporated and J.P. Morgan Securities LLC were the managing underwriters of the offering. Subsequently, on March 7, 2011, we issued an additional 721,274 ordinary shares at an offering price of $19.00 per share (before underwriters discounts and commissions) due to the exercise of the underwriters overallotment option, and received additional net proceeds of approximately $12.8 million, after underwriters discounts and commissions of approximately $0.9 million. Aggregate gross proceeds from the offering, including the exercise of the over-allotment option, were $179.9 million and net proceeds received after underwriters discounts and commissions and offering related expenses were approximately $162.3 million.
Through July 3, 2011, we used approximately $116.1 million (86.4 million) of the net proceeds from the offering to repay all of the outstanding indebtedness under our notes payable, including accrued interest thereon. Also through July 3, 2011, we used $16.8 million of the net proceeds from the offering to reduce our short-term borrowings under our lines of credit. The majority of the $116.1 million used to repay the outstanding indebtedness under our notes payable, including accrued interest thereon, and none of the $16.8 million used to reduce our short-term borrowings under various lines of credit were paid to certain of our directors and officers, or their associates, to persons owning ten percent or more of our outstanding ordinary shares and other affiliates of ours.
We expect to use the remaining net proceeds for general corporate purposes. Pending the uses described above, we have invested the remaining net proceeds in a variety of short-term, interest-bearing, investment grade securities. There has been no material change in the planned use of proceeds from the offering from that described in the final prospectus dated February 2, 2011 filed by us with the SEC pursuant to Rule 424(b)(1).
Issuer Purchases of Equity Securities
We did not purchase any ordinary shares or other equity securities of ours during the second quarter of 2011.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. [REMOVED AND RESERVED]
Not applicable.
The following exhibits are filed or furnished with this quarterly report on Form 10-Q:
Exhibit No. |
|
Description |
10.1 |
|
Rules for the Grant of Qualified Stock Options to Participants in France under the Tornier N.V. 2010 Incentive Plan (Filed herewith) |
10.2 |
|
Rules for the Grant of Qualified Stock Grants to Participants in France under the Tornier N.V. 2010 Incentive Plan (Filed herewith) |
10.3 |
|
Form of Option Certificate Representing Option Grant Under the Tornier N.V. 2010 Incentive Plan (Filed herewith) |
10.4 |
|
Form of Stock Grant Certificate Representing Stock Grant Under the Tornier N.V. 2010 Incentive Plan (Filed herewith) |
31.1 |
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith) |
31.2 |
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (Filed herewith) |
32.1 |
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith) |
32.2 |
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (Furnished herewith) |
101 |
|
The following materials from Tornier N.V.s Quarterly Report on Form 10-Q for the quarter ended July 3, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements (Furnished herewith)* |
* Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under Section 11 or 12 of the Securities Act of 1933, as amended, or otherwise subject to the liability of those sections, except as shall be expressly set forth by specific reference in such filings.
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 thereunto duly authorized.
TORNIER N.V. |
|
|
|
|
|
|
|
|
Date: August 12, 2011 |
By: |
/s/ Douglas W. Kohrs |
|
|
Douglas W. Kohrs |
|
|
President and Chief Executive Officer |
|
|
(principal executive officer) |
|
|
|
|
|
|
Date: August 12, 2011 |
By: |
/s/ Carmen L. Diersen |
|
|
Carmen L. Diersen |
|
|
Global Chief Financial Officer |
|
|
(principal financial and accounting officer) |
TORNIER N.V.
QUARTERLY REPORT ON FORM 10-Q
Exhibit No. |
|
Description |
|
Method of Filing |
10.1 |
|
Rules for the Grant of Qualified Stock Options to Participants in France under the Tornier N.V. 2010 Incentive Plan |
|
Filed herewith |
10.2 |
|
Rules for the Grant of Qualified Stock Grants to Participants in France under the Tornier N.V. 2010 Incentive Plan |
|
Filed herewith |
10.3 |
|
Form of Option Certificate Representing Option Grant Under the Tornier N.V. 2010 Incentive Plan |
|
Filed herewith |
10.4 |
|
Form of Stock Grant Certificate Representing Stock Grant Under the Tornier N.V. 2010 Incentive Plan |
|
Filed herewith |
31.1 |
|
Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
Filed herewith |
31.2 |
|
Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
Filed herewith |
32.1 |
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
Furnished herewith |
32.2 |
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 |
|
Furnished herewith |
101 |
|
The following materials from Tornier N.V.s Quarterly Report on Form 10-Q for the quarter ended July 3, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets, (ii) the unaudited Consolidated Statements of Operations, (iii) the unaudited Consolidated Statements of Cash Flows, and (iv) Notes to Consolidated Financial Statements* |
|
Furnished herewith |
* Pursuant to Rule 406T of Regulation S-T, the XBRL related information in Exhibit 101 to this quarterly report on Form 10-Q shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section, and shall not be deemed part of a registration statement, prospectus or other document filed under Section 11 or 12 of the Securities Act of 1933, as amended, or otherwise subject to the liability of those sections, except as shall be expressly set forth by specific reference in such filings.
Exhibit 10.1
RULES FOR THE GRANT OF QUALIFIED STOCK OPTIONS
TO PARTICIPANTS IN FRANCE UNDER
THE TORNIER N.V. 2010 INCENTIVE PLAN
1. Introduction.
(a) The Board of Directors of Tornier N.V. (the Company) has established the Tornier N.V. 2010 Incentive Plan, (the Plan) for the benefit of certain individuals employed by the Company and its Affiliates, including Affiliates and branches of the Company in France (French Entities).
(b) Section 4.2 of the Plan specifically authorizes the Committee (as defined in the Plan) to amend the terms of the Plan or Awards with respect to Participants resident outside of the United States or employed by a non-U.S. Affiliate in order to comply with local legal requirements, to otherwise protect the Companys or Affiliates interests, or to meet objectives of the Plan, and may, where appropriate, establish one or more subplans (including the adoption of any required rules and regulations) for the purposes of qualifying for preferred tax treatment under foreign tax laws. The Committee has determined that it is advisable to establish a sub-plan of the Plan for the purpose of granting stock options which may qualify for the favorable tax and social security treatment in France under Sections L. 225-177 to L. 225-186-1 of the French commercial code (Qualified Options). The terms of the Plan (as set forth in Appendix 1), along with the additional rules contained herein, shall collectively constitute the Rules for the Grant of Qualified Stock Options to Participants in France under the Tornier N.V. 2010 Incentive Plan (the French Options Sub-Plan). Under the French Options Sub-Plan, the Company may only grant Qualified Options; the provisions of the Plan permitting the grant of any other type of Award shall not be applicable.
2. Definitions.
Capitalized terms not otherwise defined herein shall have the same meanings as set forth in the Plan. The terms set forth below shall have the following meanings:
(a) Closed Period shall mean the specific periods as set forth by Section L. 225-177 of the French commercial code during which Qualified Options cannot be granted.
(1) Ten (10) quotation days preceding and following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or
(2) The period as from the date the corporate management of the Company (involved in the governance of the Company, such as the Board, Committee, supervisory directorate, etc.) has been disclosed information which could, if disclosed to the public, significantly impact the trading price of the Companys Common Stock, until ten (10) quotation days after
the day such information is disclosed to the public; or
(3) Twenty (20) quotation days following the issuance of a coupon granting the right to receive dividends (i.e., the ex-dividend date) or to purchase shares of Stock (i.e., a rights offering).
If French law or regulations are amended after adoption of this French Options Sub-Plan to modify the definition and/or applicability of the Closed Period to Qualified Options, such amendment shall become applicable to any Qualified Options to be granted under this French Options Sub-Plan, to the extent permitted or required by French law.
(b) Disability shall mean disability as determined in categories 2 and 3 under Section L. 341-4 of the French Social Security Code, as amended, and subject to the fulfillment of related conditions.
(c) Effective Grant Date shall mean the date on which a Qualified Option is effectively granted (i.e., the date on which the condition precedent of the expiration of a Closed Period applicable to the Qualified Option, if any, is satisfied, which is the first day after any Closed Period). Such condition precedent shall be satisfied when the Board, Committee or other authorized corporate body shall determine that the granting of Qualified Options is no longer prevented under a Closed Period (i.e., the first date following the expiration of the Closed Period which would not be a prohibited Date of Grant pursuant to French Closed Periods or the next immediately succeeding trading day if such date is not a trading day provided such date is not prohibited under the Plan rules and U.S. securities rules). If the Grant Date does not occur within a Closed Period, the Effective Grant Date shall be the same day as the Grant Date without any need for Board or Committee action.
(d) Exercise Price shall mean the purchase price of each share of Stock subject to a Qualified Option.
(e) Forced Retirement shall mean forced retirement as determined under Section L. 1237-5 of the French labor code, as amended, and subject to the fulfillment of related conditions.
(g) French Entity shall mean:
(i) an Affiliate incorporated in France of which the Company holds at least, either directly or indirectly, 10% of the share capital, or
(ii) a French branch of the Company.
(h) French Participant shall mean:
(i) an Employee of a French Entity who is resident in France for French tax purposes and/or is subject to the French social security regime and has been granted a Qualified Option and is employed under the terms and
conditions of an employment contract (contrat de travail) with a French Entity;
(ii) a Managing Director who has been granted a Qualified Option; and
(iii) in exceptional and specific circumstances, and to the extent permissible under French tax and social security laws, including guidelines and specific tax or social security rulings issued by French tax and social security authorities, any individual who is otherwise employed by the Company or one of its Affiliates even if the individual is not a tax resident of France and/or subject to French social contribution regime at the Grant Date.
(i) Grant Date or Effective Grant Date shall mean the date on which the Committee both:
(i) designates the French Participant; and
(ii) specifies the terms and conditions of the Qualified Option, including the number of shares of Stock subject to the award and the Exercise Price.
(j) Managing Director shall mean any person who serves in one of the following positions for a French Entity:
(i) Président du Conseil dAdministration;
(ii) Directeur Général;
(iii) Directeur Général Délégué;
(iv) Membre du Directoire; or
(v) Gérant de Sociétés par actions.
(k) Qualified Option shall mean a stock option granted under the French Options Sub-Plan to:
(i) acquire shares of Stock repurchased by the Company prior to the date on which the option becomes exercisable (hereinafter a purchase stock option); and
(ii) subscribe to newly-issued shares of Stock (hereinafter a subscription stock option).
3. Eligibility.
Notwithstanding any other term of this French Options Sub-Plan, the Company may grant Qualified Options only to Employees of a French Entity and/or to Managing Directors who hold less than ten percent (10%) of the outstanding shares of Stock and who otherwise satisfy the eligibility conditions of the Section 5 of the Plan.
4. Term of Option.
The term of each Qualified Option shall be stated in the Award Agreement and shall have a maximum term of nine years and six months from the Effective Grant Date or such shorter term as may be provided in the Award Agreement.
5. Modifications to Grant Terms.
Notwithstanding any provision in the Plan, the terms and conditions of a Qualified Option may not be modified after the Effective Grant Date, except as provided under Sections 7 to 10 of this French Options Sub-Plan, or as otherwise in keeping with French law.
6. Exercise Price and Consideration.
(a) The Exercise Price for a Qualified Option (or the method for determining the Exercise Price) shall be fixed by the Committee on the Grant Date or on the Effective Grant Date if this date occurs after the Grant Date. The Exercise Price shall be stated in the Award Agreement or other grant materials distributed to employees, and a Qualified Option shall be considered as granted on the Effective Grant Date.
In no event shall the Exercise Price per Share be less than the greatest of:
(i) with respect to a purchase stock option, the higher of either 95% of the average of the closing price of such shares of Stock during the 20 days of quotation immediately preceding the Effective Grant Date or 95% of the average of the purchase price paid for such shares of Stock by the Company;
(ii) with respect to a subscription stock option, 95% of the average of the closing price of such shares of Stock during the 20 days of quotation immediately preceding the Effective Grant Date; and
(iii) 100% of the Fair Market Value per Share as defined under the Plan, as determined on the Effective Grant Date.
(b) Upon exercise of a Qualified Option, payment of the full Exercise Price shall be paid by cash (only) or through a cashless exercise method if it occurs more than four years after the grant of the Qualified Options. No delivery, surrender or attestation to the ownership of previously owned shares of Stock may be used by a French Participant to pay the Exercise Price.
The net exercise arrangement as described in Section 6.4(b) of the Plan also shall not be available to a French Participant.
(c) The Company shall not grant a Qualified Option during a Closed Period.
(d) The shares of Stock acquired upon exercise of a Qualified Option shall be recorded in an account in the name of the French Participant with a broker or in such other manner as the Company may otherwise determine in order to ensure compliance with applicable law and with applicable holding periods.
7. Exercise Dates.
(a) A Qualified Option shall vest and be exercisable pursuant to the terms and conditions set forth in the Plan, the French Options Sub-Plan and the Award Agreement delivered to the French Participant. The vesting and exercisability of a Qualified Option may not be modified except as provided in Sections 8 to 10 of this French Options Sub-Plan or to the extent authorized by and permitted under French law.
To obtain the French-qualified treatment, a French Participant shall not sell or transfer shares of Stock acquired upon exercise of a Qualified Option before the expiration of the applicable holding period for Qualified Options set forth in Section 163 bis C of the French Tax Code, as amended, except as provided in this French Options Sub-Plan, or as otherwise in keeping with French law. To prevent a French Participant from selling the shares of Stock subject to a Qualified Option before the expiration of the applicable holding period, the Committee may, in its sole discretion, restrict the vesting and/or exercisability of a Qualified Option and/or the sale of shares of Stock until the expiration of the applicable holding period, as set forth in the Award Agreement to be delivered to the French Participant. In any case, the restriction on the sale of the shares of Stock shall not exceed three (3) years from the date of exercise of a Qualified Option. However, a French Participant may be permitted to exercise a vested Qualified Option or sell the shares of Stock subject to a Qualified Option before the expiration of the applicable holding period in the cases of Disability, death, Forced Retirement or dismissal, as defined in Section 91-ter of Exhibit II to the French Tax Code, as amended, and subject to very strict conditions and as set forth in the Award Agreement to be delivered to the French Participant.
(b) If a French Participant ceases to be employed by the Company or an Affiliate by reason of Disability, the disabled French Participants Qualified Option shall benefit from the favorable tax and social security contributions treatment, irrespective of the date of sale of the shares of Stock, but only in the specific circumstances as provided for by Section 163 bis C of the French Tax Code, as amended.
(c) To the extent and as long as applicable to Qualified Options granted by the Company, a specific holding period for the shares of Stock or a restriction on exercise of the Qualified Options shall be imposed in the Award Agreement for any French Participant who qualifies as a Managing Director or who has a comparable position at the level of the Company.
8. Death.
If a French Participants service to the Company or a French Entity terminates by reason of his or her death, the French Participants Qualified Options shall thereafter become fully vested and exercisable in full (with respect to all Qualified Options, vested or unvested at the time of death) by the French Participants heirs (as determined by will or by the laws of descent and distribution in France) for a six month period beginning on the date of the French Participants death. The six-month exercise period shall apply without regard to the term of a Qualified Option as described in Section 4 above. Any Qualified Option which remains unexercised shall expire six months following the date of the French Participants death.
9. Adjustments Upon a Change in Control and Change in Shares.
(a) Adjustments of Qualified Options issued hereunder shall be made to preclude the dilution or enlargement of benefits under the Qualified Option only in the event of the transactions by the Company listed under Section L. 225-181 of the French commercial code and in case of a repurchase of shares of Stock by the Company at a price which is higher than the stock quotation price in the open market, and according to the provisions of Section L. 228-99 of French commercial code, as well as according to specific decrees. In the event of an adjustment other than described above, the Qualified Options may no longer qualify for favorable tax and social security treatment under French law.
(b) In the event that a significant decrease in the value of Qualified Options granted to French Participants occurs or is likely to occur as a result of a Change in Control of the Company, or a corporate transaction as described in Sections 3.5 and 12 of the Plan, the Committee, if appropriate, may, in its discretion, authorize the immediate vesting and exercise of Qualified Options before the date on which any such Change in Control or corporate transaction becomes effective as well as the lapse of any other form of restriction. If this occurs, the Qualified Options may not receive favorable tax and social security treatment pursuant to French law.
10. Disqualification of Qualified Options.
If Qualified Options are otherwise modified or adjusted in a manner in keeping with the terms of the Plan or as mandated as a matter of law and the modification or adjustment is contrary to the terms and conditions of this French Options Sub-Plan, Options may no longer qualify as French-qualified options. If Qualified Options no longer qualify for preferential tax and social security treatment, the Committee may, in its sole discretion, lift, shorten or terminate certain restrictions applicable to the vesting of the Qualified Options, the exercisability of the Qualified Options, or the sale of the shares of Stock which may have been imposed under this French Options Sub-Plan or in the Award Agreement delivered to the French Participant.
11. Interpretation.
(a) It is intended that the Qualified Options granted under the French Options Sub-Plan shall qualify for the favorable tax and social security treatment applicable to options granted under Sections L. 225-177 to L. 225-186-1 of the French commercial code, and in accordance
with the relevant provisions set forth by French tax law and the French tax administration, but no undertaking is made to maintain such status. The terms of the French Options Sub-Plan shall be interpreted accordingly and in accordance with the relevant provisions set forth by French tax and social security laws, as well as the French tax and social security administrations and the relevant guidelines released by the French tax and social security authorities and subject to the fulfillment of legal, tax and reporting obligations.
(b) In the event of any conflict between the provisions of the French Options Sub-Plan and the Plan, the provisions of this French Options Sub-Plan shall control for any grants of Qualified Options made thereunder to French Participants.
12. Employment Rights.
The adoption of this French Options Sub-Plan shall not confer upon the French Participants or any employees of a French Entity, any employment rights and shall not be construed as a part of any employment contracts that a French Entity has with its employees.
13. Non-Transferability.
Notwithstanding any provision in the Plan to the contrary and, except in the case of death and in accordance with local applicable laws, the Qualified Options shall not be transferred to any third party. In addition, the Qualified Options are only exercisable by the French Participant during the lifetime of the French Participant.
14. Amendments.
Subject to the terms of the Plan, the Board or Committee reserves the right to amend and/or terminate the French Options Sub-Plan at any time in its sole discretion.
15. Number of Shares Granted and Shareholders Authorization.
The Plan and the share limitations set forth in Sections 3.1 and 16 of the Plan have been authorized and approved by the Companys shareholders, and shall apply to the grants to French Participants under this French Options Sub-Plan. The authorization and approval of the Companys shareholders is intended to meet the requirements of Sections L. 225-177-1 and L. 225-179 of the French commercial code, to the extent applicable to grants made by the Company.
16. Effective Date.
This French Options Sub-Plan shall be effective and shall apply to grants of Qualified Options made on or after May 3, 2011.
Exhibit 10.2
RULES FOR THE GRANT OF STOCK GRANTS IN THE FORM OF QUALIFIED RESTRICTED STOCK UNITS TO GRANTEES IN FRANCE UNDER THE TORNIER N.V. 2010 INCENTIVE PLAN
1. Introduction.
(a) The Board of Directors of Tornier N.V. (the Company) has established the Tornier N.V. 2010 Incentive Plan, (the U.S. Plan) for the benefit of certain individuals of the Company and its Affiliates, including Affiliates of the Company in France (the French Entities).
(b) Section 4.2 of the U.S. Plan specifically authorizes the Committee (as defined in the U.S. Plan) to amend the terms of the Plan or Awards with respect to Participants resident outside of the United States or employed by a non-U.S. Affiliate in order to comply with local legal requirements, to otherwise protect the Companys or Affiliates interests, or to meet objectives of the Plan, and may, where appropriate, establish one or more subplans (including the adoption of any required rules and regulations) for the purposes of qualifying for preferred tax treatment under foreign tax laws. The Committee has determined that it is advisable to establish a sub-plan of the U.S. Plan for the purpose of granting restricted stock units which may qualify for the favorable tax and social security treatment in France under Sections L. 225-197-1 to L. 225-197-6 of the French Commercial Code (Qualified RSUs). The terms of the U.S. Plan (as set forth in Appendix 1), along with the additional rules contained herein, shall collectively constitute the Rules for the Grant of Stock Grants in the Form of Qualified Restricted Stock Units to Grantees in France under the Tornier N.V. 2010 Incentive Plan (the French RSU Sub-Plan). Under the French RSU Sub-Plan, the Company may only grant Qualified RSUs; the provisions of the U.S. Plan permitting the grant of any other type of Award shall not be applicable.
2. Definitions.
Capitalized terms not otherwise defined herein used in the French RSU Sub-Plan shall have the same meanings as set forth in the U.S. Plan. The terms set out below will have the following meanings:
(a) Closed Period shall mean a closed period as set forth in Section L. 225-197-1 of the FCC including:
(i) Ten (10) quotation days preceding and following the disclosure to the public of the consolidated financial statements or the annual statements of the Company; or
(ii) The period as from the date the corporate management entities involved in the governance of the Company, such as the Board, Committee, or supervisory directorate of the Company are in possession of material nonpublic information which could, in the case it would be disclosed to the public, significantly impact the quotation of
the shares of Stock of the Company, until ten (10) quotation days after the day such information is disclosed to the public.
If the FCC is amended after adoption of this RSU Sub-Plan to modify the definition and/or the applicability of the Closed Periods to Qualified RSUs, such amendments shall become applicable to any Qualified RSUs granted under the French RSU Sub-Plan, to the extent required or permitted under French law.
(b) Date of Grant shall mean the date on which the Committee both (1) designates the French Grantees and (2) specifies the terms and conditions of the Qualified RSUs, including the number of shares of Stock to be issued at a future date, the conditions for the vesting of the Qualified RSUs and the conditions of the transferability of the shares of Stock once issued.
(c) Disability shall mean disability as determined in categories 2 and 3 under Section L. 341-4 of the French Social Security Code, as amended, and subject to the fulfillment of related conditions.
(d) FCC shall mean the French Commercial Code, as may be amended from time to time.
(e) French Entity shall mean:
(i) an Affiliate incorporated in France of which the Company holds at least, either directly or indirectly, 10% of the share capital, or
(ii) a French branch of the Company.
(f) French Grantee shall mean:
(i) an Employee of a French Entity who is resident in France for French tax purposes and/or is subject to the French social security regime and has been granted a Qualified RSU and is employed under the terms and conditions of an employment contract (contrat de travail) with a French Entity;
(ii) a Managing Director who has been granted a Qualified RSU; and
(iii) in exceptional and specific circumstances, and to the extent permissible under French tax and social security laws, including guidelines and specific tax or social security rulings issued by French tax and social security authorities, any individual who is otherwise employed by the Company or one of its Affiliates even if the individual is not a tax resident of France and/or subject to French social contribution regime at the Date of Grant.
(g) Managing Director shall mean any person who serves in one of the following positions for a French Entity:
(i) Président du Conseil dAdministration;
(ii) Directeur Général;
(iii) Directeur Général Délégué;
(iv) Membre du Directoire; or
(v) Gérant de Sociétés par actions.
(h) Qualified RSUs shall mean a promise by the Company to a future issuance at the Vesting Date (as defined herein), provided the individual remains employed as of the Vesting Date, of one Share in the Company per restricted stock unit granted to the French Grantee and subject to specific terms and conditions. Qualified RSUs issued under this French RSU Sub-Plan shall be payable in shares of Stock only. A French Grantee shall not be entitled to receive at vesting cash in lieu of shares of Stock. Any dividend and voting rights are attached only upon the issuance of the shares of Stock at the Vesting Date of the Qualified RSUs.
(i) Vesting Date shall mean the date on which the shares of Stock underlying the Qualified RSUs become non-forfeitable and shares of Stock are issued to the French Grantees. To qualify for the favorable tax and social security treatment in France, such Vesting Date specified by the Committee shall not occur prior to the second anniversary of the Date of Grant, or such other period as is required by the vesting period applicable to Qualified RSUs.
3. Eligibility
Notwithstanding any other term of this French RSU Sub-Plan, the Company may grant Qualified RSUs only to Employees of a French Entity and/or to Managing Directors who hold less than ten percent (10%) of the outstanding shares of Stock and who otherwise satisfy the eligibility conditions of the Section 5 of the U.S. Plan.
4. Conditions of Qualified RSUs.
(a) Vesting of Qualified RSUs.
The first Vesting Date of Qualified RSUs shall be specified by the Committee. In all cases, the Vesting Date shall not occur prior to the second anniversary of the Date of Grant according to the Vesting Date as defined under Section 2 above. Notwithstanding the foregoing, in the event of the death of a French Grantee, all of his or her outstanding Qualified RSUs shall fully vest and the shares of Stock underlying Qualified RSUs shall be issued as set forth in Section 7 of this French RSU Sub-Plan.
(b) Transfer of Shares of Stock.
A French Grantee must hold the shares of Stock issued pursuant to the Qualified RSUs on the Vesting Date until the relevant anniversary of the Vesting Date specified by the Committee or such other period as is required to comply with the minimum holding period applicable to shares of Stock underlying French-qualified restricted stock units under Section L.225-197-1 of the FCC or the relevant Sections of the French Tax Code or the French Social
Security Code, as amended, to benefit from favorable tax and social security treatment, even if the French Grantee is no longer an Employee or Managing Director.
In addition to this restriction on the sale of the shares of Stock issued to the French Grantees, said shares of Stock may not be sold during certain Closed Periods as provided for by Section L. 225-197-1 of the FCC and as interpreted by the French administrative guidelines, as long as those Closed Periods are applicable to the sale or transfer of shares of Stock underlying French-qualified restricted stock units.
A specific holding period for the shares of Stock underlying the Qualified RSUs may be specified by the Committee, in its discretion, for French Grantees who qualify as Managing Directors or who have comparable positions at the level of the Company or one of its Affiliates.
(c) French Grantees Account.
The shares of Stock acquired upon vesting of the Qualified RSUs shall be recorded in an account in the name of the French Grantee with a broker or in such other manner as the Company may otherwise determine in order to ensure compliance with applicable law and holding periods.
5. Non-transferability of Qualified RSUs.
Except in the case of death, any Qualified RSUs cannot be transferred or surrendered to any third party. In addition, any Qualified RSU may vest only for the benefit of the French Grantee during the lifetime of the French Grantee.
6. Adjustments Upon a Change in Control and Change in Shares of Stock.
In the event of a Change in Control as set forth in Section 12 of the U.S. Plan and in the event of a change in shares of Stock as set forth in Section 3.5 of the U.S. Plan, adjustment to the terms and conditions of the Qualified RSUs or underlying shares of Stock can only be made in accordance with the U.S. Plan and pursuant to applicable French legal and tax rules. Should the Committee decide to make adjustments pursuant to the U.S. Plan but in a manner that is not authorized under French law, the Qualified RSUs may no longer qualify for favorable tax and social security treatment in France.
7. Death.
In the event of the death of a French Grantee, the Qualified RSUs held by the French Grantee at the time of death shall become immediately transferable to the French Grantees heirs. The Company shall issue the underlying shares of Stock to the French Grantees heirs, at their request, if such request occurs within six (6) months of the date of the French Grantees death. If the French Grantees heirs do not request the issuance of the underlying shares of Stock within such six-month period, the Qualified RSUs shall expire six (6) months following the date of the French Grantees death. Upon acquisition of the underlying shares of Stock, the French Grantees heirs shall not be subject to the restriction on the sale of the shares of Stock set forth in Section 4(b) above.
8. Disability.
If a French Grantee ceases to be employed by the Company or a French Entity by reason of Disability, the French Grantee shall not be subject to the restriction on the sale of the shares of Stock set forth in Section 4(b) above.
9. Disqualification of Qualified RSUs.
If the Qualified RSUs are otherwise modified or adjusted in a manner in keeping with the terms of the U.S. Plan or as mandated as a matter of law or by decision of the Companys shareholders, or Board or Committee, and the modification or adjustment is contrary to the terms and conditions of this French RSU Sub-Plan, the Qualified RSUs shall cease to qualify for favorable tax and social security treatment in France.
If the Qualified RSUs no longer qualify as French-qualified restricted stock units, the Committee may, provided it is authorized to do so under the U.S. Plan, and in its sole discretion, determine to lift, shorten or terminate certain restrictions applicable to the Qualified RSUs or to the sale of the shares of Stock underlying the Qualified RSUs, which may have been imposed under this French RSU Sub-Plan.
10. Interpretation.
It is intended that Qualified RSUs granted under the French RSU Sub-Plan shall qualify for the favorable tax and social security treatment applicable to French-qualified restricted stock units granted under Sections L. 225-197-1 to L. 225-197-6-1 of the FCC and in accordance with the relevant provisions set forth by French tax and social security laws, but no undertaking is made to maintain such status.
The terms of the French RSU Sub-Plan shall be interpreted accordingly and in accordance with the relevant guidelines published by French tax and social security administrations and subject to the fulfilment of certain legal, tax and reporting obligations.
In the event of any conflict between the provisions of the French RSU Sub-Plan and the Plan, the provisions of this French RSU Sub-Plan shall control for any grants of Qualified RSUs made thereunder to French Grantees.
11. Employment Rights.
The adoption of this French RSU Sub-Plan shall not confer upon the French Grantees or any employees of a French Entity, any employment rights and shall not be construed as part of any employment contracts that a French Entity has with its employees.
12. Number of Shares of Stock Granted and Shareholders Authorization.
The U.S. Plan and the share limitations set forth in Section 3 of the U.S. Plan have been authorized and approved by the Companys shareholders, and shall apply to the grants to French Grantees under this French RSU Sub-Plan. The authorization and approval of the Companys
shareholders is intended to meet the requirements of Section L. 225-197-1 of the FCC, to the extent applicable to grants made by the Company.
13. Effective Date.
This French RSU Sub-Plan shall be effective and shall apply to grants of Qualified RSUs made on or after May 3, 2011.
14. Amendments.
Subject to the terms of the U.S. Plan, the Board or Committee reserves the right to amend and/or terminate the French RSU Sub-Plan at any time in its sole discretion.
Exhibit 10.3
TORNIER N.V. 2010 INCENTIVE PLAN
OPTION CERTIFICATE
Tornier N.V., a public limited liability company organized under the laws of The Netherlands (the Company), in accordance with the Tornier N.V. 2010 Incentive Plan (the Plan), hereby grants an Option to , who shall be referred to as Optionee, to purchase from the Company shares of Stock at an exercise price per share equal to U.S. $ , which grant shall be subject to all of the terms and conditions set forth in this Option Certificate and in the Plan. This grant has been made as of , 201[ ], which shall be referred to as the Grant Date. This Option is not intended to satisfy the requirements of Section 422 of the Code and thus shall be a Non-ISO as that term is defined in the Plan.
|
TORNIER N.V. | ||
|
| ||
|
| ||
|
By: |
| |
|
|
Name: |
Douglas W. Kohrs |
|
|
Title: |
President and Chief Executive Officer |
TERMS AND CONDITIONS
1. Plan. This Option grant is subject to all the terms and conditions set forth in the Plan and this Option Certificate, and all the terms in this Option Certificate which begin with a capital letter are either defined in this Option Certificate or in the Plan. If a determination is made that any term or condition set forth in this Option Certificate is inconsistent with the Plan, the Plan shall control. A copy of the Plan and the U.S. prospectus for the Plan have been delivered to Optionee together with this Option Certificate.
2. Vesting and Option Expiration.
(a) General Rule. Subject to the other provisions of this Option Certificate, Optionees right under this Option Certificate to exercise this Option shall vest, on a cumulative basis, over a four-year period and as follows: (1) 25% of the shares of Stock which may be purchased under this Option Certificate (rounding down to the nearest whole number of shares of Stock) shall vest on [Date], the one-year anniversary of the Grant Date, and (2) the remaining 75% of such shares of Stock shall vest over a three-year period thereafter in 12 as nearly equal as possible quarterly installments on the [Xst/th] day of each such quarter, beginning on [Date].
(b) Option Expiration Rules.
(1) Non-Vested Shares of Stock. If Optionees employment or service with the Company terminates for any reason whatsoever, including by reason of Optionees death, Disability or Retirement, while there are any non-vested shares of Stock subject to this Option under Section 2(a), this Option immediately upon such termination of employment or service shall expire and shall have no further force or effect and be null and void with respect to such non-vested shares of Stock.
(2) Vested Shares of Stock. Optionees right to exercise all or any part of this Option which has vested under Section 2(a) shall expire no later than the tenth (10th) anniversary of the Grant Date. However, if Optionees employment or service relationship with the Company terminates before the tenth (10th) anniversary of the Grant Date, Optionees right to exercise this Option which has vested under Section 2(a) shall expire and shall have no further force or effect and shall be null and void:
(A) on the date Optionees employment or service relationship terminates if Optionees employment or service relationship terminates due to actions constituting Cause or Adverse Action,
(B) on the one-year anniversary of the date Optionees employment or service relationship terminates if Optionees employment or service relationship terminates as a result of Optionees death or Disability, or
(C) at the end of the three month period which starts on the date Optionees employment or service relationship terminates if Optionees employment or service relationship terminates other than (1) due to actions constituting Cause or Adverse Action or (2) as a result of Optionees death or Disability.
(c) Special Rules.
(1) Sale of Business Unit. The Committee, in connection with the sale of any Affiliate, division or other business unit of the Company, may, within the Committees sole discretion, take any or all of the following actions if this Option or the rights
under this Option will be adversely affected by such transaction:
(A) accelerate the time Optionees right to exercise this Option will vest under Section 2(a),
(B) provide for vesting after such sale or other disposition, or
(C) extend the time at which this Option will expire (but not beyond the tenth (10th) anniversary of the Grant Date).
(2) Change in Control. If there is a Change in Control of the Company, this Option shall be subject to the provisions of Section 12 of the Plan with respect to such Change in Control.
(3) Affiliates. For purposes of this Option Certificate, any reference to the Company shall include any Affiliate of the Company, and a transfer of employment or service relationship between the Company and any Affiliate of the Company or between any Affiliate of the Company shall not be treated as a termination of employment or service relationship under the Plan or this Option Certificate.
(4) Termination of Employment or Service Relationship. For purposes of this Option Certificate:
(A) if Optionees employment with the Company terminates while there are any non-vested shares of Stock subject to this Option under Section 2(a) but Optionee at such time then becomes an independent consultant to the Company, Optionees right under this Option Certificate to exercise this Option shall continue to vest so long as Optionee continues to provide services to the Company in accordance with Section 2(a);
(B) if Optionees employment with the Company terminates but Optionee at such time then becomes an independent consultant to the Company, the termination of Optionees employment shall not result in the expiration of the Option under Section 2(b)(1) or 2(b)(2); provided, Optionees right to exercise all or any part of this Option which has vested under Section 2(a) shall expire no later than the tenth (10th) anniversary of the Grant Date; and
(C) Except in instances where he or she becomes an independent consultant to the Company as provided in clause (B) above, Optionees employment termination date shall mean the last day that Optionee actively performs services in an employer-employee relationship for the Company, without regard to the reason for Optionees cessation of service and without regard to any advance notice period as may be otherwise provided under local law.
(5) Effect of Actions Constituting Cause or Adverse Action. If Optionee is determined by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause or an Adverse Action during or within one (1) year after the termination of Optionees employment or other service with the Company, irrespective of whether such action or the Committees determination occurs before or after termination of Optionees employment or other service with the Company and irrespective of whether or not Optionee was terminated as a result of such Cause or Adverse Action, (i) all rights of Optionee under the Plan and this Option Certificate shall terminate and be forfeited without notice of any kind, and (ii) the Committee in its sole discretion shall have the authority to rescind the exercise, vesting or issuance of, or payment in respect of, this Option and to require Optionee to pay to the Company, within ten (10) days of receipt from the Company of notice of such rescission, any amount received or the amount of any gain realized as a result of such rescinded exercise, vesting, issuance or payment (including any dividends paid or other distributions made with respect to any shares subject to this Option). The Company may defer the exercise of this Option for a period of up to six (6) months after receipt of Optionees written notice of exercise or the issuance of share certificates upon the exercise of this Option for a period of up to six (6) months after the date of such exercise in order for the Committee to make any determination as to the existence of Cause or an Adverse Action. This Section 2(c)(5) shall not apply following a Change in Control.
(6) Clawback Policy. This Option and the shares of Stock issuable pursuant to this Option are subject to forfeiture to or clawback by the Company to the extent required and allowed by law, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes Oxley Act of 2002 and any implementing rules and regulations promulgated thereunder, and pursuant to any
forfeiture, clawback or similar policy of the Company, as such laws, rules, regulations and policy may be in effect from time to time.
(7) Fractional Shares of Stock. Optionees right to exercise this Option shall not include a right to exercise this Option to purchase a fractional share of Stock. If Optionee exercises this Option on any date when this Option includes a fractional share of Stock, Optionees exercise right shall be rounded down to the nearest whole share of Stock and the fractional share shall be carried forward until that fractional share together with any other fractional shares can be combined to equal a whole share of Stock or this Option expires.
(8) EU Age Discrimination Rules. If Optionee is a local national of and is employed in a country that is a member of the European Union, the grant of the Option and the terms and conditions governing the Option are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the Age Discrimination Rules). To the extent that a court or tribunal of competent jurisdiction determines that any provision of the Terms and Conditions is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.
3. Method of Exercise of Option.
(a) General Rule. Optionee may exercise this Option in whole or in part (to the extent this Option is otherwise exercisable under Section 2 with respect to vested shares of Stock) only in accordance with the rules and procedures established from time to time by the Company for the exercise of an Option. The Option Price shall be paid at exercise in cash (including check, bank draft or money order); provided, however, that the Committee, in its sole discretion, may allow such payments to be made, in whole or in part, by (i) by a net exercise of the Option (as further described below); (ii) through cashless exercise procedure which is effected by an unrelated broker through a sale of Stock in the open market; or (iii) by a combination of such methods. In the case of a net exercise of this Option, Optionee shall receive the number of shares of Stock underlying this Option (or portion thereof so exercised) reduced by the number of shares of Stock equal to the
aggregate exercise price of the Option (or portion thereof so exercised) divided by the Fair Market Value on the date of exercise (the Reduced Shares of Stock). In the event of a net exercise of this Option, this Option (or portion thereof so exercised) to purchase the Reduced Shares of Stock shall be cancelled in exchange for the right to receive an amount (the Redemption Amount) equal to the Fair Market Value of the Reduced Shares of Stock on the date of exercise. The Redemption Amount shall automatically be applied by the Company to satisfy the amount Optionee is required to pay to exercise the Option (or portion thereof so exercised). Thereafter, Optionee shall receive the number of shares of Stock remaining after such Reduced Shares of Stock have been cancelled. Shares of Stock shall no longer be outstanding under this Option (and shall therefore not thereafter be exercisable) following the exercise of this Option (or portion thereof so exercised) to the extent of (i) shares cancelled to pay the exercise price of this Option under the net exercise, (ii) shares actually delivered to Optionee as a result of such exercise and (iii) any shares withheld for purposes of tax withholding.
(b) Notwithstanding anything to the contrary in the Option Certificate, if Optionee resides in a country where the local foreign exchange rules and regulations either preclude the remittance of currency out of the country for purposes of paying the exercise price, or requires the Company and/or Optionee to secure any legal or regulatory approvals, complete any legal or regulatory filings, or undertake any additional steps for remitting currency out of the country, the Company may restrict the method of exercise to a form of cashless exercise or such other form(s) of exercise (as it determines in its sole discretion).
(c) As a condition of the grant of this Option, Optionee agrees to repatriate all payments attributable to the Option in accordance with local foreign exchange rules and regulations in Optionees country of residence (and country of employment, if different). In addition, Optionee agrees to take any and all actions, and consents to any and all actions taken by the Company and its Affiliates, as may be required to allow the Company and its Affiliates to comply with local laws, rules and regulations in Optionees country of residence (and country of employment, if different). Finally, Optionee agrees to take any and all actions that may be required to comply with his or her personal legal and tax obligations under local laws, rules and regulations in Optionees country of residence (and country of employment, if different).
4. Income Tax and Social Insurance Contributions Withholding.
(a) Regardless of any action the Company takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (Tax-Related Items), Optionee acknowledges that the ultimate liability for all Tax-Related Items legally due by Optionee is and remains Optionees responsibility and that the Company: (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant of the Option, the vesting of the Option, and the settlement of the Option; and (ii) does not commit to structure the terms of the Option or any aspect of the Option to reduce or eliminate Optionees liability for Tax-Related Items.
(b) Prior to the delivery of shares of Stock upon the exercise of the Option, if Optionees country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items, the Company: (i) shall withhold a sufficient number of whole shares of Stock otherwise issuable upon the exercise of the Option that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld (in which case, the cash equivalent of such withheld shares of Stock shall be used to settle the withholding obligation); or (ii) shall withhold an amount from Optionees regular salary and/or wages, or from any other amounts payable to Optionee. In cases where shares of Stock are withheld and the Fair Market Value of the number of whole shares of Stock withheld is greater than the minimum Tax-Related Items required to be withheld, the Company shall make a cash payment to Optionee equal to the difference as soon as administratively practicable. In the event the withholding requirements are not satisfied through the withholding of shares of Stock or through Optionees regular salary and/or wages or other amounts payable to Optionee, no shares of Stock will be issued to Optionee unless and until satisfactory arrangements (as determined by the Committee) have been made by Optionee with respect to the payment of any Tax-Related Items which the Company determines, in its sole discretion, must be withheld or collected with respect to the Option. By accepting the grant of the Option, Optionee expressly consents to the withholding of shares of Stock and/or the withholding of amounts from Optionees regular salary and/or wages, or other amounts payable to Optionee, as provided for hereunder. All other Tax-Related Items related to the Option and any shares of Stock acquired pursuant to the exercise of the Option is Optionees sole responsibility.
5. Delivery and Other Laws. The Company shall deliver appropriate and proper evidence of ownership of any Stock purchased pursuant to the exercise of this Option as soon as practicable after such exercise to the extent such delivery is then permissible under applicable law, rule or regulation, and such delivery shall discharge the Company of all of its duties and responsibilities with respect to this Option.
6. Non-Transferable. No rights granted under this Option shall be transferable by Optionee other than (a) by will or by the laws of descent and distribution or (b) to a family member as provided in Section 14.2 of the Plan. The person or persons, if any, to whom this Option is transferred shall be treated after Optionees death the same as Optionee under this Option Certificate.
7. No Right to Continue Employment or Service. Neither the Plan, this Option, nor any related material shall give Optionee the right to continue in employment by or perform services to the Company or shall adversely affect the right of the Company to terminate Optionees employment or service relationship with the Company with or without Cause at any time.
8. Shareholder Status. Optionee shall have no rights as a shareholder of the Company with respect to any shares of Stock under this Option until such shares have been duly issued and delivered to Optionee, and no adjustment shall be made for dividends of any kind or description whatsoever or for distributions of rights of any kind or description whatsoever respecting such Stock except as expressly set forth in the Plan.
9. Venue. In accepting this Option grant, Optionee is deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of the State of Minnesota of the United States of America to resolve any and all issues that may arise out of or relate to this Option and this Option Certificate.
10. Binding Effect. This Option Certificate shall be binding upon the Company and Optionee and their respective heirs, executors, administrators and successors.
11. Tax Withholding. This Option has been granted subject to the condition that Optionee consents to whatever action the Committee directs to satisfy the minimum statutory federal and state withholding requirements, if any, which the Company determines are applicable upon the exercise of this Option.
12. Headings and Sections. The headings contained in this Option Certificate are for reference purposes only and shall not affect in any way the meaning or interpretation of this Option Certificate. All references to sections in this Option Certificate shall be to sections of this Option Certificate unless otherwise expressly stated as part of such reference.
13. Nature of the Grant. In accepting this Option grant, Optionee acknowledges that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan or this Option Certificate;
(b) the grant of this Option is voluntary and occasional and does not create any contractual or other right to receive future Option grants, or benefits in lieu of Option grants, even if Option grants have been granted repeatedly in the past;
(c) all decisions with respect to future Option grants, if any, will be at the sole discretion of the Company;
(d) Optionee is voluntarily participating in the Plan;
(e) the Option grant is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company;
(f) the future value of the underlying shares of Stock is unknown and cannot be predicted with certainty and if Optionee vests in the Option grant, exercises this Option in accordance with the terms of this Option Certificate and is issued shares of Stock, the value of those shares may increase or decrease;
(g) in consideration of the grant of this Option, no claim or entitlement to compensation or damages shall arise from termination of this Option or diminution in value of this Option or shares of Stock acquired upon exercise of this Option resulting from termination of Optionees employment or service by the Company (for any reason whatsoever and whether or not in breach of local labor laws) and Optionee irrevocably releases the Company and its Affiliates from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by acceptance of this Option Certificate, Optionee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim;
(h) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding
Optionees participation in the Plan, or Optionees purchase or sale of the underlying shares of Stock; and
(i) Optionee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan or this Option.
14. Non-Negotiable Terms. The terms of this Option Certificate are not negotiable, but Optionee may refuse to accept this Option by notifying immediately in writing the Companys Vice President, Chief Legal Officer and Secretary or the Companys Global Vice President, Human Resources.
15. Data Privacy Consent. Pursuant to applicable personal data protection laws, the Company hereby notifies Optionee of the following in relation to Optionees personal data and the collection, processing and transfer of such data in relation to the Companys grant of the Option and Optionees participation in the Plan. The collection, processing and transfer of Optionees personal data is necessary for the Companys administration of the Plan and Optionees participation in the Plan. Optionees denial and/or objection to the collection, processing and transfer of personal data may affect Optionees participation in the Plan. As such, Optionee voluntarily acknowledges and consents (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein.
The Company holds certain personal information about Optionee, including Optionees name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all equity awards or any other entitlement to shares of Stock awarded, canceled, purchased, vested, unvested or outstanding in Optionees favor, for the purpose of managing and administering the Plan (Data). The Data may be provided by Optionee or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing Optionees participation in the Plan. The Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations in Optionees country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. Data will be accessible within the Companys organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for Optionees participation in the Plan.
The Company will transfer Data as necessary for the purpose of implementation, administration and management of Optionees participation in the Plan, and the Company may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the
United States. Optionee hereby authorizes (where required under applicable law) them to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing Optionees participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Stock on Optionees behalf to a broker or other third party with whom Optionee may elect to deposit any shares of Stock acquired pursuant to the Plan.
Optionee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of the Data, (b) verify the content, origin and accuracy of the Data, (c) request the integration, update, amendment, deletion, or blockage (for breach of applicable laws) of the Data, and (d) to oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and Optionees participation in the Plan. Optionee may seek to exercise these rights by contacting Optionees local HR manager or the Companys Human Resources Department.
16. Private Placement. If Optionee is resident and/or employed outside of the United States, the grant of the Option is not intended to be a public offering of securities in Optionees country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filing with the local securities authorities (unless otherwise required under local law), and the Option are not subject to the supervision of the local securities authorities. No employee of the Company is permitted to advise Optionee on whether Optionee should purchase shares of Stock under the Plan. Investment in shares of Stock involves a degree of risk. Before deciding to purchase shares of Stock pursuant to the Option, Optionee should carefully consider all risk factors relevant to the acquisition of shares of Stock under the Plan and should carefully review all of the materials related to the Option and the Plan. In addition, Optionee should consult with his or her personal investment advisor for professional investment advice.
17. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Option granted to Optionee under the Plan by electronic means. Optionee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
18. English Language. If Optionee is resident outside of the United States, Optionee acknowledges and agrees that it is Optionees express intent that the Option Certificate, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Option, be drawn up in English. If Optionee has received the Option Certificate, the Plan or any other documents related to the Option translated into a language other than English, and if the meaning of the translated
version is different from the English version, the meaning of the English version shall control.
19. Addendum. Notwithstanding any provisions of the Option Certificate to the contrary, the Option shall be subject to any special terms and conditions for Optionees country of residence (and country of employment, if different), as are forth in the applicable Addendum to the Option Certificate. Further, if Optionee transfers residence and/or employment to another country reflected in an Addendum to the Option Certificate, the special terms and conditions for such country will apply to Optionee to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Any applicable Addendum shall constitute part of the Option Certificate.
20. Additional Requirements. The Company reserves the right to impose other requirements on the Option, any payment made pursuant to the Option, and Optionees participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Such requirements may include (but are not limited to) requiring Optionee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
[Remainder of page intentionally left blank]
Optionee acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions hereof and thereof. Optionee has reviewed this Option Certificate and the Plan in their entirety, has had an opportunity to obtain the advice of counsel and fully understands all provisions of this Option Certificate and the Plan. Optionee also acknowledges receipt of the Prospectus for the Plan.
Dated: |
|
|
Signed: |
|
|
|
|
| |
|
|
Name: |
| |
|
|
|
| |
|
|
Address: |
| |
|
|
| ||
|
|
| ||
|
|
| ||
|
|
|
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
OPTION CERTIFICATE
AUSTRALIA
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Option Certificate (the Option Certificate), the Option is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Option Certificate. If Optionee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Option to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Option Conditioned on Satisfaction of Regulatory Obligations. If Optionee is (a) a director of an Affiliate incorporated in Australia, or (b) a person who is a management-level executive of an Affiliate incorporated in Australia and who also is a director of an Affiliate incorporated outside of the Australia, the grant of the Option is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.
2. Exercise of Option Rights. Notwithstanding anything in the Option Certificate to the contrary, the vested portion of the Option may not be exercised by Optionee unless and until such time as the Fair Market Value of the underlying shares of Stock on the date of exercise equals or exceeds the Option exercise price for such shares.
* * * * *
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
OPTION CERTIFICATE
ITALY
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Option Certificate (the Option Certificate), the Option is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Option Certificate. If Optionee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Option to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Mandatory Cashless Exercise. Notwithstanding anything in Section 3(a) of the Option Certificate to the contrary, Optionee may exercise the Option only by means of a cashless sell-all exercise. Under a cashless sell all exercise, all of the shares of Stock issuable upon exercise of the Option will be sold and the sales proceeds (net from the payment of the exercise price and any taxes and social insurance contributions that are required to be withheld pursuant to Section 4 of the Option Certificate) will be paid to Optionee in cash.
* * * * *
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
OPTION CERTIFICATE
NETHERLANDS
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Option Certificate (the Option Certificate), the Option is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Option Certificate. If Optionee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Option to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Waiver of Termination Rights. As a condition to the grant of the Option, Optionee hereby waives any and all rights to compensation or damages as a result of the termination of Optionees employment with the Company or any reason whatsoever, insofar as those rights result or may result from (a) the loss or diminution in value of such rights or entitlements under the Plan, or (b) Optionee ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
OPTION CERTIFICATE
SPAIN
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Option Certificate (the Option Certificate), the Option is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Option Certificate. If Optionee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Option to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Termination for Cause. Notwithstanding anything to the contrary in the Plan or the Option Certificate, Cause shall be defined in the Plan, irrespective of whether the termination is or is not considered a fair termination (i.e., despido procedente) under Spanish legislation.
2. Optionee Labor Acknowledgement. The following provision supplements Section 16 of the Option Certificate:
In accepting the Option, Optionee acknowledges that he or she consents to participation in the Plan and has received a copy of the Plan. Further, Optionee understands and agrees that, as a condition of the grant of Option, Optionees termination of employment for any reason (including for the reasons listed below) will automatically result in the cancellation and loss of any Option that may have been granted to Optionee and that were not fully vested on the date of termination. In particular, Optionee understands and agrees that the Option will be cancelled without entitlement to exercise for the acquisition of shares of Stock or to any amount as indemnification if Optionee terminates employment by reason of, including, but not limited to: resignation, death, disability, retirement, disciplinary dismissal adjudged to be with Cause, disciplinary dismissal adjudged or recognized to be without Cause, individual or collective layoff on objective grounds, whether adjudged to be with Cause or adjudged or recognized to be without Cause, material modification of the terms of employment under Article 41 of the Workers Statute, relocation under Article 40 of the Workers Statute, Article 50 of the Workers Statute, unilateral withdrawal by the Company, and under Article 10.3 of Royal Decree 1382/1985. Furthermore, Optionee understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant Option under the Plan to individuals who may be Optionees of the Company or an Affiliate throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or an Affiliate on an ongoing basis.
Consequently, Optionee understands that the Option are granted on the assumption and condition that the Option and the shares of Stock issued upon exercise of the Option shall not become a part of any employment contract (either with the Company or an Affiliate) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, Optionee understands that the grant of the Option would not be made to Optionee but for the assumptions and conditions referred to above; thus, Optionee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of Option shall be null and void.
* * * * *
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
OPTION CERTIFICATE
UNITED KINGDOM
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Option Certificate (the Option Certificate), the Option is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Option Certificate. If Optionee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Option to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Income Tax and Social Insurance Contribution Withholding. The following provisions shall replace Section 4 of the Option Certificate:
(a) Regardless of any action the Company takes with respect to any or all income tax, primary and secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant, vesting or exercise of the Option, or the release or assignment of the Option for consideration, or the receipt of any other benefit in connection with the Option (Tax-Related Items), Optionee acknowledges that the ultimate liability for all Tax-Related Items legally due by Optionee is and remains Optionees responsibility and that the Company: (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant of the Option, the vesting of the Option, and the exercise of the Option; and (ii) does not commit to structure the terms of the Option or any aspect of the Option to reduce or eliminate Optionees liability for Tax-Related Items.
(b) As a condition of settling the Option following the date of exercise, the Company shall be entitled to withhold and Optionee agrees to pay, or make adequate arrangements satisfactory to the Company to satisfy, all obligations of the Company to account to HM Revenue & Customs (HMRC) for any Tax-Related Items. In this regard, Optionee authorizes the Company to withhold all applicable Tax-Related Items legally payable by Optionee from any wages or other cash compensation paid to Optionee by the Company. Alternatively, or in addition, if permissible under local law, Optionee authorizes the Company, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by Optionee by one or a combination of the following: (i) withholding otherwise deliverable shares of Stock; (ii) arranging for the sale of shares of Stock otherwise deliverable to Optionee (on Optionees behalf and at Optionees direction pursuant to this authorization); or (iii) withholding from the proceeds of the sale of any shares of Stock acquired upon the exercise of the Option. If the obligation for
Tax-Related Items is satisfied by withholding a number of whole shares of Stock as described herein, Optionee shall be deemed to have been issued the full number of whole shares of Stock issued in exercise of the Option, notwithstanding that a number of shares of Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Option. If, by the date on which the event giving rise to the Tax-Related Items occurs (the Chargeable Event), Optionee has relocated to a country other than the United Kingdom, Optionee acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one country, including the United Kingdom. Optionee also agrees that the Company may determine the amount of Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right which Optionee may have to recover any overpayment from the relevant tax authorities.
(c) Optionee shall pay to the Company any amount of Tax-Related Items that the Company may be required to account to HMRC with respect to the Chargeable Event that cannot be satisfied by the means previously described. If payment or withholding is not made within 90 days of the Chargeable Event or such other period as required under U.K. law (the Due Date), Optionee agrees that the amount of any uncollected Tax-Related Items shall (assuming Optionee are not a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), constitute a loan owed by Optionee to the Company, effective on the Due Date. Optionee agrees that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company may recover it at any time thereafter by any of the means referred to above. If any of the foregoing methods of collection are not allowed under applicable laws or if Optionee fails to comply with Optionees obligations in connection with the Tax-Related Items as described in this section, the Company may refuse to deliver any shares of Stock otherwise payable in exercise of the Option.
2. Exclusion of Claim. Optionee acknowledges and agrees that Optionee will have no entitlement to compensation or damages in consequence of the termination of Optionees employment with the Company for any reason whatsoever and whether or not in breach of contract, insofar as such entitlement arises or may arise from Optionees ceasing to have rights under or to be entitled to exercise the Option as a result of such termination, or from the loss or diminution in value of the Option. Upon the grant of the Option, Optionee shall be deemed to have irrevocably waived any such entitlement.
* * * * *
Exhibit 10.4
TORNIER N.V. 2010 INCENTIVE PLAN
STOCK GRANT CERTIFICATE
(IN THE FORM OF A RESTRICTED STOCK UNIT)
Tornier N.V., a public limited liability company organized under the laws of The Netherlands (the Company), in accordance with the Tornier N.V. 2010 Incentive Plan (the Plan), hereby grants a Stock Grant to , who shall be referred to as Grantee, of shares in the form of a restricted stock unit, which grant and the issuance of such shares shall be subject to all of the terms and conditions set forth in this Stock Grant Certificate and in the Plan. This grant has been made as of , 201[ ], which shall be referred to as the Grant Date.
|
|
TORNIER N.V. | |
|
|
| |
|
|
| |
|
|
By: |
|
|
|
|
Name: Douglas W. Kohrs |
|
|
|
Title: President and Chief Executive Officer |
TERMS AND CONDITIONS
1. Plan and Stock Grant Certificate. This Stock Grant is subject to all of the terms and conditions set forth in this Stock Grant Certificate and in the Plan. If a determination is made that any term or condition set forth in this Stock Grant Certificate is inconsistent with the Plan, the Plan shall control. All of the capitalized terms not otherwise defined in this Stock Grant Certificate shall have the same meaning in this Stock Grant Certificate as in the Plan. A copy of the Plan and the prospectus for the Plan have been delivered to Grantee together with this Stock Grant Certificate.
2. Shareholder Status. Grantee shall have no rights as a shareholder of the Company with respect to the shares of Stock subject to this Stock Grant until such shares have been issued pursuant to Section 3 of this Stock Grant Certificate. Notwithstanding the generality of the foregoing, Grantee shall not be entitled to vote any of the shares of Stock subject to this Stock Grant until such shares have been issued pursuant to Section 3 of this Stock Grant Certificate or receive any dividends declared prior to the issuance of such shares or otherwise exercise any incidents of ownership with respect to such shares of Stock until such shares have been issued pursuant to Section 3 of this Stock Grant Certificate.
3. Vesting and Conditions to Issuance of Shares; Forfeiture.
(a) Vesting and Conditions to Issuance of Shares. Subject to the other provisions of this Stock Grant Certificate, Grantees interest in the
Stock subject to this Stock Grant shall vest and the shares of Stock subject to this Stock Grant shall be issued in such increments and at such times as follows:
(1) Grantees interest in [ ] of the shares of Stock subject to this Stock Grant shall vest and such shares of Stock shall be issued and become nonforfeitable on [ ];
(2) Grantees interest in an additional [ ] of the shares of Stock subject to this Stock Grant shall vest and such shares of Stock shall be issued and become nonforfeitable on [ ];
(3) Grantees interest in an additional [ ] of the shares of Stock subject to this Stock Grant shall vest and such shares of Stock shall be issued and become nonforfeitable on [ ]; and
(4) Grantees interest in all remaining shares of Stock subject to this Stock Grant shall vest and such remaining shares of Stock shall be issued and become nonforfeitable on [ ].
(b) Forfeiture of Rights to Receive Unissued Shares.
(1) If Grantees continuous employment or service relationship (including service as an employee and as a consultant) with the Company terminates for any reason whatsoever before his or her interest in all of the shares of Stock subject to this Stock Grant have vested and become issuable under Section 3(a), then Grantee shall (except as provided in Section 12 of the Plan) forfeit his or her rights to receive all of the remaining shares of Stock subject to this Stock Grant that have not vested and been issued as of the date Grantees employment or service relationship with the Company so terminates.
(2) Notwithstanding Section 3(b)(1), if Grantees employment with the Company terminates before his or her interest in all of the shares of Stock subject to this Stock Grant have vested and become issuable under Section 3(a) but Grantee at such time then becomes an independent consultant to the Company, Grantees rights under this Stock Grant Certificate shall continue to vest in accordance with Section 3(a) so long as Grantee continues to provide services to the Company and such change in status does not constitute a
separation from service under Section 409A of the Internal Revenue Code.
(3) Except in instances where he or she becomes an independent consultant to the Company as provided in clause (2) above, Grantees employment termination date shall mean the last day that Grantee actively performs services in an employer-employee relationship for the Company, without regard to the reason for Grantees cessation of service and without regard to any advance notice period as may be otherwise provided under local law.
(c) Affiliates. For purposes of this Stock Grant Certificate, any reference to the Company shall include any Affiliate of the Company, and a transfer of employment or service relationship between the Company and any Affiliate of the Company or between any Affiliate of the Company shall not be treated as a termination of employment or service relationship under the Plan or this Stock Grant Certificate.
(d) Effect of Actions Constituting Cause or Adverse Action. If Grantee is determined by the Committee, acting in its sole discretion, to have taken any action that would constitute Cause or an Adverse Action during or within one (1) year after the termination of employment or other service with the Company, irrespective of whether such action or the Committees determination occurs before or after termination of Grantees employment or other service with the Company and irrespective of whether or not Grantee was terminated as a result of such Cause or Adverse Action, (i) all rights of Grantee under this Stock Grant Certificate shall terminate and be forfeited without notice of any kind, and (ii) the Committee in its sole discretion shall have the authority to rescind this Stock Grant and to require Grantee to pay to the Company, within ten (10) days of receipt from the Company of notice of such rescission, any amount received or the amount of any gain realized as a result of such rescission (including any dividend equivalents paid or other distributions made with respect to this Stock Grant). The Company shall be entitled to withhold and deduct from future wages of Grantee (or from other amounts that may be due and owing to Grantee from the Company) or make other arrangements for the collection of all amounts necessary to satisfy such payment obligations. This Section 3(d) shall not apply following a Change in Control.
(e) Clawback Policy. This Stock Grant and the shares of Stock issuable pursuant to this Stock Grant are subject to forfeiture to or clawback by the Company to the extent required and allowed by
law, including the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the Sarbanes Oxley Act of 2002 and any implementing rules and regulations promulgated thereunder, and pursuant to any forfeiture, clawback or similar policy of the Company, as such laws, rules, regulations and policy may be in effect from time to time.
(f) Sale of Business Unit. The Committee, in connection with the sale of any Affiliate, division or other business unit of the Company, may, within the Committees sole discretion, take any or all of the following actions if this Stock Grant or the rights under this Stock Grant will be adversely affected by such transaction:
(1) accelerate the time Grantees interest in the Stock subject to this Stock Grant will vest and the shares of Stock subject to this Stock Grant will be issued under Section 3(a), or
(2) provide for vesting after such sale or other disposition, or
(g) EU Age Discrimination Rules. If Grantee is a local national of and is employed in a country that is a member of the European Union, the grant of the Stock Grant and the terms and conditions governing the Stock Grant are intended to comply with the age discrimination provisions of the EU Equal Treatment Framework Directive, as implemented into local law (the Age Discrimination Rules). To the extent that a court or tribunal of competent jurisdiction determines that any provision of the Terms and Conditions is invalid or unenforceable, in whole or in part, under the Age Discrimination Rules, the Company, in its sole discretion, shall have the power and authority to revise or strike such provision to the minimum extent necessary to make it valid and enforceable to the full extent permitted under local law.
4. Change in Control. If there is a Change in Control of the Company, this Stock Grant shall be subject to the provisions of Section 12 of the Plan with respect to such Change in Control.
5. Issuance of Shares; Book-Entry or Stock Certificates.
(a) Share Settlement. As soon as practicable after each date as of which shares of Stock subject to this Stock Grant become vested pursuant to Section 3, the Company shall direct its transfer agent to issue such number of shares of Stock in the name of Grantee in book entry or to issue one or more physical stock certificates representing such shares in the name of Grantee.
(b) Cash Settlement. Notwithstanding anything in this Stock Grant Certificate to the contrary, the Company may, in its sole discretion,
settle all or a portion of this Stock Grant in the form of a cash payment to the extent settlement in shares of Stock is prohibited under local law, or would require Grantee and/or the Company to obtain the approval of any governmental and/or regulatory body in Grantees country of residence (or country of employment, if different). Alternatively, the Company may, in its sole discretion, settle all or a portion of this Stock Grant in the form of shares of Stock but require an immediate sale of such shares of Stock (in which case, this Stock Grant Certificate shall give the Company the authority to issue sales instructions on Grantees behalf).
(c) Repatriation; Compliance with Laws. As a condition of the grant of this Stock Grant, Grantee agrees to repatriate all payments attributable to the Stock Grant in accordance with local foreign exchange rules and regulations in Grantees country of residence (and country of employment, if different). In addition, Grantee agrees to take any and all actions, and consents to any and all actions taken by the Company and its Affiliates, as may be required to allow the Company and its Affiliates to comply with local laws, rules and regulations in Grantees country of residence (and country of employment, if different). Finally, Grantee agrees to take any and all actions that may be required to comply with his or her personal legal and tax obligations under local laws, rules and regulations in Grantees country of residence (and country of employment, if different).
6. Non-Transferable. No rights granted under this Stock Grant Certificate shall be transferable by Grantee other than by will or by the laws of descent and distribution.
7. Other Laws. The Company shall have the right to refuse to issue to Grantee or transfer shares of Stock subject to this Stock Grant if the Company acting in its absolute discretion determines that the issuance or transfer of such shares of Stock might violate any applicable law or regulation.
8. Income Tax and Social Insurance Contributions Withholding.
(a) Regardless of any action the Company takes with respect to any or all income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, payment on account or other tax-related withholding (Tax-Related Items), Grantee acknowledges that the ultimate liability for all Tax-Related Items legally due by Grantee is and remains Grantees responsibility and that the Company: (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Grant, including the grant of the Stock Grant, the vesting of the Stock Grant, and the settlement of the
Stock Grant; and (ii) does not commit to structure the terms of the Stock Grant or any aspect of the Stock Grant to reduce or eliminate Grantees liability for Tax-Related Items.
(b) Grantees acceptance of this Stock Grant constitutes Grantees agreement to execute and deliver to the Company a Tax Withholding Payment Authorization in substantially the form attached as Exhibit A to this Stock Grant Certificate if requested to do so by the Company. If Grantees country of residence (and/or the country of employment, if different) requires withholding of Tax-Related Items and if Grantee has not executed and delivered to the Company the Tax Withholding Payment Authorization prior to the one or more dates on which a Grantees liability for a Tax-Related Item becomes due as determined by applicable law (generally, the date or dates that shares of Stock underlying this Stock Grant vest and become issuable pursuant to Section 3(a) of this Stock Grant Certificate) (any such date, the Taxable Date), then prior to the delivery of shares of Stock upon the vesting of the Stock Grant, the Company: (i) shall withhold a sufficient number of whole shares of Stock otherwise issuable upon the vesting of the Stock Grant that have an aggregate Fair Market Value sufficient to pay the minimum Tax-Related Items required to be withheld (in which case, the cash equivalent of such withheld shares of Stock shall be used to settle the withholding obligation); or (ii) shall withhold an amount from Grantees regular salary and/or wages, or from any other amounts payable to Grantee. In cases where shares of Stock are withheld and the Fair Market Value of the number of whole shares of Stock withheld is greater than the minimum Tax-Related Items required to be withheld, the Company shall make a cash payment to Grantee equal to the difference as soon as administratively practicable.
(c) In the event the withholding requirements are not satisfied through the sale of shares of Stock pursuant to the Tax Withholding Payment Authorization, through the withholding of shares of Stock or through Grantees regular salary and/or wages or other amounts payable to Grantee, no shares of Stock will be issued to Grantee unless and until satisfactory arrangements (as determined by the Committee) have been made by Grantee with respect to the payment of any Tax-Related Items which the Company determines, in its sole discretion, must be withheld or collected with respect to the Stock Grant. By accepting the grant of the Stock Grant, Grantee expressly consents to the withholding of shares of Stock and/or the withholding of amounts from Grantees regular salary and/or wages, or other amounts payable to Grantee, as provided for hereunder. All other Tax-Related Items related to the Stock Grant and any shares of Stock acquired pursuant to the vesting of the Stock Grant are Grantees sole responsibility.
9. Data Privacy Consent. Pursuant to applicable personal data protection laws, the Company hereby notifies Grantee of the following in relation to Grantees personal data and the collection, processing and transfer of such data in relation to the Companys grant of the Stock Grant and Grantees participation in the Plan. The collection, processing and transfer of Grantees personal data is necessary for the Companys administration of the Plan and Grantees participation in the Plan. Grantees denial and/or objection to the collection, processing and transfer of personal data may affect Grantees participation in the Plan. As such, Grantee voluntarily acknowledges and consents (where required under applicable law) to the collection, use, processing and transfer of personal data as described herein.
The Company holds certain personal information about Grantee, including Grantees name, home address and telephone number, date of birth, social security number or other employee identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all equity awards or any other entitlement to shares of Stock awarded, canceled, purchased, vested, unvested or outstanding in Grantees favor, for the purpose of managing and administering the Plan (Data). The Data may be provided by Grantee or collected, where lawful, from third parties, and the Company will process the Data for the exclusive purpose of implementing, administering and managing Grantees participation in the Plan. The Data processing will take place through electronic and non-electronic means according to logics and procedures strictly correlated to the purposes for which Data are collected and with confidentiality and security provisions as set forth by applicable laws and regulations in Grantees country of residence. Data processing operations will be performed minimizing the use of personal and identification data when such operations are unnecessary for the processing purposes sought. Data will be accessible within the Companys organization only by those persons requiring access for purposes of the implementation, administration and operation of the Plan and for Grantees participation in the Plan.
The Company will transfer Data as necessary for the purpose of implementation, administration and management of Grantees participation in the Plan, and the Company may further transfer Data to any third parties assisting the Company in the implementation, administration and management of the Plan. These recipients may be located in the European Economic Area, or elsewhere throughout the world, such as the United States. Grantee hereby authorizes (where required under applicable law) them to receive, possess, use, retain and transfer the Data, in electronic or other form, for purposes of implementing, administering and managing Grantees participation in the Plan, including any requisite transfer of such Data as may be required for the administration of the Plan and/or the subsequent holding of shares of Stock on Grantees behalf to a broker or other third party with whom Grantee may elect to deposit any shares of Stock acquired pursuant to the Plan.
Grantee may, at any time, exercise his or her rights provided under applicable personal data protection laws, which may include the right to (a) obtain confirmation as to the existence of the Data, (b) verify the content, origin and accuracy of the Data, (c) request the integration, update, amendment, deletion, or blockage (for breach of
applicable laws) of the Data, and (d) to oppose, for legal reasons, the collection, processing or transfer of the Data which is not necessary or required for the implementation, administration and/or operation of the Plan and Grantees participation in the Plan. Grantee may seek to exercise these rights by contacting Grantees local HR manager or the Companys Human Resources Department.
10. No Right to Continue Employment or Service. None of the Plan, this Stock Grant Certificate, or any related material shall give Grantee the right to remain employed by the Company or to continue in the service of the Company in any other capacity.
11. Venue. In accepting this Stock Grant, Grantee is deemed to submit to the exclusive jurisdiction and venue of the federal or state courts of the State of Minnesota of the United States of America to resolve any and all issues that may arise out of or relate to this Stock Grant and this Stock Grant Certificate.
12. Binding Effect. This Stock Grant Certificate shall be binding upon the Company and Grantee and their respective heirs, executors, administrators and successors.
13. Headings and Sections. The headings contained in this Stock Grant Certificate are for reference purposes only and shall not affect in any way the meaning or interpretation of this Stock Grant Certificate. All references to sections in this Stock Grant Certificate shall be to sections of this Stock Grant Certificate unless otherwise expressly stated as part of such reference.
14. Language. If Grantee receives this Stock Grant Certificate or any other document related to the Plan translated into a language other than English and the translated version is different to the English version, the English version will control.
15. Nature of the Grant. In accepting this Stock Grant, Grantee acknowledges that:
(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time, unless otherwise provided in the Plan or this Stock Grant Certificate;
(b) the grant of the Stock Grant is voluntary and occasional and does not create any contractual or other right to receive future Stock Grants, or benefits in lieu of Stock Grants, even if Stock Grants have been granted repeatedly in the past;
(c) all decisions with respect to future Stock Grants, if any, will be at the sole discretion of the Company;
(d) Grantee is voluntarily participating in the Plan;
(e) the Stock Grant is an extraordinary item that does not constitute compensation of any kind for services of any kind rendered to the Company or the Employer, and which is outside the scope of Grantees employment contract, if any;
(f) the Stock Grant is not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, end of service payments, bonuses, long-service awards, pension or retirement benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company;
(g) in the event that Grantee is not an employee of the Company, the Stock Grant will not be interpreted to form an employment contract or relationship with the Company; and furthermore, the Stock Grant will not be interpreted to form an employment contract with the Employer of the Company;
(h) the future value of the underlying shares of Stock subject to this Stock Grant is unknown and cannot be predicted with certainty and if Grantee vests in the Stock Grant and is issued the shares of Stock, the value of those shares may increase or decrease;
(i) in consideration of the grant of the Stock Grant, no claim or entitlement to compensation or damages shall arise from termination of the Stock Grant or diminution in value of the Stock Grant or shares of Stock acquired upon vesting of the Stock Grant resulting from termination of Grantees employment or service by the Company (for any reason whatsoever and whether or not in breach of local labor laws) and Grantee irrevocably releases the Company from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by signing this Stock Grant Certificate, Grantee shall be deemed irrevocably to have waived his or her entitlement to pursue such claim;
(j) in the event of termination of Grantees employment or service (whether or not in breach of local labor laws), Grantees right to receive the Stock Grant and vest in the Stock Grant under the Plan, if any, will terminate effective as of the date that Grantee is no longer actively employed or providing service and will not be extended by any notice period mandated under local law (e.g., active employment or service would not include a period of garden leave or similar period pursuant to local law); furthermore, in the event of termination of Grantees employment or service (whether or not in breach of local labor laws), Grantees right to vest in the
Stock Grant after such termination, if any, will be measured by the date of termination of Grantees active employment or service and will not be extended by any notice period mandated under local law; the Committee shall have the exclusive discretion to determine when Grantee is no longer actively employed or providing service for purposes of his or her Stock Grant;
(k) the Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Grantees participation in the Plan, or Grantees acquisition or sale of the underlying shares of Stock; and
(l) Grantee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding his or her participation in the Plan before taking any action related to the Plan or the Stock Grant.
16. Private Placement. If Grantee is resident and/or employed outside of the United States, the grant of the Stock Grant is not intended to be a public offering of securities in Grantees country of residence (and country of employment, if different). The Company has not submitted any registration statement, prospectus or other filing with the local securities authorities (unless otherwise required under local law), and the Stock Grant is not subject to the supervision of the local securities authorities.
17. Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Stock Grant granted to Grantee under the Plan by electronic means. Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.
18. English Language. If Grantee is resident outside of the United States, Grantee acknowledges and agrees that it is Grantees express intent that the Stock Grant Certificate, the Plan and all other documents, notices and legal proceedings entered into, given or instituted pursuant to the Stock Grant, be drawn up in English. If Grantee has received the Stock Grant Certificate, the Plan or any other documents related to the Stock Grant translated into a language other than English, and if the meaning of the translated version is different from the English version, the meaning of the English version shall control.
19. Addendum. Notwithstanding any provisions of the Stock Grant Certificate to the contrary, the Stock Grant shall be subject to any special terms and conditions for Grantees country of residence (and country of employment, if different), as are forth in the applicable Addendum to the Stock Grant Certificate. Further, if Grantee transfers residence and/or employment to another country reflected in an Addendum to the Stock Grant Certificate, the special terms and conditions for such country will apply to Grantee to the extent the Company determines, in its sole discretion, that the application of such
terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Any applicable Addendum shall constitute part of the Stock Grant Certificate.
20. Additional Requirements. The Company reserves the right to impose other requirements on the Stock Grant, any payment made pursuant to the Stock Grant, and Grantees participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable in order to comply with local law or to facilitate the administration of the Plan. Such requirements may include (but are not limited to) requiring Grantee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.
[Remainder of page intentionally left blank]
Grantee acknowledges receipt of a copy of the Plan, represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Stock Grant subject to all of the terms and provisions hereof and thereof. Grantee has reviewed this Stock Grant Certificate and the Plan in their entirety, has had an opportunity to obtain the advice of counsel and fully understands all provisions of this Stock Grant Certificate and the Plan. Grantee also acknowledges receipt of the Prospectus for the Plan.
Dated: |
|
|
Signed: |
|
|
|
|
| |
|
|
Name: |
| |
|
|
|
| |
|
|
Address: |
| |
|
|
| ||
|
|
| ||
|
|
| ||
|
|
|
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
STOCK GRANT CERTIFICATE
AUSTRALIA
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Stock Grant Certificate (the Stock Grant Certificate), the Stock Grant is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Stock Grant Certificate. If Grantee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Stock Grant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Stock Grant Conditioned on Satisfaction of Regulatory Obligations. If Grantee is (a) a director of an Affiliate incorporated in Australia, or (b) a person who is a management-level executive of an Affiliate incorporated in Australia and who also is a director of an Affiliate incorporated outside of the Australia, the grant of the Stock Grant is conditioned upon satisfaction of the shareholder approval provisions of section 200B of the Corporations Act 2001 (Cth) in Australia.
* * * * *
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
STOCK GRANT CERTIFICATE
NETHERLANDS
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Stock Grant Certificate (the Stock Grant Certificate), the Stock Grant is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Stock Grant Certificate. If Grantee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Stock Grant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Waiver of Termination Rights. As a condition to the grant of the Stock Grant, Grantee hereby waives any and all rights to compensation or damages as a result of the termination of Grantees employment with the Company or any reason whatsoever, insofar as those rights result or may result from (a) the loss or diminution in value of such rights or entitlements under the Plan, or (b) Grantee ceasing to have rights under, or ceasing to be entitled to any awards under the Plan as a result of such termination.
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
STOCK GRANT CERTIFICATE
SPAIN
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Stock Grant Certificate (the Stock Grant Certificate), the Stock Grant is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Stock Grant Certificate. If Grantee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Stock Grant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Termination for Cause. Notwithstanding anything to the contrary in the Plan or the Stock Grant Certificate, Cause shall be defined in the Plan, irrespective of whether the termination is or is not considered a fair termination (i.e., despido procedente) under Spanish legislation.
2. Grantee Labor Acknowledgement. The following provision supplements Section 15 of the Stock Grant Certificate:
In accepting the Stock Grant, Grantee acknowledges that he or she consents to participation in the Plan and has received a copy of the Plan. Further, Grantee understands and agrees that, as a condition of the grant of Stock Grant, Grantees termination of employment for any reason (including for the reasons listed below) will automatically result in the cancellation and loss of any Stock Grant that may have been granted to Grantee and that were not fully vested on the date of termination. In particular, Grantee understands and agrees that the Stock Grant will be cancelled without entitlement to vesting for the acquisition of shares of Stock or to any amount as indemnification if Grantee terminates employment by reason of, including, but not limited to: resignation, death, disability, retirement, disciplinary dismissal adjudged to be with Cause, disciplinary dismissal adjudged or recognized to be without Cause, individual or collective layoff on objective grounds, whether adjudged to be with Cause or adjudged or recognized to be without Cause, material modification of the terms of employment under Article 41 of the Workers Statute, relocation under Article 40 of the Workers Statute, Article 50 of the Workers Statute, unilateral withdrawal by the Company, and under Article 10.3 of Royal Decree 1382/1985. Furthermore, Grantee understands that the Company has unilaterally, gratuitously and in its sole discretion decided to grant Stock Grant under the Plan to individuals who may be Grantees of the Company or an Affiliate throughout the world. The decision is a limited decision that is entered into upon the express assumption and condition that any grant will not economically or otherwise bind the Company or an Affiliate on an ongoing basis.
Consequently, Grantee understands that the Stock Grant is granted on the assumption and condition that the Stock Grant and the shares of Stock issued upon vesting of the Stock Grant shall not become a part of any employment contract (either with the Company or an Affiliate) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever. In addition, Grantee understands that the grant of the Stock Grant would not be made to Grantee but for the assumptions and conditions referred to above; thus, Grantee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then any grant of Stock Grant shall be null and void.
* * * * *
TORNIER N.V. 2010 INCENTIVE PLAN
ADDENDUM TO
STOCK GRANT CERTIFICATE
UNITED KINGDOM
In addition to the provisions of the Tornier N.V. 2010 Incentive Plan (the Plan) and the Stock Grant Certificate (the Stock Grant Certificate), the Stock Grant is subject to the following additional terms and conditions. All defined terms as contained in this Addendum shall have the same meaning as set forth in the Plan and the Stock Grant Certificate. If Grantee transfers residency and/or employment to another country reflected in an Addendum, the additional terms and conditions for such country (if any) will apply to the Stock Grant to the extent the Company determines, in its sole discretion, that the application of such terms and conditions is necessary or advisable in order to comply with local law or to facilitate the administration of the Plan.
1. Income Tax and Social Insurance Contribution Withholding. The following provisions shall replace Section 8 of the Stock Grant Certificate:
(a) Regardless of any action the Company takes with respect to any or all income tax, primary and secondary Class 1 National Insurance contributions, payroll tax or other tax-related withholding attributable to or payable in connection with or pursuant to the grant or vesting of the Stock Grant, or the release or assignment of the Stock Grant for consideration, or the receipt of any other benefit in connection with the Stock Grant (Tax-Related Items), Grantee acknowledges that the ultimate liability for all Tax-Related Items legally due by Grantee is and remains Grantees responsibility and that the Company: (i) makes no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Grant, including the grant of the Stock Grant and the vesting of the Stock Grant; and (ii) does not commit to structure the terms of the Stock Grant or any aspect of the Stock Grant to reduce or eliminate Grantees liability for Tax-Related Items.
(b) As a condition of settling the Stock Grant following the date of vesting, the Company shall be entitled to withhold and Grantee agrees to pay, or make adequate arrangements satisfactory to the Company to satisfy, all obligations of the Company to account to HM Revenue & Customs (HMRC) for any Tax-Related Items. In this regard, Grantee authorizes the Company to withhold all applicable Tax-Related Items legally payable by Grantee from any wages or other cash compensation paid to Grantee by the Company. Alternatively, or in addition, if permissible under local law, Grantee authorizes the Company, at its discretion and pursuant to such procedures as it may specify from time to time, to satisfy the obligations with regard to all Tax-Related Items legally payable by Grantee by one or a combination of the following: (i) withholding otherwise deliverable shares of Stock; (ii) arranging for the sale of shares of Stock otherwise deliverable to Grantee (on Grantees behalf and at Grantees direction pursuant to this authorization); or (iii) withholding from the proceeds of the sale of any shares of Stock acquired upon the vesting of the Stock Grant. If the obligation for Tax-
Related Items is satisfied by withholding a number of whole shares of Stock as described herein, Grantee shall be deemed to have been issued the full number of whole shares of Stock issued upon vesting of the Stock Grant, notwithstanding that a number of shares of Stock are held back solely for the purpose of paying the Tax-Related Items due as a result of any aspect of the Stock Grant. If, by the date on which the event giving rise to the Tax-Related Items occurs (the Chargeable Event), Grantee has relocated to a country other than the United Kingdom, Grantee acknowledges that the Company may be required to withhold or account for Tax-Related Items in more than one country, including the United Kingdom. Grantee also agrees that the Company may determine the amount of Tax-Related Items to be withheld and accounted for by reference to the maximum applicable rates, without prejudice to any right which Grantee may have to recover any overpayment from the relevant tax authorities.
(c) Grantee shall pay to the Company any amount of Tax-Related Items that the Company may be required to account to HMRC with respect to the Chargeable Event that cannot be satisfied by the means previously described. If payment or withholding is not made within 90 days of the Chargeable Event or such other period as required under U.K. law (the Due Date), Grantee agrees that the amount of any uncollected Tax-Related Items shall (assuming Grantee are not a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), constitute a loan owed by Grantee to the Company, effective on the Due Date. Grantee agrees that the loan will bear interest at the then-current HMRC Official Rate and it will be immediately due and repayable, and the Company may recover it at any time thereafter by any of the means referred to above. If any of the foregoing methods of collection are not allowed under applicable laws or if Grantee fails to comply with Grantees obligations in connection with the Tax-Related Items as described in this section, the Company may refuse to deliver any shares of Stock otherwise issuable upon the vesting of the Stock Grant.
2. Exclusion of Claim. Grantee acknowledges and agrees that Grantee will have no entitlement to compensation or damages in consequence of the termination of Grantees employment with the Company for any reason whatsoever and whether or not in breach of contract, insofar as such entitlement arises or may arise from Grantees ceasing to have rights under or to be entitled to vesting of the Stock Grant as a result of such termination, or from the loss or diminution in value of the Stock Grant. Upon the grant of the Stock Grant, Grantee shall be deemed to have irrevocably waived any such entitlement.
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Douglas W. Kohrs, certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended July 3, 2011 of Tornier N.V. (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Intentionally omitted;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 12, 2011 |
|
|
|
/s/ Douglas W. Kohrs |
|
By: Douglas W. Kohrs |
|
Title: President and Chief Executive Officer |
|
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Carmen L. Diersen certify that:
1. I have reviewed this quarterly report on Form 10-Q for the quarter ended July 3, 2011 of Tornier N.V. (the registrant);
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrants other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b. Intentionally omitted;
c. Evaluated the effectiveness of the registrants disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrants internal control over financial reporting that occurred during the registrants most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and
5. The registrants other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrants auditors and the audit committee of the registrants board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrants ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrants internal control over financial reporting.
Date: August 12, 2011 |
|
|
|
/s/ Carmen L. Diersen |
|
By: Carmen L. Diersen |
|
Title: Global Chief Financial Officer |
|
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Tornier N.V. (the Registrant) on Form 10-Q for the quarter ended July 3, 2011 filed with the Securities and Exchange Commission (the Report), I, Douglas W. Kohrs, President and Chief Executive Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: |
/s/ Douglas W. Kohrs |
|
Name: |
Douglas W. Kohrs |
|
Title: |
President and Chief Executive Officer |
|
Date: |
August 12, 2011 |
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the quarterly report of Tornier N.V. (the Registrant) on Form 10-Q for the quarter ended July 3, 2011 filed with the Securities and Exchange Commission (the Report), I, Carmen L. Diersen, Global Chief Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes Oxley Act of 2002, that:
1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and
2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
By: |
/s/ Carmen L. Diersen |
|
Name: |
Carmen L. Diersen |
|
Title: |
Global Chief Financial Officer |
|
Date: |
August 12, 2011 |
Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jul. 03, 2011
|
Jul. 04, 2010
|
Jul. 03, 2011
|
Jul. 04, 2010
|
|
Revenue | $ 65,158 | $ 54,563 | $ 134,593 | $ 116,406 |
Cost of goods sold | 18,017 | 14,725 | 38,058 | 32,001 |
Gross profit | 47,141 | 39,838 | 96,535 | 84,405 |
Operating expenses: | Â | Â | Â | Â |
Sales and marketing | 34,872 | 29,721 | 69,571 | 64,191 |
General and administrative | 6,362 | 4,668 | 12,387 | 11,194 |
Research and development | 5,189 | 4,003 | 10,299 | 8,816 |
Amortization of intangible assets | 2,897 | 2,881 | 5,707 | 5,878 |
Special charges | 132 | 28 | 132 | 252 |
Total operating expenses | 49,452 | 41,301 | 98,096 | 90,331 |
Operating loss | (2,311) | (1,463) | (1,561) | (5,926) |
Other income (expense): | Â | Â | Â | Â |
Interest expense | (489) | (4,935) | (2,967) | (10,765) |
Foreign currency transaction gain (loss) | 226 | (3,445) | 147 | (5,739) |
Loss on extinguishment of debt | Â | Â | (29,475) | Â |
Other non-operating income (expense) | 35 | (153) | 16 | 61 |
Loss before income taxes | (2,539) | (9,996) | (33,840) | (22,369) |
Income tax (expense) benefit | (330) | 1,393 | 7,002 | 3,715 |
Consolidated net loss | (2,869) | (8,603) | (26,838) | (18,654) |
Net loss attributable to non-controlling interest | Â | Â | Â | (695) |
Net loss attributable to Tornier | (2,869) | (8,603) | (26,838) | (17,959) |
Accretion of non-controlling interest | Â | Â | Â | (679) |
Net loss attributable to ordinary shareholders | $ (2,869) | $ (8,603) | $ (26,838) | $ (18,638) |
Net loss per share: | Â | Â | Â | Â |
Basic and diluted (in dollars per share) | $ (0.07) | $ (0.31) | $ (0.72) | $ (0.72) |
Weighted average shares outstanding: | Â | Â | Â | Â |
Basic (in shares) | 39,040 | 27,411 | 37,248 | 26,039 |
Diluted (in shares) | 39,040 | 27,411 | 37,248 | 26,039 |
"+ text.join( "
\n" ) +"
" + text[p] + "
\n"; } } }else{ formatted = '' + raw + '
'; } html = ''+ "\n"+''+ "\n"+''+ "\n"+' formatted: '+ ( this.Default == 'raw' ? 'as Filed' : 'with Text Wrapped' ) +''+ "\n"+' | '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
'+ "\n"+' | '+ "\n"+' '+ "\n"+'
Other Long-Term Debt
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Debt | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Long-Term Debt |
|
Other Comprehensive Income (Loss)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Comprehensive Income (Loss) |
|
Inventories
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||
Inventories | Â | ||||||||||||||||||||||||||||||||||||||||
Inventories |
|
Share-Based Compensation
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation. | Â | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation |
|
Litigation
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Litigation | Â | |
Litigation |
|
Income Taxes
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Income Taxes | Â | |
Income Taxes |
|
Notes Payable and Warrants to Issue Ordinary Shares
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable and Warrants to Issue Ordinary Shares | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Notes Payable and Warrants to Issue Ordinary Shares |
|
Summary of Significant Accounting Policies
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Summary of Significant Accounting Policies | Â | |
Summary of Significant Accounting Policies |
|
Property, Plant and Equipment
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment |
|
Instruments
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||
Instruments | Â | ||||||||||||||||||||||||||||||||||||||||
Instruments |
|
Non-Controlling Interests
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Non-Controlling Interests | Â | |
Non-Controlling Interests |
|
Goodwill and Other Intangible Assets
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jul. 03, 2011
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets | Â | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Other Intangible Assets |
|
Subsequent Events
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Subsequent Events | Â | |
Subsequent Events |
|
Business Description
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Business Description | Â | |
Business Description |
|
Document and Entity Information
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
Aug. 10, 2011
|
|
Document and Entity Information | Â | Â |
Entity Registrant Name | Tornier N.V. | Â |
Entity Central Index Key | 0001492658 | Â |
Document Type | 10-Q | Â |
Document Period End Date | Jul. 03, 2011 | |
Amendment Flag | false | Â |
Current Fiscal Year End Date | --01-01 | Â |
Entity Current Reporting Status | Yes | Â |
Entity Filer Category | Non-accelerated Filer | Â |
Entity Common Stock, Shares Outstanding | Â | 39,170,863 |
Document Fiscal Year Focus | 2011 | Â |
Document Fiscal Period Focus | Q2 | Â |
Fair Value of Financial Instruments
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Fair Value of Financial Instruments | Â | |
Fair Value of Financial Instruments |
|
Capital Stock and Earnings Per Share
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Capital Stock and Earnings Per Share | Â | |
Capital Stock and Earnings Per Share |
|
Special Charges
|
6 Months Ended | |
---|---|---|
Jul. 03, 2011
|
||
Special Charges | Â | |
Special Charges |
|
Consolidated Balance Sheets (Parenthetical)
In Thousands, except Share data |
Jul. 03, 2011
USD ($)
|
Jul. 03, 2011
EUR (€)
|
Jan. 02, 2011
USD ($)
|
Jan. 02, 2011
EUR (€)
|
---|---|---|---|---|
Consolidated Balance Sheets | Â | Â | Â | Â |
Accounts receivable, allowance (in dollars) | $ 2,709 | Â | $ 2,519 | Â |
Ordinary shares, par value (in Euro per share) |  | € 0.03 |  | € 0.03 |
Ordinary shares, authorized | 175,000,000 | 175,000,000 | 175,000,000 | 175,000,000 |
Ordinary shares, issued | 39,042,986 | 39,042,986 | 29,568,731 | 29,568,731 |
Ordinary shares, outstanding | 39,042,986 | 39,042,986 | 29,568,731 | 29,568,731 |